Information Technology and Intellectual Property Law 9781526506849, 9781526506870, 9781526506856

Information Technology and Intellectual Property Law is a complete exploration of the relationship between information t

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English Pages [779] Year 2019

Table of contents :
Preface
Contents
Table of Statutes
Table of Statutory Instruments
Table of European Legislation
Table of Cases
Chapter 1 Introduction to information technology and intellectual property law
Introduction
Justification for the legal protection of computer software
Forms of protection for computer software
Development of protection for computer software
Liability of information society service providers
Trade marks on the internet and passing off
Competition law
Jurisdiction
Brexit
Summary
Chapter 2 Essentials of copyright law
Introduction
Layout of this chapter
Subsistence of copyright
Original works of copyright
Other works of copyright
Authorship
Ownership
Duration
Rights of the copyright owner and infringement
Remedies
Secondary infringement
Criminal offences
The permitted acts
Public interest and other defences
Dealing with copyright
Moral rights
Rights related to copyright
Chapter 3 Copyright and computer programs
Introduction
Layout of the chapter
Background and historical context
Subsistence of copyright in computer programs
Restricted acts and infringement of copyright in computer programs
Exceptions to the exclusive rights
Decompilation
Special measures of protection
Presumptions
Computer-generated works
Chapter 4 Non-textual copying of computer programs and emulating the functions of a computer program
Introduction
Layout of this chapter
Brief historical perspective
Non-textual copying in the UK
Emulating the functionality and other aspects of a computer program
Concluding remarks – emulating the functionality of a computer program
Chapter 5 Copyright in databases
Introduction
Layout of this chapter
Database technology
What is a database for the purposes of the Directive?
Subsistence of copyright in a database
Authorship, ownership and duration
Dealing with copyright databases
Rights of the owner and infringement
Exceptions to the restricted acts
Moral rights
Chapter 6 The sui generis database right
Introduction
Layout of this chapter
Subsistence
Ownership and dealing with the database right
Term of protection
Rights of database owners
Infringement
Exceptions to the database right
Rights and obligations of lawful users
Remedies
Licensing schemes
Circumvention of effective technological measures
Commission report 2005
Evaluation and Fitness Check Roadmap
Chapter 7 Copyright in the information society
Introduction
Layout of this chapter
Subsistence and exclusive rights
The Directive on copyright and related rights in the information society
Rights provided for by Directive
Exceptions and limitations
Protection of technological measures
Electronic rights management information
Remedies
Injunctions against information society service providers
Digital Economy Act 2010
Cross-border portability of online content services
The proposed Directive on copyright in the Digital Single Market
Chapter 8 Design law, computer graphics and typefaces
Introduction
Layout of this chapter
Copyright protection for computer graphics and typefaces
Trade mark protection
Design protection
The Community design
The UK registered design
Implications of design law for computer graphics, images displayed on websites and software fonts
Brexit and design law
Chapter 9 Semiconductor topography right
Introduction
Layout of this chapter
Background
The Directive on the legal protection of topographies of semiconductor products
Extension of protection to nationals of third countries
Experiences of semiconductor topography protection
The 2018 draft Regulations
Chapter 10 Confidential information, trade secrets and information technology
Introduction
Layout of this chapter
Basic requirements for an action in breach of confidence
Employees
Consultants and others
Covenants in restraint of trade
Public interest defence
Remedies
Human rights and the impact on the action of breach of confidence
Trade secrets law
Data protection law
Freedom of information
Chapter 11 Essentials of patent law
Introduction
Layout of this chapter
Requirements for the grant of a patent
Entitlement to a patent
Dealing with patents
Infringement and remedies
Defences
Formalities for the grant of a patent
The unitary patent and Unified Patent Court
Chapter 12 Patents and computer-implemented inventions
Introduction
Layout of this chapter
What is a computer-implemented invention?
Status of decisions of the Boards of Appeal at the EPO
Patentability under the Patents Act 1949
Position of software patents in the United States
Development of case law on computer-implemented inventions at the EPO
The position in the UK
Sufficiency and computer-implemented inventions
Patents and artificial intelligence
Chapter 13 Essentials of trade mark law and the law of passing off
Introduction
Layout of this chapter
Registered trade marks
Limitations on the effects of a trade mark
Licensing and dealing in trade marks
Requirement that trade mark must be used
Revocation and invalidity
Remedies
Registration of a national trade mark
The EU trade mark
Passing off
Malicious falsehood
Chapter 14 Trade marks, goodwill and the internet
Introduction
Layout of this chapter
Trade marks, websites and the internet
Passing off and the internet
Malicious falsehood and online statements
Chapter 15 Competition law
Introduction
Layout of this chapter
Restrictive trade agreements
Abuses of a dominant position
EU Antitrust Damages Directive65
Exhaustion of rights
Freedom to provide services
Chapter 16 Jurisdiction and intellectual property aspects of information technology
Introduction
Layout of this chapter
Development of rules on jurisdiction
The 'Brussels Regulation' and the basic rules
Copyright and related rights
Patents
Jurisdiction, trade marks and websites
Glossary
Computer terms
Legal and quasi-legal terms
Index

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Information Technology and Intellectual Property Law

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Information Technology and Intellectual Property Law Seventh edition

David I Bainbridge BSc, LLB, PhD, MBCS, Chartered IT Professional, Barrister Emeritus Professor of Intellectual Property Law, Aston University Honorary Member, Hardwicke Chambers, Lincoln’s Inn

BLOOMSBURY PROFESSIONAL Bloomsbury Publishing Plc 41–43 Boltro Road, Haywards Heath, RH16 1BJ, UK BLOOMSBURY and the Diana logo are trademarks of Bloomsbury Publishing Plc Copyright © David I Bainbridge, 2019 David I Bainbridge has asserted his right under the Copyright, Designs and Patents Act 1988 to be identified as Author of this work. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system, without prior permission in writing from the publishers. While every care has been taken to ensure the accuracy of this work, no responsibility for loss or damage occasioned to any person acting or refraining from action as a result of any statement in it can be accepted by the authors, editors or publishers. All UK Government legislation and other public sector information used in the work is Crown Copyright ©. All House of Lords and House of Commons information used in the work is Parliamentary Copyright ©. This information is reused under the terms of the Open Government Licence v3.0 (http://www.nationalarchives.gov.uk/doc/opengovernment-licence/version/3) except where otherwise stated. All Eur-lex material used in the work is © European Union, http://eur-lex.europa.eu/, 1998–2019. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library. ISBN: PB: ePDF: ePub:

978 1 52650 684 9 978 1 52650 685 6 978 1 52650 686 3

Typeset by Compuscript Ltd, Shannon To find out more about our authors and books visit www.bloomsburyprofessional.com. Here you will find extracts, author information, details of forthcoming events and the option to sign up for our newsletters

Preface

A lot has happened since the previous edition of this book. There have been significant developments both in intellectual property law and information technology. In terms of intellectual property we have had clarification from the Court of Justice as to the meaning of the act of communication to the public, there is a new permitted act allowing the making of accessible format copies for the blind, visually-impaired and those otherwise print-disabled. There are also provisions for cross-border exchanges of accessible format copies. Lending of e-books by public libraries will be possible soon. There has been much controversy over certain provisions in the proposed Directive on copyright in the digital society which has now been approved by the European Parliament after earlier rejection. This Directive should be adopted in the near future. There have been a number of cases on orders for blocking injunctions against internet service providers (ISPs) including Cartier v BT in which the UK Supreme Court considered whether the implementation costs should be borne by the copyright owners applying for the injunctions or the ISPs against whom the orders were sought. In the courts below, that case is also important in accepting that blocking injunctions against ISPs could be granted for online trade mark infringement even though there is no specific legislation providing for such injunctions. A trade secrets Directive was adopted in 2016 and was implemented in UK law during 2018. This provides for focused protection for trade secrets and clearly defined penalties for the unauthorised acquisition, use or disclosure of trade secrets, potentially enhancing the existing protection of trade secrets under the law of breach of confidence. A major development in patent law is the forthcoming European patent with unitary effect which, together with the Unified Patent Court, will greatly improve the practicalities of patent litigation. The unitary patent will be available in 26 Member States (Spain and Croatia are not participating). At the present time, 16 States have ratified the Agreement including the UK and France. The Agreement cannot come into effect until Germany ratifies but there is a

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Preface legal challenge in Germany and things are stalled until resolution of that challenge. Furthermore, the position of the UK is unclear because of Brexit. There have been some interesting developments in patenting software inventions including, in the United States, the adoption of the ‘Alice two-step test’ and its subsequent application in a number of cases. There remain difficulties in reconciling UK decisions on computer-implemented inventions with those before the Boards of Appeal at the European Patent Office (EPO). The problem of precedent has stifled the UK courts’ ability to respond to evolving reasoning at the Boards of Appeal, and although the English Court of Appeal may more readily depart from its own previous d ecisions in this context, it is not an easy matter to pin down a consistency in the jurisprudence at the EPO that can reliably be followed. What is needed is a significant decision before the Enlarged Board of Appeal at the EPO. We are now seeing the patenting of artificial intelligence (AI) inventions. This is an exciting new field, as with blockchain inventions, but these areas will further test the scope of the exceptions from the meaning of invention as such, especially in respect of mental steps and methods of doing business. AI and blockchain inventions are emerging forms of information technology to be watched together with their impact on intellectual property rights. These will be studied in more detail in new editions of this book. There is a new EU trade mark Regulation and a new EU trade mark Directive which brings greater harmonisation of trade mark law across the EU as from January 2019. Section 10(6) of the UK Trade Marks Act 1994 which appeared to apply to comparative advertising, being described by Jacob LJ as an unnecessary distraction in an already complicated branch of law, will be repealed during 2019. The law of passing off continues to be useful and has been applied to a case on endorsement involving Rihanna and a case involving the shape of taxis. The old and difficult groundless threats provisions have been replaced by a new unjustified threats regime for patents, trade marks, registered and unregistered designs. This marks a significant improvement and brings a harmonised approach, mutatis mutandis, for each of the relevant intellectual property rights. Writing this new edition has proved both challenging and rewarding. I thank all who helped me in writing and publishing this new edition especially

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Preface Leanne Barrett and the rest of the team at Bloomsbury. It has been my pleasure to work with them. My wife, Lorraine, also deserves a mention for her boundless patience and support. I have attempted to state the law as at 1 January 2019. David I Bainbridge January 2019

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Contents

Prefacev Table of Statutes xv Table of Statutory Instruments xxi Table of European Legislation xxiii Table of Cases xxxi Chapter 1 Introduction to information technology and intellectual property law 1 Introduction1 Justification for the legal protection of computer software 4 Forms of protection for computer software 8 Development of protection for computer software 8 Liability of information society service providers 11 Trade marks on the internet and passing off 12 Competition law 14 Jurisdiction15 Brexit16 Summary19 Chapter 2 Essentials of copyright law 20 Introduction20 Layout of this chapter 23 Subsistence of copyright 24 Original works of copyright 26 Other works of copyright 27 Authorship29 Ownership30 Duration35 Rights of the copyright owner and infringement 37 Remedies47 Secondary infringement 50 Criminal offences 51 The permitted acts 56 ix

Contents Public interest and other defences Dealing with copyright Moral rights Rights related to copyright

62 64 67 69

Chapter 3 Copyright and computer programs 71 Introduction71 Layout of the chapter 72 Background and historical context 73 Subsistence of copyright in computer programs 77 Restricted acts and infringement of copyright in computer programs100 Exceptions to the exclusive rights 121 Decompilation130 Special measures of protection 134 Presumptions140 Computer-generated works 142 Chapter 4 Non-textual copying of computer programs and emulating the functions of a computer program 145 Introduction145 Layout of this chapter 147 Brief historical perspective 147 Non-textual copying in the UK 153 Emulating the functionality and other aspects of a computer program158 Concluding remarks – emulating the functionality of a computer program175 Chapter 5 Copyright in databases 178 Introduction178 Layout of this chapter 181 Database technology 182 What is a database for the purposes of the Directive? 184 Subsistence of copyright in a database 188 Authorship, ownership and duration 197 Dealing with copyright databases 199 Rights of the owner and infringement 200 Exceptions to the restricted acts 205 Moral rights 208 x

Contents Chapter 6 The sui generis database right 210 Introduction210 Layout of this chapter 212 Subsistence213 Ownership and dealing with the database right 226 Term of protection 227 Rights of database owners 230 Infringement238 Exceptions to the database right 242 Rights and obligations of lawful users 246 Remedies251 Licensing schemes 252 Circumvention of effective technological measures 253 Commission Report 2005 254 Evaluation and Fitness Check Roadmap 255 Chapter 7 Copyright in the information society 257 Introduction257 Layout of this chapter 260 Subsistence and exclusive rights 261 The Directive on copyright and related rights in the information society272 Rights provided for by Directive 274 Exceptions and limitations 287 Protection of technological measures 300 Electronic rights management information 315 Remedies317 Injunctions against information society service providers 317 Digital Economy Act 2010 327 Cross-border portability of online content services 329 The proposed Directive on copyright in the Digital Single Market334 Chapter 8 Design law, computer graphics and typefaces 345 Introduction345 Layout of this chapter 346 Copyright protection for computer graphics and typefaces 346 Trade mark protection 351

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Contents Design protection The Community design The UK registered design Implications of design law for computer graphics, images displayed on websites and software fonts Brexit and design law

351 355 373 374 375

Chapter 9 Semiconductor topography right 376 Introduction376 Layout of this chapter 377 Background378 The Directive on the legal protection of topographies of semiconductor products 383 Extension of protection to nationals of third countries 390 Experiences of semiconductor topography protection 391 The 2018 draft Regulations 392 Chapter 10 Confidential information, trade secrets and information technology 393 Introduction393 Layout of this chapter 395 Basic requirements for an action in breach of confidence 395 Employees401 Consultants and others 406 Covenants in restraint of trade 407 Public interest defence 410 Remedies411 Human rights and the impact on the action of breach of confidence 417 Trade secrets law 424 Data protection law 435 Freedom of information 444 Chapter 11 Essentials of patent law 447 Introduction447 Layout of this chapter 449 Requirements for the grant of a patent 450 Entitlement to a patent 458 Dealing with patents 462 xii

Contents Infringement and remedies 468 Defences469 Formalities for the grant of a patent 475 The unitary patent and Unified Patent Court 478 Chapter 12 Patents and computer-implemented inventions 484 Introduction484 Layout of this chapter 486 What is a computer-implemented invention? 487 Status of decisions of the Boards of Appeal at the EPO 488 Patentability under the Patents Act 1949 489 Position of software patents in the United States 490 Development of case law on computer-implemented inventions at the EPO 496 The position in the UK 511 Sufficiency and computer-implemented inventions 532 Patents and artificial intelligence 533 Chapter 13 Essentials of trade mark law and the law of passing off 536 Introduction536 Layout of this chapter 539 Registered trade marks 540 Limitations on the effects of a trade mark 553 Licensing and dealing in trade marks 556 Requirement that trade mark must be used 557 Revocation and invalidity 558 Remedies558 Registration of a national trade mark 564 The EU trade mark 566 Passing off 568 Malicious falsehood 573 Chapter 14 Trade marks, goodwill and the internet 575 Introduction575 Layout of this chapter 576 Trade marks, websites and the internet 577 Passing off and the internet 610 Malicious falsehood and online statements 622 xiii

Contents Chapter 15 Competition law 627 Introduction627 Layout of this chapter 628 Restrictive trade agreements 629 Abuses of a dominant position 633 EU Antitrust Damages Directive 644 Exhaustion of rights 647 Freedom to provide services 651 Chapter 16 Jurisdiction and intellectual property aspects of information technology 654 Introduction654 Layout of this chapter 655 Development of rules on jurisdiction 656 The ‘Brussels Regulation’ and the basic rules 658 Copyright and related rights 665 Patents669 Jurisdiction, trade marks and websites 672 Glossary679 Index689

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Table of Statutes Communications Act 2003 s 124A–124N�� 7.150 Competition Act 1998�� 1.27; 15.38, 15.50 s 2�� 15.1 s 18�� 15.1, 15.24 Copyright Act 1911 s 1(1)�� 3.12, 3.30 s 1(2)�� 3.75 s 15�� 6.78 Copyright Act 1956�� 3.8; 5.1 s 48(1)�� 5.1 Copyright (Computer Software) Amendment Act 1985�� 3.8, 3.10 Copyright, Designs and Patents Act 1988�� 2.1, 2.6, 2.14, 2.42, 2.48, 2.87, 2.118; 3.8, 3.10, 3.35, 3.36, 3.49, 3.51, 3.68, 3.71, 3.72, 3.81, 3.98, 3.124, 3.135, 3.160, 3.172, 3.174, 3.178; 5.1, 5.37, 5.53, 5.67, 5.68; 6.3, 6.47, 6.96; 7.4, 7.21, 7.24, 7.59, 7.61, 7.83, 7.85; 8.12; 9.43 Pt 1 (ss 1–179)�� 7.114 s 1�� 7.11 s 1(1)�� 2.10 s 3�� 2.13 s 3(1)�� 3.20; 4.48; 5.24; 7.11 s 3(1)(a)�� 7.11 s 3(2)�� 2.14 s 3A�� 2.13; 3.50; 5.11 s 3A(1)�� 7.11 s 3A(2)�� 3.31; 5.24, 5.25 s 4�� 2.13, 2.15; 8.10 s 4 (1)�� 7.14 s 4(2)�� 7.14, 7.16 s 5A�� 2.16 s 5B�� 2.17 s 5B(1)�� 7.15 s 6�� 7.32 s 7�� 7.32 s 8(1)�� 7.17

Copyright, Designs and Patents Act 1988 – contd s 9�� 2.21; 5.44 s 9(2)(c)�� 7.17 s 9(3)�� 3.175, 3.177; 5.37 s 10�� 5.44 s 10A�� 2.36 s 11�� 2.33; 5.46 s 11(1)�� 2.25 s 12�� 2.34; 5.47 s 12(7)�� 3.175 s 13, 13A�� 2.34 s 13B�� 2.34, 2.36 s 13B(2)�� 2.37 s 15�� 7.17 s 14–15A�� 2.34 s 16(1)�� 2.40; 3.98 s 16(2)�� 7.54 s 16(3)�� 2.42; 3.75; 7.8, 7.33 s 17�� 2.46, 2.47; 7.33 s 17(2)�� 7.19 s 17(4)�� 7.16 s 17(5)�� 7.19 s 17 (6)�� 7.63 s 18�� 2.46, 2.54; 3.107; 7.59 s 18(2)�� 7.56 s 18A�� 2.56; 3.109 s 19�� 2.46; 3.69 s 20�� 2.46, 2.61; 3.106, 3.107; 7.47, 7.54 s 20(2)�� 7.25 s 21�� 2.46, 2.63; 3.61, 3.96 s 21(3)�� 3.96 s 21(3)(ab)�� 3.96 s 21(3)(ac)�� 5.55 s 21(4)�� 3.96, 3.97 s 22�� 3.160 s 23�� 2.75; 3.160, 3.161 s 23(1)(d)�� 3.160 s 24�� 2.75 s 28A�� 2.47, 2.90; 5.67; 7.17, 7.62, 7.63 s 28B�� 2.89; 7.78 s 29(1), (1C)�� 6.75

xv

Table of Statutes Copyright, Designs and Patents Act 1988 – contd s 29A�� 7.84 s 30A�� 2.90; 7.85 s 31A�� 2.99; 5.67 s 31B�� 2.99; 5.67 s 31C–31F�� 2.99 s 36A�� 2.56 s 40A�� 2.56; 2.59 s 44A�� 6.74, 6.78 s 45�� 5.68; 6.76 s 46–50�� 6.76 s 50A�� 6.82; 10.17 s 50B�� 3.150; 6.82; 15.30 s 50B(1)�� 3.150 s 50BA�� 3.140; 6.82; 7.4 s 50C�� 3.125; 6.82 s 50D�� 5.59, 5.67 s 54�� 2.15; 8.10 s 55�� 2.15 s 56�� 3.121, 3.122, 3.138; 7.56 s 56(3)�� 3.122 s 57�� 6.80 s 65�� 7.85 s 70�� 7.82 s 71�� 7.82 s 72�� 7.82, 7.85 s 72(1)�� 7.41, 7.67 s 72(1A)�� 7.41 s 72(1B)�� 7.85 s 77�� 2.120; 7.29 s 80�� 2.120 s 85�� 5.69 s 90�� 2.112; 5.48; 6.37, 6.40 s 90(3)�� 6.28 s 91�� 5.48; 6.37, 6.40 s 92�� 2.116; 5.48, 5.50; 6.37, 6.40 s 92(5)�� 7.106 s 93�� 6.37, 6.38, 6.40 s 96�� 3.158; 6.88, 6.94 s 96(2)�� 3.74 s 97�� 6.88, 6.94 s 97(1)�� 7.116 s 97(2)�� 3.158 s 97A�� 1.20; 6.94; 7.127, 7.128, 7.130, 7.133, 7.134, 7.139, 7.143, 7.144, 7.147, 7.188; 14.74, 14.75 s 98�� 6.88, 6.94, 6.96 s 99, 100�� 6.88, 6.94

Copyright, Designs and Patents Act 1988 – contd s 101�� 5.50; 6.88 s 101(3)�� 3.167 s 101A�� 2.117; 5.50; 6.88 s 102�� 2.117; 6.88, 6.94 s 104�� 3.167, 3.172; 7.99 s 104(2)�� 3.172 s 105�� 3.167, 3.173 s 106�� 3.167 s 107�� 1.12; 2.77, 2.85, 2.86; 3.160; 7.102 s 107(1)(e)�� 2.85 s 107(2A)�� 2.80 s 107(4A)�� 2.80, 2.83 s 111�� 2.72 s 113, 114�� 6.94 s 116A–116D�� 2.118 s 144�� 6.96 s 153�� 2.12 s 154�� 2.11, 2.12 s 155, 156�� 2.12 s 163�� 2.39 s 163(1)�� 2.33 s 164�� 2.39 s 164(1)�� 2.33 s 165–166A�� 2.39 s 168(1)�� 2.33 s 171(1)(e)�� 10.27 s 173�� 6.40 s 173(2)�� 6.40 s 175(4)�� 7.17 s 178�� 2.14; 3.175; 5.37; 7.19 s 180(2)�� 10.14 s 182(1A)�� 7.63 s 182A�� 7.33 s 182CA�� 7.41 s 191�� 2.38 s 192(2)�� 2.38 s 205C–205H�� 5.51 Pt III (ss 213–264)�� 9.1 s 220(a), (b)�� 9.43 s 226(2)�� 9.34 s 237�� 9.39 s 296�� 3.162, 3.163, 3.164, 3.168; 7.87, 7.115; 15.49 s 296(1)(c)�� 3.140 s 296(2A)�� 7.87 s 296A�� 3.137 s 296A(c)�� 7.4

xvi

Table of Statutes Copyright, Designs and Patents Act 1988 – contd s 296ZA�� 6.100; 7.98, 7.101, 7.115; 15.49 s 296ZB�� 6.100, 7.102, 7.105, 7.107; 15.49 s 296ZB(1)�� 7.102 s 296ZB(1)(c)(i)�� 7.104 s 296ZB(2)�� 7.103 s 296ZB(4)�� 7.111 s 296ZB(5)�� 7.106 s 296ZC�� 6.100; 15.49 s 296ZD�� 6.100; 7.101, 7.112, 7.114; 15.49 s 296ZD(1)(b)(ii)�� 7.114 s 296ZD(7)�� 7.116 s 296ZE�� 6.100; 7.119; 15.49 s 296ZE(2)�� 7.117 s 296ZE(3)�� 7.119 s 296ZE(9)�� 7.120 s 296ZF�� 6.100; 7.104; 15.49 s 296ZG�� 6.92; 7.124 s 297(1)�� 15.54 s 298�� 15.54 Sch ZA1�� 2.93 Sch 5A�� 7.118 Copyright etc and Trade Marks ( Offences and Enforcement) Act 2002�� 2.77 Data Protection Act 1998�� 10.94 Data Protection At 2018�� 10.5, 10.92, 10.110, 10.111 s 9�� 10.102 Defamation Act 1996 s 1�� 14.4 Defamation Act 2013�� 14.110, 14.113 s 5�� 14.4, 14.113, 14.115 s 8�� 14.110 Digital Economy Act 2010�� 1.21; 7.6, 7.150, 7.154 s 3–18�� 7.150 Digital Economy Act 2017�� 2.81 s 31�� 2.59 s 42(2)�� 2.78 Enterprise Act 2002�� 1.27 Enterprise and Regulatory Reform Act 2013�� 2.118 s 77�� 2.118 European Communities Act 1972 s 2(2)�� 2.1

Fraud Act 2006 s 6(1)�� 2.85 s 8(1)�� 2.87 Freedom of Information Act 2000�� 7.121; 10.110, 10.111, 10.112, 10.113, 10.115 s 1�� 7.121 s 43�� 10.113 Freedom of Information (Scotland) Act 2002�� 10.110 Human Rights Act 1998�� 10.5 s 2–4�� 10.52 Intellectual Property Act 2014�� 2.11; 8.66; 9.29 Intellectual Property (Unjustified Threats) Act 2017�� 11.50; 13.45 s 6�� 8.53 Legal Deposit Libraries Act 2003�� 6.74, 6.78, 6.79 s 10(5)�� 6.78 Limitation Act 1980�� 10.90 s 4A�� 14.110 Patents Act 1949�� 11.17; 12.5, 12.12 Patents Act 1977�� 11.3, 11.5, 11.17, 11.21, 11.24, 11.48, 11.60; 12.1, 12.2, 12.15, 12.110 s 1(2)�� 1.17; 12.2, 12.9, 12.64, 12.67, 12.97 s 1(2)(c)�� 12.71 s 7(2), (3)�� 11.24 s 14(3)�� 11.5, 11.9; 12.110 s 14(5)�� 12.110 s 21�� 11.60 s 23�� 11.59 s 33(1)�� 11.33 s 39�� 11.24, 11.25 s 39(2)�� 11.25 s 40�� 11.28 s 40(1)�� 11.26 s 46, 47�� 11.31 s 60�� 11.41, 11.52; 16.33 s 60(1)�� 11.33, 11.41 s 60(1)(a)–(c)�� 11.41 s 60(2)�� 11.41; 16.31, 16.32, 16.33 s 60(5)�� 11.43 s 61�� 11.42 s 62�� 11.42 s 62(1)�� 10.45

xvii

Table of Statutes Patents Act 1977 – contd s 64�� 11.45 s 68�� 11.33 s 70, 70A–70F�� 11.50 s 91(1)(c)�� 12.10 s 101(1)�� 12.12 Patents and Designs Act 1907�� 12.108 Patents, Designs, and Trade Marks Act 1883 s 32�� 11.50 Prescription and Limitation (Scotland) Act 1973�� 10.90 Private International Law (Miscellaneous Provisions) Act 1995 s 10�� 16.24 s 11(1)�� 16.4 Public Lending Right Act 1979�� 2.59 Registered Designs Act 1949�� 3.94; 8.17, 8.20, 8.22, 8.65, 8.71, 8.76 s 5�� 8.65 s 24B�� 8.51 s 33–35�� 8.65 s 35ZA�� 8.66, 8.69 s 35ZB–35ZD�� 8.70 Regulation of Investigatory Powers Act 2000 s 81�� 7.110 Senior Courts Act 1981 s 37(1)�� 14.76 s 72�� 7.115; 10.50 Statute of Anne 1710�� 2.1, 2.34 Statute of Monopolies 1623�� 11.1; 12.12 s 6�� 11.1 s 6(a)�� 12.12 Supreme Court Act 1981 see Senior Courts Act 1981 Trade Descriptions Act 1968�� 14.92 Trade Marks Act 1938�� 13.3, 13.23 s 4(1)�� 13.3 Trade Marks Act 1994�� 13.3, 13.7, 13.11, 13.14, 13.16, 13.20, 13.23, 13.24, 13.56 s 2(2)�� 13.71 s 4(4)�� 13.71 s 6A�� 13.39 s 10(2), (3)�� 14.47

Trade Marks Act 1994 – contd s 10(4)�� 13.24 s 10(6)�� 13.28 s 14(2)�� 13.43 s 15, 16�� 13.43 s 21�� 13.45 s 21A�� 13.45, 13.46 s 21B�� 13.45, 13.47 s 21C�� 13.45, 13.48 s 21D�� 13.45, 13.51 s 21E, 21F�� 13.45 s 25�� 13.37 s 28(4)�� 13.36 s 32(3)�� 13.14, 13.16 s 46(1)(c)�� 13.27 s 47�� 13.11, 13.39 s 48�� 13.33 s 56�� 13.63 s 92�� 13.52 s 92(1)�� 13.53 s 103(1)�� 13.8 Sch 3 para 2(1)�� 13.23 AUSTRALIA Copyright Act 1968�� 3.9 FRANCE Intellectual Property Code (Law 92-597) L.134-1–L.134-9�� 7.49 JAMAICA Copyright Act (Act No 5 of 1993) s 22(1)�� 2.32 SINGAPORE Copyright Act 1987 s 26�� 3.101 SWEDEN Copyright Act�� 2.111 UNITED STATES Constitution s 8�� 12.17 Copyright Act 1976�� 3.9, 3.60; 7.136; 9.11 § 101�� 3.9 § 102(b)�� 4.12, 4.14, 4.17 § 512�� 7.136, 7.137 § 512(i)(1)(A)�� 7.136 Ch 9 (§§ 901–914)�� 9.11 § 906(a)�� 9.13 § 1201–1205�� 7.122

xviii

Table of Statutes Copyright Act 1980�� 3.9 Digital Millennium Copyright Act 1998�� 7.122, 7.136 Lanham (Trademark) Act 1946 § 32(1)�� 14.20 Leahy-Smith America Invents Act 2011�� 11.4 Online Copyright Infringement Liability Limitation Act 1998�� 7.136

Patents Act 1952�� 11.4; 12.16 § 101�� 12.16, 12.17, 12.24, 12.29, 12.30 § 273(b)(1)�� 12.21 Semiconductor Protection Chip Act 1984�� 9.8, 9.11, 9.12, 9.41

xix

xx

Table of Statutory Instruments Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017, SI 2017/385�� 15.38 Collective Management of Copyright (EU Directive) Regulations 2016, SI 2016/221�� 7.192 Consumer Protection from Unfair Trading Regulations 2008, SI 2008/1277�� 14.92 Copyright and Performances (Application to Other Countries) Order 2016, SI 2016/1219�� 2.12; 6.27 Copyright and Related Rights Regulations 1996, SI 1996/2967 reg 16�� 2.127; 7.2 Copyright and Related Rights Regulations 2003, SI 2003/ 24982.80;�� 3.106, 3.140, 3.162, 3.164; 6.88; 7.4, 7.17, 7.24, 7.32, 7.83 Copyright and Rights in Databases Regulations 1997, SI 1997/ 3032�� 6.3, 6.4, 6.24, 6.68 Pt III (regs 12–25)�� 6.3 reg 12(1)�� 6.24 reg 12(2)�� 6.89 reg 12(5)�� 6.49 reg 14�� 6.29 reg 14(1)�� 6.29 reg 14(2)�� 6.33, 6.89 reg 14(3), (4), (4A)�� 6.89 reg 14(5)�� 6.31 reg 14(6)�� 6.36 reg 15�� 6.36 reg 16(2)�� 6.68 reg 17(1)�� 6.41 reg 18�� 6.26 reg 18(3)�� 6.35 reg 19�� 6.83

Copyright and Rights in Databases Regulations 1997, SI 1997/3032 – contd reg 20(1)�� 6.75 reg 20A�� 6.79 reg 21�� 6.80 reg 22�� 6.43; 7.100 reg 22(3)�� 6.90 reg 23�� 6.88, 6.94 Sch 1�� 6.76 Sch 2�� 6.97 Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014, SI 2014/2861�� 2.93 Copyright and Rights in Performances (Dis ability) Regulations 2014, SI 2014/1384�� 7.83 Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014, SI 2014/2361�� 2.89 reg 3�� 7.78 Copyright and Rights in Performances (Quotation and Parody) Regulations 2014, SI 2014/2356�� 7.85 Copyright (Computer Programs) Regulations 1992, SI 1992/3233� 3.96 reg 10�� 7.87 Copyright (Free Public Showing or Playing) (Amendment) Regulations 2016, SI 2016/565�� 7.41 Design Right (Semiconductor Topographies) (Amendment) (EU Exit) Regulations 2018, SI 2018/1052�� 9.6, 9.43 Design Right (Semiconductor Topographies) (Amendment) Regulations 2006, SI 2006/ 1833�� 9.1 Design Right (Semiconductor Topographies) Regulations 1989, SI 1989/1100�� 9.1, 9.43 reg 4�� 9.43

xxi

Table of Statutory Instruments Duration of Copyright and Rights in Performances Regulations 1995, SI 1995/3297�� 5.47 Electronic Commerce (EC Directive) Regulations 2002, SI 2002/ 2013�� 7.64; 14.115 reg 2�� 7.134 reg 6(1)(c)�� 7.130 reg 17, 18�� 1.20 reg 19�� 1.20; 14.113 reg 20�� 1.20 Environmental Information Regulations 2004, SI 2004/ 3391�� 10.115 Intellectual Property (Enforcement etc) Regulations 2006, SI 2006/ 1028�� 2.67; 3.158; 6.95; 13.43 reg 3�� 6.95

Legal Deposit Libraries Act 2003 (Commencement) Order 2004, SI 2004/130�� 6.79 Scotland Act 1998 (Consequential Modifications) (No 1) Order 1999, SI 1999/1042�� 6.89 Semiconductor Products (Protection of Topography) Regulations 1987, SI 1987/1497�� 9.1 Trade Marks Regulations 2018, SI 2018/825�� 13.7 reg 5�� 13.22 Trade Secrets (Enforcement etc) Regulations 2018, SI 2018/ 597�� 10.6, 10.72, 10.90

xxii

Table of European Legislation CONVENTIONS AND TREATIES Charter of Fundamental Rights of the Europe Union (Nice, 7 December 2000)�� 7.132, 7.190; 10.49 art 8�� 7.132; 10.93 art 8(1)�� 10.93 art 11�� 7.140, 7.189 art 16�� 7.189 art 17�� 10.54 Convention for the Protection of Human Rights and Funda mental Freedoms (Rome, 4 November 1950)�� 2.110; 7.55, 7.106, 7.132; 10.5, 10.7, 10.49, 10.52, 10.53, 10.55, 10.56 art 6(1)�� 10.104 art 6(2)�� 13.52 art 8�� 10.39, 10.53, 10.57, 10.64, 10.66, 10.83, 10.93; 14.114 art 10�� 7.51; 10.53, 10.57, 10.64, 10.66 10.84, 10.104; 14.114 art 10(1)�� 7.51 art 10(2)�� 2.111; 7.51 art 11�� 7.132; 10.84 art 13–19�� 10.105 Protocol 1 art 1��2.111; 7.51; 10.54 Convention for the Protection of Industrial Property (Paris, 20 March 1883) art 1�� 15.2 art 6�� 13.12, 13.19, 13.58, 13.63 art 6(3)�� 13.14 Convention for the Protection of Literary and Artistic Works (Berne, 9 September 1886)�� 2.3, 2.34, 2.113; 3.11, 3.12, 3.13, 3.14, 3.15, 3.16, 3.30, 3.51, 3.71, 3.155; 4.53; 5.44, 5.69, 5.70; 6.27; 7.12, 7.15, 7.117, 7.184; 16.1

Convention for the Protection of Literary and Artistic Works (Berne, 9 September 1886) – contd art 2�� 2.4; 7.51 art 2(1)�� 3.11 art 2(3)�� 3.12 art 2(5)�� 2.12; 3.12, 3.51; 7.11 art 2(8)�� 7.184 art 3, 4�� 2.4; 7.51 art 5�� 2.4; 7.51; 16.22 art 5(2)�� 7.49, 7.50 art 6�� 2.4; 3.13; 5.69; 7.51 art 7, 8�� 2.4; 7.51 art 9�� 2.4; 7.51 art 9(1)�� 7.51 art 9(2)�� 3.13, 3.155; 7.51, 7.69, 7.77 art 10–21�� 2.4; 7.51 Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations (Rome, 26 October 1961)�� 3.15 art 13(d)�� 7.40 Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Brussels, 21 May 1968)�� 16.6, 16.23, 16.24 art 6(1)�� 16.23 art 8(1)�� 16.23 Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Lugano, 30 October 2007)�� 16.2, 16.5, 16.7 Convention on the Grant of European Patents (Munich, 5 October 1973) �� 1.35; 3.97; 4.66; 11.3, 11.4, 11.5, 11.6, 11.21, 11.48, 11.59, 11.65, 11.67, 11.68; 12.1, 12.2, 12.6, 12.10, 12.12, 12.19, 12.31, 12.32, 12.41, 12.55, 12.56, 12.57, 12.63, 12.85, 12.93 art 52�� 12.9, 12.12, 12.31, 12.97

xxiii

Table of European Legislation Convention on the Grant of European Patents (Munich, 5 October 1973) – contd art 52(1)�� 11.10; 12.95 art 52(2)�� 1.17; 11.10, 11.21, 11.22, 11.23; 12.2, 12.30, 12.40, 12.42, 12.44, 12.51, 12.53, 12.57, 12.60, 12.61, 12.64, 12.71, 12.74, 12.82, 12.86 art 52(2)(c)�� 12.36, 12.54 art 52(3)�� 1.17; 11.21; 12.2, 12.30, 12.42, 12.54, 12.57, 12.64, 12.71, 12.82 art 53�� 11.23 art 54(1)–(3)�� 11.11 art 55�� 11.12 art 56�� 11.15, 11.16; 12.60, 12.61 art 57�� 11.18 art 60�� 11.24 art 64�� 11.41 art 96�� 11.20 art 83�� 11.9; 12.110 art 84�� 12.110 art 112(1)(b)�� 12.55 Convention on the Law of Treaties (Vienna, 23 May 1969) art 31�� 12.85 art 31(1)�� 12.85 Patent Cooperation Treaty (Washington, 19 June 1970)�� 11.3, 11.59, 11.61 Treaty Establishing the European Economic Community (Rome, 25 March 1957) art 81�� 15.1, 15.9, 15.36 art 82�� 3.136; 15.1, 15.36 art 234�� 3.24, 3.177; 6.8 Treaty on Intellectual Property in Respect of Integrated Circuits (Washington, 26 May 1989)�� 9.4, 9.9, 9.11, 9.40 art 2�� 9.9 art 36�� 9.10 Treaty on the Functioning of the European Union (Rome, 25 March 1957)�� 11.49; 15.2, 15.56 art 2�� 15.14 art 3(1)�� 15.2 art 4, 5�� 15.14

Treaty on the Functioning of the European Union (Rome, 25 March 1957) – contd art 26(2)�� 15.2 art 34, 35�� 11.48; 15.2, 15.45, 15.52 art 36�� 11.48; 15.2, 15.45, 15.52 art 56�� 7.156; 15.2, 15.53, 15.55 art 57�� 7.156 art 101�� 5.6; 11.38, 11.49; 15.1, 15.9, 15.36, 15.41 art 101(1)�� 15.5, 15.7, 15.9, 15.10, 15.12, 15.13, 15.14 art 101(2)�� 15.6 art 101(3)�� 15.12, 15.13, 15.14 art 102�� 3.136, 3.157; 5.6; 11.36, 11.38, 11.49; 15.1, 15.9, 15.15, 15.16, 15.17, 15.18, 15.20, 15.21, 15.23, 15.24, 15.27, 15.28, 15.32, 15.34, 15.36, 15.24, 15.25 ,15.34, 15.41,15.42, 15.47 art 267�� 3.24; 6.8; 15.54 art 269�� 3.177 art 345�� 15.2 Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired, or Otherwise Print Disabled (Marrakesh, 27 June 2013)�� 2.100 WIPO Copyright Treaty (Geneva, 20 December 1996)�� 2.3, 2.57; 3.14, 3.15, 3.80, 3.105, 3.106, 3.107, 3.139; 5.22; 7.1, 7.51, 7.122 art 2�� 3.14, 3.81; 4.4, 4.54; 5.52 art 3�� 3.81 art 3(1)�� 5.23 art 4�� 3.14, 3.105 art 5�� 5.22 art 6�� 2.57; 3.109 art 7�� 2.57; 3.109 art 10(2)�� 3.80 WIPO Performances and Phonograms Treaty 1996 (Geneva, 20 December 1996)�� 2.3; 3.15; 7.1

xxiv

Table of European Legislation DIRECTIVES Dir 87/54/EEC�� 1.7; 9.1, 9.2, 9.3, 9.6, 9.13, 9.33 art 1(1)�� 9.21 art 2�� 9.34 art 2(2)�� 9.36 art 3(2)(a), (b)�� 9.29 art 4�� 9.23, 9.30 art 5(1)�� 9.34 art 5(2)–(4)�� 9.36 art 7(1)�� 9.31 art 8�� 9.27 art 10�� 9.28 Dir 89/104/EEC�� 1.19; 13.3, 13.23 Dir 90/313/EEC�� 10.115 Dir 91/250/EEC �� 3.5, 3.10, 3.21, 3.31, 3.70, 3.125, 3.131, 3.162; 5.4; 7.3, 7.29 art 3(3)�� 3.113 Dir 92/100/EEC�� 7.3 Dir 93/83/EEC�� 7.3, 7.41 art 2�� 7.45 Dir 93/98/EEC�� 2.34, 2.127; 7.3 Dir 95/46/EC�� 7.164, 7.193; 10.128 Dir 96/9/EC�� 3.36; 5.1, 5.2, 5.4, 5.58; 6.2, 6.3, 6.6, 6.17, 6.25, 6.82, 6.102, 6.103, 6.104, 6.105, 6.106; 7.3, 7.169, 7.172, 7.176 art 1�� 6.66 art 1(2)�� 4.48; 5.11, 5.16, 5.30, 5.38, 5.39; 6.7, 6.8 art 1(3)�� 5.4, 5.13, 5.58 art 2�� 5.4, 5.56, 5.57 art 3(1)�� 3.31; 5.30, 5.36 art 3(2)�� 5.38 art 4�� 5.43 art 4(3)�� 5.44 art 5�� 5.51, 5.61, 5.63 art 5(a)�� 7.169 art 6�� 5.59, 5.60, 5.65 art 6(1)�� 5.61, 5.63; 6.82 art 6(2)�� 5.64, 5.66 art 6(3)�� 5.60, 5.65 art 7�� 6.60 art 7(1)�� 6.11, 6.18, 6.48, 6.61; 7.169 art 7(2)�� 6.48, 6.49 art 7(2)(b)�� 6.56

Dir 96/9/EC – contd art 7(3)�� 6.37 art 7(4)�� 6.66 art 7(5)�� 6.68 art 8(1), (2)�� 6.82 art 8(3)�� 6.82, 6.84, 6.85 art 10�� 6.45 art 10(1), (2)�� 6.41 art 10(3)�� 6.42 art 11�� 6.11, 6.25, 6.26 art 12(1)�� 6.11 art 13�� 5.6 art 14(2)�� 5.24; 6.47 art 14(3), (5)�� 6.46 art 15�� 5.63; 6.82 art 16(1)�� 6.46 art 16(3)�� 6.101 Recital 1�� 5.24 Recital 2�� 5.24 Recital 3�� 5.24 Recital 4�� 5.24 Recital 7�� 6.24 Recital 12�� 5.2 Recital 14�� 5.11 Recital 15�� 5.3, 5.11, 5.30 Recital 17�� 5.12, 5.39; 6.7 Recital 19�� 5.12; 6.7 Recital 20�� 5.41, 5.52 Recital 21�� 5.19 Recital 23�� 5.58 Recital 34�� 6.84 Recital 38�� 6.52 Recital 40�� 6.24, 6.29 Recital 41�� 6.28 Recital 42�� 6.64 Recital 43�� 6.49 Recital 45�� 6.8 Recital 46�� 6.8 Recital 50�� 6.74 Recital 53�� 6.43, 6.90 Recital 54�� 6.43, 6.90 Recital 55�� 6.42 Recital 58�� 5.3, 5.57 Dir 98/34/EC�� 7.154 Dir 98/48/EC�� 7.154; 10.48, 10.50; 13.43 art 4(c)�� 14.9 art 13�� 13.43 Dir 98/71/EC�� 1.18 Dir 2010/13/EU�� 7.156 art 1�� 7.156

xxv

Table of European Legislation Dir 2000/31/EC�� 1.20; 7.64, 7.130, 7.131, 7.187; 14.81, 14.113, 14.115 art 11�� 14.29 art 12, 13�� 7.145, 7.187; 14.9 art 14�� 7.145, 7.187; 14.9, 14.51, 14.54 art 14(1)�� 14.28 art 15(2)�� 7.150 Dir 2001/29/EC�� 1.16; 2.3, 2.100, 2.126; 3.2, 3.104; 6.49; 7.1, 7.2, 7.3, 7.4, 7.5, 7.28, 7.30, 7.31, 7.64, 7.78, 7.88, 7.172, 7.176, 7.193; 8.22; 15.46; 16.22 art 2�� 7.32, 7.77, 7.127, 7.169, 7.170, 7.175, 7.180 art 2(a)�� 4.60; 7.50 art 3�� 3.112; 7.43, 7.127 art 3(1)�� 7.35, 7.50, 7.76, 7.157, 7.158, 7.169 art 3(2)�� 7.35, 7.169 art 3(3)�� 6.49; 7.58 art 4�� 7.2, 7.59, 7.77, 7.127, 7.158 art 4(2)�� 6.49 art 5�� 2.47; 3.2; 5.53; 7.28, 7.34, 7.49, 7.57, 7.61, 7.86, 7.127, 7.159, 7.164, 7.166, 7.175, 7.180 art 5(1)�� 2.90, 2.116; 7.62, 7.63, 7.65, 7.67, 7.68, 7.69, 7.71, 7.73, 7.77 art 5(2)�� 7.62, 7.77, 7.78 art 5(2)(b)�� 2.89 art 5(3)�� 7.62, 7.77, 7.83 art 5(3)(a)�� 7.84 art 5(3)(b)�� 7.84 art 5(3)(k)�� 2.91; 7.85, 7.181 art 5(3)(l)�� 7.85 art 5(3)(m)�� 7.85 art 5(4)�� 7.62, 7.77 art 5(5)�� 7.65, 7.67, 7.69, 7.72, 7.76, 7.86, 7.127, 7.162, 7.180 art 6�� 7.89, 7.93 art 6(1)�� 7.94; 16.24

Dir 2001/29/EC – contd art 6(2)�� 7.95, 7.112 art 6(3)�� 7.90 art 6(4)�� 7.96 art 7�� 7.163, 7.178, 7.180 art 7(1)(c)�� 7.87 art 8�� 7.97, 7.127, 7.178, 7.180 art 8(1)�� 7.127 art 8(3)�� 7.129, 7.130, 7.188; 14.74, 14.75 art 9�� 7.165 art 10�� 7.166, 7.179 art 11�� 7.3, 7.180 art 11(1)�� 7.169 art 12�� 7.181 art 13(1)�� 7.185 art 14�� 7.191 Recital 5�� 7.74 Recital 9�� 7.39 Recital 10�� 7.39 Recital 23�� 7.35, 7.39 Recital 25�� 7.28 Recital 27�� 7.28 Recital 29�� 6.49; 7.28 Recital 21�� 7.182 Recital 33�� 7.63 Recital 48�� 7.101 Dir 2002/20/EC art 12�� 7.154 Dir 2002/21/EC�� 7.156 art 2(a)�� 7.156 Dir 2002/58/EC�� 7.164, 7.193 Dir 2003/4/EC�� 10.115 Dir 2004/48/EC�� 2.67, 2.74; 3.158; 7.127; 14.29 art 2(2)�� 3.158 art 11�� 7.129; 14.74, 14.75, 14.76 art 13�� 2.68 Recital 23�� 14.79 Dir 2005/29/EC�� 14.92 Dir 2006/114/EC�� 13.24, 13.29; 14.33 art 4�� 13.29 art 4(1)(h)�� 14.33 art 4(4)(a)�� 14.35 Dir 2006/115/EC�� 3.109; 7.3, 7.40 art 4�� 3.110 art 6�� 2.57 art 8(2)�� 7.34 art (3)�� 7.40

xxvi

Table of European Legislation Dir 2006/116/EC�� 2.34, 2.127; 5.38; 7.3 art 1(7)�� 2.36 art 4�� 7.89 Recital 18�� 2.36 Recital 19�� 2.36 Dir 2008/95/EC�� 1.19; 13.3 art 2�� 13.9, 13.10, 13.11 art 3(1)(b)–(d)�� 13.41 art 4�� 13.12 art 4(1)�� 13.12 art 4(1)(a)�� 13.12 art 4(1)(b)–(d)�� 13.36 art 4(2)�� 13.14 art 5�� 13.17 art 5(2)�� 1.22; 14.32, 14.35, 14.53, 14.54, 14.64 art 5(2)(d)�� 13.63 art 7�� 13.13 art 9�� 14.57 art 10�� 13.24 art 12�� 13.27 art 13�� 13.39 art 14�� 13.31 art 14(2)�� 13.32 art 17�� 13.39 art 20�� 13.27 art 25(3)�� 13.36 art 25(5)�� 13.27 Dir 2009/24/EC�� 3.5, 3.10, 3.15, 3.20, 3.23, 3.24, 3.31, 3.34, 3.69, 3.70, 3.71, 3.79, 3.91, 3.97, 3.104, 3.105, 3.110, 3.139, 3.155; 4.4, 4.9, 4.15, 4.20, 4.38, 4.39, 4.44, 4.45; 6.1; 7.3, 7.176; 15.30 art 1(1)�� 3.16, 3.19, 3.28; 4.53 art 1(2)�� 3.18, 3.45, 3.91, 3.139; 4.4, 4.20, 4.37, 4.53 art 1(3)�� 3.30, 3.31, 3.34 art 3�� 3.104 art 4�� 3.67, 3.104 art 4(1)(a)�� 3.81, 3.125; 4.38; 5.58 art 4(1)(b)�� 3.95, 3.125, 3.126 art 4(1)(c)�� 3.103, 3.113 art 4(2)�� 3.114, 3.115, 3.116, 3.121, 3.128, 3.150

Dir 2009/24/EC – contd art 5�� 3.67, 3.81, 3.124 art 5(1)�� 3.115, 3.119, 3.124, 3.125, 3.127, 3.128, 3.130, 3.131, 3.132, 3.133; 4.58 art 5(2)�� 3.124, 3.137 art 5(3)�� 3.124, 3.137, 3.140, 3.145; 4.56, 4.57, 4.58, 4.62 art 6�� 3.67, 3.105, 3.124, 3.137, 3.150, 3.151, 3.152; 4.62 art 6(1)�� 3.151 art 6(1)(a)–(c)�� 3.152 art 6(2)�� 3.153 art 6(2)(c)�� 3.79 art 6(3)�� 3.154 art 7�� 3.159 art 7(1)�� 3.163 art 7(1)(a)�� 3.160 art 7(1)(c)�� 7.29 art 7(2), (3)�� 3.159 art 8�� 3.71, 3.91, 3.105, 3.137, 3.140, 3.152; 4.56, 4.62 art 9�� 3.71 art 11�� 3.71 art 11(1)�� 7.172 Recital 1�� 6.1 Recital 2�� 6.1 Recital 3�� 6.1 Recital 7�� 3.16, 3.117 Recital 8�� 3.34 Recital 10�� 3.150 Recital 11�� 3.45; 4.4, 4.20, 4.37, 4.41, 4.53 Recital 12�� 3.103 Recital 13�� 3.121, 3.132 Recital 14�� 3.57 Dir 2011/77/EU art 1(1)�� 2.36 art 1(2)�� 2.38 Dir 2012/28/EU�� 2.93, 2.94, 2.97 Dir 2014/26/EU�� 7.192 Dir 2014/104�� 15.38, 15.39, 15.44 art 1�� 15.40 art 2�� 15.40 art 3�� 15.41

xxvii

Table of European Legislation Dir 2014/104 – contd art 3(3)�� 15.47 art 4�� 15.41 art 4(2)�� 15.47 art 5�� 15.42, 15.43 art 6�� 15.42, 15.43 art 7, 8�� 15.42 art 11�� 15.44 art 36�� 15.45 Recital 28�� 15.46 Recital 29�� 15.46 Dir 2015/1535/EU�� 7.185 Dir 2015/2436/EU�� 13.3, 13.8, 13.12, 13.20 art 5(4)(a)�� 14.35 art 10�� 14.57 art 15�� 14.6 Dir 2016//680/EU�� 10.94 Dir 2016/943/EU�� 10.6, 10.51, 10.72 art 1�� 10.75 art 1(1)�� 10.75, 10.91 art 1(2)�� 10.75 art 1(3)�� 10.76 art 2(4)�� 10.79 art 3(1)�� 10.77 art 3(2)�� 10.77 art 4�� 10.78 art 4(3)–(5)�� 10.79 art 5�� 10.80 Ch III (arts 6–15)�� 10.81 art 6(1), (2)�� 10.82 art 7�� 10.82 art 8, 9�� 10.83 art 12, 13�� 10.86 art 14�� 10.87 art 15�� 10.89 Recital 2�� 10.72 Recital 5�� 10.74 Recital 6�� 10.73 Recital 69�� 10.51, 10.81 Dir 2017/1128/EU�� 7.155 Dir 2017/1564/EU�� 2.100; 7.4, 7.83 REGULATIONS Reg 1768/92�� 11.2 Reg 40/94�� 13.3 art 9(1)�� 14.52 art 9(1)(c)�� 14.71 Reg 44/2001�� 16.2 art 5(3)�� 6.58; 16.27, 16.28, 16.43

Reg 1206/2001�� 15.42 Reg 6/2002�� 8.51; 16.14 art 3(a)�� 8.24 art 3(b)�� 8.24 art 4(1)�� 8.27 art 6�� 8.34 art 8(1)�� 8.28 art 10(1), (2)�� 8.42 art 14(1)�� 8.39 art 19(2)�� 8.46 art 20�� 8.47 art 20(1)(c)�� 16.19 art 21�� 8.48 art 81(b)�� 16.16 art 82(1)�� 16.16 art 88(2)�� 16.20 art 89(1)�� 16.20 Reg 1/2003�� 15.36 art 23(2)(a)�� 15.35 Reg 1901/2006�� 11.2 Reg 864/2007 art 8(2)�� 16.21 Reg 207/2009�� 13.3 Reg 330/2010�� 15.12 art 2�� 15.12 art 4(b), (c)�� 15.12 Reg 1215/2012�� 6.58; 11.62; 16.2, 16.6, 16.7 art 4�� 16.8 art 6(1)�� 16.20 art 7(2)�� 16.8, 16.27, 16.43 art 8(1)�� 16.8, 16.20, 16.27 art 22(4)�� 16.9, 16.29 art 24�� 16.13 art 24(1)�� 16.4 art 24(2)�� 16.4, 16.10, 16.11 art 24(4)�� 11.62; 16.9, 16.10 art 25�� 16.11 art 29�� 16.12 art 30�� 16.13 art 30(3)�� 16.13 art 32(1)�� 16.13 art 66�� 16.2 art 71a–71d�� 11.62 Reg 1257/2012 (implementing creation of unitary patent protection)�� 11.65, 11.71 art 9�� 11.71 Reg 316/2014�� 15.13 art 1�� 15.13

xxviii

Table of European Legislation Reg 2016/679�� 7.164, 7.165, 7.193; 10.94, 10.95, 10.97, 10.109 art 4�� 10.98 art 6�� 10.99 art 6(1)�� 10.104 art 7, 8�� 10.102 art 9�� 10.103 art 10�� 10.104 art 13–19�� 10.105 art 20�� 10.108 art 22(1)�� 10.107 art 25�� 10.100 art 37�� 10.97 art 37(1)�� 10.97

Reg 2016/679 – contd art 38, 39�� 10.97 Recital 63�� 10.105 Reg 2017/1001�� 13.3, 13.19, 13.56, 13.61; 14.6; 16.14 art 1(2)�� 13.37 art 8(2)(c)�� 13.63 art 9(2)(c)�� 14.64, 14.71 art 15�� 14.6 art 25(1)�� 13.37 art 58�� 13.27 art 58(1)(b)�� 13.27 art 59, 60�� 13.11 Reg 2017/1563�� 2.100 Reg 2018/625�� 13.57

xxix

xxx

Table of Cases

1800-Flowers Inc v Phonenames Ltd [2001] EWCA Civ 721, [2001] 2 Costs LR 286, [2002] FSR 12�� 16.37 1800-Flowers Trade Mark [2000] ETMR 369, [2000] FSR 697�� 16.37 A A v B plc (a company) [2002] EWCA Civ 337, [2003] QB 195, [2002] 3 WLR 542�� 10.56 AG Spalding & Bros v AW Gamage Ltd (Taxation) [1914-15] All ER Rep 147, (1915) 31 TLR 328, (1915) 84 LJ Ch 449�� 14.82 A-G v Blake (Jonathan Cape Ltd Third Party) [2001] 1 AC 268, [2000] 3 WLR 625, [2000] 4 All ER 385�� 10.45 A-G v Guardian Newspapers Ltd [1990] 1 AC 109, [1988] 3 WLR 776, [1988] 3 All ER 545�� 2.107; 10.16, 10.20 AMF Inc v Sleekcraft Boards 599 F 2d 341 (9th Cir, 1979)�� 14.20 AMP Inc v Utilux Pty Ltd [1971] 10 WLUK 90, [1971] FSR 572, [1972] RPC 103�� 8.28 AT Poeton (Gloucester Plating) Ltd v Horton [2000] ICR 1208, [2001] FSR 14, (2000) 23 (8) IPD 23060�� 10.26 AT & T Knowledge Ventures LP v Comptroller General of Patents Designs & Trade Marks [2009] EWHC 343 (Pat), [2009] Info TLR 69, [2009] FSR 19�� 12.99, 12.100, 12.103 Abbey v Gilligan & Associated Newspapers Ltd [2012] EWHC 3217 (QB), [2012] 11 WLUK 547, [2013] EMLR 12�� 10.38 Abkco Music & Records Inc v Music Collection International Ltd [1995] EMLR 449, [1995] RPC 657�� 3.72 Actavis UK Ltd v Merck & Co Inc [2008] EWCA Civ 444, [2009] 1 WLR 1186, [2008] RPC 26�� 12.93 Adidas-Salomon AG v Fitnessworld Trading Ltd (Case C-408/01) [2004] Ch 120, [2004] 2 WLR 1095, [2003] ECR I-12537�� 13.20; 14.36 Aerotel Ltd v Telco Holdings Ltd; Macrossan’s Patent Application [2006] EWCA Civ 1371, [2007] 1 All ER 225, [2007] RPC 7�� 11.3; 12.56, 12.81, 12.84, 12.86, 12.87, 12.93, 12.94, 12.96, 12.97, 12.99, 12.100, 12.102, 12.116 Airfield NV v Belgische Vereniging van Auters, Componisten en Uitgevers CVBA (Sabam) (Joined Cases C-431/09 & C-432/09) [2011] ECR I-9363, [2011] 10 WLUK 347, [2012] ECDR 3�� 7.45 Ajinomoto Sweeteners Europe SAS v Asda Stores Ltd [2010] EWCA Civ 609, [2011] QB 497, [2010] FSR 30�� 13.73 Algemeen Dagblad BV v Eureka Internetdienster [2002] ECDR 1�� 6.12; 7.23 Alice Corpn Pty Ltd v CLS Bank International 134 S Ct 2347 (2014)�� 12.24, 12.25, 12.26, 12.28, 12.29, 12.52, 12.116 Allen v Bloomsbury Publishing plc [2010] EWHC 2560 (Ch), [2010] ECDR 16�� 4.6

xxxi

Table of Cases Altera Corpn v Clear Logic Inc (15 September 2005)�� 9.11, 9.16, 9.20, 9.41 American Cyanamid Co v Ethicon Ltd (No 1) [1975] AC 396, [1975] 2 WLR 316, [1975] 1 All ER 504�� 2.70 Anheuser-Busch Inc v Budějovický Budvar, Národní Podnik (Case C-245/02) [2004] ECR I-10989, [2004] 11 WLUK 412, [2005] ETMR 27�� 13.31 Apimed Medical Honey Ltd v Brightwake Ltd (t/a Advancis Medical) [2012] EWCA Civ 5, [2012] RPC 17�� 12.102 Apis-Hristovich EOOD v Lakorda AD (Case C-545/07) [2009] Bus LR 1554, [2009] ECR I-01627, [2009] 3 CMLR 3�� 6.51, 6.52, 6.53, 6.54, 6.95 Apple Computer Inc v Computer Edge Pty Ltd [1984] FSR 246�� 3.9 Apple Computer Inc v Design Registry [2002] ECDR 19, [2002] FSR 38, [2002] Masons CLR 21�� 1.18; 8.18, 8.19 Aquinas Education Ltd v Dorian Miller [2018] EWHC 404 (QB), [2018] 3 WLUK 53, [2018] IRLR 518�� 10.43 Argos Ltd v Argos Systems Inc [2018] EWCA Civ 2211, [2018] 10 WLUK 157�� 14.71 Arsenal Football Club plc v Reed (Case C-206/01) [2003] Ch 454, [2003] 3 WLR 450, [2002] ECR I-10273�� 14.34 Association for Molecular Pathology v Myriad Genetics Inc 569 US 576 (2013)�� 12.17 Attheraces Ltd v British Horseracing Board Ltd [2007] EWCA Civ 38, [2007] UKCLR 309, [2007] ECC 7�� 15.23 Autodesk Inc v Dyason [1992] RPC 575�� 3.77 Autortiesību un komunicēšanās konsultāciju aĜentūra/Latvijas Autoru apvienība v Konkurences padome (Case C-177/16)�� 15.25 Availability to the Public (G01/92) [1993] EPOR 241�� 11.13 Axel Springer AG v Germany (39954/08) [2012] EMLR 15, (2012) 55 EHRR 6, 32 BHRC 493�� 10.63 B BMG Rights Management (US) LLC v Cox Communications Inc (No 16-1972) (CA, 4th Cir, 1 Feb 2018�� 7.137 BGW Beratungs-Gessellschaft Wirtschaft mBH v Bodo Scholz (Case C-20/14) [2015] 10 WLUK 575, [2016] ETMR 1�� 13.18 BHB Enterprises plc v Victor Chandler (International) Lts [2005] EWHC 1074 (Ch), [2005] UKCLR 787, [2005] ECC 40�� 15.24 BO Morris Ltd v F Gilman (BST) Ltd (1943) 60 RPC 20�� 2.15 Baigent v Random House Group Ltd [2007] EWCA Civ 247, [2008] EMLR 7, [2007] FSR 24�� 4.6 Baker v Selden 101 US 99 (1880)�� 2.52; 4.7 Balan v Moldova (Application 19247/033) [2008] 1 WLUK 33, [2009] ECDR 6�� 7.51 Balston Ltd v Headline Filters Ltd (No 2) [1987] FSR 330�� 10.36 Banyan Tree Holdings (P) Ltd v Reddy [2010] FSR 8�� 16.41 Barclays Bank plc v RBS Advanta [1997] ETMR 199, [1996] RPC 307, (1996) 15 Tr LR 262�� 13.30 Bayerische Motoren Werke AG v Acacia Srl (Case C-433/16) [2018] Bus LR 419, [2017] 7 WLUK 248, [2018] CEC 226�� 16.16 Baywatch Production Co Inc v Home Video Channel [1997] EMLR 102, [1997] FSR 22, (1997) 20 (1) IPD 20010�� 14.42 Baywatch Trade Mark Application (12 November 1999) �� 13.15 Belgische Vereniging van Auteurs Componsiten en Uitgevers CVBA (SABAM) v Netlog NV (Case C-360/10) [2012] 2 CMLR 18, [2012] CEC 1271�� 7.133

xxxii

Table of Cases Berkeley Administration Inc v McClelland (Breach of Confidence) [1990] FSR 505�� 10.32 Bezpecˇnostni Softwarová Asociace – Svaz Softwarove Ochrany v Ministerstvo Kultury (Case C-393/09) [2011] ECDR 3, [2011] FSR 18, [2010] ECR I-13971�� 3.18, 3.61, 3.94; 4.9, 4.28, 4.49, 4.54, 4.63, 4.64; 8.8 Bilski v Kappos 561 US (2010)�� 12.21, 12.22 Bocacina Ltd v Boca Cafes Ltd [2013] EWHC 3090 (IPEC)�� 14.90, 14.91 Boehringer Inleheim Ltd v VetPlus Ltd [2007] EWCA Civ 583, [2007] Bus LR 1456, [2007] ETMR 67�� 14.117 Bristol-Myers Squibb Co v Paranova A/S (Joined Cases C-427/93, C-429/93 & C-436/93) [2003] Ch 75, [2002] 3 WLR 1746, [1996] ECR I-3457�� 15.51 British Airways plc v Ryanair Ltd [2001] ETMR 24, [2001] FSR 32, (2001) 24 (3) IPD 24013�� 14.116 British Celanese Ltd v Courtaulds Ltd (1935) 52 RPC 171�� 12.108 British Horseracing Board Ltd v William Hill Organisation Ltd (Case C-203/02) [2009] Bus LR 932, [2004] ECR I-10415, [2005] 1 CMLR 15�� 6.12, 6.17, 6.19, 6.20, 6.22, 6.48, 6.51, 6.52, 6.55, 6.57, 6.60, 6.63, 6.68, 6.71, 6.103, 6.107; 15.24 British Leyland Motor Corpn v Armstrong Patents Co Ltd [1986] AC 577, [1986] 2 WLR 400, [1986] 1 All ER 850 , [1986] RPC 279�� 3.35, 3.134, 3.135; 6.86 British Sky Broadcasting Group plc v Microsoft Corpn [2013] EWHC 1826 (Ch)�� 14.39 British South Africa Co v Companhia de Moçambique [1893] AC 602, [1891–94] All ER Rep 640�� 16.4, 16.5, 16.23 British Telecommunications plc v One in a Million Ltd see Marks & Spencer plc v One in a Million Ltd Brooktree Corpn v Advanced Micro Devices Inc 977 F 2d 1555 (1992)�� 9.14, 9.15, 9.19, 9.35, 9.41 Brookfield Communications Inc v West Coast Entertainment Corpn 174 F 3d 1036 (9th Cir, 1999)�� 14.21, 14.48 Browne v Flower [1911] 1 Ch 219, [1908-10] All ER Rep 547, [1910] 11 WLUK 88�� 5.63 Bunt v Tilley [2006] EWHC 407 (QB), [2007] 1 WLR 1243, [2006] 3 All ER 336�� 7.64 Burrough’s Corpn (Perkin’s) Application, Re [1973] FSR 439, [1974] RPC 147�� 12.14 Burrows v Smith [2010] EWHC 22 (Ch), [2010] Info TLR 69�� 10.10, 10.18 Buttress BV v L’Oreal Produits de Luxe France SNC [2008] ETMR 51�� 16.41 Byrne v Dean [1937] 1 KB 818, [1937] 2 All ER 204�� 14.113 C CA Sheimer (M) Sdn Bhd’s Trade Mark Application [2000] ETMR 1170 (Note), [2000] RPC 484�� 14.42 CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] AC 1013, [1988] 2 WLR 1191, [1988] 2 All ER 484�� 3.72 CFPH LLC’s Applications (Nos 0226884.3 & 0419317.3) [2005] EWHC 1589 (Pat), [2006] RPC 5, 28(9) IPD 28070�� 12.72, 12.73, 12.79, 12.80 Campbell v Mirror Group Newspapers Ltd [2002] EWHC 499 (QB), [2002] EMLR 30; revs’d [2002] EWCA Civ 1373, [2003] QB 633, [2003] 2 WLR 80; revs’d [2004] UKHL 22, [2004] 2 AC 457, [2004] 2 WLR 1232�� 10.56, 10.59, 10.60, 10.62, 10.66

xxxiii

Table of Cases Canon Kabushiki Kaisha v Green Cartridge Co (HK) Ltd [1997] C 728, [1997] 3 WLR 13, [1997] FSR 817�� 2.108; 3.135 Canon Kabushiki Kaisha v Metro Goldwyn Mayer Inc (Case C-39/97) [1998] ECR I-5507, [1998] 9 WLUK 285, [1999] 1 CMLR 77�� 14.19 Cantor Fitzgerald International v Tradition (UK) Ltd [2000] RPC 95, [1999] Masons CLR 157, (1999) 22 (7) IPD 22068�� 3.51, 3.77, 3.78; 4.22, 4.23, 4.29; 5.54 Cantor Gaming Ltd v Gameaacount Global Ltd [2007] EWHC 1914 (Ch), [2007] ECC 24, [2008] FSR 4�� 5.38 Cappellini’s Application (No GB2381884A) [2007] EWHC 476 (Pat), [2007] Info TLR 97, [2007] FSR 26�� 12.89, 12.90 Carflow Products (UK) Ltd v Linwood Securities (Birmingham) Ltd [1996] FSR 424, (1996) 19 (6) IPD 19048�� 10.16 Cartier International AG v British Sky Broadcasting Ltd [2016] EWCA Civ 658, [2017] 1 All ER 700, [2017] RPC 3�� 1.20; 7.143, 7.147; 14.75, 14.78 Cartier International AG v British Telecommunciations plc [2018] UKSC 28, [2018] 1 WLR 3259, [2018] 4 All ER 373�� 7.144, 7.147, 7.148, 7.154; 14.79 Celltech Chiroscience Ltd v MedIimmune Inc [2002] EWHC 2167 (Pat), [2003] FSR 25�� 16.11 Centrafarm BV v Sterling Drug Inc (Case C-15/74) [1974] ECR 1183, [1974] ECR 1147, [1974] 2 CMLR 480�� 7.56 Chaplin v Leslie Frewin (Publishers) Ltd [1966] Ch 71, [1966] 2 WLR 40, [1965] 3 All ER 764�� 2.10 Chartered Institute of Patent Attorneys v Registrar of Trade Marks (Case C-307/10) [2013] Bus LR 740, [2012] 6 WLUK 363, [2013] CEC 361�� 13.16 Chocoladefabriken Lindt & Sprungli AG v Franz Hauswirth GmbH [2010] Bus LR 443, [2009] ECR I-4893, [2009] ETMR 56�� 13.15 Coco v AN Clark (Engineers) Ltd [1968] FSR 415, [1969] RPC 41�� 10.8, 10.12, 10.20, 10.58 Collag Corpn v Merck & Co Inc [2003] FSR 16�� 10.12 Colonial Bank v Whinney (1885) LR 30 Ch D 261�� 2.10 combit Software GmbH v Commit Business Solutions Ltd (Case C-223/15) [2016] Bus LR 1393, [2016] 9 WLUK 420�� 13.57 Commonwealth of Massachusetts v Microsoft Corpn (unreported, 30 June 2004)�� 15.33 Compagnie Générale des Eaux v Compagnie Générale des Eaux Sdn Bhd [1997] FSR 610�� 14.100 COMPTEL / Classification method (Case T1784/06) [2012] 9 WLUK 372, [2013] EPOR 9�� 12.59, 12.60 COMVIK / Two Identities (Case T641/00) [2002] 9 WLUK 326, [2004] EPOR 10�� 12.60, 12.61, 12.62 Comptroller-General of Patents, Designs & Trade Marks v Intellectual Property Agency Ltd [2015] EWHC 3256 (IPEC), [2015] 11 WLUK 213, [2016] FSR 22�� 13.63 Computer Associates International Inc v Altai Inc 982 F 2d 693 (2nd Cir, 1992)�� 3.46; 4.8, 4.13, 4.14, 4.16, 4.17, 4.25, 4.26, 4.27, 4.67; 9.17 Computermax Inc v UCR Inc 26 USPQ 2d 1001 (MD Georgia 1992)�� 4.13 Conductive Inkjet Technology Ltd v Uni-Pixel Displays Inc [2013] EWHC 2968 (Ch), [2014] 1 All ER (Comm) 654, [2014] FSR 22�� 16.8

xxxiv

Table of Cases Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] UKHL 49, [2008] 4 All ER 621, [2008] RPC 28�� 12.93 Conservant Wireless Licensing SARL v Huawei Technologies Ltd [2018] EWHC 1216 (Ch)�� 11.40 Cooperateive Vereniging SNB-REACT UA v Deepak Mehta (Case C-521/17) [2018] Bus LR 1825, [2018] 8 WLUK 48, [2018] ETMR 39�� 14.9 Copad SA v Christian Dior Couture SA (Case C-9/08) [2009] Bus LR 1571, [2009] ECR I-3421, [2009] ETMR 40�� 13.34 Corelli v Gray [1913] TLR 570�� 2.50; 4.1, 4.6, 4.21 Cosmetic Warriors v Amazon.co.uk Ltd [2014] EWHC 181 (Ch), [2014] 2 WLUK 282, [2014] FSR 31�� 14.15 Coty Germany GmbH v eBay International AG [2011] 12 WLUK 681, [2012] ETMR 19�� 14.29 Coty Germany GmbH v First Note Perfumes NV (Case C-360/12) [2014] Bus LR 1294, [2014] 6 WLUK 128, [2015] CEC 511�� 16.27 Coty Germany GmbH v Parfumerie Akzente GmbH (Case C-230/16) [2018] Bus LR 1371, [2017] 12 WLUK 111, [2018] 4 CMLR 9�� 15.10, 15.12 Coward v Phaestos Ltd [2013] EWHC 1292 (Ch)�� 10.19 Cranway Ltd v Playtech Ltd [2009] EWHC 1588 (Pat), [2009] Info TLR 357, [2010] FSR 3�� 12.100 Crawford’s Patent Application (No GB0108683.4) [2005] EWHC 2417 (Pat), [2006] RPC 11�� 12.74, 12.78 Cream Holdings Ltd v Banerjee [2004] UKHL 44, [2005] 1 AC 253, [2004] 3 WLR 918�� 14.69 Creative Technology Ltd v Aztech Systems Pte Ltd [1997] FSR 491�� 3.101 Credinfor SA v Artprice.com [2005] ECC 22, [2006] ECDR 15�� 5.27 Cummins v Bond [1927] 1 Ch 167, [1926] 7 WLUK 97�� 3.179 Cybersource Corpn v Retail Decisions Inc 645 F 3d 1366 (Fed Cir, 2011)�� 12.23 D DP Anderson & Co Ltd v Leiber Code Co [1917] 2 KB 469�� 3.55 Daimler AG v Egyud Garage Gepjarmujavito es Erekesito Kft (Case C-179/15) [2016] Bus LR 632, [2016] 3 WLUK 99, [2016] CEC 1322�� 14.12, 14.88 Dalrymple (JR)’s Application, Re [1957] RPC 449�� 10.12 Danske Dagblades Forening (DDF) v Newsbooster [2003] ECDR 5�� 7.23 Data Engine Technologies LLC v Google LLC (Case T-208/84) [1987] 2 EPOR 74�� 12.28 Davidoff & Cie SA v Gofkid Ltd (Case C-292/00) [2003] 1 WLR 1714, [2003] All ER (EC) 1029, [2003] ECR I-389�� 13.20 Davis v Johnson [1979] AC 264, [1978] 2 WLR 553, [1978] 1 All ER 1132�� 12.83 Dearlove (t/a Diddy) v Combs (t/a Sean Puffy Combs, Puffy & P Diddy) [2007] EWHC 375 (Ch), [2008] EMLR 2, [2007] Info TLR 295�� 16.38 Def Lepp Music v Stuart Brown [1986] RPC 273�� 16.24 Delves-Broughton v House of Harlot Ltd [2012] EWPCC 29, [2012] 5 WLUK 571, [2012] Info TLR 343�� 2.121 Designers Guild Ltd v Russell Williams (Textiles) Ltd (t/a Washington DC) [2000] 1 WLR 2416, [2001] 1 All ER 700, [2001] FSR 11�� 2.49; 3.47, 3.75; 4.1, 4.36 Diamond v Diehr 450 US 175 (1981)�� 12.18, 12.19 Die BergSpechte Outdoor Reisen und Alpinschule Edi Koblmüller GmbH v Günter Guni (Case C-2778/08) [2010] ECR I-2517, [2010] ETMR 33�� 14.53, 14.60 Digital Equipment Corpn v LCE Computer Maintenance Ltd (unreported, 22 May 1992) �� 3.136

xxxv

Table of Cases Directline Group Ltd v Directline Estate Agency [1997] FSR 374�� 14.97 Directmedia Publishing GmbH v Albert Ludwigs-Universität Freiburg (Case C-304/07) [2008] ECR I-7565, [2008] ECDR 16�� 1.38; 6.51, 6.52 Donaldson v Beckett (1774) 2 Bro PC 129, 1 ER 837�� 1.8; 2.1 Douglas v Hello! Ltd (No 6) [2005] EWCA Civ 595, [2006] QB 125, [2005] 3 WLR 881�� 10.14, 10.57, 10.58 Dramatico Entertainment Ltd v British Sky Broadcasting Ltd [2012] EWHC 1152 (Ch), [2012] 5 WLUK 49, [2012] 3 CMLR 15�� 7.134 Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48, [2003] 2 AC 366, [2002] 3 WLR 1913 �� 6.71 Dufour v News Group Newspapers Ltd (unreported, 12 June 2015)�� 10.39 DUNS LICENSING ASSOCIATES / estimating sales activity (T154/04) [2007] EPOR 38�� 12.52, 12.55, 12.85 Dyson Ltd v Qualtex (UK) Ltd [2006] EWCA Civ 166, [2006] RPC 31, (2006) 29 (6) IPD 29044�� 9.25 Dyson Ltd v Vax Ltd [2011] EWCA Civ 1206, [2013] Bus LR 328, [2012] FSR 4�� 8.28, 8.34 E EMI Records Ltd v British Sky Broadcasting Ltd [2013] EWHC 379 (Ch), [2013] Bus LR 884, [2013] ECDR 8�� 7.133 ESL Fuels Ltd v Fletcher [2013] EWHC 3726 (Ch), [2013] 11 WLUK 762�� 10.42 easyJet Airline Co Ltd v Dainty (t/a easyRealestate) [2001] EBLR 104, [2002] FSR 6, [2001] Masons CLR 94�� 14.105 eBay Inc v MercExchange LLC 547 US 388 (2006)�� 1.4 Electrolux Ltd v Hudson [1977] FSR 312�� 11.25 Eli Lilly & Co v Human Genome Sciences Inc [2008] EWHC 1903 (Pat), [2008] RPC 29, (2009) 105 BMLR 27; aff’d [2010] EWCA Civ 33, [2010] RPC 14, (2010) 112 BMLR 161; revs’d [2011] UKSC 51, [2012] 1 All ER 1154, [2012] RPC 6�� 11.19, 11.20 Enfish LLC v Microsoft Corpn 822 F 3d 1327 (Fed Cir 2016)�� 12.25 Engineering Dynamics Inc v Structural Software Inc 26 F 3d 1335 (5th Cir 1994)�� 4.13 Enterprise Holdings Inc v Europcar Group UK Ltd [2015] EWHC 300 (Ch), [2015] 2 WLUK 329�� 13.43 Entidad de Gestion de Derechos de los Productores Audiovisuales (EGEDA) v Administracion del Estrada (Case C-470/14) [2016] 6 WLUK 208, [2017] CEC 111�� 7.81 Erven Warnink BV v J Townend & Sons (Hull) Ltd (No 1) [1979] AC 731, [1979] 3 WLR 68, [1979] 2 All ER 927�� 13.65; 14.86 Euromarket Designs Inc v Peters [2000] ETMR 1025, [2001] FSR 20�� 16.36, 16.39 Executive Grapevine International Ltd v Wall [2012] EWHC 4152 (Ch)�� 6.53 Express Newspapers plc v Liverpool Daily Post & Echo [1985] 1 WLR 1089, [1985] 3 All ER 680, [1986] ECC 204�� 3.174, 3.179; 8.13 Exxon Corpn v Exxon Insurance Consultants International Ltd [1982] Ch 119, [1981] 3 WLR 541, [1981] 3 All ER 241, [1982] RPC 69�� 3.9, 3.52; 4.41 F FKI Engineering Ltd v Stribog Ltd [2011] EWCA Civ 622, [2011] 1 WLR 3264, [2012] 1 All ER (Comm) 549�� 16.13 FSS Travel & Leisure Systems Ltd v Johnson [1998] IRLR 382, [1999] ITCLR 218, [1999] FSR 505�� 10.35

xxxvi

Table of Cases Faccenda Chicken Ltd v Fowler [1985] 1 All ER 724, [1984] ICR 589, [1984] IRLR 61; aff’d [1987] Ch 117, [1986] 3 WLR 288, [1986] 1 All ER 617�� 10.21, 10.25, 10.26, 10.36, 10.68 Fage UK Ltd v Chobani UK Ltd [2014] EWCA Civ 5, [2014] 1 WLUK 663, [2014] FSR 29�� 13.66 Feist Publications Inc v Rural Telephone Service Co Inc 499 US 340 (1991)�� 3.30, 3.35; 4.17; 5.2; 6.1 Fenty v Arcadia Group Brands Ltd (t/a Topshop) [2015] EWCA Civ 3, [2015] 1 WLR 3291, [2015] FSR 14�� 13.67, 13.68 Fitch v Dewes [1921] 2 AC 158�� 10.32 Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou (OPAP) (Case C-444/02) [2004] ECR I-10549, [2005] 1 CMLR 16, [2005] CEC 38 �� 5.19; 6.8, 6.12, 6.14, 6.18, 6.20, 6.44, 6.61, 6.69, 6.107 Fixtures Marketing Ltd v Oy Veikkaus AB (Case C-46/02) [2004] ECR I-10365, [2005] ECDR 2�� 6.12, 6.18, 6.20, 6.107 Fixtures Marketing Ltd v Svenska Spel AB (Case C-338/02) [2004] ECR I-10497, [2005] ECDR 4�� 6.12, 6.18, 6.20, 6.107 Flogates Britain Ltd v Calor Gas Ltd [2013] EWHC 3060 (Ch), [2013] 10 WLUK 471, [2014] FSR 34�� 6.16, 6.21, 6.71; 10.47 Football Association Premier League Ltd v British Sky Broadcasting [2013] EWHC 2058 (Ch), [2013] 7 WLUK 490, [2013] ECDR 14�� 7.134 Football Association Premier League Ltd v British Telecommunications plc [2017] EWHC 480 (Ch), [2017] 3 WLUK 305, [2017] ECDR 17�� 7.139, 7.142 Football Association Premier League Ltd v QC Leisure (Case C-403/08) [2011] ECDR 11, [2011] ECR I-9083�� 3.2; 7.34, 7.39, 7.41, 7.67, 7.105, 7.141; 15.8, 15.53 Football Dataco Ltd v Brittens Pools Ltd [2010] EWHC 841 (Ch), [2010] 3 CMLR 25, [2010] RPC 17�� 5.26, 5.29 Football Dataco Ltd v Sportradar GmbH (Case C-173/11) [2013] 1 CMLR 29, [2013] FSR 4�� 6.58 Football Dataco Ltd v Sportradar GmbH [2013] EWCA Civ 27, [2013] Bus LR 837, [2013] FSR 30�� 6.3, 6.8, 6.20, 6.21, 6.23, 6.70 Football Dataco Ltd v Yahoo! UK Ltd (Case C-604/10) [2012] ECDR 7�� 5.24, 5.29, 5.36 Force India Formula One Team Ltd v Aerolab Srl sub nom Force India Formula One Team Ltd v Malaysia Racing Team Sdn Bhd [2013] EWCA Civ 780, [2013] RPC 36�� 10.48 Fort Dodge Animal Health Ltd v Akzo Nobel NV [1998] ILPr 732, [1998] FSR 222, (1998) 21 (1) IPD 21003�� 16.23 France.com Inc v European Union Intellectual Property Office (EUIPO) (Case T-71/17) [2018] 6 WLUK 505�� 13.18 Francis Day & Hunter Ltd v Twentieth Century Fox Corpn Ltd [1940] AC 112, [1939] 4 All ER 192�� 7.24 Frank Industries Pty Ltd v Nike Retail BV [2018] EWHC 1893 (Ch), [2018] 7 WLUK 597, [2018] FSR 35�� 13.31 Freistat Bayern v Verlag Esterbauer GmbH (Case C-490/14) [2015] Bus LR 1428, [2015] 10 WLUK 766�� 5.16 Fujifilm Kyowa Kirin Biologics Co Ltd v Abbvie Biotechnology Ltd [2017] EWHC 395 (Pat), [2017] 3 WLUK 104, [2018] RPC 1�� 10.82 FUJITSU / file search method (T1351/04)�� 12.95

xxxvii

Table of Cases Fujitsu Ltd’s Patent Application (No 9204959.2) [1997-98] Info TLR 103, [1997] RPC 608, (1997) 16 Tr LR 352�� 12.68, 12.76, 12.82, 12.83, 12.96 Fundación Española para la Innovacion de la Artesania (FEIA) v Cul de Sac Espacio Creativo SL (Case C-32/08) [2010] Bus LR 466, [2009] ECR I-5611, [2009] ECDR 19�� 8.39 G GA Cramp & Sons Ltd v Frank Smythson Ltd [1944] AC 329, [1944] 2 All ER 92�� 3.35; 7.12 GS Media BV v Samona Media Netherlands BV (Case C-160/15) [2016] Bus LR 1231, [2016] 9 WLUK 124, [2017] 1 CMLR 30�� 2.62; 7.36, 7.38 Gale’s Application, Re [1991] RPC 305�� 12.15, 12.64, 12.66, 12.82, 12.96 Gama Healthcare Ltd v PAL International Ltd [2016] EWHC 75 (IPEC), [2016] 1 WLUK 316 �� 13.63 Gates Rubber Co v Bando Chemical Ltd 9 F 3d 823 (10th Cir 1993)�� 4.14 Gemstar-TV Guide International Inc v Virgin Media Ltd [2009] EWHC 3068 (Ch), [2009] Info TLR 227, [2010] RPC 10�� 12.103 Genentech Inc’s Patent (Human Growth Hormone) [1989] RPC 147�� 12.67, 12.83 Gesellschaft fur Antriebstechnik mbH & Co KG (GAT) v Lamellen und Kupplungsbau Beteiligungs KG (LuK) (Case C-4/03) [2006] ECR I-6509, [2007] ILPr 34, [2006] FSR 45�� 16.11 Gever’s Application, Re [1969] FSR 480, [1970] RPC 91�� 12.13 Gillette Safety Razor Co v Anglo-American Trading Co Ltd (1913) 30 RPC 465�� 11.44 Glaxo plc v Glaxowellcome Ltd [1996] FSR 388�� 14.97 Glyn v Weston Feature Film Co [1916] 1 Ch 261�� 4.21 Goodrich Actuation Systems Ltd v Valente (unreported, 23 July 2018)�� 10.47, 10.78 Google France SARL v Louis Vuitton Malletier SA (Case C-236/08) [2011] All ER (EC) 411, [2011] Bus LR 1, [2010] ECR I-2417�� 14.16, 14.51, 14.55, 14.58, 14.60, 14.64 Google Inc v Copiepresse SCRL [2007] ECDR 5�� 7.23 Gottschalk v Benson 409 US 63 (1972)�� 12.18 Greater Glasgow Health Board’s Application, Re [1996] RPC 207, (1996) 19 (1) IPD 19003�� 11.25 Green Lane Products Ltd v PMS International Group plc [2007] EWHS 1712 (Pat), [2008] Bus LR 338, [2008] FSR 1�� 8.30 Griggs Group Ltd v Evans (No 1) [2005] EWCA Civ 11, [2005] ECDR 30, [2005] FSR 31�� 2.27, 2.28 Gromax Plasticulture Ltd v Dun & Low Nonwovens Ltd [1999] RPC 367, (1998) 21 (9) IPD 21098�� 13.14 Grupo Promer Mon Graphic SA v Office for Harmonisation in the Internal Market (Trade Marks & Designs) (OHIM) (T9/07) [2010] ECR II-981, [2010] ECDR 7, [2011] Bus LR D13�� 8.35 Gust Inc v AlphaCap Ventures LLC 226 F Supp 232 (SD NY, 8 December 2016)�� 12.26 Gut Springenheide GmbH v Oberkreisdirektor des Kreises Steinfurt – Amt fur Lebensmitteluberwachung (Case C-210/96) [1998] ECR I-4657, [1999] 1 CMLR 1383�� 14.19

xxxviii

Table of Cases H HTC Europe Co Ltd v Apple Inc [2013] EWCA Civ 451, [2013] RPC 30�� 12.2, 12.102 Halliburton Energy Services Inc’s Patent Applications [2011] EWHC 2508 (Pat), [2012] RPC 12, (2011) 108 (41) LSG 23�� 12.77, 12.84 Halliburton Energy Services Inc v Smith International (North Sea) Ltd [2006] EWCA Civ 185, [2006] RPC 26 �� 12.102, 12.112 Hanfstaengl v Empire Palace [1894] 2 Ch 1�� 16.1 Hanssen Beleggingen BV v Prast-Knipping (Case C-341/16) [2018] Bus LR 1384, [2017] 10 WLUK 82, [2018] CEC 240�� 16.9 Harbor Software Inc v Applied Systems Inc 925 F Supp 1042 (SD NY 1996)�� 4.14 Harman Pictures NV v Osborne [1967] 1 WLR 723, [1967] 2 All ER 324, (1967) 111 SJ 434�� 4.21 Harris’s Patent [1985] RPC 19�� 11.25 Hawkes & Sons (London) Ltd v Paramount Film Service Ltd [1934] Ch 593�� 2.44 Hearst Holdings Inc v AVELA Inc [2014] EWHC 439 (Ch), [2014] 2 WLUK 790, [2014] ETMR 34�� 13.67 Herbert Morris Ltd v Saxelby [1916] 1 AC 688�� 10.32, 10.67 Hewlett-Packard Belgium SPRL v Reprobel SCRL (Case C-572/13) [2016] Bus LR 73, [2015] 11 WLUK 304, [2016] ECDR 2�� 7.50 Heythrop Zoological Gardens Ltd (t/a Amazing Animals) v Captive Animals Protection Society (CAPS) [2016] EWHC 1370 (Ch), [2016] 5 WLUK 472, [2017] FSR 10�� 10.14, 10.37 Hilti AG v Commission to the European Communities (Case T-30/89) [1991] ECR II-1439, [1992] 4 CMLR 16, [1992] FSR 210�� 15.28 HITACHI / auction method (T258/03) [2004] EPOR 55�� 12.43, 12.43, 12.45, 12.49, 12.58, 12.79, 12.80, 12.82, 12.83, 12.86, 12.95, 12.108 Hollie Hobby Trade Mark [1994] FSR 199 �� 13.3 Hollinrake v Truswell [1893] 2 Ch 377�� 3.9 Hulton & Co v Jones [1910] AC 20�� 10.52 Huawei Technologies Co Ltd v ZTE Corpn (Case C-170/13) [2015] Bus LR 1261, [2015] 7 WLUK 564, [2015] 5 CMLR 14�� 11.36, 11.38; 15.19 Huber v Ross 1912 SC 898, 1912 1 SLT 399, [1912] 3 WLUK 61�� 5.63 Hyperion Records Ltd v Sawkins [2005] EWCA Civ 565, [2005] 1 WLR 3281, [2005] RPC 32�� 2.123 I IBM / Card Reader (T854/90) [1994] EPOR 89�� 12.37, 12.43, 12.72 IBM / Computer programs (T935/97) [1999] EPOR 301, [1998-99] Info TLR 135, [1999] RPC 861�� 12.38, 12.55 IBM / Document abstracting & retrieving (T22/85) [1990] EPOR 98�� 12.36 IGT / computer implemented game process (T1023/06) [2007] EPOR 36�� 12.49 IGT / electronic multi-play poker (T336/07) [2008] EPOR 18�� 12.101 IMS Health GmbH & Co OHG v NDC Health GmbH & Co KG (Case C-418/01) [2004] All ER (EC) 813, [2004] ECR I-5039, [2004] 4 CMLR 28�� 15.21 IRC Comrs v Muller & Co’s Margarine Ltd [1901] AC 217�� 13.63; 14.83 ITV Broadcasting Ltd v TV Catchup Ltd (Case C-607/11) [2013] Bus LR 1020, [2013] 3 CMLR 1, [2013] ECDR 9�� 7.35, 7.36, 7.42

xxxix

Table of Cases Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd [1994] FSR 275, [1998] Masons CLR Rep 1�� 3.46, 3.49, 3.51, 3.84, 3.88, 3.90; 4.27, 4.28, 4.35; 5.47, 5.58; 7.13 India TV Independent News Service Pvt Ltd v India Broadcast Live LLC [2008] FSR 2 (High Ct, Delhi)�� 14.107 Infopaq International A/S v Danske Dagblades Forening (Case C-5/08) [2012] Bus LR 102, [2009] ECR I-6569, [2009] ECDR 16�� 2.42; 3.36; 4.59, 4.63; 7.66, 7.68, 7.69, 7.70, 7.71, 7.75, 7.184 Infopaq International A/S v Danske Dagblades Forening (Case C-302/10) [2012] ECR I�� 7.28, 7.68, 7.69, 7.70, 7.71, 7.75, 7.184 Innoweb BV v Wegener ICT Media (Case C-202/12) [2014] Bus LR 308, [2013] 12 WLUK 667�� 6.59 Interflora Inc v Marks & Spencer plc [2011] ECR I-8625�� 14.7, 14.55, 14.56, 14.64, 14.66 Interflora Inc v Marks & Spencer plc [2013] EWCA Civ 319, [2013] FSR 26�� 13.44 Interflora Inc v Marks & Spencer plc [2013] EWHC 1291 (Ch), [2013] 5 WLUK 540, [2013] FSR 33; revs’d [2014] EWCA Civ 1403, [2015] Bus LR 492, [2015] FSR 10�� 14.66, 14.69 Interflora Inc v Marks & Spencer plc [2014] EWHC 4168 (Ch), [2014] 12 WLUK 55, [2015] FSR 13�� 14.69 Interflora Inc v Marks & Spencer plc (Case C-323/09) [2012] Bus LR 1440, [2011] 9 WLUK 460, [2013] All ER (EC) 519�� 14.15 Intel Corpn Inc v CPM United Kingdom Ltd (Case C-252/07) [2009] Bus LR 1079, [2008] ECR I-8823, [2009] CEC 668�� 14.35 Intel Corpn Inc v European Commission (Case C-413/14P) [2017] 8 WLUK 57, [2017] 5 CMLR 18�� 15.26 Internet Specialities West v Milon-DiGiorgio Enterprises Inc 559 F 3d 985 (9th Cir, 2009)�� 14.23 Irvine v Talksport Ltd (Damages) [2003] EWCA Civ 423, [2003] 2 All ER 881, [2003] FSR 35�� 13.68 J JA Mont (UK) Ltd v Mills [1993] IRLR 172, [1993] FSR 577�� 10.34 Jif Lemon see Reckitt & Colman Products Ltd v Borden Inc Jockey Club v Rahim (unreported, 22 July 1983)�� 3.174, 3.179; 8.13 John Richardson Computers Ltd v Flanders [1993] FSR 497�� 4.8, 4.25, 4.27, 4.28 Johnson Controls Inc v Phoenix Control Systems Inc 886 F 2d 1173 (9th Cir 1989)�� 4.17 K KK Suwa Siekosha’s Design Application [1982] RPC 166�� 8.18 Kabushiki Kaisha Sony Computer Entertainment Inc v Ball (Application for Summary Judgment) [2004] EWHC 1738 (Ch), [2005] ECC 24, [2005] FSR 9�� 3.135, 3.137; 7.101, 7.113; 15.49 Karlsruhe Court of Appeals [1906] WRP 587 �� 3.164 Kaye v Robertson [1991] FSR 62�� 10.52 Kelly v GE Healthcare [2009] EWHC 181 (Pat), [2009] RPC 12, (2009) 32 (5) IPD 32035�� 11.27

xl

Table of Cases Kenzo Tsukimoto v European Union Intellectual Property Office (EUIPO) (Cases C-85/16P & C-86/16P) (Judgment 30 May 2018)�� 13.18 King v South African Weather Service [2008] 11 WLUK 720, [2009] FSR 6�� 2.24, 2.26 King Features Syndicate Inc v O & M Kleeman Ltd [1941] AC 417, [1941] 2 All ER 403, [1941] 5 WLUK 46�� 13.67 Kirin-Amgen Inc v Hoechst Marion Roussel Ltd (No 2); Kirin-Amgen v Transkaryotic Therapies Inc (No 2) [2004] UKHL 46, [2005] 1 All ER 667, [2005] RPC 9�� 11.9 KOCH & STERZEL / X-ray apparatus (T26/86) [1988] EPOR 72�� 12.45 Koger v O’Donnell [2013] IESC 28 �� 3.86 KONAMI / Video game device (T1793/07) [2009] EPOR 13�� 12.101 Koninklijke Philips Electronics NV v Remington Consumer Products Ltd (Case C-299/99) [2003] Ch 159, [2003] 2 WLR 294, [2002] ECR I-5475�� 13.12 L LA Gear Inc v Hi-Tec Sports plc [1992] FSR 121�� 2.76; 7.98 LB (Plastics) Ltd v Swish Products Ltd [1979] FSR 145, [1979] RPC 551�� 2.52; 3.86; 4.6 La Croix du Arib SA v Kwikform (UK) Ltd [1998] FSR 493, (1998) 21 (3) IPD 21029�� 16.1 Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273, [1964] 1 All ER 465, (1964) 108 SJ 135�� 2.12, 2.44; 3.30, 3.35 Lambretta Clothing Ltd v Teddy Smith (UK) Ltd [2004] EWCA Civ 886, [2005] RPC 6, (2004) 148 SJLB 911�� 9.26 Lancashire Fires Ltd v SA Lyons & Co Ltd [1997] IRLR 113, [1996] FSR 629, (1996) 19 (8) IPD 19068�� 10.22, 10.26 Land Nordrhein-Westfalen v Dirk Renckhoff (Case C-161/17) [2018] Bus LR 1815, [2018] 8 WLUK 56, [2018] ECDR 21�� 7.44, 7.46 Lansing Linde Ltd v Kerr [1991] 1 WLR 251, [1991] 1 All ER 418, [1991] ICR 428 �� 10.69, 10.70 Lantana Ltd v Comptroller General of Parents, Designs & Trade Marks [2014] EWCA Civ 1463, [2014] 11 WLUK 343, [2015] RPC 16�� 1.37; 12.106, 12.109 La SA des Anciennes Etablissements Panhard et Levassor v Panhard Levassor Motor Co Ltd [1901] 2 Ch 513, [1901] 7 WLUK 46, (1901) 18 RPC 405�� 14.85 Laserdisken ApSII v Kulturministeriet (Case C-479/04) [2007] All ER (EC) 549, [2006] ECR I-8089, [2007] CMLR 6�� 7.57 Lauri v Renad [1892] 3 Ch 402�� 6.39 Law Society of Upper Canada v CCH Canadian Ltd [2004] FSR 871�� 3.72 Le Roy v Tatham 14 How 156 (1853)�� 12.17 Levi Strauss & Co v Tesco Stores Ltd [2002] Ch 109, [2002] 2 WLR 321, [2001] ECR I-8691�� 15.47 Lifestyle Equities CV v Santa Monica Polo Club Ltd [2017] EWHC 3578 (Ch), [2017] 12 WLUK 658�� 13.43 Linder Recylcingtech GmbH v Franssons Verkstader AB [2009] 10 WLUK 621, [2010] ECDR 1�� 8.28 Lion Laboratories Ltd v Evans [1985] QB 526, [1984] 3 WLR 539, [1984] 2 All ER 417�� 2.107; 10.15, 10.80 Lister v Hesley Hall Ltd [2001] UKHL 22, [2002] 1 AC 215, [2001] 2 WLR 1311�� 6.71 Littlewoods Organisation Ltd v Harris [1977] 1 WLR 1472, [1978] 1 All ER 1026, (1977) 121 SJ 727�� 10.34 Live Nation Motor Sports Inc v Davis (12 December 2006, US Northern District Court Texas)�� 7.22

xli

Table of Cases Lloyd Shuhfabrik Meyer & Co GmbH v Klijsen Handel BV (Case C-342/97) [1999] All ER (EC) 587, [1999] ECR I-3819, [1999] 2 CMLR 1343�� 13.24, 13.26; 14.19 London Taxi Corpn Ltd (t/a London Taxi Co) v Fraser-Nash Research Ltd [2016] EWHC 52 (Ch), [2016] 1 WLUK 321, [2016] ETMR 18�� 13.63 L’Oreal SA v Bellure NV (Case C-487/07) [2010] Bus LR 303, [2009] ECR I-5185, [2009] 6 WLUK 482�� 13.8; 14.15, 14.32, 14.57 L’Oreal SA v Bellure NV [2010] EWCA Civ 535, [2010] Bus LR 1579, [2010] RPC 23�� 14.33 L’Oreal SA v eBay International AG (Case C-324/09) [2012] All ER (EC) 501, [2012] Bus LR 1369, [2011] ECR I-6011�� 6.59; 7.129; 14.16, 14.27, 14.53, 14.74 Lotus Development Corpn v Borland International Inc [1997] FSR 61; aff’d 516 US 233 (1996)�� 4.11, 4.12 Lotus Development Corpn v Paperback Software International 740 F Supp 37 (D Mass 1990)�� 4.11 Louboutin v Van Haren Schoenen BV (Case C-163/16) [2018] Bus LR 1411, [2018] 6 WLUK 178, [2018] ETMR 31�� 13.12 Lucas Bols v Colgate-Palmolive (1976) 7 IIC 420�� 14.38 Lucasfilm Ltd v Ainsworth [2011] UKSC 39, [2012] 1 AC 208, [2011] 3 WLR 487�� 16.5, 16.24, 16.25 Lungowe v Vedanta Resources plc [2016] EWHC 975 (TCC), [2016] 5 WLUK 672, [2016] BCC 774�� 16.6 Luskan v Petrus van der Let (Case C-277/10) [2013] ECDR 5�� 7.78 M MEI / currency validator (T-494/07) [2011] EPOR 36�� 12.58 McCambridge Ltd v Joseph Brennan Bakeries [2014] IEHC 269, [2014] ETMR 44�� 13.69 McKennitt v Ash [2006] EWCA Civ 1714, [2008] QB 73, [2007] 3 WLR 194�� 10.57 Macmillan & Co Ltd v Cooper (1923) 93 LJPC 113 (PC)�� 4.43; 5.1; 7.11, 7.12 Macmillan v Suresh Chunder Deb (1890) ILR 17 Calc 981�� 4.43 Mafin SpA’s Design [2005] ETMR 106, [2005] ECDR 29�� 8.34 Magmatic Ltd v PMS International Group plc [2016] UKSC 12, [2016] 4 All ER 1027, [2016] RPC 11�� 8.44 Malaysia Dairy Industries Pte Ltd v Ankenaevnet For Patenter Og Varaemerker (Case C-320/12) [2013] Bus LR 1106, [2013] ETMR 36�� 13.15 Marathon Asset Management LLP v Seddon [2017] EWHC 300 (Comm), [2017] 2 WLUK 594, [2017] FSR 36�� 10.4 Marks & Spencer plc v One in a Million Ltd sub nom British Telecommunications plc v One in a Million Ltd [1997-98] Info TLR 316, [1998] ITCLR 7, [1998] FSR 265�� 14.96, 14.103 Mars UK Ltd v Teknowlegde Ltd (Costs) [1999] 2 Costs LR 44, [2000] FSR 138, (1999) 22 (10) IPD 22097�� 3.134, 3.135, 3.164; 6.86; 10.77 Mason v Provident Clothing & Supply Co Ltd [1913] AC 724�� 10.34 Mayo Collaborative Services c Prometheus Laboraties Inc 556 US 66 (2012)�� 12.24 MAX-PLANCK / BDP1 Phosphatase (T870/04) [2006] EPOR 14�� 11.19 Media Agency Group Ltd v Space Media Agency Ltd [2018] EWHC 1434 (QB), [2018] 4 WLUK 275�� 10.10 Mediakabel BV v Commissariaat voor de Media (Case C-89/04) [2005] ECR I-4891, [2005] Info TLR 307�� 7.39

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Table of Cases Medical Innovations Ltd v Eakins [2014] EWHC 4626 (Ch), [2014] 12 WLUK 576�� 5.13; 6.66 Menashe Business Mercantile Ltd v William Hill Organisation Ltd [2002] EWHC 397 (Pat), [2002] 3 All ER 597, [2002] RPC 47�� 16.32 Merck Genericos Produtos Farmaceuticos Lda v Merck & Co Inc (Case C-431/05) [2008] All ER (EC) 40, [2007] ECR I-7001, [2007] 3 CMLR 49�� 3.13 Merck KGaA v Merck Sharp & Dohme Corpn [2017] EWCA Civ 1834, [2017] 11 WLUK 598, [2018] ETMR 10�� 14.72 Merlet v Mothercare plc [1986] RPC 115�� 2.48 Merrell Dow Pharmaceuticals Inc v HN Norton & Co Ltd [1996] RPC 76, (1997) 33 BMLR 201, (1996) 19 (1) IPD 19004�� 12.93 Merrill Lynch, Pierce Fenner & Smith Incorporated’s application, Re [1988] RPC 1�� 12.64 Merrill Lynch Inc’s Patent Application, Re [1989] RPC 561�� 12.83, 12.84 Metro-Goldwyn-Mayer Studios Inc v Grokster Inc 545 US 913 (2005)�� 3.72; 7.53 Micro Leader Business v Commission of the European Communities (T-198/98) [2000] All ER (EC) 361, [1999] ECR II-3989, [2000] CMLR 886�� 15.7, 15.47 Microsense Systems Ltd v Control Systems Technology Ltd (unreported, 17 July 1991) �� 3.55; 4.41 MICROSOFT / clipboard formats I (T424/03) [2006] EPOR 39�� 12.46, 12.47, 12.55, 12.82, 12.83 MICROSOFT / clipboard formats II (T411/03) [2006] EPOR 40�� 12.46, 12.82, 12.83 Microsoft Corpn v Electro-Wide Ltd [1998] ECC 52, [1997–98] Info TLR 147, [1997] FSR 580�� 3.173 Microsoft Corpn’s Design; Application for a Declaration of Invalidity by Heidelberger Druckmaschinen AG [2006] 2 WLUK 110, [2006] ECDR 29�� 8.32 Microsoft Corpn v Commision to the European Communities (Case T-201/04) [2007] ECR II-3601, [2007] 9 WLUK 269�� 15.31 Microsoft Inc v EC (T-167/08) [2012] ECR II�� 1.28, 1.38; 3.157; 15.32 MICROSDOT / on-demand property system (Case T1370/11) [2016] 3 WLUK 347, [2016] EPOR 28�� 12.62 Mirage Studios v Counter-Feat Clothing Co Ltd [1990] 10 WLUK 337, [1991] FSR 145�� 13.67 Moorhouse & Angus & Robertson (Publishers) Pty v University of South Wales [1976] RPC 151, (1975) 49 AJLR 267�� 3.72 Morison v Moat (1851) 9 Hare 241, 68 ER 492�� 10.1 Morning Star Cooperative Society Ltd v Express Newspapers Ltd [1979] FSR 113�� 14.55 Murray v Express Newspapers plc [2007] EWHC 1908 (Ch), [2007] ECDR 20, [2007] EMLR 22; revs’d [2008] EWCA Civ 446, [2009] Ch 481, [2008] 3 WLR 1360�� 10.61 Musical Hits Database, Re (I ZR 290/02) [2006] ECC 31�� 6.12 N NVM v De Telegraaf (unreported, 12 September 2000)�� 6.12 Naruto v Slater (Case No 15-cv-04324-WHO) (ND Cal, 28 Jan 2016)�� 8.13 National Guild of Removers & Storers Ltd v Bee Moved Ltd [2018] EWCA Civ 1302, [2018] 6 WLUK 185�� 14.88 Navitaire Inc v EasyJet Airline Co Ltd (No 3) [2004] EWHC 1725 (Ch), [2005] ECC 30, [2006] RPC 3�� 2.15; 3.27, 3.53, 3.54, 3.55, 3.59, 3.92; 4.23, 4.29, 4.31, 4.32, 4.35, 4.39, 4.42, 4.46, 4.47, 4.61, 4.63; 5.5, 5.58, 5.59; 8.7

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Table of Cases Neij v Sweden (Admissibility) (40397/12) [2013] ECDR 7, (2013) 56 EHRR SE19�� 1.10; 2.111; 7.55; 10.54 Newspaper Licensing Agency Ltd v Marks & Spencer plc [2001] UKHL 38, [2003] 1 AC 551, [2001] 3 WLR 290�� 2.19; 7.19, 7.184 Niche Products Ltd v MacDermid Offshore Solutions LLC (No 2) [2013] EWHC 3540 (IPEC), [2013] 11 WLUK 358, [2014] FSR 24�� 14.117 Nichols v Universal Pictures Co 45 F 2d 119 (2nd Cir, 1930)�� 4.7, 4.13 Nintendo v Centronics Systems Pty Ltd [1994] HCA 27�� 9.41 Nintendo v Compatinet SLU (R 1772/2012-3) [2014] 4 WLUK 535, [2015] ECDR 3�� 8.28 Nintendo Co Ltd v BigBen Interactive (Joined Cases C-24/16 & 25/16) [2018] Bus LR 1245, [2017] 9 WLUK 402, [2018] ECDR 3�� 16.19, 16.21 Nintendo Co Ltd v Console PC Com Ltd [2011] EWHC 1458 (Ch)�� 3.170; 7.90, 7.91, 7.92 Nintendo Co Ltd v Playables Ltd [2010] EWHC 1932 (Ch), [2010] ECDR 14, [2010] FSR 36�� 3.168; 7.90, 7.114 Noah v Shuba [1991] FSR 14�� 2.25; 5.46; 6.33 Noir d’Ivoire SPRL v Home Boutiques Private Ltd Co SPRL [2003] ECDR 29�� 5.27; 6.8 Norowzian v Arks (No 1) [1999] EMLR 57, [1998] FSR 394, (1998) 21 (3) IPD 21027�� 7.16 Northern Office Microcomputer (Pty) Ltd v Rosenstein [1982] FSR 124 (S Africa S Ct)�� 10.23 Norwich Pharmacal Co v C & E Comrs [1974] AC 133, [1973] 3 WLR 164, [1973] 2 All ER 943�� 2.74; 3.158; 6.93; 14.76 Nova Productions Ltd v Mazooma Games Ltd [2006] EWHC 24 (Ch), [2006] EMLR 14, [2006] RPC 14; aff’d [2007] EWCA Civ 219, [2007] Bus LR 1032, [2007] ECC 21�� 3.6, 3.24, 3.25, 3.28, 3.47, 3.177; 4.39; 7.8, 7.14; 8.11, 8.13 O O2 Holdings Ltd (formerly O2 Ltd) v Hutchinson 3G Ltd [2006] EWCA Civ 1656, [2007] 2 CMLR 15, [2007] RPC 16�� 13.28; 14.116 O2 Holdings Ltd v Hutchinson 3G UK Ltd [2008] ECR I-04231�� 13.29 OBG Ltd v Allan [2007] UKHL 21, [2008] 1 AC 1, [2007] 2 WLR 920�� 10.14, 10.58 OP Solutions Inc v Intellectual Property Network Ld 50 USPQ 2d (SD NY 1999)�� 4.14 OSA – Ochranný svaz autorský pro práva k dílům hudebním os v Léčebné lázně Mariánské Lázně (Case C-351/12)�� 15.25 Oakley Inc v Animal Ltd [2005] EWCA Civ 1191, [2006] Ch 337, [2006] 2 WLR 294�� 8.22 Ocular Sciences Ltd v Aspect Vision Care Ltd (No 2) [1997] RPC 289, (1997) 20 (3) IPD 20022�� 9.25; 10.40 Oneida Indian Nation’s Application No 0308259 [2007] EWHC 954 (Pat)�� 12.86, 12.87 Oracle America Inc v Google Inc (unreported, 31 May 2012)�� 4.17, 4.18 Oscar Bronner GmbH & Co KG v Mediaprint Zeitungs-und Zeitschriftenverlag GmbH & Co KG (Case C-7/97) [1998] ECR I-7791, [1999] 4 CMLR 112, [1999] CEC 53�� 15.18 Owusu v Jackson (t/a Villa Holidays Bal Inn Villas) (Case C-281/02) [2005] QB 801, [2005] 2 WLR 942, [2005] ECR I-1383�� 16.6

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Table of Cases P PBS PARTNERSHIP / Controlling pensions benefits system (T931/95) [2002] EPOR 522�� 12.41, 12.44, 12.79, 12.82, 12.90 PSM International plc v Whitehouse [1992] IRLR 279, [1992] FSR 489�� 10.13 Padawan SL v Sociedad General de Autores y Editores España (SGAE) (Case C-467/08) [2011] ECDR 1, [2011] FSR 17, [2010] ECR I-10055�� 7.79 Page v Wisden (1869) 20 LT 435�� 2.52 Painer (Eva-Maria) v Standard Verlags GmbH (Case C-145/10) [2011] ECDR 13 �� 3.15, 3.36, 3.176; 5.28 Pammer v Reederei Karl Schluter GmbH & Co KG; Hotel Alpenhof GesmbH v Heller (Joined Case C-585/08 & C-144/09) [2011] 2 All ER (Comm) 888, [2012] Bus LR 972, [2010] ECR I-12527�� 14.72 Paramount Home Entertainment International Ltd v British Sky Broadcasting Ltd [2013] EWHC 3479 (Ch), [2013] 11 WLUK 310, [2014] ECDR 7�� 7.48 Pari Pharma GmbH v European Medicines Agency (Case T-235/15) (Judgment 5 February 2018)�� 10.74 Parker v Flook 437 US 584 (1978)�� 12.24 Paul (KS) (Printing Machinery) Ltd v Southern Instruments (Communications) & EP Ellis (Male) (t/a Ellis & Soons) [1964] RPC 118�� 10.16, 10.77 Paymaster (Jamaica) Ltd v Grace Kennedy Remittance Services Ltd [2017] UKPC 40, [2018] Bus LR 492, [2017] 12 WLUK 226�� 2.32; 10.11 Pearce (Gareth) v Ove Arup Partnership Ltd (Jurisdiction) [1997] Ch 293, [1997] 2 WLR 779, [1997] FSR 641; revs’d in part [2000] Ch 403, [2000] 3 WLR 332, [1999] FSR 525�� 16.23, 16.24 Peek & Cloppenburg KG v Cassina SpA (Case C-456/06) [2009] Bus LR 149, [2008] ECR I-2731, [2009] ECDR 9�� 7.60 PepsiCo Inc v Grupo Promer Mon Graphics SA (Case C-281/10P) [2012] FSR 5, [2011] ECR I-10153�� 8.36 Perry v Truefitt (1842) 49 ER 749, (1842) 5 Beav 66�� 14.82 Pez Hejduk v EnergieAgentur NRW GmbH (Case C-441/13) [2015] Bus LR 560, [2015] 1 WLUK 453, [2015] ECDR 10�� 16.26 Pfizer Ltd v Eurofood Link (UK) Ltd [2000] ETMR 896, [2001] FSR 3�� 14.47 Phillips v Eyre (1870–71) LR 6 QB 1�� 16.4 Phillips v News Group Newspapers Ltd [2012] UKSC 28, [2013] 1 AC 1, [2013] FSR 12�� 10.50 Phones 4u Ltd v Phone4u.co.uk Internet Ltd [2005] EWHC 334 (Ch); revs’d [2006] EWCA Civ 244, [2007] RPC 5, (2006) 103 (23) LSG 32�� 14.98 Pinckney v KDG Mediatech AG (Case C-170/12) [2013] Bus LR 1313, [2013] 10 WLUK 113, [2014] CEC 534�� 16.28 Pirtek (UK) Ltd v Jackson [2018] EWHC 1004 (QB), [2018] 4 WLUK 585�� 13.74 Pitman Training Ltd v Nominet UK [1997–98] Info TLR 177, [1998] ITCLE 17, [1997] FSR 797�� 14.93 Playboy Enterprises Inc v Calvin Designer Labels 985 F Supp 1220 (ND Cal, 1997)�� 14.47 Playboy Enterprises Inc v Welles 7 F Supp 2d 1098 (SD Cal, 1998)�� 14.47 Plentyoffish Media Inc v Plenty More LLP [2011] EWHC 2568 (Ch), [2012] ECC 15, [2012] RPC 5�� 16.36, 16.45 Plix Products Ltd v Frank M Winstone (Merchants) [1986] FSR 63�� 2.43 Polydor Ltd v Brown [2005] EWHC 3191 (Ch), (2006) 29 (3) IPD 29021�� 7.54 Polymasc Pharmaceutical plc v Charles [1999] FSR 711�� 10.32

xlv

Table of Cases Portakabin Ltd v Primakabin BV (Case C-558/08) [2011] Bus LR 1339, [2010] ECR I-6963, [2011] CEC 552�� 14.53, 14.58 Potter v Broken Hill Pty Co Ltd (1906) 3 CLR 479�� 16.4 Pozzoli SpA v BDMO SA [2007] EWCA Civ 588, [2007] FSR 37, (2007) 30 (8) IPD 30051�� 11.17 PRESIDENT’S REFERENCE / Computer program exclusion (Case G3/08) [2009] EPOR 9�� 12.53, 12.93 P-SAT.1 SatellitenFernsehen GmbH v OHIM (Case C-322/02)�� 13.62 Prince Albert v Strange (1849) 1 Mac & G 25�� 10.1 Printers & Finishers Ltd v Holloway (No 2) [1965] 1 WLR 1, [1964] 3 All ER 731, [1965] RPC 239�� 10.22, 10.24 Procter & Gamble Co v Reckitt Benckiser (UK) Ltd [2007] EWCA Civ 936, [2008] Bus LR 801, [2008] FSR 8�� 8.35, 8.43 Programs for computers (G3/08) [2010] EPOR 36�� 12.55 Protecting the Kids the World Over Ltd’s Patent Application [2012] EWHC 2720 (Pat), [2012] RPC 13�� 12.99 Public Relations Consultants Association Ltd v Newspaper Licensing Agency Ltd [2013] UKSC 18, [2013] 2 All ER 852, [2013] RPC 19�� 2.47; 7.69, 7.71, 7.72, 7.75 Q Quads 4 Kids v Campbell [2006] EWHC 2482 (Ch), [2006] Info TLR 338�� 1.20; 7.130; 8.52 R R v Department of Health, ex p Source Infomatics Ltd (No 1) [2001] QB 424, [2000] 2 WLR 940, [2001] FSR 8�� 10.9 R v Evans (Wayne) [2017] EWCA Civ 139, [2017] 1 Cr App R (S) 56�� 2.85 R v Gilham (Christopher Paul) [2009] EWCA Crim 2293, [2010] ECDR 5, [2010] Lloyd’s Rep FC 89�� 7.104, 7.105; 8.6 R v Higgs (Neil Stanley) [2008] EWCA Crim 1324, [2009] 1 WLR 73, [2008] FSR 34�� 7.90, 7.105 R v Johnstone (Robert Alexander) [2003] UKHL 28, [2003] 1 WLR 1736, [2003] FSR 42�� 7.106; 13.52 R v M [2017] UKSC 58, [2017] 1 WLR 3006, [2017] Cr App R 30�� 13.53 RTE & ITP v Commission of the European Communities (Joined Cases C-241/91P & C-242/91P)�� 15.16, 15.20, 15.21, 15.22 R (on the application of British Academy of Songwriters, Composers & Authors) v Secretary of State for Business, Innovation & Skills (No 2) [2015] EWHC 2041 (Admin), [2015] Bus LR 1435, [2015] RPC 27�� 2.89; 7.78 Radio Taxicabs (London) Ltd (t/a Radio Taxis) v Owner Drivers Radio Taxi Services Ltd (t/a Dial-a-Cab) [2004] RPC 19, [2002] Masons CLR 29�� 14.99 Ray v Classic FM plc [1998] ECC 488, [1999] ITCLR 256, [1998] FSR 622�� 2.30; 5.1, 5.48 Raytheon Co’s Application [1993] RPC 427�� 12.23, 12.75 Raytheon Co v Comptroller General of Patents, Trade Marks & Designs [2007] EWHC 1230 (Pat), [2008] RPC 3, [2007] Bus LR D98�� 12.91 Really Virtual Co Ltd v Comptroller-General of Patents [2012] EWHC 1086 (Pat), [2013] RPC 3, [2013] Bus LR D32�� 12.2 Reckitt & Colman Products Ltd v Borden Inc (No 3) [1990] 1 WLR 491, [1990] 1 All ER 873, [1990] RPC 341�� 7.27; 8.15; 13.44, 13.65; 14.83, 14.86

xlvi

Table of Cases Redrow Homes Ltd v Betts Bros plc [1999] 1 AC 197, [1998] 2 WLR 198, [1998] FSR 345�� 2.66 Redwood Tree Services Ltd v Apsey (t/a Redwood Tree Surgeons) [2011] EWPCC 14�� 14.108 Reed Executive plc v Reed Business Information Ltd [2004] EWCA Civ 159, [2004] ETMR 56, [2004] RPC 40�� 14.24 Rees v Melville [1911–1916] MacG CC 168�� 4.6, 4.21 Reha Training Gesellschaft fur Sport und Unfallrehabilitation mbH v v GEMA (Case C-117/15) [2016] Bus LR 933, [2016] 5 WLUK 696, [2016] 3 CMLR 40�� 2.62; 7.35, 7.36 Research Corpn Techs v Microsoft Corpn 627 F 3d 859 (Fed Cir, 2010)�� 12.23 Research in Motion UK Ltd v Visto Corpn [2008] EWCA Civ 153, [2008] 2 All ER (Comm) 560, [2008] FSR 20�� 16.13 Rhone-Poulenc Rorer International Holdings Inc v Yeda Research & Development Co Ltd [2006] EWCA Civ 1094, [2007] Bus LR 1, [2007] RPC 9�� 3.97 Roadtech Computer Systems Ltd v Mandata Ltd (Management & Data Services) [2000] ETMR 970, [2001] EBLR 17�� 14.47 Roberts v Northwest Fixings [1993] FSR 281�� 10.32 Ryanair Ltd v PR Aviation BV (Case C-30/14) [2015] 2 All ER (Comm) 455, [2015] Bus LR 117, [2015] 1 WLUK 181�� 5.63; 6.82 S SAS Institute Inc v World Programming Ltd (Case C-406/10) [2010] EWHC 1829 (Ch), [2010] ECDR 15, [2010] Info TLR 157; preliminary ruling given [2013] Bus LR 941, [2012] 3 CMLR 4, [2012] ECDR 22�� 3.61, 3.64, 3.127, 3.143, 3.145; 4.19, 4.31, 4.35, 4.49, 4.50, 4.52, 4.55, 4.57, 4.61, 4.63, 4.66, 4.67 SAS Institute v World Progamming Ltd [2013] EWCA Civ 1482, [2013] 11 WLUK 538, [2014] RPC 8�� 2.42 SBS Belgium NV v Belgische Vereniging van Auters, Componisten en Uitgevers (SABAM) (Case C-325/14) [2015] Bus LR 1558, [2015] 11 WLUK 487�� 7.43 Sabel BV v Puma AG, Rudolf Dassler Sport (Case C-251/95) [1997] ECR I-6191, [1998] 1 CMLR 445, [1998] CEC 315�� 13.18, 13.24; 14.19 Saltman Engineering Co v Campbell Engineering Co (1948) [1963] 3 All ER 413 (Note), (1948) 65 RPC 203�� 10.8 Samsung Electronics (UK) Ltd v Apple Inc [2012] EWHC 1882 (Pat), [2013] ECDR 1; aff’d [2012] EWCA Civ 1339, [2013] ECDR 2, [2013] FSR 9�� 8.45, 16.18 Samsung Electronics (UK) Ltd v Apple Inc [2012] EWCA Civ 1430, [2013] EMLR 11, [2013] FSR 10�� 3.158; 16.18 Saphena Computing Ltd v Allied Collection Agencies Ltd [1995] FSR 616�� 2.29; 3.134 Sawyer v Atari Interactive Inc [2005] EWHC 2351 (Ch), [2006] IlPr 8, (2006) 29 (2) IPD 29012�� 16.6 Scandecor Developments AB v Scandecot Marketing AB (Reference to ECJ) [2001] UKHL 21, [2001] 4 WLUK 96, [2002] FSR 7�� 13.31 Scarlet Extended SA v Societe Belge des Auteurs, Compositeurs et Editeurs SCRL (SABAM) (Case C-70/10) [2012] ECDR 4, 31 BHRC 558, [2011] ECR I-11519�� 7.132 Schlumberger Holdings Ltd v Electromagnetic Geoservices AS [2010] EWCA Civ 819, [2010] RPC 33�� 11.17

xlvii

Table of Cases Schutz (UK) Ltd v Werit (UK) Ltd [2013] UKSC 16, [2013] 2 All ER 177, [2013] RPC 16�� 11.46 Scotch Whisky Association v Michael Klotz (Case C-44/17) [2018] Bus LR 1466, [2018] 6 WLUK 80�� 13.12 Seager v Copydex Ltd (No 2) [1969] 1 WLR 809, [1969] 2 All ER 718, [1969] FSR 261�� 10.44 Sega Enterprises Ltd v Richards (No 2) [1983] FSR 73�� 3.9 Sepracor Inc v Hoechst Marrion Roussel Ltd [1999] FSR 746, (1999) 22 (4) IPD 22034�� 11.62; 16.29 Series 5 Software Ltd v Clarke [1996] 1 All ER 853, [1996] CLC 631, [1996] FSR 273�� 2.70 Shanks v Unilever plc [2010] EWCA Civ 1283, [2011] RPC 12, (2011) 117 BMLR 176 �� 11.28, 11.29 Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287�� 10.40 Shenzhen Taiden Industrial Co Ltd v Office for Harmonisation in the Internal Market (Trade Marks & Designs) (OHIM) (T153/08) [2010] ECR II-2517�� 8.34 Sheraton Corpn of America v Sheraton Motels Ltd [1964] 1 WLUK 724, [1964] RPC 202�� 14.85 Shetland Times Ltd v Wills 1997 SC 316, 1997 SLT 669, [1997] FSR 604�� 2.18; 7.24 Shoppalotto.com Ltd’s Patent Application (GB 0017772.5) [2005] EWHC 2416 (Pat), [2006] RPC 7�� 12.73, 12.78 Sieckmann (Ralf) v Deutsches Patent-und Markenamt (Case C-273/00) [2003] Ch 487, [2003] 3 WLR 424, [2002] ECR I-11737�� 13.9 Sinanide v La Maison Kosmeo (1928) 139 LT 365�� 3.52; 7.24 Singer Manufacturing Ltd v Loog (1880) LR18 Ch D 395�� 14.95, 14.96 Sirdar Rubber Co Ltd v Wallington Weston & Co (1907) 24 RPC 539�� 11.46 Siskina, The, Owners of Cargo Lately Laden on Board v Distos Compania Naviera SA [1979] AC 210, [1977] 3 WLR 818, [1977] 3 All ER 803�� 14.76 Sky plc v Skykick UK Ltd [2018] EWHC 943 (Ch), [2018] 4 WLUK 535, [2018] RPC 12�� 13.16 Smithkline Beecham Ltd v GSKline Ltd [2011] EWHC 169 (Ch)�� 14.97 Sociedad General de Autores y Editores de Espana (SGAE) v Rafael Hotels SA (Case C-306/05) [2007] Bus LR 521, [2006] ECR I-11519, [2007] ECDR2�� 2.62; 7.37, 7.39, 7.40 Società Consortile Fonografici (SCF) v Del Corso (Case C-135/10) [2012] Bus LR 1870, [2013] 2 Costs LO 164, [2012] ECDR 16�� 3.15; 7.39 Société des Produits Nestle SA v Mondelez UK Holdings & Services Ltd (Cases C-84/17P, C-87/17P & C-95/17P)�� 13.58 Société Française du Radiotéléphone v Union des Producteurs de Cinema (6 July 2017)�� 14.81 Société Ouest France Multimedia v Société Direct Annonces [2010] ECC 9�� 6.62 Sony Computer Entertainment Inc v Ball see Kabushiki Kaisha Sony Computer Entertainment Inc v Ball (Application for Summary Judgment) �� Sony Computer Entertainment Ltd v Peers [2010] EWHC 3053 (Ch)�� 3.171 Sony Corpn of America v Universal City Studios Inc 464 US 417 (1984)�� 3.72; 7.53 Soulier v Ministre de la Culture et de la Communication (Case C-301/15) [2016] 11 WLUK 446, [2017] 2 CMLR 9, [2017] CEC 890�� 7.49 South Carolina Insurance Co v Assurantie Maatscappij ‘De Zeven Provincien’ NV [1987] AC 24, [1986] 3 WLR 398, [1986] 3 All ER 487�� 14.76 Spain v Council of the EU (Case C-147/13) (Judgment 5 May 2015)�� 11.63

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Table of Cases Speciality European Pharma Ltd v Doncaster Pharmaceuticals Ltd [2015] EWCA Civ 54, [2015] 3 All ER 504, [2015] RPC 20�� 15.52 Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24, [2012] 1 WLUK 674, [2012] ETMR 17�� 14.73 Spectrum Plus Ltd (in liquidation), Re [2005] UKHL 41, [2005] 2 AC 680, [2005] 3 WLR 58�� 12.83 Spiliada Maritime Corpn v Cansulex Ltd (The Spiliada) [1987] AC 460�� 16.6 Starbuck v Patsystems (UK) Ltd [2017] EWHC 397 (IPEC), [2017] 3 WLUK 193�� 3.44, 3.45 Starbucks (HK) Ltd v British Sky Broadcasting Group plc [2013] EWHC 3074 (Ch), [2013] WLUK 71, [2013] FSR 29; aff’d [2013] EWCA Civ 1465, [2013] 11 WLUK 442, [2014] ECC 4; aff’d [2015] UKSC 31, [2015] 1 WLR 2628, [2015] FSR 29�� 13.63; 14.84; 16.47 State Street Bank & Trust Co v Signature Financial Group 149 F 3d 1368 (Fed Cir, 1998) �� 12.20, 12.22 Stena Rederi AB v Irish Ferries Ltd [2003] EWCA Civ 214, [2003] RPC 37, (2003) 26 (5) IPD 26028�� 11.43 Stichting Brein v Wullums (t/a Filmspeler) (Case C-527/15) [2017] Bus LR 1816, [2017] 4 WLUK 447, [2017] 3 CMLR 30�� 2.62; 7.36 Stichting Brein v Ziggo BV (Case C-610/15) [2017] Bus LR 1899, [2017] 6 WLUK 237, [2018] CEC 191�� 7.36 Stichting de Thuiskopie v Opus Supplies Deutschland GmbH (Case C-462/09) [2011] 3 CMLR 28, [2012] CEC 183, [2011] ECR I-05331�� 7.80 Svensson v Retriever SverigeAB (Case C-466/12) [2014] Bus LR 259, [2014] 2 WLUK 451, [2014] 3 CMLR 4�� 7.36, 7.44 Symbian Ltd v Comptroller General of Patents, Designs & Trademarks [2008] EWCA Civ 1066, [2009] Bus LR 607, [2009] RPC 1�� 12.92, 12.94, 12.97, 12.98, 12.99 T Tamiz v Google Inc [2013] EWCA Civ 38, [2013] 1 WLR 2151, [2013] EMLR 14�� 14.113, 14.114 Tamiz v United Kingdom (Application 3877/14) [2017] 10 WLUK 270, [2018] EMLR 6�� 14.114 Taittinger SA v Allbev Ltd [1994] 4 All ER 75, [1993] 2 CMLR 741, [1993] FSR 641�� 7.27; 13.67; 14.35, 14.86 Tavener Rutledge Ltd v Trexapalm Ltd [1975] 7 WLUK 166, [1975] FSR 479, [1977] RPC 275�� 13.67 Tea Board v European Union Intellectual Property Office (EUIPO) (Cases C-673/15P– C-676/15P) [2018] Bus LR 1095, [2017] 9 WLUK 304, [2018] ETMR 1�� 13.56 Tech 21 UK Ltd v Logitech SA [2015] EWHC 2614 (Ch), [2015] Bus LR 1276, [2016] FSR 14�� 16.16 Technip France SA’s Patent Application sub nom Rockwater Ltd v Coflexip SA [2004] EWCA Civ 381, [2004] RPC 46, (2004) 27 (7) IPD 27066�� 11.15 Technograph Printed Circuits Ltd v Mills & Rockley (Electronics) Ltd [1971] FSR 188, [1972] RPC 346�� 11.15 Technomed Ltd v Bluecrest Health Screening Ltd [2017] EWHC 2142 (Pat), [2017] 8 WLUK 268, [2018] FSR 8�� 1.37; 3.29, 3.63; 5.14, 5.21, 5.35, 5.36; 6.21, 6.70

xlix

Table of Cases Temple Island Collections Ltd v New English Teas Ltd [2012] EWPCC 1, [2012] ECFR 11, [2012] FSR 9�� 2.51 Terrapin v Builders Supply Co (Hayes) [1967] RPC 375�� 10.40 Tetra Pak Rausing SA v Commission of the European Communities (T51/89) [1990] ECR II-309, [1991] 4 CMLR 334, [1991] FSR 654�� 1.28 Thames & Hudson Ltd v Design & Artists Copyright Society Ltd [1995] FSR 153�� 2.84 Thomas Marshall (Exports) v Guinle [1979] Ch 227, [1978] 3 WLR 116, [1978] 3 All ER 193�� 10.9 Thornton v Telegraph Media Group Ltd [2011] EWHC 1884 (QB), [2012] EMLR 8�� 14.111 Tommy Hilfiger Licensing LLC v Delta Center as (Case C-494/15) [2016] Bus LR 1008, [2016] 7 WLUK 168, [2017] CEC 182�� 7.129; 14.74 Total Information Processing Systems Ltd v Daman Ltd [1992] FSR 171�� 3.46; 5.58 Toth v Emirates [2012] EWHC 517 (Ch), [2012] 2 All ER (Comm) 1302, [2012] FSR 26 �� 14.104 Townsend’s Patent Application (No GB0301172.3) [2004] EWHC 482 (Pat), (2004) 27 (7) 27080�� 12.78 TRILLIUM Trade Mark (Case CD000053447/1) (28 March 2000) �� 13.14 Twentieth Century Fox Film Corpn v Harris [2013] EWHC 159 (Ch), [2013] 2 WLR 1454, [2013] EMLR 16�� 2.66; 3.74 Twentieth Century Fox Film Corpn v Harris [2014] EWHC 1568 (Ch), [2014] 5 WLUK 540 �� 3.74 Tyburn Productions Ltd v Conan Doyle [1991] Ch 75, [1990] 3 WLR 167, [1990] 1 All ER 909�� 16.4, 16.5 U Unauthorised Reproduction of Telephone Directories on CD-Rom, Re (I ZR 199/96) [2000] ECC 433, [2002] ECDR 3�� 5.2, 5.27 Union des Association Europeenes de Football (UEFA) v Briscomb (Application for Summary Judgment) [2006] EWHC 1268 (Ch), (2006) 150 SJLB 670�� 7.47 United Brands Continental BV v Commission of the European Communities (Case 27/76) [1978] ECR 207, [1978] 2 WLUK 102, [1978] 1 CMLR 429�� 15.15 United Wire Ltd Screen Repair Services (Scotland) Ltd [2000] 4 All ER 353, [2000] ENPR 324, [2001] RPC 24�� 11.46 University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601�� 2.12 Unwired Planet International Ltd v Huawei Technologies Co Ltd [2017] EWHC 711 (Pat), [2017] 4 WLUK 74�� 11.38, 11.39; 15.15, 15.19 UsedSoft GmbH v Oracle International Corpn (Case C-128/11) [2012] All ER (EC) 1220, [2013] Bus LR 911, [2012] 3 CMLR 44�� 3.106, 3.113, 3.119, 3.128, 3.131 V VCAST Ltd v RTI SpA (Case C-265/16) [2017] 11 WLUK 694, [2018] 2 CMLR 12, [2018] CEC 738�� 7.81 Vereniging Operbare Bibliotheken v Stichting Leenrecht (Case C-174/15) [2018] Bus LR 108, [2016] 11 WLUK 323, [2017] CEC 811�� 2.58; 3.111; 7.3 Verwerungsgesellschaft Rundfunk GmbH v Hetteger Hotel Edelweiss GmbH (Case C-641/15) [2017] Bus LR 751, [2017] 2 WLUK 417, [2017] ECDR 9�� 7.40

l

Table of Cases Vestergaard Frandsen S/A (now called MVF3 APS) v Bestnet Europe Ltd [2009] EWHC 657 (Ch); aff’d [2011] EWCA Civ 424; aff’d [2013] UKSC 31, [2013] 1 WLR 1556, [2013] 1 WLR 1556�� 10.28, 10.49 Vestergaard Frandsen S/A (now called MVF3 APS) v Bestnet Europe Ltd [2016] EWCA Civ 541, [2017] FSR 5�� 10.83 VICOM / Computer-related invention (T208/84) [1987] EPOR 74�� 12.6, 12.11, 12.31, 12.33, 12.35, 12.36, 12.38, 12.39, 12.40, 12.43, 12.64, 12.65, 12.66, 12.70, 12.72, 12.82, 12.83, 12.96, 12.101, 12.116 Victoria Plum Ltd (t/a Victoria Plum) v Victorian Plumbing Ltd [2016] EWHC 2911 (Ch), [2017] Bus LR 363, [2017] FSR 17�� 14.87, 14.89 Visual Memory LLC v Nvidia Corpn 867 F 3d 1253 (2017)�� 12.27 Von Hannover v Germany (59320/00) [2004] EMLR 21, (2005) 40 EHRR 1, 16 BHRC 545�� 10.55, 10.60 Von Hannover v Germany (No 2) (40660/08 & 60641/08) [2012] EMLR 16, (2012) 55 EHRR 15, 32 BHRC 527�� 10.64, 10.65 W W3 Ltd v easyGroup Ltd [2018] EWHC 7 (Ch), [2018] 1 WLUK 87, [2018] FSR 16�� 13.70 Wagamama Ltd v City Centre Restaurants plc [1997] Eu LR 313, [1996] ETMR 23, [1995] FSR 713�� 13.24 WALKER / Text processor (T49/04) [2007] EPOR 34�� 12.51 Walmsley v Education Ltd (Case No IP13504792, 13 March 2014, IPEC)�� 2.120 Walsh v Shanahan [2013] EWCA Civ 411, [2013] 2 P & CR DG7�� 10.44, 10.46 Wang Laboratories Inc’s Application [1991] RPC 463�� 12.69 Warwick Film Producers Ltd v Eisinger [1969] 1 Ch 508, [1967] 3 WLR 1599, [1967] 3 All ER 367�� 3.75 Waterlow Directories Ltd v Reed Information Services Ltd [1993] ECC 174, [1992] FSR 409�� 5.1 Waterlow Publishers Ltd v Rose [1995] FSR 207�� 5.1 Website Layout, Re [2003] ECC 3, [2003] ECDR 24�� 7.9 Wheaton v Peters 33 US 8 Pet 591 (1834)�� 1.8; 2.120 Whelan Associates Inc v Jaslow Dental Laboratory Inc [1987] FSR 1�� 4.10, 4.11, 4.13, 4.16, 4.17 White v Mellin [1895] AC 154�� 14.109 Windsurfing International Inc v Commission to the European Communities (Case C-193/83) [1986] ECR 611, [1986] 3 CMLR 489, [1988] FSR 139�� 15.28 Windsurfing International Inc v Tabur Marine (Great Britain) Ltd [1985] RPC 59�� 11.17 Wintersteiger AG v Products 4U Sondermaschinenbau GmbH (Case C-523/10) [2013] Bus LR 150, [2012] 4 WLUK 342, [2013] CEC 15�� 16.42 Wombles Ltd v Wombles Skips Ltd [1975] 7 WLUK 100, [1975] FSR 488, [1977] RPC 99�� 13.67 Wright v Caan [2011] EWHC 1978 (QB)�� 14.109 X Xerox Corpn, Re [1982] RPC 166�� 8.18

li

Table of Cases Y Yahoo! Inc v Akash Arora [1999] FSR 931�� 14.107 Yell Ltd v Giboin [2011] EWPCC 9�� 16.38 Young v Bristol Aeroplane Co Ltd [1944] KB 718, [1944] 2 All ER 293, (1945) 89 Ll L Rep 6�� 12.83, 12.93 Yoyo Email Ltd v Royal Bank of Scotland Group plc [2015] EWHC 3509 (Ch), [2015] 12 WLUK 65, [2016] FSR 18�� 14.102 Z Zino Davidoff SA v A & G Imports Ltd (Case C-414/99–416/99) [2001] ECR I-8691, [2001] ETMR 67, [2001] RPC 44�� 7.57; 15.47 Zippo Manufacturing Co v Zippo Dot Com Inc 952 F Supp 1119 (WD Pa 1997)�� 16.40, 16.41

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Chapter 1

Introduction to information technology and intellectual property law

INTRODUCTION 1.1 This book is concerned with the interaction between information technology and intellectual property law. Central to this is computer software, widely defined, its protection by intellectual property laws, how its many uses may infringe or impact on intellectual property laws and how its availability and dissemination on the internet, websites and social media may have implications for both intellectual property laws and other areas of law such as competition law and rules on jurisdiction. Information technology has other legal consequences and may be relevant to computer misuse offences, licence agreements, privacy and data protection and defamation. It is, however, intellectual property laws with which this book is primarily concerned and how those laws apply in relation to information technology. These laws include copyright and related rights, design laws, patent law, trade marks and the law of passing off and malicious falsehood.1 1.2 What then is ‘computer software’? It is anything in, or converted into, digital form which is generated, stored (whether or not transiently), copied, modified, accessed or transmitted electronically via the internet or other tele communications systems. Computer software covers a vast range of works, materials, information, data and other matter. Indeed, the term can be applied to anything in a digital form, whether or not available or occurring in other formats. At one time, computer software referred mainly to computer programs and materials associated with the operation of computer programs such as data files and databases. Computer software now covers, but is not limited to, the fields of entertainment, gaming, advertising, education, science, engineering, information and communication services, public services, electronic 1

Malicious falsehood has a number of similarities with the law of defamation and has been described to as ‘trade libel’.

1

1.3 Introduction to information technology and IP law mail, electronic commerce, social media and a host of other activities and platforms. Almost everything exists in software form now. The value of the computer software industry is immense. It cannot sensibly be measured to put a realistic figure on it. It might be possible to evaluate the annual turnover of companies specialising in computer programming and software engineering but this is only the tip of the iceberg.2 Most businesses, public bodies, professions and individuals create and use computer software in one or more forms, whether computer programs, databases, documents, images, websites, service providers, search engines, communication systems, social media and so on. 1.3 With such an important and all pervasive digital technology, it is vital that a balance between effective and proportionate protection of information technology and the wider public interest is achieved. Intellectual property rights are key to this and all forms of intellectual property rights may be engaged in relation to the creation, use, storage, transmission and dissemination of digital information. It may be an issue of copyright protection of computer programs and databases, the patentability of computer-implemented inventions or whether using a digital trade mark infringes trade mark rights, for example, by use as an AdWord, in a keyword meta-tag or by its accessibility in other jurisdictions. Competition law may control abuses of dominant positions where a software company fails to make information concerning its interfaces and protocols available to competitors. 1.4 The impact of intellectual property laws on information technology often brings new forms of conflict. For example, monopoly rights such as patents are seen as very desirable by large corporations but the patenting of software is a controversial subject. Smaller companies are concerned that large and powerful organisations could tie up vast areas of software applications. A particular problem in the United States is that some companies acquire software patents but do not use the software or distribute it or license the

2

Microsoft Corporation’s most recent annual turnover figure was $110bn: Microsoft Corporation Annual Report 2018 fiscal year available at: https://www.microsoft.com/ en-us/annualreports/ar2018/annualreport. Apple Inc’s 2017 turnover was over $229bn, see: https://www.apple.com/newsroom/pdfs/fy17-q4/Q4FY17ConsolidatedFinancialStatements.pdf. Samsung Electronics’ turnover for 2017 was around the equivalent of $212bn, see: https://news.samsung.com/global/samsung-electronics-announces-fourthquarter-and-fy-2017-results. Alphabet, the parent company of Google, 2017 turnover was $110bn, see: https://www.androidauthority.com/alphabet-q4-2017-earnings-834774/.

2

Introduction 1.6 software in the normal course of events.3 They exploit their patents by threatening others with patent litigation unless they pay a licence fee or royalty. These organisations are known as ‘patent trolls’4 and this practice has been subject to judicial criticism in the United States Supreme Court, so much so that injunctions are less likely to be granted to such companies alleging infringement of their patents.5 1.5 There is a tension between different forms of protection for computer programs in particular. Should the owner be granted monopoly rights or simply a right to prevent copying? Would it be better with such a fast-moving technology to give a short-lived monopoly right of, say, five years, compared with the 20 years available through the grant of a patent? Questions such as these have been asked for a long time6 and it must be said that we are probably just as far away from a definitive answer. Reasons for the difficulty in identifying a single appropriate form of intellectual property right for computer programs are that: ••

Computer programs are unlike of other forms of copyright work in that they are dynamic rather than static as is generally the case with copyright works. Computer programs do things, they manipulate symbols and data and cause or control effects including physical effects.

••

Computer programs are intangible and are unlike conventional forms of invention which are typically physical in nature, being a product or a process used to make products.

1.6 It is little wonder that several forms of legal protection may apply to computer programs and software generally. This is because computer software covers such a wide range of things, from audio-visual works in digital form to databases to digital works, data or other materials or subject-matter to signals sent through a telecommunications system to computer programs and associated materials themselves.

3 4 5 6

It is arguable that software patents have been too readily available in the United States in the past. One of the author’s clients in the UK received a threat from a Canadian patent troll with a US patent for a means of carrying out electronic commerce. eBay Inc v MercExchange LLC 547 US 388 (2006). See, for example, DM Davidson (1983), ‘Protecting Computer Software: A Comprehensive Analysis’ 23(4) Jurimetrics Journal 337.

3

1.7 Introduction to information technology and IP law 1.7 Much of the law described in this book has resulted from European Union (EU) Directives and Regulations. There is also much case law from the Court of Justice of the EU. Intellectual property rights are important to the operation of the internal market in the EU (and the European Economic Area (EEA)) and a programme of approximation or harmonisation of intellectual property rights was embarked upon starting with a Directive to harmonise the protection of the topography of semiconductor products in 1986.7 This was followed by a Directive on trade marks, numerous Directives on copyright and related rights and a Directive on registered designs. The creation of EU wide rights was seen as an important step and we now have an EU trade mark and a Community design.8 Proposals going back to 1975 for a Community patent have so far proved fruitless, though it seems that unitary patent protection may soon be available through the European Patent Office. EU competition law has proved effective in the context of information technology and Conventions and Regulations on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters allow some flexibility in the decision as to the forum for deciding intellectual property disputes.

JUSTIFICATION FOR THE LEGAL PROTECTION OF COMPUTER SOFTWARE 1.8 Because the subject-matter of intellectual property is the result of the exercise of human intellect, it is a fundamental form of property. There should be strong reasons for depriving a person of property rights in what he has created. A number of reasons can be put forward for protecting these fruits of the human mind. In the context of computer software, they include: ••

Economic reasons: a person who has expended skill, judgement and labour to create computer software, whether it be a computer program, database or conventional work which has been converted into digital form, should be given the opportunity to reap an economic reward. The creation of new and improved software will be encouraged. Investment is also stimulated if there exists effective legal protection against unauthorised use. The scale of investment in developing and creating

7

Council Directive 87/54/EEC of 16 December 1986 on the legal protection of semi conductor products, L 24, 27.01.1987, p 36. At the time of writing, although the trade mark is known as the EU trade mark, the design is still known as the Community Design.

8

4

Justification for the legal protection of computer software 1.8 computer software can be very substantial and, even with strong legal protection, resulting profit is not assured. The increase in creative work and investment will have the effect of benefiting society by increasing and stimulating employment, technical development, commercial growth and wealth. ••

Moral reasons: a person who has created computer software (as with any other creative work) has a natural bond with the software, it is his and, morally, belongs to that person.9 It is an item of property that has been brought into existence by that person. He should, therefore, be able to prevent others from exploiting it without permission and should be in a position to control its subsequent distribution and use. He should also be able to require identification as the creator of the work on the work and on copies of it.

••

By acknowledging the economic and moral rights in software and thus encouraging creativity, innovation and investment, the total store of human knowledge is enriched. One only has to think of the vast amount of information, works and other materials available online.10 By limiting the legal protection in time and in scope, knowledge is disseminated and made available to the public at large. Some might argue that the person creating the work in question, whether it be computer software or music or poetry, etc, should own legal rights in the work in perpetuity (the work owes its very existence to that person). However, the law has an ingrained dislike of perpetual ownership11 which caused problems in previous times by allowing landowners to tie up parcels of land for long periods of time. Because land is finite, this led to a shortage, especially at the time of the industrial revolution. However, unlike land, the totality of innovative ideas is not finite.

9

Unless, perhaps, he has been paid to create it. Although much material available online is placed there without a view to profit, but without protection, a great deal of other material would not be made available in this way. Examples include subscription databases, film and music and other materials for downloading. In any case, even a person making material freely available might object if it is subsequently distorted or his or her name as author removed. 11 At one time it was argued that an author had a perpetual common law copyright in what he created, irrespective of any statutory copyright which was limited in time. Eventually, the House of Lords in Donaldson v Beckett (1774) 2 Bro PC 129 confirmed that, once published, only the statutory copyright remained. This case, decided by a 6 to 5 majority in the House of Lords, was followed in the United States in Wheaton v Peters (1834) 8 Pet 591. 10

5

1.9 Introduction to information technology and IP law 1.9 There are some arguments against giving legal protection to creative works and inventions, for example, because it prejudices competition and allows the owner of the work or invention to charge exorbitant prices and to make a profit out of proportion to the investment and risks undertaken.12 Those who make such claims suggest that the owner still has certain advantages in the absence of legal protection. The owner is able to get his product into the market place before any competitors. The owner has the advantage of a ‘lead-time’, the time taken to set up the necessary manufacturing capability and to produce and distribute products. This lead-time could, in terms of computer hardware, be several months and, during this period, the originator will be able to charge a premium. However, for computer software, the lead-time can be very small and significant numbers of copies of computer programs and other items of software can be pirated by copying on magnetic or optical media or making them available online for downloading by third parties, for example by persons operating file-sharing systems. 1.10 If the software is placed on the internet the lead time is, in effect, zero. In any case, the lead-time argument fails to address the costs associated with research and development (including market research and testing). These costs can account for a considerable proportion of the final price of the product concerned and this is so in the computer industry. The costs are also high in the pharmaceuticals industry where a new drug can cost millions of pounds to develop and test yet be produced for a few pence per pill. The final price must reflect these indirect costs and, without legal protection, a competitor would easily be able to undercut the original developer of the drug. All incentive to develop new drugs would disappear overnight, and the same is largely true in terms of computer software. The large scale of computer software piracy which occurred in the early to mid-1980s was a good example of this and may have contributed to the failure of a number of software companies and the relatively high prices then asked for legitimate software. More recently, the focus has been on illegitimate file sharing through ‘peerto-peer’ networks. Legislation has been brought in to try to deal with this

12

There are safeguards against abuses that may be associated with the exploitation of intellectual property rights generally, under competition law. Particular intellectual property rights also provide for specific defences and certain acts that may be carried out without the consent of the holder of the intellectual property right, such as the permitted acts under copyright law.

6

Justification for the legal protection of computer software 1.12 problem and terms of imprisonment have been imposed on some of the worst offenders.13 1.11 On the whole, it is clear that effective legal protection is in everyone’s best interests, provided that it is not too strong. Protection should be such as to provide for a fair return on investment, and in terms of the effort associated with the development of new software products and the enhancement of existing software. Protection should not be so strong as to stifle competition (in the past, competition has been a great stimulus to the rate of improvement in the quality, power and availability of computer software). A software company which markets poor quality software should not be able to succeed because it has monopoly control of its market. Having said this, it lies to determine the most appropriate form of legal protection for computer software. 1.12 A final point is that having intellectual property laws which are effective, dissuasive and proportionate, including criminal penalties where appropriate, is that they are important in the fight against organised crime and terrorism. Software piracy and counterfeiting are vehicles for money laundering and other criminal activities. This is why, particularly in relation to copyright and other rights, such as rights in performances, the criminal penalties have been increased significantly.14 Links between organised crime and intellectual property infringement have been noted.15 Estimating the costs of intellectual property crime is notoriously difficult but the IP Crime Report 2017–2018 makes interesting reading and gives the impression of the enormous scale of intellectual property crime. The costs must certainly run well into tens of billions of pounds.16

13

For example, the individuals behind the ‘Pirate Bay’ website were imprisoned in Sweden. Their application to the European Court of Human Rights, arguing that their right of freedom of expression was infringed was rejected: Neij & Sunde Kolmisoppi v Sweden (2013) 56 EHRR SE19. See Chapter 7. 14 Depending on the nature of the offence, a copyright pirate can face imprisonment for a period up to ten years and/or a fine: section 107 of the Copyright, Designs and Patents Act 1988. 15 Gowers Review of Intellectual Property, HMSO, 2006 at para 5.77. 16 The report is available at: https://assets.publishing.service.gov.uk/government/uploads/ system/uploads/attachment_data/file/740124/DPS-007593_IP_Crime_Report_2018_-_ Web_v2.pdf.

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1.13 Introduction to information technology and IP law

FORMS OF PROTECTION FOR COMPUTER SOFTWARE 1.13 Copyright is the first form of intellectual property right which comes to mind when considering how computer software is protected against unauthorised copying, distribution, adaptation or use. Copyright is a useful right because it is informal and comes into existence on the creation of the work in question. There are also a number of rights related to copyright, sometimes referred to as neighbouring rights. These include rights in live performances and a sui generis right which applies to databases which have been the result of a substantial investment in terms of financial, human or technical resources. Patents may be available for some s oftware-implemented inventions, though by no means all. Patents are granted after a formal process which can be difficult and is usually expensive. Software generated images may be protected by copyright, as artistic works, by trade mark rights or by registration as a design.17 If the software in question is in the nature of a trade secret, it may be protected from unauthorised use or disclosure by the law of breach of confidence. In some cases, a number of these different rights might apply to a particular item of computer software.

DEVELOPMENT OF PROTECTION FOR COMPUTER SOFTWARE 1.14 In some cases, computer software may be generated and used solely within a particular organisation. It may be created specifically for the organisation and reflect its own internal processes and procedures and be of little or no use to any other organisation. In such cases, legal protection is unlikely to have been a serious concern.18 This was the position in the early days of computers where programs tended to be specially written for an organisation, often using its own in-house staff. In the early days, computer programs were seen more as business and industrial tools rather than items of property capable of being commercially exploited. 1.15 Once it was realised that property rights in computer programs and other items of computer software could be used to generate income, software

17 18

They may also be protected by an unregistered form of the Community design. There may have been confidentiality issues relating to the development of the source code programs.

8

Development of protection for computer software 1.17 companies developing off-the-shelf, ready-made, software packages sprang up at an impressive rate. These businesses relied on intellectual property laws to protect their investment and soon realised that these laws were seriously wanting. At that time, many software companies thought that contract law gave them the best protection through licence agreements with their clients and customers.19 The introduction of the personal computer brought the need to have effective laws protecting computer software from unauthorised copying and use into sharp focus and the software industry was proactive in calling for better protection. Intellectual property laws were modified and extended to give better protection for computer software. 1.16 The first legislative initiatives were directed towards protection by copyright law of computer programs, putting it beyond doubt that computer programs were protected by copyright. It is true to say that the focus has been on copyright law and rights related to copyright, such as the sui generis right protecting databases. More recent changes take account of the implications of digitisation and the online availability and delivery of all manner of works and other materials as a result of a Directive on copyright and related rights in the information society.20 Copyright law gives its owner the right to control certain acts in relation to the subject-matter, such as making copies and distributing those copies to the public. It is not a true monopoly right as the independent creation of a similar work does not infringe copyright.21 1.17 Patents are a powerful form of intellectual property. A patent gives its owner a monopoly but obtaining the grant of a patent can be a complex, drawn out and costly process. Furthermore, patent litigation is notoriously expensive. Patenting software has been a difficult and unpredictable process, often resulting in failure. Attempts to modify patent law in Europe failed to meet with agreement by the European Parliament22 and the state of p atenting

19

SM Elsom, Legal and Technological Protection of Computer Software, PhD Thesis, 1983, Aston University. 20 Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10. 21 However, where the owner is the sole source of the content of the work, it may have the appearance of a monopoly right. 22 A proposal for a Directive of the European Parliament and of the Council on the patentability of computer-implemented inventions, Brussels, 20.02.2002, COM(2002) 92 final, 2002/0047 (COD) was defeated in the European Parliament in July 2005.

9

1.18 Introduction to information technology and IP law software remains difficult and somewhat unsatisfactory. This is primarily due to the exceptions to what constitutes an invention for the purposes of the European Patent Convention which states that, inter alia, computer programs, as such, are not inventions.23 Some of these exceptions, particularly in respect of computer programs and business methods, do not apply in other jurisdictions, notably the United States, adding further to the unsatisfactory state of patent law in relation to computer software.24 1.18 Design law in the UK was originally directed to protecting designs applied to tangible articles by an industrial process. This meant that computer programs, software generally and computer-generated images were not registrable as designs with very few exceptions.25 Registered design law in the UK was drastically altered by virtue of a harmonising Directive.26 The introduction of a Community-wide design right, registered and unregistered,27 provides further opportunities to protect computer graphics. Screen displays, computer icons and software typefaces and fonts are potentially protectable by design law, providing they are new and have an individual character. This is because designs now have to be applied to a product, the definition of which includes graphic symbols and typographic typefaces. Registration gives a monopoly protection for relatively little expense.28 Facilitating the registrability of software images by changes to design law has not been as well publicised as it might have been. 1.19 Some forms of legal protection have not required specific amendment to cater for computer software. The law relating to breach of confidence, particularly important in terms of employees, freelancers and consultants, applies to computer software, especially, source code, as it does generally to ‘trade secrets’. Trade mark law underwent substantial modification as a result of

23 24 25 26 27 28

Article 52(2) and (3) of the European Patent Convention. The equivalent provision in UK law is section 1(2) of the Patents Act 1977. However, in the United States abstract ideas are not patentable. A rare exception was in Apple Computer Inc’s Design Applications [2002] FSR 38, discussed in Chapter 8. Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs, OJ L 289, 28.10.1998, p 28. Council Regulation 6/2002/EC on Community designs, OJ L 3, 05.01.2002, p 1. The unregistered Community design will give protection against copying for up to three years.

10

Liability of information society service providers 1.20 a harmonising Directive29 and an EU trade mark30 was also introduced with the same requirements for registrability.31 Even before these changes, there were no particular barriers to registering graphical images generated by computer programs as trade marks. Indeed, many were already protected, as were the names of software companies and their products.32

LIABILITY OF INFORMATION SOCIETY SERVICE PROVIDERS 1.20 Information Society Service Providers, such as internet service providers, search engines, website hosting services, online auction sites and social media sites, cannot be expected to police all the information transmitted through, hosted or temporarily stored on the computer servers. They are, therefore, given defences in relation to illegal material but once they are aware of the presence of such material, they have obligations to remove it or disable access to it. In some cases, it is thought that service providers play safe and simply remove or disable access to information once they have received a complaint about it.33 It is often difficult and time-consuming for them to take a view on the illegality or otherwise of the information. The specific defences of information society service providers are in relation to acting as a mere conduit, caching and hosting and are set out in the Directive on electronic commerce.34 In all cases, the service provider does not have a general obligation to monitor information they transmit or store. 29

30

31 32 33 34

First Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, OJ L 40, 11.02.1989, p 1. This has now been replaced by a codified version: Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks, OJ L 299, 08.11.2008, p 25. Council Regulation 40/94/EC of 20 December 1993 on the Community trade mark, OJ L 11, 14.01.1994, p 1, now replaced by Regulation 2017/1001/EU of 14 June 2017 on the European trade mark (codification) OJ L 154, 16.06.2017, p 1. Apart from being in the context of the whole of the EU and the fact that some forms of infringement in the Directive were optional. For example, MICROSOFT was first registered as a trade mark in the UK in 1979 and the ‘Windows’ symbol was first registered in 1991. As was the case with eBay: see Quad 4 Kids v Dr Colin Campbell [2006] EWHC 2482 (Ch), mentioned in Chapters 7 and 8. Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, OJ L 178, 17.07.2000, p 1.

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1.21 Introduction to information technology and IP law However, a court or administrative authority may, in accordance with a Member State’s legal system, require that the service provider terminate or prevent an infringement.35 Under section 97A of the Copyright, Designs and Patents Act 1988, the High Court (or Court of Session in Scotland) has the power to grant injunctions against a service provider, where the service provider has actual knowledge that the service is being used to infringe copyright. An equivalent applies to trade marks but there is no express statutory provision for this: see Cartier International AG v British Sky Broadcasting Ltd,36 discussed in Chapter 14. 1.21 It was intended that certain provisions of the Digital Economy Act 2010 would, when a code of practice was adopted, require that internet service providers maintained lists of alleged copyright infringements and notified subscribers accordingly with the prospect of obtaining a court order for the disclosure of the identities of persistent offenders to copyright owners. However, there is a delay, following a legal challenge which will require a costs order to be implemented. It seems doubtful that the notification system will come into effect due to significant resistance to it.

TRADE MARKS ON THE INTERNET AND PASSING OFF 1.22 Using, in the course of trade, a sign identical to or similar to a registered trade mark may infringe that trade mark if used for identical or similar goods or services.37 So simply using such a sign for identical goods or services on a website will infringe that trade mark if the use occurs within the territory covered by the trade mark’s registration. The problem is one of matching the territories in which the sign is being used to those in which there are conflicting trade marks. The fact that the website bearing the sign is accessible within a jurisdiction does not necessarily mean that it is used in a trade mark sense for the purposes of determining infringement. 35

The main provisions of Directive 2000/31/EC were implemented in the UK by the Electronic Commerce (EC Directive) Regulations 2002, SI 2002/2013. Regulations 17–20 implement the service providers’ defences. 36 [2016] EWCA Civ 658, [2017] RPC 3. 37 Infringement may occur where the sign is used in relation to goods or services that are not similar. This is where the trade mark is one of repute and the use complained of would, without due cause, take unfair advantage of or be detrimental to the trade mark’s reputation: see Article 5(2) of the trade marks Directive, discussed in Chapter 13. However, this form of infringement also applies where the goods or services are identical or similar.

12

Trade marks on the internet and passing off 1.26 1.23 A major headache for trade mark proprietors is that competitors could register their trade mark names as Google AdWords, a system by which adver tisers could appear in sponsored links when the trade mark was entered into a search engine by an internet user. So, for example, entering ‘Interflora’ in a search engine until recently would retrieve advertising in the sponsored links for rival flower delivery businesses unconnected with the Interflora network of independent florists. The Court of Justice of the EU had to consider this type of situation and ruled that it would infringe the trade mark if the average internet user would think there was a business connection between the sponsored link advertiser and the owner of the trade mark.38 1.24 Other issues relating to trade marks is their use in a website’s keyword meta-tags which are used by search engines and the like to retrieve websites which might be most appropriate to the search inquiry. Case law on this is unsatisfactory and it is not clear whether this invisible use infringes a trade mark. In most cases, entry of a well-known trade mark will retrieve websites used by the proprietor, news items, social media and related items which one might expect,39 including websites of businesses and individuals with the same or similar names. 1.25 The law of passing off protects a trader’s goodwill from damage (or potential damage) caused by another’s misrepresentation. This area of law proved very useful in the fight against cybersquatting, where persons registered the names of large corporations and celebrities as domain names in the hope that they would be offered large sums of money to transfer them. The figures bandied about were completely out of proportion to the cost of registering the domain names. In the early days of electronic commerce and internet domains, some large organisations were taken by surprise and did not realise just how important it was to have domain names including their trading names. 1.26 Goodwill protected by passing off is not effective on a global scale. Indeed, in some cases, it does not even apply on a national scale and there are many examples of local businesses which have local goodwill. Several small and medium sized businesses located in different parts of the UK could each have goodwill in similar names. In the past, this has not usually caused 38 39

Or where it would be difficult for the user to make the necessary distinction. Websites critical of the proprietor’s business might also be retrieved. These could give rise to a claim for malicious falsehood.

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1.27 Introduction to information technology and IP law conflicts as each may only have traded in their own local area and advertised in a local newspaper or advertising journal. As soon as it became possible to operate a website, the potential for impinging on the goodwill of others became a live issue. It became important to make it clear on websites that the business was limited geographically.

COMPETITION LAW 1.27 EU competition law has sharp teeth. It is particularly concerned with facilitating the free movement of goods, services, finance and persons throughout the EU. For example, fragmenting the internal market by selling goods at different prices in different Member States is prohibited. This gives rise to the doctrine of exhaustion of rights. Once the owner of the relevant intellectual property right or rights has placed goods on the market within the EU, he can no longer exercise his intellectual property rights to prevent their further commercialisation.40 Competition law also controls restrictive practices and abuses of dominant trading positions, both of which can distort competition within the EU. In terms of intellectual property, the owner may want to impose restrictive terms in any technology transfer agreement whereby a licensee must grant-back improvements to the licensed technology or must not actively engage in commercial activity outside the territory covered by the licence agreement.41 1.28 Certain intellectual property rights provide monopoly rights. Even rights such as copyright which do not afford monopoly protection as such may be subject to abuse where the owner is the only person with access to the information subject to the right or where it is otherwise impossible or extremely difficult for others to generate the information independently. Abuses on monopoly positions are controlled, although being in a monopoly position does not, per se, attract the attention of the European Commission. Some form of abuse is required such as buying up all the patents in a given technology with the intention of increasing prices disproportionately.42 Another example is an attempt by a software company to freeze out competitors by 40

This also applies where the goods have been placed on the market with the owner’s consent, for example, where his licensee has done so. 41 The EEA Agreement has equivalent rules. The UK Competition Act 1998 and the Enterprise Act 2002 control anti-competitive practices within the UK. 42 For example, see Tetra-Pak Rausing SA v Commission to the European Communities, Case T-51/89, EU:T:1990:41.

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Jurisdiction 1.30 refusing to give them information allowing them to write new software which can interface or interoperate with that of the software company.43

JURISDICTION 1.29 Where a case has an element involving more than one jurisdiction, such as where an Italian defendant infringes, in Bavaria, a German patent, owned by a British citizen, the courts of each country have to decide which should try the case and which other or others ought to stay proceedings.44 In order to provide a predictable set of rules, there are Conventions and European Regulations. A basic rule is that defendants should be sued ‘at home’, that is, in the Member State in which they are domiciled or established. Alternatively, proceedings can be commenced in the State in which the harmful event occurred.45 1.30 There are significant differences in relation to whether the dispute involves ‘hard ip’, rights acquired through registration or deposit such as a patent, or ‘soft ip’ where the right is not subject to formalities, such as copyright. Where the right is a registered right and there is a claim or counterclaim involving the registration or validity of the right, the case can only be brought before the courts of the Member State in which the right is registered. To allow otherwise would be to undermine the sovereignty of that Member State. Apart from this, the rules on jurisdiction may give a claimant a choice of jurisdictions. This may provide the possibility of forum shopping. A claimant may choose a litigant friendly jurisdiction where cases are dealt with quickly and remedies, including interim remedies, are quick and effective. On the other hand, a party about to be sued may seek to apply for a declaration of non-infringement in a State where due process is a lengthy and unpredictable affair.46 43 See

Microsoft Inc v European Commission, Case T-167/08, EU:T:2012:323, discussed in Chapter 15. 44 A German patent is effective only within the territory or Germany. If the validity of the patent is challenged the case can only be heard in Germany. Otherwise, proceedings could be brought either in Germany or in Italy. 45 In the case of a tort. Infringement of an intellectual property right generally is a tort. Where the issue relates to an allegation of a breach of a licence agreement the question may become one of the rules of jurisdiction relating to breach of contract. A possibility here is to bring proceedings in the State in which the contract was to be performed. 46 In days of old, Belgium was a favourite forum for those wishing to delay matters. This was known as ‘deploying the Belgian torpedo’.

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1.31 Introduction to information technology and IP law

BREXIT 1.31 At the time of writing, the UK plans to leave the EU on 29 March 2019 at 11.00am. There is still some doubt about the final deal though it would seem sensible to maintain harmony with EU intellectual property legislation and Court of Justice rulings on intellectual property issues. The government has issued a number of guidance documents on the position if there is no deal.47 However, the government intends to ensure that EU-derived intellectual property law will continue to be available in UK law as it applied before Brexit, under section 7 of the European Union (Withdrawal) Act 2018, which covers retained EU law.48 Some intellectual property rights, such as the sui generis database right is a child of the EU. 1.32 As far as the interpretation of EU law is concerned, first, under section 6(1) of the European Union (Withdrawal) Act 2018, a court of tribunal: (a) is not bound by any principal laid down, or decision made, on or after exit day,49 by the European Court (that is, the Court of Justice of the European Union), and (b) cannot refer any matter to the European Court on or after exit day. S ection 6(2) goes on to confirm that a court or tribunal may, nevertheless, have regard to anything done on or after exit day by the European Court, another EU entity or the EU, so far as it is relevant to any matter before the court of tribunal. The section goes on to confirm that any question as to the validity, meaning or effect of any retained EU law is to be decided in accordance with any retained case law and any retained general principles of EU law.50 1.33 The Supreme Court and High Court of Justiciary (mainly acting as an appeal court) is not bound by any retained EU law but may only depart from retained EU law applying the same test as it would in deciding whether to depart from its own previous case law.51 Therefore, it can be said that

47

48

49 50 51

For example, copyright if there’s no Brexit deal, and similar guidance documents published on 24 September 2018, see: https://www.gov.uk/government/publications/copyrightif-theres-no-brexit-deal. Of course, some technical amendments will be required and the government has produced draft Regulations on the semiconductor topography design right. The main change is in relation to the qualification provisions. ‘Exit day’ is 29 March 2019 at 11.00am. Having regard, inter alia, to the limits immediately before exit day, of EU competences. No court or tribunal is bound by retained case law that it would not otherwise be bound by.

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Brexit 1.35 d ecisions of the Court of Justice and other EU bodies and institutions will still have relevance and the former will continue to be important where retained EU law is involved in a case here. This will be of particular importance for cases on copyright and related rights, the UK registered design and UK registered trade marks. It is in these areas that changes made in the past in implementing EU Directives and Court of Justice rulings thereon are most likely to remain important as will future Court of Justice rulings on these and subsequent Directives. The downside is that the UK courts will no longer be able to refer cases to the Court of Justice for preliminary rulings. It is by no means certain but it is likely that the UK will implement future EU Directives on intellectual property into UK law as a failure to do so would be likely to give rise to trade barriers between the UK and EU.52 1.34 EU wide rights such as the EU trade mark and the Community design will no longer extend to the territory of the UK after Brexit.53 This will mean that applications for EU trade marks and registered Community designs made by UK domiciled persons and businesses made on or after exit day will have effect in the territory of the remaining 27 Member States only and a separate application for protection will have to be made for a UK registered trade mark or design. It is intended to enact the equivalent of the unregistered Community design in the UK, which is significantly different to the UK’s unregistered design right. This will increase the costs and administrative burdens on UK businesses.54 1.35 Patent substantive law is largely unaffected as it falls under the auspices of the European Patent Office which is not an EU institution. But EU law will have a growing impact on patent law primarily because of the unitary patent and the Unified Patent Court.55 The Unified Patent Court Agreement requires that 13 Member States ratify, including the three Member States

52

There are other issues such as reciprocal agreements relating to the actions of custom authorities in relation to counterfeit goods and materials. 53 Provisional and transitional arrangements are likely to ensure existing EU trade marks and Community designs still have some effect in the UK. 54 It may ease these problems if application is made for a UK trade mark and an EU trade mark through the Madrid System. 55 The sources of law of the Unified Patent Court are EU law, the Unified Patent Court Agreement (set out in an EU Regulation), the European Patent Convention, certain international conventions and, finally, national law. EU law has primacy.

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1.36 Introduction to information technology and IP law with the greater number of patent applications, being Germany, the UK and France. Germany has failed to ratify because there is a legal challenge in Germany. By the time there is resolution of the challenge, the UK will most likely have left the EU. This makes it very difficult for the UK to take part, the consequence being that the unitary patent will not apply to the territory of the UK. An applicant for a unitary patent will have to apply separately for a UK patent. 1.36 To summarise all of the above, it is at least arguable that in terms of intellectual property rights, whatever the final deal, the UK would be better off staying in the EU.56 Even the most recent exiting Brexit Secretary, Dominic Raab, MP, accepted that staying in the EU was preferable to the emerging deal between the EU and the UK.57

Note on case references 1.37 Case references for UK cases comply with the media neutral system adopted by the courts around 2001 followed, where applicable, with one particular law report reference. In preference either the Reports of Patents, Designs and Trade Marks Cases (RPC) or the Fleet Street Reports (FSR) are used, or other reports if neither are available. The following are examples: Lantana Ltd v Comptroller General of Patents, Designs and Trade Marks [2014] EWCA Civ 1463, [2015] RPC 16 and Technomed Ltd v Bluecrest Health Screening Ltd [2017] EWHC 2142 (Pat), [2018] FSR 8. 1.38 Case references for cases before the Court of Justice of the EU use the case reference followed by ECLI identifier (omitting ECLI) for example, Directmedia Publishing GmbH v Albert-Ludwigs-Universität Freiburg, Case C-304/07, EU:C:2008:552 or for cases before the General Court, Microsoft Inc v European Commission, Case T-167/08, EU:T:2012:323.

56

A paper written by a former legal counsel of the European Council and Directive General of the EU Council Legal Services, written before the Brexit vote, on the possible options facing the UK if it decided to leave the EU makes depressing reading. See Jean-Claude Piris, If the UK votes to leave: the seven alternatives to EU membership, Policy Brief, Centre for European Reform, 12 January 2016, available at: https://www.cer.eu/publications/archive/ policy-brief/2016/if-uk-votes-leave-seven-alternatives-eu-membership. 57 BBC Radio 4, Friday 23 November 2018.

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Summary 1.40

SUMMARY 1.39 This book seeks to cover and explain the above and other issues, questions and situations by describing and applying the relevant intellectual property and associated laws that are relevant to these areas of information technology. The previous edition has been updated to reflect significant changes in legislation and case law and the scope of this book has been widened to reflect the greater impact of legal controls over the use of online infringement of intellectual property rights. Areas covered in the book range from copyright in computer programs, databases and other copyright works made available online, to the sui generis database right, to the setting of copyright and related rights in the information society. Obligations, defences and duties have been set out for information society service providers who can no longer sit back and ignore what is made available through their networks and servers. An example is the use of blocking injunctions against internet service providers in respect of information infringing copyright, related rights and trade marks which is available through their services. Another issue is whether the service provider or the holder of the relevant intellectual property right should pay the costs of implementing blocking injunctions. 1.40 Other areas covered include the protection of computer graphics, screen displays, icons and software typefaces by design law. Patents for computer-implemented inventions remains a thorny issue and remains in the unsatisfactory position of the UK courts compared with decisions before the Boards of Appeal of the European Patent Office. When one considers the size of the software industry in Europe, this remains an area where greater certainty, reflecting the position in other parts of the world, such as the United States is desperately needed. Competition law is an area that cannot be neglected and the technology transfer regulation should be consulted when entering into licence agreements involving computer software. The rules on jurisdiction should also be considered, not only in cases of infringement but also where an agreement involving the exploitation of intellectual property is concerned as the parties may wish to stipulate the jurisdiction where disputes can be settled, subject to the exclusive jurisdiction reserved for disputes involving challenges to the registration or validity of hard IP rights.

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Chapter 2

Essentials of copyright law

INTRODUCTION 2.1 Copyright has existed as a legal right of property for several hundred years, first as a common law right then as a statutory right.1 It first came to prominence with the invention of the printing press. Now, copyright is entirely a creature of statute and, in the UK, is provided for by the Copyright, Designs and Patents Act 1988 together with statutory instruments made under the Act and under section 2(2) of the European Communities Act 1972.2 The Act has been amended on numerous occasions, primarily by way of compliance with EU Directives. 2.2 The term ‘copyright’ suggests it is a right to control copying. It is, however, more extensive than this and covers other acts, such as making a work of copyright available to the public or making an adaptation of a work, such as a translation of a literary work from French to English or a conversion of a computer program written in one programming language into another programming language. It is true to say that copyright is a right to allow or prevent others to carry out certain acts in relation to the subject matter. It operates by granting certain exclusive rights to the copyright owner. Copyright is not an absolute right and acts falling outside the owner’s exclusive rights may be done by anyone with access to the work, without the owner’s permission.

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The Statute of Anne 1710, 8 Anne c. 19, was the first copyright Act in Great Britain and, possibly, the first in the world. For some time, it was thought that an author had both a common law copyright, of unlimited duration, and a statutory copyright which lasted originally for 14 years. Eventually, in Donaldson v Beckett (1774) 2 Bro PC 129 the House of Lords narrowly decided that the common law copyright was extinguished on first publication. This case was followed in the US in Wheaton v Peters (1834) 8 Pet 591. This provision allows EU obligations to be implemented in the UK by secondary legislation. Several EU Directives on copyright law have been implemented in this way, as will be seen later in this and subsequent chapters.

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Introduction 2.4 Moreover, there are a great many acts, described as permitted acts, which may also be performed without the owner’s permission even though they fall within the exclusive rights. Examples include certain fair uses of a work and making a back-up copy of a computer program if this is necessary for the lawful use of the program. An important permitted act is concerned with making accessible ideas and principles underlying any element of a computer program.3 2.3 The first major international convention affecting copyright was the Berne Convention for the Protection of Literary and Artistic Works 1886. The Convention has been revised on a number of occasions and now has 175 Contracting Parties. Very few countries are not party to the Convention. The Berne Convention sets out some basic principles for copyright protection and provides for a form of reciprocal protection. A country, being a party to the Convention, must grant the same rights to nationals of other countries which are party to the Convention. The Berne Convention falls under the auspices of the World Intellectual Property Organisation (WIPO). Importantly, there is also a WIPO Copyright Treaty and a WIPO Performances and Phonograms Treaty, both dating from 1996.4 These are important, inter alia, as they form the basis of an EU Directive on copyright in the information society,5 and are also part of the jurisprudence of the EU. The former Treaty also specifically recognises computer programs and databases as protectable subject matter. 2.4 The World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights dates from 1994.6 This important Agreement requires adherence to Articles 1 to 21 of the Berne Convention7 and provides for protection of computer programs as literary works under the Berne C onvention. TRIPS also protects compilations of data or other

3 4 5

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This important permitted act is examined in detail in Chapter 4. There are presently 96 Contracting Parties to the former and 96 Contracting Parties to the latter. Almost all the same Parties belong to each but there are a couple of differences. Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 1. The ‘TRIPS Agreement’. It resulted from an agreement at the Uruguay Round of the General Agreement on Tariffs and Trade, 1994. There are currently 96 Member States. The current version dates from 23 January 2017. These Articles provide for the substantive provisions on the protection of literary and artistic works.

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2.5 Essentials of copyright law material, whether or not in machine readable form, which are by reason of the selection or arrangement of their contents constitute intellectual creations.8 2.5 Copyright law has developed in a fairly pragmatic manner, usually taking new forms of creative works under its wings. Generally, copyright has not concerned itself with literary or artistic merit. For example, some of the artistic works are protected by copyright ‘irrespective of artistic quality’. There are good reasons for this. Tastes change over time and it would be unreasonable and unsatisfactory to expect judges to be arbiters of literary and artistic taste. Furthermore, copyright is intended to reward the creative efforts of authors to ‘promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries’.9 It would be unfair to deny protection on the subjective basis that the work lacks merit. 2.6 There are some rights similar to copyright, which are described as related rights or neighbouring rights. These include rights in performances, the sui generis database right and a publication right which applies to works which are first published after their copyright has expired. Performers are given rights in their live performances as do those having an exclusive recording contract. The sui generis database right protects databases which result from substantial investment in obtaining, verifying or presenting the contents of the database.10 For the large part, similar considerations apply to these rights as to copyright, especially in relation to communicating such works to the public, for example, by placing them on a website. The database right forms the subject matter of Chapter 6. Rights in performances and the publication right, are discussed where appropriate. Unless otherwise stated, all statutory references in this chapter are to the Copyright, Designs and Patents Act 1988, as amended. 2.7 As mentioned above, copyright law has undergone substantial changes as a result of an incomplete harmonisation through numerous EU Directives. In the UK there have been reviews and reports on future potential

8

This protection does not extend to but is without prejudice to the protection of the contents. We will come across this definition in the chapter on copyright databases. 9 Section 8 of the US Constitution. 10 This is different to the test for copyright in a database but some databases may be subject to both rights.

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Layout of this chapter 2.9 developments and improvements in copyright law.11 Other changes have come about through home-grown reforms and developments. An EU Directive on orphan works was implemented towards the end of 2014 and provided that relevant bodies could make certain uses of orphan works by means of a new permitted act. An orphan works is one where it is not possible to identify the copyright owner or his whereabouts after a diligent search. The UK further implemented a home-grown system of licensing orphan works administered by the UK Intellectual Property Office.

LAYOUT OF THIS CHAPTER 2.8 In this chapter, the requirements for subsistence of copyright are first described. There are two distinct categories of works: the original works which consist of literary, dramatic, musical and artistic works and other types of works which are often derivative in that they are normally based on one or more of the original works. They include sound recordings, broadcasts and films. A further form of work is a typographical arrangement of a published edition.12 Next, the identity of the author (that is, the creator) of the work and the person entitled to the copyright (its owner) are examined. For most forms of works, copyright protection lasts for a long time, in some cases extending beyond the author’s life for 70 years and the duration of copyright is discussed before looking at the owner’s exclusive rights and what constitutes infringement of copyright, followed by the remedies available for infringement. 2.9 Apart from the primary forms of infringement of copyright, another type of infringement is secondary infringement which applies, in most cases, to unauthorised commercial exploitation of the work in question, such as by selling counterfeit or pirate copies. Acts of secondary infringement may also attract criminal penalties. Our attention then turns to the permitted acts. These are acts which may be performed in relation to a work of copyright without the licence of the owner without infringing the copyright. These include a permitted act that applies to orphan works. We then look briefly at some specific permitted acts that apply to computer programs and databases. Following this, 11

Gowers Review of Intellectual Property, 6 December 2006; I Hargreaves, Digital Opportunity: A Review of Intellectual Property and Growth, Intellectual Property Office, 2011 and HM Government, Consultation on Copyright, December 2011. 12 This can protect the layout of a newspaper or magazine, for example.

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2.10 Essentials of copyright law we turn our attention to transferring ownership of copyright and licensing others to make use of copyright works including the UK’s system of l icensing the use of orphan works.13 A discussion of moral rights under copyright law follows. Two of these rights, the right to be identified as author (or principal director of a film) and the right to object to a derogatory treatment of a work are important and give the author some control over the use of the work even though he or she may no longer be the owner of the copyright. Finally, rights related to copyright are examined. These include the sui generis database right, rights in performances and a publication right, which gives a new right of limited duration where a work in which the copyright has expired is published for the very first time.

SUBSISTENCE OF COPYRIGHT 2.10 Copyright is a property right that subsists in the following categories of works: (a) original literary, dramatic, musical or artistic works, (b) sound recordings, films or broadcasts and (c) the typographical arrangement of published editions.14 Being a property right, copyright can be dealt with, for example, by a transfer of ownership (the legal term being an assignment of copyright) or by granting a licence to another to allow him to perform certain acts in relation to the work. It may even be mortgaged or used as security for a loan. It is important to note that assignments and licences may be partial, for example, by being limited in terms of the acts covered, geographical area or duration. 2.11 A work must qualify for UK copyright to subsist. There are two main routes to qualification, through the author or the country of first publication. 13

This is different to the permitted act that applies to uses of orphan works by relevant bodies which was an EU initiative. 14 Section 1(1). Copyright sometimes is referred to as a chose in action. Strictly speaking, however, copyright is a form of incorporeal property though not a chose in action. It gives no right of action, per se. It is a right to do certain acts and gives a cause of action only if it is infringed. In Colonial Bank v Whinney (1885) LR 30 ChD 261, Lindley LJ (at 284) doubted copyright was a chose in action though it has often been so described by writers and judges. See, for example, Chaplin v Leslie Frewin (Publishers) Ltd [1966] Ch 71 per Danckwerts LJ at 93.

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Subsistence of copyright 2.12 A work may qualify for copyright protection by virtue of the author’s citizenship or domicile or residency or if the author is a body incorporated under the law of any part of the UK.15 Alternatively, a work may qualify by virtue of the country of first publication being the UK or other country to which the relevant provisions apply.16 Simultaneous publication in a number of countries (being within 30 days of the first publication) counts as first publication in each, making it possible to gain a bundle of separate copyrights. Copyright and neighbouring rights, such as rights in performances, are extended to a great many other countries which are members of relevant conventions and agreements or are members of the European Union (EU) or the European Free Trade Agreement (EFTA).17 The EFTA Member States are Iceland, Liechtenstein, Norway and Switzerland. Many EU Directives, including those on copyright, are relevant also to the EFTA countries through the European Economic Agreement (EEA).18 2.12 Literary, dramatic, musical and artistic works of copyright are required to be original. In the past, in the UK, this has been taken to mean that the author created the work by the application of his skill, judgement and/or labour.19 However, EU Directives on copyright use the term ‘author’s own intellectual creation’ and that is, strictly speaking the test that should be used nowadays.20 It is arguable that the two tests are very similar if not identical in most practical applications. In terms of literary, dramatic, musical and artistic 15

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For example, the author may be a British Citizen, EEA national, British Overseas Territories citizen, or domiciled or resident in the UK, EEA State, the Channel Islands, the Isle of Man or Gibraltar. These are examples only. See section 154 for more detail. The full detail of the qualification provisions is set out in sections 153–156. For broadcasts, it is the country from which the broadcast was first made rather than the country of publication. Different provisions apply in respect of Crown copyright and parliamentary copyright. The qualification provisions were widened under the Intellectual Property Act 2014 with effect from 6 April 2017. Such ‘reciprocal protection’ is currently afforded in the UK by the Copyright and Performances (Application to Other Countries) Order 2016, SI 2016/1219, in force on 6 April 2017. The EEA comprises Iceland, Norway, Liechtenstein and the EU. Switzerland is not a member of the EU or the EEA but chooses to follow some EU laws and has numerous agreements with the EU. Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273 in which the House of Lords approved Peterson J to similar effect in University of London Press Ltd v University Tutorial Press Ltd [1916] 2 Ch 601. The term ‘intellectual creation’ is found in Article 2(5) of the Berne Convention which relates to collections of works.

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2.13 Essentials of copyright law works, the better view is that the work must be the author’s own intellectual creation for the purposes of copyright. There are no specific requirements or threshold tests for the other works of copyright except that they must fall within the relevant meaning of that type of work and, possibly, that they must be more than merely trivial.

ORIGINAL WORKS OF COPYRIGHT 2.13 The ‘original works’ of copyright are literary, dramatic, musical or artistic works. These works are further described in sections 3, 3A and 4 of the Act. The definition of literary work, in line with some other definitions, is not exhaustive and merely gives examples of what is included in this category, for the avoidance of doubt. Thus, a literary work is a work, other than a dramatic or musical work which is written, spoken or sung, and includes: (a) a table or compilation other than a database; (b) a computer program; (c) preparatory design material for a computer program; and (d) a database. A dramatic work includes a work of dance or mime and a musical work means a work consisting of music, exclusive of any words or action intended to be sung, spoken or performed with the music. Thus, a song has two copyrights, one in the music and another in the words sung with the music. However, such a work comprising both a literary work and a musical work is now described as a work of co-authorship. 2.14 Literary, dramatic and musical works are required to be recorded in writing or otherwise.21 The time when it is so recorded is taken to be the time the work was made for the purposes of the copyright provisions in the Act. This is relevant to the time copyright starts to run or in relation to the qualification requirements, for example, whether the author became a British citizen before or after the work was recorded. ‘Writing’ is defined widely in section 178 as including any form of notation or code, whether by hand or otherwise and regardless of the method by which, or medium in or on which, it is recorded. There is no doubt that this will apply to all forms of electronic 21

Section 3(2).

26

Other works of copyright 2.16 storage including on magnetic or optical disks or other memory devices incorporated in, or capable of being accessed by, a computer. 2.15 The artistic work category is set out in section 4 and is very wide ranging and includes, inter alia, graphic works, photographs, sculptures, collages, works of architecture and works of artistic craftsmanship. Graphic works include paintings, drawings, diagrams, maps, charts, plans and engravings. Apart from works of architecture and artistic craftsmanship, artistic quality is irrelevant. It is clear that engineering drawings, flowcharts or sketches are considered to be artistic works and will be protected by copyright providing they qualify and are the author’s own intellectual creation.22 Typefaces are not specifically mentioned in section 4, but other parts of the Act make it clear that they are artistic works.23 In any case, the list of things falling to be considered graphic works is not expressed exhaustively. There is no requirement for an artistic work to be recorded in any way. Images displayed on webpages and on social media will be considered to be artistic works, providing they are not trivial.24 Software fonts may also be works of copyright as virtual typefaces.25

OTHER WORKS OF COPYRIGHT 2.16 The other works of copyright are sound recordings, films, broadcasts and typographical arrangements of published editions. They are sometimes referred to as derivative works as many include one or more of the original works of copyright, but this is not always the case, an example being a sound recording of birdsong or a steam engine in operation. Sound recordings are defined as a recording of sounds from which the sounds may be reproduced or a recording of the whole or any part of a literary, dramatic or musical work, from which the sounds reproducing the work or part of it may be produced.26 No regard is taken of the medium on which the recording is made nor the

22 23 24 25 26

For example, in B O Morris Ltd v F Gilman (BST) Ltd (1943) 60 RPC 20, it was accepted that a sketch of machinery was protected. Section 54 and 55, which provide for permitted acts for typefaces use the phrase ‘copyright in an artistic work consisting of the design of a typeface’. It has even been accepted that computer icons can be artistic works: see Navitaire Inc v EasyJet Airline Co Ltd [2004] EWHC 1725 (Ch), [2006] RPC 3. Computer-generated graphics and software typeface fonts may also be protected as Community designs and the UK registered design if they are new and have individual character. Section 5A.

27

2.17 Essentials of copyright law method by which the sounds are reproduced or produced. This makes the definition media neutral, so it does not matter whether the sound is reproduced from a musical comb, pianola, magnetic or optical disk or solid-state storage device. There is no need for the storage medium to be located at or near to where the sounds are reproduced. They may be listened to by means of a radio, television or internet connection. 2.17 A film is a recording on any medium from which a moving image may by any means be produced.27 Again the definition is media neutral and the proximity of the recording and the person viewing the film is irrelevant. Also included in the definition of film is the sound track accompanying it, which may have its own separate copyright as a sound recording. 2.18 The definition of broadcast in given in section 6 and is intended primarily to cover scheduled programmes where the provider controls the timing of the transmission.28 The subject matter of a broadcast is the electronic transmission of visual images, sounds or other information. It does not apply generally to internet transmissions unless they are in the nature of scheduled programmes or a simultaneous transmission of a live event. A person accessing information from a website or downloading film or music at a time of his own choosing does not cause a broadcast to be made.29 2.19 For the purposes of typographical arrangements, a published edition is a published edition of the whole or any part of one or more literary, dramatic or musical works. In Newspaper Licensing Agency Ltd v Marks & Spencer plc,30 the House of Lords confirmed that this form of copyright applied to the whole ‘between the covers’ work. Whilst a collection of l iterary works might have a separate copyright in the whole as a compilation, the reverse does not hold true of typographical arrangement copyright where, for example, the published edition is a composite work such as a newspaper.

27

Section 5B. Programmes available outside scheduled times, such as through the BBC iPlayer and the ITV Player are not broadcasts, even though they were broadcasts when originally transmitted during the normal schedules time. 29 This was clarified when the type of work known as a cable programme was subsumed into the definition of broadcast. Previously, it was thought that operating a website might fall within the meaning of providing a cable programme service: Shetland Times Ltd v Dr Jonathan Wills [1997] FSR 604. 30 [2001] UKHL 38, [2003] 1 AC 551. 28

28

Authorship 2.22 There is no ‘published edition’ copyright in the typographical arrangement of a single article in a newspaper, distinct from the newspaper as a whole. Of course, the article may be subject to literary copyright. 2.20 For all these other forms of copyright work there are some limitations. For example, a copy of a sound recording, film or typographical arrangement does not have a separate copyright. However, anyone copying the copy will infringe the copyright in the original because copyright can be infringed indirectly. Another point is that many of these other works will include or incorporate original works of copyright. Making a copy of a published work of fiction will infringe the copyright in the literary work as well as the copyright in the typographical arrangement. The utility of the latter form of copyright is that it gives protection to newly published editions of works which themselves are out of copyright.

AUTHORSHIP 2.21 The author of a work is simply the person who creates the work.31 However, the identity of the author is not necessarily obvious in relation to some forms of work. For a sound recording, the author is the producer, for a film it is the principal director and producer jointly, for a broadcast it is the person making the broadcast and for a typographical arrangement it is the publisher. A ‘producer’ is the person by whom the arrangements necessary for the making of the sound recording or film are undertaken. 2.22 A computer-generated work is one generated by computer in circumstances such that there is no human author. That said, the author of a computer-generated literary, dramatic, musical or artistic work is taken to be the person by which the arrangements necessary for the creation of the work are undertaken.32 A work is of joint authorship if it was produced by the collaboration of two or more authors such that the contribution of each is not distinct from the other or others. An edited book with chapters written by different persons is not a work of joint authorship. Where the work is the 31 32

Section 9. The separate provision for computer-generated works is strange and it could be argued that every work is the result of human authorship, albeit indirect. There is no equivalent in any EU Directive and it would be better if the parts of the Act relating to computer-generated works were repealed.

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2.23 Essentials of copyright law result of a collaboration between the author of a musical work and the author of a literary work where the two works are created to be used together, it is a work of co-authorship under section 10A. The obvious example, is a song comprising music and lyrics. 2.23 Where the identity of the author is unknown or, if it is a work of joint authorship, the identity of all the authors in unknown, the work is defined as a work of unknown authorship. Note that a work of co-authorship is not a work of joint authorship as the contribution of each author in a work of co-authorship is distinct from that of the other.33 An author is regarded as unknown if it is not possible for a person to ascertain his identity by reasonable inquiry. The fact that a work is one of unknown authorship has implications for the duration of copyright.

OWNERSHIP Right to employee works – King v South African Weather 2.24 The provisions on the ownership of copyright are simple but frequently misunderstood or even overlooked. Problems caused by this are common in relation to works created by persons who are not employees.34 Self-employed persons, contractors and sub-contractors are often involved in the development and modification of computer software, including computer programs and databases and text, tables, reports, visual and audio-visual works in software form. The fact that a client has paid someone to create a work of copyright does not automatically mean that the client will be the owner of the copyright in the work once created. 2.25 The basic rule is given in section 11(1) which states that the author of a work is the first owner of the copyright in it. The major exception is where a work is created by an employee in the course of his employment. In this case the employer will be the first owner of the copyright, subject to agreement to the contrary. That contrary agreement may be express or implied, for example, based on past conduct.35 There is no separate provision for ownership 33

The relevance of co-authorship relates to the duration of the work. See infra. Or where the work is created by an employee but not in the course of his employment. 35 The agreement to the contrary was based on past practices between an employer and employee in Noah v Shuba [1991] FSR 14. 34

30

Ownership 2.27 of a work created under a commission. Simply paying a person to create a work does not mean that, at law, copyright automatically passes to the person making the payment. Sometimes, it may be difficult to determine the boundaries of what falls within an employee’s contract of employment. 2.26 In a South African case, King v South African Weather Service,36 King had been employed as a meteorological officer. He developed a computer-based weather information system. The employee’s duties under his contract of employment did not extend to writing computer software. At first, he wrote the computer-based system at home but later worked on it during working hours. His employer was aware of his work on the programs and he was even asked to write similar software for other weather stations. The South African Court of Appeal stressed that it was not possible to lay down hard and fast rules as to whether a work had been created in the course of employment. This was a factual issue to be determined from the contract of employment and the particular circumstances in which the work was created. The Court of Appeal held that the employer was entitled to be the first owner of the copyright. A number of factors pointed to this conclusion: ••

the programs were integrated into the employer’s automated weather system and were of advantage to the employer;

••

the duties of a meteorologist did not ordinarily include writing computer programs – although the employee had written the programs to make his job easier, he had done it because of his job;

••

there was a close causal connection between the claimant’s employment and the creation of the programs;

••

the employer had specified the format of these programs which had to be approved by the employer before implementation and use;

••

the job description had not been all-embracing – a later fuller description was issued which stated that a work could be created in the course of employment without having been created in terms of the contract – furthermore, a contract of employment could change either expressly or by implication.

2.27 Where a work has been created under a commission, for example, by a self-employed consultant working for a client, and provision has not been 36

[2009] FSR 6.

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2.28 Essentials of copyright law made for an assignment37 of copyright to the client, the consultant will be the first owner of the copyright at law. Failure to have a formal assignment of copyright in such a case can lead to problems. For example, the consultant may later decide to assign the copyright to a third party, which may be a competitor or potential competitor of the client.38 Alternatively, the consultant may demand further payment from the client to assign the copyright to the client. Another possibility is that the consultant may try to interfere with the client’s subsequent use or exploitation of the work. 2.28 The courts may overcome difficulties arising from a failure to properly deal with copyright ownership in two ways. The person paying for the creation of the work may be granted beneficial ownership of the copyright. This will allow him to use and exploit the copyright, generally exercising the rights of the owner under the copyright. The person who created the work will remain the legal owner.39 The disadvantage of being a beneficial owner only is that, in any legal action to obtain a permanent injunction or damages, the legal owner must be joined in the action, either as co-claimant or as a defendant. This is because of the principle of double jeopardy. If it were otherwise, the legal owner might decide to bring separate infringement proceedings later. Of course, it is highly undesirable to have to resort to litigation to remedy a failure to provide for the simple expedient of a legally binding assignment of copyright. 2.29 The courts may be less likely to grant beneficial ownership in relation to a computer program for the simple reason that software companies usually prefer to grant non-exclusive licences. Even where a computer program and other items of software have been written specifically for a client’s requirements, in some cases, the software company will retain the copyright and only grant a non-exclusive licence. The software company may want to grant licences to others for that software, or part of it, or a modified version of it. The advantage for the client is that the price will be less, in some cases considerably less, than if the client obtained an assignment of copyright or an

37

Assignment of copyright is dealt with later in this chapter. An example of this in relation to a drawing of a logo for Dr Marten shoes was the case of Griggs Group Ltd v Evans [2005] EWCA Civ 11, [2005] FSR 31. 39 A court may order the owner at law to formally assign the copyright to the beneficial owner. This happened in Griggs v Evans. The person who designed the logo was paid the going rate for the job of £15 per hour. 38

32

Ownership 2.32 exclusive licence. In Saphena Computing Ltd v Allied Collection Agencies Ltd,40 it was held that the usual expectation of software companies to retain copyright and grant licences to others was a sufficient reason to deny granting beneficial ownership even though, in that case, the software had been commissioned by the client. Something else would be needed to show an intention that ownership was intended to pass to the client. 2.30 An alternative approach is to imply a licence to the person paying for the work to be made. The scope of the licence will be such as to allow that person to carry out the acts in relation to the work consistent with what was agreed expressly or impliedly by the parties. For example, where a computer programmer writes a program for a client, it is possible that a non-exclusive licence would be implied in favour of the client. Of course, it will depend on the circumstances. For example, whether it would be reasonable to expect the programmer to grant licences to others, whether it would be important for the client to have exclusive use of the program and whether the fee paid was commensurate with exclusive use. Generally, the courts will only grant the minimum to give effect to the presumed intention of the parties.41 2.31 Where a self-employed computer programmer creates or modifies software for a client, it is important to express whether the client will be assigned the copyright in the software or be granted an exclusive or nonexclusive licence. It is common for self-employed programmers to operate under a business model whereby they retain ownership of the copyright in the software the create so that they may in future grant non-exclusive licences to their clients in respect of the software, which may be modified, as appropriate, to suit other clients’ needs. 2.32 In Paymaster (Jamaica) Ltd v Grace Kennedy Remittance Services Ltd,42 the claimant had an informal oral contract with Mr Lowe, a computer programmer, to develop software for its multi-payment system. Later, Mr Lowe offered the software to the defendant, with modifications. 40

[1995] FSR 616. The judgment in Robin Ray v Classic FM plc [1998] FSR 622 sets out the criteria for deciding whether to grant beneficial ownership or to imply a licence and, if the latter, what the scope of the licence should be. 42 [2017] UKPC 40. This was appeal from Jamaica to the Judicial Committee of the Privy Council. Section 22(1) of the Jamaican Copyright Act 1993 provided that the author would be the first owner of copyright subject to an agreement to the contrary. 41

33

2.33 Essentials of copyright law The claimant argued that a term should be implied into the contract with Mr Lowe to the effect that the copyright was to be assigned to the claimant. The Judicial Committee of the Privy Council disagreed. This was incompatible with Mr Lowe’s business model. He retained control of his software he developed for clients. The purpose underlying the claimant’s claim was to give it an exclusive licence43 and there was no basis for implying a term giving it ownership of the copyright. The software had been commissioned for use in the claimant’s business, there was no suggestion that it wanted the right to sell copies of it to others. Had the claimant wanted exclusive use of the software and modified versions of it, the claimant should have sought an express term to that effect. 2.33 Section 11 does not apply to Crown copyright, Parliamentary copyright or to copyright of certain international organisations such as the United Nations. Where a work is created by Her Majesty, or by an officer or servant of the Crown in the course of his duties, Her Majesty is the owner of the copyright in the work, referred to as Crown copyright.44 Acts of Parliament and Measures of the General Synod of the Church of England are also Crown copyright.45 The copyright in works created under the direction of either or both Houses of Parliament belongs first to either House or both jointly, as the case may be, and is known as Parliamentary copyright.46 The copyright in these works is still described as Crown copyright or Parliamentary copyright even if the copyright is assigned. Further provisions apply to Parliamentary Bills, including those of the Scottish Parliament, National Assembly of Wales or Northern Ireland Assembly. Where an original literary, dramatic, musical or artistic work is made by an officer or employee of, or is published by, certain international organisations, that organisation is the first owner of the copyright.47

43 44 45 46 47

To use the software as written for the client. This must mean that licences could be granted in respect of modified versions tailor-made for other clients. Section 163(1). The work qualifies for copyright protection even if the normal provisions for qualification are not satisfied. Provision is also made in respect of the Scottish Parliament, National Assembly for Wales and the Northern Ireland Assembly. Section 164(1). The work qualifies for copyright protection even if the normal provisions for qualification are not satisfied. Section 168(1). Again, there is no need for the normal qualification provisions to be satisfied. The organisations concerned are the United Nations, the Specialised Agencies of the United Nations and the Organisation of American States.

34

Duration 2.36

DURATION 2.34 The duration of copyright is based on the author of the work not the owner. From the Statute of Anne 1710 which gave 14 years protection to newly published books48 the term of copyright has increased to its present very generous term of ‘life plus 70 years’, based on the life of the author of the work.49 The 70 years runs from the end of the calendar year during which the author died. The Berne Convention generally provides for life plus 50 years. This was originally based on giving protection to the author and two generations of his descendants. As life spans have increased, a Directive harmonising the term of copyright throughout the EU used a 70-year period instead.50 The increase was possible because the Berne Convention leaves Contracting States free to grant periods longer than life plus 50 years. 2.35 There are exceptions to the life plus 70-year period. For example, copyright in a computer-generated literary, dramatic, musical or artistic work expires 50 years from the end of the calendar year during which it was made. For sound recordings and broadcasts a 50-year period is used and for typographical arrangements, it is 25 years from the end of the calendar year of first publication. The terms of protection for sound recordings can be longer if the sound recording is not immediately published or made available to the public. If during the 50-year period, the sound recording is published, the 50 years runs from the end of the calendar year when it is first published. If not published but is otherwise made available to the public, for example, by being played in public, the 50 years runs from the end of the calendar year during which it was made available to the public. 2.36 Where a literary, dramatic, musical or artistic work is one of joint authorship, the 70-year period runs from the end of the calendar year during which the last surviving author dies. For films, the 70 years runs from the end of the calendar year during which the last of the following persons dies: the principal director, the author of the screenplay, the author of the dialogue or 48

Books already published at the time the Act came into force were given 21 years. The author is the person who creates the work. Sections 12 to 15A set out the provisions on duration of copyright. 50 Council Directive 93/98/EEC of 29 October 1993 harmonising the term of protection of copyright and certain related rights OJ L 290, 24.11.1993, p 9, codified in Directive 2006/116/EC of the European Parliament and of the Council of 12 D ecember 2006 on the term of protection of copyright and certain related rights, OJ L 372, 27.12.2006, p 12. 49

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2.37 Essentials of copyright law the composer of music specially created for and used in the film.51 Copyright in a work of co-authorship expires 70 years from the end of calendar year during which the last surviving co-author dies.52 2.37 If a literary, dramatic, musical or artistic work or a film is of unknown authorship,53 copyright expires at the end of the period of 70 years from the end of the calendar year during which it was made. However, if it was made available to the public during that period, copyright expires 70 years from the end of the calendar year during which it was so made available. If, before the end of whichever 70-year period applies, the identity of the author (or persons on whom the duration of copyright in a film is based) becomes known, the normal rules apply. Where a work has joint authors, it is a work of unknown authorship only if the identity of none of the authors is known. In the case of a film, to be of unknown authorship, the identity of the principal director, author of the screenplay, author of the dialogue and composer of music specially created for and used with the film must not be known. Note that the authors of a film for the question of authorship, with the exception of the principal director, are different to the persons used to determine the d uration of copyright. 2.38 Rights in performances generally last for 50 years from the end of the year in which the performance takes place or, if a recording (other than a sound recording) of the performance is released during that period, the 50 years runs from the end of the calendar year in which it was released.54

51

Section 13B. Originally, the duration of copyright in films in the UK was based on 50 years from the end of the year of its making or, if released during that period, 50 years from the end of the calendar year when it was released. Some other countries treated films like the original works of copyright on the basis that they were artistic creations. 52 Section 10A. A work of co-authorship is one where the author of a musical work and the author of a literary work collaborate where the works are creation to be used together. Section 10A came into force on 1 November 2013 and reflected that fact that some EU Member States already treated musical compositions as works of joint authorship and gave effect to Article 1(1) of Directive 2011/77/EU of the European Parliament and of the Council of 27 September 2011 amending Directive 2006/116/EC on the term of protection of copyright and certain related rights, OJ L 265, 11.10.2011, p 1. See recitals 18 and 19 of the later Directive and new Article 1(7) of the latter amended Directive. 53 For film, reference is made to the identity of the persons mentioned in section 13B(2), being (a) the principal director; (b) the author of the screenplay; (c) the author of the dialogue; or (d) the composer of music specially created for and used in the film. 54 Section 191. ‘Released’ means published, played or shown in public or communicated to the public.

36

Rights of the copyright owner and infringement 2.41 If a sound recording is released during the 50-year period from the end of the calendar year in which the performance takes place, the performance rights last for 70 years from the end of the calendar year during which the sound recording was released.55 2.39 Different periods apply to works of Crown copyright, Parliamentary copyright and copyright vested in certain international organisations. Generally, a 50-year period is used but Crown copyright lasts for 125 years from the end of the calendar year during which the work was made but, if published in the first 75 years, copyright lasts 50 years from the end of the calendar year during which it was published. Copyright in a public Bill only lasts until it gets Royal Assent or is rejected or withdrawn.56

RIGHTS OF THE COPYRIGHT OWNER AND INFRINGEMENT 2.40 The owner of a copyright has the exclusive right to do certain acts in the UK in relation to the work.57 The acts are: (a) to copy the work; (b) to issue copies of the work to the public; (c) to rent or lend the work to the public; (d) to perform, show or play the work to the public; (e) to communicate the work to the public; (f) to make an adaptation of the work or do any of the above in relation to an adaptation. These acts are described as ‘the acts restricted by the copyright’. 2.41 Any person who does, or authorises another to do, any of the acts restricted by the copyright without the licence of the copyright owner, in relation to the whole or a substantial part of the work, directly or indirectly,

55

Section 192(2). The 70 period was introduced on 1 November 2013 in accordance with rticle 1(2) of Directive 2011/77/EU; supra. A 56 Sections 163 to 166A. Other provisions apply to private Bills and the limitation of Parliamentary copyright to 50 years applies only to literary, dramatic, musical or artistic works. 57 Section 16(1).

37

2.42 Essentials of copyright law infringes the copyright. It does not matter whether or not any intervening acts themselves infringe the copyright. This is subject to the permitted acts so if the act in question falls within one of the permitted acts there is no infringement.58 This is also subject to the existence of a licensing scheme covering the act, for example, the scheme operated by the Copyright L icensing Agency which permits limited copying for students and pupils by educational establishments subscribing to the scheme. 2.42 The issue of substantiality is a matter of whether the part taken represents the expression of intellectual creation by the author. As the Court of Justice of the EU ruled in Infopaq International A/S v Danske Dagblades Forening:59 … there will only be reproduction of a substantial part of a literary work … where what has been reproduced represents the expression of the intellectual creation of the author of that literary work. It is now accepted that this test is appropriate to determining substantiality under the UK Act: at least in terms of the original works of copyright. In SAS Institute v World Programming Ltd,60 Lewison LJ said (at para 38): In Infopaq the court said that parts of a work are entitled to the same protection as the work as a whole. But the parts in question must ‘contain elements which are the expression of the intellectual creation of the author of the work’. This is now the test for determining whether a restricted act has been done in relation to a substantial part of a work. Both counsel agreed that to interpret section 16(3) in this way was consistent with the court’s duty to interpret domestic legislation, so far as possible, so as to conform with European Directives.61 2.43 As copyright can be infringed indirectly, it is possible to infringe the copyright in a work one has not even seen at first hand. For example, it is possible to infringe the copyright in a work of architecture by constructing a similar work from a photograph of the building. It is even possible to infringe

58

For the permitted acts, see infra. There is also a limited public interest defence under common law. 59 Case C-5/08, EU:C:2009:465 at paras 31 to 48. 60 [2013] EWCA Civ 1482, [2014] RPC 8. 61 Section 16(3) of the Copyright, Designs and Patents Act 1988 provides, inter alia, that the restricted acts apply in relation to the whole or a substantial part of the work.

38

Rights of the copyright owner and infringement 2.46 copyright from a verbal description of the work.62 Indirect infringement is important in relation to computer programs as it is theoretically possible to infringe the copyright by writing a computer program to emulate the operation and function of another computer program without actually seeing and inspecting the code of the original program.63 Although theoretically possible, it must be noted that the Directive on the protection of computer programs effectively denies copyright in the ideas and principles underlying any element of a computer program. 2.44 To infringe copyright, the whole work or a substantial part of it must have been taken. Substantiality usually has been considered to be a question of quality rather than quantity.64 To infringe, the part taken should be the result of skill and labour in its own right. Typically, it will be an important part of the work. The oft-quoted example, is Hawkes & Sons (London) Ltd v Paramount Film Service Ltd,65 in which it was accepted that 20 seconds of the tune Colonel Bogey was a substantial part. The main theme was captured in those 20 seconds even though the whole tune lasted for around 4 minutes. 2.45 Where a part of a work has been taken and incorporated into a larger work by the defendant, whether that part is a substantial part is determined by comparing it to the work alleged to have been infringed rather than the alleged infringing work. Thus, taking 20 lines of code from a computer program consisting of 100 lines in total may be deemed a substantial part of it even if those 20 lines were included in a much larger program written by the defendant. 2.46 Sections 17 to 21 expand upon the meaning of the acts restricted by the copyright in the context of infringement. Some are more or less selfexplanatory, but it should be noted that special attention should be paid to the acts of copying, issuing copies to the public, rental right and lending right, communicating to the public and making an adaptation. These restricted acts

62 In

Plix Products Ltd v Frank M Winstone (Merchants) [1986] FSR 63, it was accepted that designing a pack for kiwifruit from a written specification and a verbal description of the claimant’s pack infringed its copyright. 63 There has not yet a successful infringement action based on this sort of activity, sometimes referred to as non-literal or non-textual copying though these terms have a more extensive meaning, as discussed in Chapter 4. 64 See, for example, Lord Pearce in Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273 at 293. 65 [1934] Ch 593.

39

2.47 Essentials of copyright law are of particular importance in relation to computer software and information technology generally. The restricted acts are now considered in more detail.

Copying 2.47 Copying a work is a restricted act in relation to all forms of works. Under section 17, in relation to literary, dramatic, musical or artistic works, it means reproducing the work in any material form. Importantly, this includes storing the work in any medium by electronic means and it does not matter if the copy is transient or incidental to some other use of the work. The fact that a transient copy can infringe copyright is very significant and this means that a copy in a computer’s volatile memory (RAM) is a copy for the purposes of infringement. Thus, accessing a website involves making copies of all the works viewed on the screen of the computer used to gain access. Running a computer program involves making transient copies of it or parts of it. This means that using a computer to access or view any work requires the licence of the copyright owner.66 This fact should be contrasted with reading a hard copy of a book. This is not an act restricted by the copyright in the book. However, in Public Relations Consultants Association Ltd v Newspaper Licensing Ltd,67 the Supreme Court has submitted questions to the Court of Justice for a preliminary ruling on this issue.68 2.48 Copying extends to making a copy in three-dimensions of a twodimensional work and vice versa. Therefore, making a model car from a drawing of it is making a copy of the drawing. Before the 1988 Act, there was a requirement that the one looked like a copy of the other to a layperson. This no longer applies so it is possible to infringe copyright in a dressmaking pattern printed on paper by copying the finished garment even though

66

For licensing, see infra. There is an exception under section 28A - making temporary transient or incidental copies for the sole purpose of onward transmission or lawful use if this has no independent economic significance: see Chapter 7 on copyright in the information society. 67 [2013] RPC 19. 68 The issue is the scope of the exception to the right of reproduction under Article 5 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10. Does it apply where the copy remains in a computer cache memory until overwritten or remains on screen, potentially for some time. See Chapter 7.

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Rights of the copyright owner and infringement 2.49 the finished garment would not look much like the pattern to a layperson.69 In terms of films or broadcasts copying includes making a photograph of the whole or a substantial part of an image forming part of the film or broadcast. For a typographical arrangement of a published edition, copying means making a facsimile copy of the arrangement. 2.49 To infringe copyright, it is not essential that the work, or the part of it copied, has been copied without modification. Creating a similar work by using the original work may infringe. In Designers Guild Ltd v Russell Williams (Textiles) Ltd,70 the works in question were fabric designs comprising of vertical patterns made up of stripes and flowers. The defendant’s design looked similar though not identical to that of the claimant. The House of Lords held that in such cases, the test for infringement required two steps: 1.

By comparing the similarities and differences, decide whether there has been copying by the defendant. If there is no copying, there can be no infringement.

2.

If copying is found, compare the works again but this time concentrating on the similarities to decide whether the defendant incorporated in his design a substantial part of the skill and labour used in the claimant’s design, taking account of the cumulative effect of the similarities, if more than one.

As implied in the first step, copyright infringement requires access to and use of the work alleged to have been infringed. The independent creation of a work which happens to be similar or even identical cannot infringe copyright. An example is where two photographers, each using their own intellect, independently decide to take a photograph of the same subject. Any resemblance between the photographs will be coincidental only and each photographer will have copyright in his photograph. However, if a photographer, seeing someone else’s photograph of a subject, tries to get as close as possible to that photograph, he may infringe copyright, depending on the degree of similarity and whether, by doing so, he or she has ‘captured’ the intellectual creativity of the first photographer.

69 In

Merlet v Mothercare plc [1986] RPC 115, a case before the 1988 Act, it was held, inter alia, that a cutting pattern for a rain cape for a baby was not infringed by the defendant which copied the cape because the layperson would not recognise the pattern as looking like a copy of the rain cape. 70 [2001] FSR 11.

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2.50 Essentials of copyright law 2.50 As complete identity of the works is not required, this means that infringement by copying can extend to ‘non-literal’ copying, sometimes referred to as ‘non-textual’ copying. An early example was where the defendant wrote a dramatic sketch from the claimant’s novel in Corelli v Gray.71 There was little in the way of literal similarity between the two works, but it was held that the defendant had infringed the copyright in the novel. 2.51 More recently, in Temple Island Collections Ltd v New English Teas Ltd,72 the claimant’s photograph was a photograph of a London Bus on Westminster Bridge with the Houses of Parliament and ‘Big Ben’ in the background. The photograph was monochrome apart from the bus which was the usual red colour. After seeing this photograph, the defendant took his own photograph which had some similarities, having a bus on Westminster Bridge with the Houses of Parliament and Big Ben showing. This photograph was also monochrome but with the bus in red. Although there were a number of differences, especially as the photographs were taken from different positions, it was held in the Patents County Court that the second photograph infringed the copyright in the first. It is submitted that this case of non-identical copying is at the outer limits of infringement.73 2.52 It is often said that copyright protects the expression of an idea but not the idea itself. As is usually the case with trite phases, it is not entirely accurate. After all, it all depends on what one means by an idea.74 Nevertheless, many judges have expressed the view that copyright does not protect ideas.75 The debate began in the late nineteenth century in cases such as the US Supreme Court decision in Baker v Selden76 in which the court held that the method of ruling up pages to carry out double-entry bookkeeping was unprotectable idea. In England, copyright was denied to a cricket scoring sheet, though on slightly different grounds, in Page v Wisden.77

71 72 73 74 75 76 77

[1913] TLR 570. [2012] FSR 9. This case is considered in more detail in Chapter 4. Per Lord Hailsham, agreeing with Professor Joad, in LB (Plastics) Ltd v Swish Products Ltd [1979] RPC 551 at 629. Note that the Directive on the legal protection of computer programs expressly denies protection to ideas and principles underlying any element of a computer program. 101 US 99 (1880). (1869) 20 LT 435. This case was cited with approval in Baker v Selden.

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Rights of the copyright owner and infringement 2.55 2.53 The idea/expression dichotomy has been developed in a fairly refined manner in relation to computer programs in the US where it is accepted that one can infringe the copyright in a computer program by writing the program in a different computer programming language. A comparison of code of the programs will yield little, if anything, in the way of literal similarities. What has been taken is not the program code as expressed but the structure, logic or techniques used by the person who wrote the first program. This is another form of non-textual copying which, whilst recognised as a possibility also in the UK courts, has met with little success there. We will return to this form of copying in 4 in much more detail.

Issuing copies to the public 2.54 Under section 18, issuing copies of a work to the public is a restricted act in relation to all types of copyright work. Thus, the copyright owner can control the issue of copies (including issuing the original to the public) whether in book form, on optical or magnetic media or any other tangible form. The doctrine of exhaustion of rights applies and, where a copy has been placed on the market within the EEA78 by or with the consent of the owner, his rights are exhausted as regards that particular copy. The owner cannot use his copyright to prevent the further commercialisation of that copy within the EEA. This would not apply where the copy had been placed on the market outside the EEA. In this case, the owner could object to the copy being imported and put on sale within the EEA. The doctrine of exhaustion of rights applies generally to other goods, articles or products subject to intellectual property rights. The rationale for the doctrine is that it prevents the holder of such a right using it to divide the market within the EEA, for example, by charging different prices in different Member States, thus prejudicing the freedom of movement of goods within the EEA. 2.55 Exhaustion of rights does not apply with respect to rental or lending. A person lawfully acquiring a copy of a copyright work still must have the licence of the copyright owner to rent or lend the work to the public. Rental and lending to the public are separate acts restricted by the copyright. Nor does exhaustion of rights apply to works in digital form published online.

78

Which comprises the Member States of the EU, Iceland, Liechtenstein and Norway and the EU itself as a separate party.

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2.56 Essentials of copyright law

Rental and lending right 2.56 The rental right and lending right derives from an EU Directive.79 ‘Rental’ means making a copy of the work available for use, on terms that it will or may be returned, for direct or indirect economic or commercial advantage. ‘Lending’ is ‘making a copy of the work available for use, on terms that it will or may be returned, otherwise than for direct or indirect economic or commercial advantage, through an establishment which is accessible to the public’. A charge may be made for lending, provided it does not go beyond the operating costs of the establishment.80 2.57 The rights of distribution and rental under Articles 6 and 7 of the WIPO Copyright Treaty 1996, apply only in relation to ‘copies’ and ‘original and copies’ that are fixed copies put in circulation as tangible objects.81 Consequently, the rental right does not extend to digital copies. On the other hand, Article 6 of the Directive on rental right and lending right allows derogation from the exclusive right of lending for the purposes of public lending provided the authors are remunerated in respect of such lending.82 2.58 The question of whether such lending to the public extended to the lending of digital copies arose in Vereniging Openbare Bibliotheken v Stichting Leenrecht.83 The Court of Justice of the EU ruled that the public lending right applies to digital copies but only under specific circumstances. The act of lending applies to lending a digital copy of a book, where the lending is carried out by placing a copy of the server of a public library so that a user may download that copy onto his own computer, providing only one copy may be downloaded during the period of lending and, after the lending period has expired, the downloaded copy is no longer accessible by that user. In other words, lending of a digital copy must emulate the act of public 79

80 81 82 83

Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (codified version), OJ L 376, 27.12.2006, p 28. This replaced the original Directive which dates from 1992. The restricted act is set out in section 18A of the Act. There are some specific permitted acts to allow lending by educational establishments; see sections 36A and 40A. Agreed statement annexed to the WIPO Copyright Treaty at the diplomatic conference adopting the Treaty. Normally, remuneration is payable through collecting societies. Case C-174/15, EU:C:2016:856.

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Rights of the copyright owner and infringement 2.61 lending of a physical copy. Member States may stipulate that the digital copy in question must have been put into circulation in the EU by, or with the consent of, the holder of the distribution right. The public lending exception does not apply where the digital copy was obtained from an illegal source. 2.59 Section 31 of the Digital Economy Act 2017 provides for the lending of e-books by public libraries. The necessary changes are made to the Public Lending Right Act 1979 (to cover lending by communication by electronic transmission to a place other than library premises) and to section 40A of the Copyright, Designs and Patents Act 1988 to cover lending of e-books and e-audio-books but only if the book has been lawfully acquired by the library and the lending complies with any purchase or licensing terms to which the book is subject. At the time of writing, section 31 of the Digital Economy Act 2017 has not been brought into force.

Performance, playing or showing of work in public 2.60 A performance of a work in public is restricted in relation to literary, dramatic and musical works. This extends to a performance made by means of visual or acoustic presentation, including by means of a sound recording, film or broadcast. Playing or showing a sound recording, film or broadcast in public is also a restricted act. Where the performance, playing or showing in public is by means of apparatus for receiving visual images or sounds conveyed by electronic means, the person by whom the images or sounds are sent is not to be regarded as responsible for infringement.84 There should be no difficulty in finding infringement where the performance, playing or showing in public is made by means of the internet, for example, where a film is streamed from a website apparatus viewed by a public audience, without the authorisation of the appropriate rightholder(s).

Communication of a work to the public 2.61 This restricted act of communication to the public applies to literary, dramatic, musical and artistic works, sound recordings, films and broadcasts. It does not apply to typographical arrangements of published editions. This restricted act came about in response to the Directive on copyright in the 84

This extends also to the performers in the case of a performance.

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2.62 Essentials of copyright law information society. Under section 20 of the Copyright, Designs and Patents Act 1988 communication to the public means communication by means of electronic transmission including broadcasting the work and making it available to the public by electronic transmission in such a way that members of the public may access the work from a place and at a time individually chosen by them. The latter form of communication is intended to cover the online transmission of works over the internet where the work in question is available on a website for access by streaming or downloading, as and when individuals visit that website. The visit to the website may come about by direct means, such as where a person enters the internet address of the website, or indirectly, where access results from a search enquiry or a link from another website. 2.62 For an act of communication to the public, two cumulative criteria are involved. First, there must be an ‘act of communication’ of a work and the communication of the work must be to ‘the public’.85 Where a work has already been made available to the public with the consent of the copyright owner, this must be a ‘new public’. Guests staying in hotel bedrooms can be considered to be part of the public and making available broadcasts on television sets in the bedrooms is within the restricted act even though the number of guests at any one time might be a relatively small number of the public.86

Making an adaptation 2.63 This restricted act applies only to literary, dramatic and musical works and is provided for under section 21. The meaning of ‘adaptation’ varies according to the type of work. For a conventional literary work, other than a computer program or database, it is a translation of the work, for example, from one spoken language to another. For dramatic works it is a version in non-dramatic format. A conversion of a non-dramatic work into a dramatic format is also an adaptation. A version of a work in which the story or action is conveyed wholly or mainly by means of pictures in a form suitable for

85

Stichting Brein v Wullums, Case C-527/15, EU:C:2017:300, citing Reha Training v GEMA, Case C-117/15, EU:C:2016:379 and G S Media BV v Samona Media Netherlands BV, Case C-160/15, EU:C:2016:644. 86 Sociedad General de Autores y Editores de España (SGAE) v Rafael Hoteles SA, Case C-306/05, EU:C:2006:764.

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Remedies 2.66 reproduction in a book, newspaper, magazine or other periodical is also an adaptation. For a musical work it is an arrangement or transcription of the work. 2.64 For a computer program, an adaptation is an arrangement or altered version or a translation of it. In this context ‘translation’ includes a version of the program in which it is converted into or out of a computer language or code or into a different computer language or code. For a database, an adaptation is an arrangement or altered version or a translation of it. It should be remembered that databases, as literary works, are not restricted to electronic databases and paper databases are also included. 2.65 Doing any of the other restricted acts in relation to the whole or a substantial part of an adaptation also infringes copyright. Therefore, making a copy of an altered version of a database infringes copyright if it is done without the licence of the copyright owner.

REMEDIES 2.66 The remedies for copyright infringement are damages, injunctions and accounts or otherwise as available for the infringement of a property right.87 Additional damages are also possible, as the name implies, in addition to ordinary damages where the infringement is flagrant, taking account of the benefit to the defendant. Additional damages are at the discretion of the court but must be claimed along with a claim for damages rather than a claim for an account of profits.88 In most cases a claimant will seek damages and an injunction to prevent further infringement. However, damages are not available if the defendant did not know and had no reason to believe that, at the time he did the relevant act, copyright subsisted in the work. This is without prejudice to the other remedies, so an account of profits may still be available as well as injunctive relief. The non-availability of damages for ‘innocent’ defendants is one good reason why a copyright notice should be placed on copies of the work. Where a copy of a work is made available online 87

The term ‘or otherwise’ does not extend to a proprietary right in the proceeds of infringement giving a right to a proprietary injunction: Twentieth Century Fox Film Corpn v Harris [2013] EWHC 159 (Ch), [2013] 2 WLR 1454. 88 Confirmed in the House of Lords in Redrow Homes Ltd v Betts Brothers plc [1998] FSR 345.

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2.67 Essentials of copyright law a copyright notice should include information as to the uses that may be made of the work and also carry an assertion of relevant moral rights. 2.67 The Directive on the enforcement of intellectual property rights89 applies to all forms of intellectual property, not just copyright, and lays down some important principles as to remedies, including preliminary measures such as search orders and interim injunctions. In the main, law in the UK already complied. However, Article 13 of the Directive sets out a useful approach to the measure of damages to be awarded. This Directive was implemented in the UK, in as much as was required, by the Intellectual Property (Enforcement, etc.) Regulations 2006.90 2.68 Article 13 states that, where the infringer knew or had reasonable grounds for knowing that he was infringing an intellectual right, damages are to be appropriate to the actual prejudice suffered by the injured party. Account is to be taken of all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the rightholder by the infringement. As an alternative, in appropriate cases, damages may be assessed as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorisation to use the intellectual property right in question. 2.69 This is not really that different to the traditional rule that damages will be assessed on normal principles applying to a tort,91 being to compensate the claimant for the loss suffered by reason of the infringement, providing the loss is not too remote.92 For example, where the copyright owner grants non-exclusive licences for the use of the work on a royalty basis, an award in damages might be based on the royalties he would have obtained had the use been carried out under such a licence. Accounts of profits are usually more difficult to assess. They are an alternative to damages. The basis of an award is to deprive the defendant of the profit he made from his unlawful use of the work. 89

Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 157, 30.04.2004, p 45. 90 SI 2006/1028. 91 A tort is a civil wrong independent of contract. 92 The question of remoteness is a complex one but may be put simply as being whether the loss in question was a natural and foreseeable consequence of the wrong.

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Remedies 2.72 2.70 As bringing a case to trial in the High Court93 may take two or three years, it is important that interim relief can be obtained by a copyright owner to bring a quick end to the harm caused by the alleged infringement. It is possible to obtain an interim injunction which will have the effect of prohibiting the acts alleged to infringe until the full trial of the action. Interim injunctions are not granted lightly and there must be a serious issue and the ‘balance of convenience’ must favour the grant of an injunction.94 This balance looks at the impact on the parties of granting an injunction compared with the impact of refusing to grant an injunction. If the defendant is likely to have the means to pay damages which can be reasonably well assessed should he be found to infringe, then an interim injunction is unlikely to be granted. On the other hand, if the claimant’s interests are likely to be seriously affected and the defendant is unlikely to be able to pay damages, it is more likely that an interim injunction will be granted.95 Where an interim injunction is granted, the claimant usually has to make an undertaking to compensate the defendant should it turn out at full trial that the copyright was not infringed after all. 2.71 It is also possible for a copyright owner to obtain a search order enabling him, with his solicitors to carry out a without notice search of the defendant’s premises for evidence of infringement, such as a hoard of pirated music CDs and documentary evidence as to sales activities. The purpose of such an order is to preserve such evidence for the trial where there is a danger that the defendant might destroy or conceal such evidence if given notice. 2.72 There is a limited right of seizure exercisable by copyright owners and in relation to performers’ rights. The right may be used typically where infringing copies or articles are being sold at a temporary market or a car boot sale. Before exercising the right, the police must be informed. More importantly, HM Revenue and Customs have powers of seizure of items such as counterfeit goods, copies or articles being imported into the UK. The powers may be exercised in one or more Member States of the EU. Other specific provisions 93

An alternative venue is the Patents County Court but the time to bring the case to court is likely to be similar. 94 American Cyanamid Co v Ethicon Ltd [1975] AC 396. In Series 5 Software Ltd v Clarke [1996] FSR 273, Laddie J suggested that a further issue was the relative strength of the parties’ cases. Of course, at the interim stage, the court may not be able to take a view on this. 95 Depending on the circumstances, other factors might be relevant such as where the grant of an injunction could close the defendant’s business activities, resulting in loss of jobs.

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2.73 Essentials of copyright law for seizure are contained in the relevant legislation such as section 111 of the Copyright, Designs and Patents Act 1988 for infringing copies of copyright works.96 2.73 Where an owner of an intellectual property right suspects counterfeit or infringing goods or articles are being imported, he may make an application for seizure. Customs authorities may also act under their own initiative and stop goods in transit and inform the relevant intellectual property right owner so that he can make a formal application to have the goods seized. The applicant must undertake to pay all costs including the costs of destruction if eventually ordered and pay compensation to the owner of the goods if they are found not to infringe the right claimed. 2.74 The owner of an intellectual property right suspected of being infringed may apply for an order, known as a Norwich Pharmacal order,97 for discovery against a person other than the infringer but who may have information identifying the infringer or evidence of infringement. Before 2006, there was no equivalent order in Scotland, but this was changed as a result of a Directive on the enforcement of intellectual property rights.98

SECONDARY INFRINGEMENT 2.75 There are a number of forms of infringement which are collectively known as secondary infringement of copyright. They are mostly concerned with acts of a commercial nature such as selling infringing copies or possessing infringing copies in the course of a business.99 Other forms of secondary infringement include making, or being in possession in the course of a business of, an article which is specifically designed or adapted to make copies 96

HM Revenue and Customs publish a notice on these provisions HMRC Notice 34 Intellectual Property Rights, available via the HMRC website at http://www.hmrc.gov.uk (carry out a search for ‘Notice 34 intellectual property rights’). The latest update is dated 12 July 2016. 97 The name comes from the case of Norwich Pharmacal Co v Commissioners of Customs and Excise [1974] AC 133. In that case, the claimant sought information from Customs and Excise as to the identity of companies importing chemicals alleged to infringe the claimant’s patent. 98 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 157, 30.04.2004, p 45. 99 Section 23.

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Criminal offences 2.77 of a work of copyright.100 Years ago this latter form of infringement would apply to things such as an engraved plate for making copies of a drawing101 or a master copy of music used to make copies of the music on vinyl disks. Nowadays, it could cover a digital image of a painting stored on an optical or magnetic disk from which copies may be made and distributed. Importing infringing copies into the UK otherwise than for private and domestic use is another form of secondary infringement. An infringing copy is one which infringed copyright or, if it has been or is proposed to be imported into the UK, its making in the UK would have infringed the copyright in the work in question or been in breach of an exclusive licence agreement.102 2.76 A form of knowledge is required for secondary infringement to be made out. In most cases it is based on knowledge or reason to believe, for example, that the copies are infringing copies or that the article was to be used to make infringing copies.103 Having reason to believe is an objective test based on whether a reasonable person with knowledge of the facts known to the defendant would have reason to believe the copy was an infringing copy.104

CRIMINAL OFFENCES 2.77 The criminal offences under copyright law are set out in section 107 of the Act. At one time, prosecutions for the criminal offences under copyright law were rare; the maximum penalties being no more than a small fine. With the growth of copying technologies, such as dual cassette machines and magnetic and optical disks, allowing the wholesale copying of works of copyright, there was an explosion of copyright piracy. This resulted in a response from Parliament leading to the increase in penalties up to a maximum of two years’ imprisonment and/or a fine on conviction on indictment. 100

Section 24. Or even to make forgeries of banknotes as these too are works of copyright. A careful inspection of a Bank of England banknote will reveal a copyright notice. 102 An example of the latter is where the licence forbids the importation into the UK of copies of the work. 103 Other forms of secondary infringement are permitting the use of premises or p roviding apparatus for an infringing performance. The mental element is different here and a person is liable unless he did not believe on reasonable grounds that the performance would not infringe copyright or that the apparatus was not to be used to infringe copyright: sections 25 and 26. 104 LA Gear Inc v Hi-Tec Sports plc [1992] FSR 121. 101

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2.78 Essentials of copyright law Subsequently, concerns about the scale of piracy and the involvement of organised crime and terrorists in copyright piracy and counterfeiting led to further increases in the maximum penalties. The Copyright, etc. and Trade Marks (Offences and Enforcement) Act 2002 increased the maximum penalty for some of the offences, such as making for sale or hire, importing or distributing infringing copies to 10 years’ imprisonment and/or a fine.105 Some offences are triable only in the magistrates’ court and carry a maximum sentence of imprisonment of three months and/or a fine not exceeding level 5 on the standard scale. An example is selling or offering for sale an article which is an infringing copy. 2.78 A number of the criminal offences bear a striking resemblance to some forms of secondary infringement.106 They mainly relate to activities in a business context such as making for sale or hire, importing into the UK other than for private and domestic use, selling, offering for sale or distributing in the course of a business an article which is an infringing copy. It is also an offence to distribute otherwise than in the course of a business articles which are infringing copies to such an extent as to affect prejudicially the copyright owner. The mental element, the mens rea for the offences, is as for the equivalent secondary infringement, that is knowing or having reason to believe, for example, that the article is an infringing copy. It is beyond doubt that this is also an objective test as with secondary infringement. The offences carrying a maximum of 10 years imprisonment and/or a fine on conviction on indictment are those of making for sale or hire, importing into the UK other than for private and domestic use and distributing articles which are infringing copies. The maximum penalty on summary conviction for these offences is imprisonment for a term not exceeding six months and/or a fine not exceeding £50,000.107

Communication to the public offence 2.79 With the growth of the internet and increases in online storage capabilities and cloud computing there has been an exponential growth in actual and potential copyright infringement. Access restriction protocols and 105

This came into force on 20 November 2002. The criminal offences are set out in section 107. 107 The increase to a maximum fine of £50,000 in the magistrates’ courts was introduced by section 42(2) of the Digital Economy Act 2010. 106

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Criminal offences 2.81 protection systems have had limited impact and are impractical for many individuals who upload their works of copyright on internet websites or social media. Measures to tackle the problem include blocking injunctions served on internet and information service providers requiring them to block sites responsible for facilitating copyright infringement, including peer-to-peer file sharing sites. 2.80 An offence of communicating a work to the public was introduced by the Copyright and Related Rights Regulations 2003.108 The offence required that the offender communicated the work to the public in the course of a business or, otherwise than in the course of a business, to such an extent as to affect prejudicially the owner of the copyright. As with the other offences, the offence required that the person concerned knew or had reason to believe that he was infringing copyright. Originally the offence carried a maximum penalty on summary conviction of imprisonment for a term not exceeding three months or a fine not exceeding the statutory maximum or both. On conviction on indictment, the maximum penalty was imprisonment for a term not exceeding two years and/or a fine.109 As the maximum term of imprisonment following conviction on indictment was already 10 years for some of the offences, including distributing infringing articles, it is surprising that this was not matched for the communication to the public offence. Indeed, the Gowers Review of Intellectual Property recommended that the penalty for such online infringement should be brought harmonised with that for physical infringement.110 2.81 The communication to the public offence was significantly modified by the Digital Economy Act 2017. Now a person commits the offence if he knows or has reason to believe that he is infringing copyright and either: (i) he intends to make a gain for himself or another, or (ii) he knows or has reason to believe that the communication of the work to the public will cause loss to the owner of the copyright or expose the owner to a risk of loss. In the context of the offence, ‘gain’ and ‘loss’ extend only to gain or loss in money

108

SI 2003/2498. New subsections 107(2A) and 4(A) were inserted into the Act with effect from 31 October 2003. These Regulations also brought in the restricted act of communicating a work to the public. 109 An equivalent offence was introduced in relation to rights in performances. 110 Gowers Review of Intellectual Property, 6 December 2006, at p 98. The Review was commissioned by the then Chancellor of the Exchequer, Gordon Brown.

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2.82 Essentials of copyright law and includes any such gain or loss whether temporary or permanent and ‘loss’ includes a loss by not getting what one might get.111 2.82 A feature of all the offences is that they are expressed in terms of knowledge or having reason to believe that the activity in question is one that infringes copyright. Unlike fraud or theft offences, there is no need to show dishonesty. However, it could be argued that knowing or having reason to believe that one is infringing copyright is equivalent to dishonesty.

Liability of officers for an offence by a corporate body 2.83 One offence which has no equivalent to the secondary infringements is communicating the work to the public neither in the course of a business nor otherwise but to such an extent as to affect prejudicially the copyright owner. Again, the knowledge required is the same: knowing or having reason to believe that copyright is being infringed. This latter form of the offence could apply where an individual makes a work available for downloading from a website without the copyright owner’s licence. If this results in large numbers of copies being made by persons accessing the website, it is likely that a court would accept that the copyright owner is affected prejudicially, particularly in a case where the owner himself sells copies or licences other to do so in return for royalty payments. Unlike most of the other offences, this offence only carries a maximum penalty of imprisonment for two years and/or a fine.112 There is no justification for this offence having a lesser penalty than the others. 2.84 The offences can be committed by a corporate body. The mental element of a senior officer of the body, such as the managing director of a company, will be imputed to the body. In common with a number of other offences that can be committed by a corporate body, directors and senior officers can also be convicted of the offences if they consented to or connived in the commission of the offence. In Thames & Hudson Ltd v The Design and Artists Copyright Society Ltd,113 the Society brought a private prosecution against the publishing company and its directors. The directors applied for a stay in 111

Using the concept of gain or loss is not unlike that used in relation to fraud offences. The maximum penalty on summary conviction is imprisonment for a period not exceeding three months and/or a fine not exceeding £50,000: section 107(4A). 113 [1995] FSR 153. 112

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Criminal offences 2.86 the proceedings, claiming that they were respectable business persons and not copyright pirates. The judge refused the stay, saying that nowhere did the Act say that the offence could only be committed by a ‘pirate’. The test was simply that of knowing or having reason to believe.

Sentencing guidelines 2.85 The Sentencing Council has not provided guidance in connection with the offences under section 107. This was noted by the Court of Appeal in R v Wayne Evans.114 Mr Evans was convicted of two counts of distributing an article infringing copyright under section 107(1)(e) and one count of possessing an article for use in fraud contrary to section 6(1) of the Fraud Act 2006.115 Mr Evans operated a number of websites which enabled users to go to ‘torrent’ websites from where they could download infringing files, such as the ‘Top 40’ music files. The losses to the copyright owners was estimated at around £1m although Mr Evans made relatively little money out of the venture. 2.86 The Sentencing Council had provided guidelines for fraud, bribery and money laundering offences and these were relevant to the fraud offence. However, in the absence of guidance for the section 107 offences, counsel for the Crown suggested that the Court of Appeal itself lay down guidance for sentencing for the section 107. The Court acceded and suggested: ••

Illegal downloading and distribution is often very difficult to investigate and detect. It results in serious problems and losses to the music and entertainment industries. A deterrent sentence is appropriate.

••

The length of time of the unlawful activity (including after cease and desist notices) is highly relevant.

••

The profit accruing to the defendant as a result of the unlawful activity will always be relevant.

114 115

[2017] EWCA Civ 139, [2017] 1 Cr App R (S) 56. At the time of the offending, the maximum penalty under section 107(1)(e) was 10 years’ imprisonment and/or a fine on conviction on indictment but the maximum for the communication to the public offence was only two years’ imprisonment and/or a fine. This may explain the reason why the charges were brought under section 107(1)(e). The Fraud Act charge related to Mr Evans’ computer equipment.

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2.87 Essentials of copyright law ••

Regardless of the defendant’s profit, the losses to the copyright owners, as far as it can be calculated, will also be relevant as will the wider impact on the music industry – though this may be difficult to calculate.

••

Guidelines on fraud, bribery and money laundering offences may be helpful, especially where one of the counts is for fraud. However, it will be for the judge in individual cases to assess whether these guidelines are of use.

••

Personal mitigation, assistance to the authorities and bases and pleas of guilt are to be taken into account in the usual way.

••

Unless this type of unlawful activity is very amateur, minor or shortlived, or in the absence of particularly compelling mitigation or other exceptional circumstances, an immediate custodial sentence is likely to be appropriate in cases of illegal distribution of copyright infringing articles.

2.87 Mr Evans appeal against his sentence of 12 months’ immediate imprisonment was dismissed. He pleaded guilty to the offences but had continued with the unlawful activity after being served with cease and desist notices. The choice of offences of distributing articles knowing or having reason to believe that they infringed copyright seems inappropriate and the communication to the public offence is more fitting to the activities in practice. The word ‘article’ is not defined in the Copyright, Designs and Patents Act 1988, except in relation to articles in a periodical. It suggests something tangible with a physical presence. However, section 8(1) of the Fraud Act 2006 defines ‘article’ as including any program or data held in electronic form.

THE PERMITTED ACTS 2.88 There are a large number of acts which may be performed by anyone without infringing the copyright in a work. They are known as the permitted acts. Examples include fair dealing with a literary, dramatic, musical or artistic work for non-commercial research or private study; criticism, review, quotation or news reporting; fair dealing with a work for the purposes of caricature, parody or pastiche; making an accessible copy of a work for a disabled person;116 numerous other permitted acts including in the context 116 See

infra.

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The permitted acts 2.91 of education, libraries and archives and public administration and a host of miscellaneous permitted acts.117 2.89 A permitted act, under section 28B, allowed private copying, for example, where an individual had lawful possession of a copy of a work, he or she would be allowed to make another copy for their personal use. This came into force on 1 October 2014 but the Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014,118 which inserted section 28B, were quashed with prospective effect by the decision in R (on the application of British Academy of Songwriters, Composers and Authors) v Secretary of State for Business, Innovation and Skills (No.2).119 2.90 An important permitted act in the context of this book is that of making a transient or incidental copy which is an integral and essential part of a technological process, the sole purpose of which is to enable the transmission of the work in a network between third parties by an intermediary or a lawful use of the work neither of which has any economic significance.120 This applies to literary works (but not computer programs or databases), dramatic, musical and artistic works, typographical arrangements of published editions, sound recordings or films. The purpose of this permitted act is to protect internet service providers and other intermediaries where their networks are used to transmit works from one person to another.121 2.91 Section 30A provides a permitted act of fair dealing with a work for the purposes of caricature, parody or pastiche. Any term which purports to prevent or restrict this permitted act is unenforceable. This permitted act was an option under Article 5(3)(k) of the Directive on copyright and related rights in the information society and was introduced into the Act by the Copyright and Rights in Performances (Quotation and Parody) Regulations 2014.122 117

Many of the permitted acts are outside the scope of this book. SI 2004/2361. 119 [2015] EWHC 2041 (Admin), [2015] RPC 27. The Regulations made no provision, inter alia, for fair compensation for rightholders as required under Article 5(2)(b) of Directive 2001/29/EC. 120 Section 28A. The origin of this provision is Article 5(1) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10. 121 This permitted act is considered in more detail in Chapter 7 on copyright in the information society. 122 SI 2014/2356. 118

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2.92 Essentials of copyright law 2.92 There are some specific permitted acts for computer programs and databases. Under certain circumstances it is permissible for a lawful user of a computer program to decompile the program for the purpose of making a new program that will ‘interoperate’ with that program or another program. Another permitted act is making a back-up copy of a computer program, if necessary, for the lawful use of the program. A very important permitted act is that of observing, studying and testing computer programs to determine underlying ideas and principles. These permitted acts for computer programs are described fully in the next chapter. The permitted act for databases is described in Chapter 5.

Permitted uses of orphan works 2.93 An orphan work is one where the identity of the copyright owner (or any of the owners in the case of a jointly owned work) cannot be found or his whereabouts cannot be discovered after a diligent search. As some, though not all, EU Member States already have provisions for orphan works, this is seen as a hindrance to the working of the internal market. In an effort to encourage the digitisation and dissemination of orphan works held in archives, museums, educational establishment and public libraries, the Directive on certain permitted uses of orphan works123 contains the mechanisms for making such works available to the public. The Copyright and Rights in Performances (Certain Permitted Uses of Orphan Works) Regulations 2014 inserted the relevant provisions into the Act.124 2.94

The Directive applies to works:125

(a) published in the form of books, journals, magazines or other writings held by publicly accessible libraries, educational establishments, museums, collections in archives or film or audio heritage institutions; (b) cinematographic or audio-visual works and phonograms contained in collections of such bodies as above; (c) cinematographic or audio-visual works and phonograms produced by public service broadcasting organisations up to and including 123

Directive 2012/28/EU of the European Parliament and of the Council of 25 October 2012 on certain permitted uses of orphan works, OJ L 299, 27.10.2012, p 5. 124 SI 2014/2861. The main provisions are contained in Schedule ZA1 to the Act. 125 Note: this description of the works and other subject matter is not completely verbatim.

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The permitted acts 2.96 31 December 2002 and included in their archives which are protected by copyright or related rights (for example, rights in performances) and are first published in a Member State or, in the absence of publication, first broadcast in a Member State.

Also included are works and phonograms as above but which have not been published or broadcast but have been made publicly accessible by the relevant organisations with the consent of the rightholder where it is reasonable to assume that the rightholders would not object to the permitted uses of their works or phonograms.

The Directive also applies to embedded works and other protected subject-matter incorporated in, or constitute an integral part of, the works or phonograms referred to above. For example, it could apply to photographs and illustrations contained within a book or journal.

2.95 An orphan work is one where none of the rightholders are identified, or if any are identified, they cannot be located after carrying out a diligent search. In a case where one or more rightholders are identified and located, it may be treated as an orphan work nevertheless, if that person or persons authorise the use of the work as an orphan work. Only specified bodies may carry out the diligent search. The provisions are limited to such bodies. The diligent search must be carried out prior to use of the work or phonogram and appropriate sources must be consulted. The annex to the Directive provides a non-exhaustive list of sources. For example, for published books these include legal deposit libraries, publishers’ and authors’ associations, databases of relevant collecting societies and registries, etc. 2.96 Diligent searches will normally be made in the Member State where the work was first published or broadcast. Results of diligent searches must be recorded with information about the results which lead to the conclusion that the work or phonogram is an orphan work; the use made by the organisation concerned; any change in status (for example, where a rightholder has put an end to the orphan work status of his work or phonogram; and, relevant contract information of the organisation concerned). This information must be held by competent national authorities and made available in a publicly accessible database. The information will also be recorded in a single publicly accessible database established and managed by the EU Intellectual Property Office. There are provisions for mutual recognition of diligent searches between Member States. 59

2.97 Essentials of copyright law 2.97 The Directive provides exceptions to the rights of reproduction (for the purposes of digitisation, making available, indexing, cataloguing, preservation or restoration). The uses must relate to the organisations’ publicinterest missions, in particular the preservation of, the restoration of, and the provision of cultural and educational access to, works and phonograms contained in their collection. Revenues generated from the use of the works must be used for the exclusive purpose of covering the costs of digitisation and making available. Importantly, a rightholder may at any time put an end to the orphan status of his work. Fair compensation must be paid. 2.98 Standalone photographs are not within the scope of the Directive at this stage126 but there is a review clause, so the scope of the Directive may in future be extended to other works.

Permitted acts in relation to blind, visually impaired or print-disabled persons 2.99 At present, sections 31A to 31F provide for making accessible copies of works for disabled persons. A disabled person is a person who has a physical or mental impairment which prevents that person from enjoying a copyright work to the same degree as a person who does not have that impairment. There are provisions for authorised bodies to make and supply accessible copies to disabled persons. There are equivalent provisions in respect of performances. 2.100 As from 11 December 2018, Directive 2017/1564/EU introduces a new regime for permitted uses for the benefit of persons who are blind, visually impaired or otherwise print-disabled.127 The obvious example is making available large print books to such persons. There is also an EU Regulation on the cross-border exchange between the EU and third countries of accessible

126 127

A book, journal or magazine may include photographs or other works of course. Directive 2017/1564/EU of the European Parliament and of the Council of 13 September 2017 on certain permitted uses of certain works and other subject matter protected by copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise print-disabled and amending Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 242, 20.09.2017, p 6.

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The permitted acts 2.103 format copies.128 This came into force on 12 October 2018. The permitted uses apply also in relation to the restricted acts under the Directives on rental right and lending right, databases, copyright and related rights in the information society and orphan works. 2.101 Formats that could be used, depending on the circumstances, include audio-books, electronic copies of books and other documents, that can be viewed in appropriate ways on computers and other devices or can be read out to a blind person by an e-book reading app. Older books and other documents may have to be digitised so as to make them accessible. Special forms of navigation may be used. An electronic database may be made searchable by voice command and the results read out by a reading app. 2.102 Under Article 2, a beneficiary of the permitted act is a person who is blind, has a visual impairment that cannot be improved to give that person visual function substantially equivalent to a person without that impairment and is, as a result, unable to read printed works to substantially the same degree as a person without that impairment. A print-disabled person is a person having a perceptual or reading disability and, as a result, is unable to read to substantially the same degree as a person without such disability or is unable, due to a physical disability, to hold or manipulate a book or to focus or move their eyes to the extent that would normally be acceptable for reading. 2.103 An accessible format copy is one which is a copy in an alternative manner or form that gives a beneficiary person access to the work or other subject matter, including allowing such person to have access as feasibly and comfortably as a person without any of the impairments or disabilities as mentioned above. An ‘authorised entity’ is an entity authorised or recognised by a Member State to provide education, instructional training, adaptive reading or information access to beneficiary persons on a non-profit basis. It also includes a public institution or non-profit organisation that provides the same services to beneficiary persons as one of its primary activities, institutional obligations or as part of its public-interest missions. 128

Regulation 2017/1563/EU of the European Parliament and of the Council of 13 S eptember 2017 on the cross-border exchange between the Union and third countries of accessible format copies of certain works and other subject matter protected by copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise printdisabled, OJ L 242, 20.09.2017, p 1. This implements the Marrakesh Treaty to Facilitate Access to Published Works for Persons who are Blind, Visually Impaired, or Otherwise Print Disabled, 27 June 2013. This Treaty is administered by WIPO.

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2.104 Essentials of copyright law 2.104 Article 3 set out the permitted uses. The authorisation of the rightholder is not required for acts necessary for a beneficiary person, or person acting on their behalf, to make an accessible format copy to which the beneficiary person has lawful access for his exclusive use. An authorised entity may make an accessible format copy of a work or other subject matter to which it has lawful access, or to communicate, make available, distribute or lend an accessible format copy to a beneficiary person or to another authorised entity on a non-profit basis for the purpose of exclusive use by a beneficiary person. 2.105 It is a condition that each accessible format copy respects the integrity of the work or other subject matter, with due consideration given to the changes required to make the work or other subject matter accessible in the alternative format. The permitted uses may only be applied in certain special cases which do not conflict with a normal exploitation of the work or other subject matter and do not unreasonably prejudice the legitimate interests of the rightholder. The permitted uses cannot be prevented or restricted by contract. However, where the permitted uses are undertaken by authorised entities, there will be compensation schemes. 2.106 Under Article 4, authorised entities may make accessible format copies available for beneficiaries in, or other authorised entities established in, other Member States. Authorised entities will be subject to specified obligations. The Commission will report on the working of the Directive by 11 October 2020 and there is provision for review and evaluation of the w orking of the Directive by 11 October 2023.

PUBLIC INTEREST AND OTHER DEFENCES 2.107 There is a limited public interest defence to copyright infringement. This could apply, for example, where a person publishes some malicious computer program code to warn others. It could also apply where an internal report is published which indicates that a company is involved in a secret price-fixing ring. In Hyde Park Residence Ltd v Yelland,129 the Court of Appeal suggested the defence would be available where the work was immoral, scandalous or contrary to family life or where it was injurious to public life, public health and safety or the administration of justice. Public interest may be satisfied by a court refusing to enforce copyright as happened with the Spycatcher 129

[2000] RPC 604.

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Public interest and other defences 2.111 novel by the former MI5 agent Peter Wright130 or by providing a defence to a copyright infringement action.131 2.108 A defence of non-derogation from grant was first applied to the copyright field in British Leyland Motor Corpn v Armstrong Patents Co Ltd.132 The House of Lords refused to enforce copyright in drawings of exhaust pipes for cars on the basis that a person buying a complex product which would need replacement parts during its normal life had a right to a free market in spare parts. By selling new cars but then controlling the market for spare parts, B ritish Leyland was derogating from its grant. This case was influential in how the protection of utilitarian designs was dealt with in the Copyright, Designs and Patents Act 1988. The defence survived that Act but it has been made clear subsequently that it is limited in scope and is unlikely to be developed further.133 In terms of computer software, it is arguable that it might be relevant in terms of software maintenance and there have been suggestions that it might be applicable so as to allow a person using software specifically written for him by a software development company to engage other companies to maintain that software. 2.109 Other potential defences may be based on implied consent or that the copyright owner acquiesced in the infringement or is estopped from enforcing the copyright because, for example, he encouraged the infringing act and it would now be unconscionable for him to enforce his copyright. 2.110 Enforcing a copyright may conflict with the right of freedom of expression under Article 10 of the Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms. However, this right is not absolute and it may be derogated from, inter alia, in protecting the rights of others and preventing the disclosure of information received in confidence. 2.111 In Sweden, persons responsible for ‘The Pirate Bay’ website, which made it possible for users to engage in file-sharing, were convicted 130

Attorney-General v Guardian Newspapers Ltd [1988] 3 All ER 567. Lion Laboratories Ltd v Evans [1984] 2 All ER 417. In that case, which concerned the publication of a confidential internal report indicating that a device for detecting the amount of alcohol on a person’s breath was unreliable, the public interest provided a defence in relation to both copyright and breach of confidence. 132 [1986] AC 577. 133 Canon Kabushiki Kaisha v Green Cartridge Co (HK) Ltd [1997] FSR 817. 131

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2.112 Essentials of copyright law of complicity to commit crimes under the Swedish Copyright Act. Large numbers of copies of copyright works, including computer games, films and music, were distributed through the website. They were sentenced to imprisonment and fined a total of €5m. They applied to the European Court of Human Rights on the basis that their Article 10 right of freedom of expression had been violated.134 They argued that this right covered the provision of an internet service which could be used to transmit legal and illegal information. This was rejected by the Court which held that such interference was justified under Article 10(2) as being necessary in a democratic society in the interests of protecting copyright works. The Court stressed that intellectual property is protected under Article 1 of Protocol No 1 to the Convention (protection of property).

DEALING WITH COPYRIGHT 2.112 Copyright is a property right and may be dealt with in a number of ways, as with other property rights. In particular, it may be assigned, pass under a will or pass by operation of law as personal property.135 Copyright may also be licensed, exclusively or non-exclusively. It may also be used as a security for a loan or made subject to a mortgage. It is also possible to deal with copyright in a work or works yet to be created. This is referred to as future copyright. Once the work is created, the copyright will automatically vest in the assignee. It is also possible to grant licences under a future copyright.

Assignment 2.113 An assignment of copyright is a transfer of ownership. It need not be in relation to the entire copyright and it is possible to have a partial assignment, for example, covering only some of the acts restricted by the copyright or limited in time. It may also be possible to limit an assignment territorially. This is an important feature as operation of the Berne Convention for the Protection of Literary and Artistic Works effectively gives the owner of a copyright equivalent copyrights in the other countries which are Contracting Parties to the Convention. 134 135

Neij and Sunde Kolmisoppi v Sweden (2013) 56 EHRR SE19. Section 90. In Scotland, it is treated as ‘moveable property’.

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Dealing with copyright 2.116 2.114 For an assignment to be effective at law it is required to be made in writing and signed by or on behalf of the assignor.136 There is no need for the assignee to sign also. Without this simple formality, the person acquiring the copyright will, at best, only get the beneficial title to it.137 The courts may be prepared to construe documents such as bills of sale or receipts generously to give effect to the assignment. An example might be where a painting is sold and the receipt signed by the seller confirms the sale of the painting and ‘all rights in it’. This is assuming of course, that the seller has the right to assign the copyright. Buying an expensive oil painting without an assignment of copyright or a licence under it simply gives possession of the physical object. 2.115 An assignee is bound by licences granted by the previous owners of the copyright except a purchaser in good faith for valuable consideration without notice, actual or constructive. In such a case, the chain will be broken and persons deriving title under such a purchaser also take free of any such licences.

Licences 2.116 As with assignments, licences may be partial. There are two forms of licence. An exclusive licence grants the right to carry out the acts covered by the licence to the exclusion of everybody else including the copyright owner. To be effective, an exclusive licence must be in writing and be signed by or on behalf of the licensor.138 A non-exclusive licence is one where a number of persons are granted the same or overlapping rights under the copyright. Standard software packages are made available under non-exclusive licences. Using any form of computer software involves, at the very least, making transient copies in the computer’s volatile memory, hence the need for a licence.139 Likewise, accessing material online involves making temporary copies in

136

This also applies to future copyright. In appropriate cases, a court may order the execution of a valid assignment. However, a court may instead infer that the grant of a limited licence may be more appropriate, especially where software is concerned as licensing is so common in this field. 138 Section 92. 139 In some cases, a permanent copy may be made where the software is copied onto the computer’s disk drive. However, this is in doubt. It depends on the scope of Article 5(1) of the Directive on copyright and related rights in the information society: see Chapter 7. 137

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2.117 Essentials of copyright law a cache140 and on the computer display. No formalities are required for a nonexclusive licence though they are usually in writing and often contain a whole host of other contractual terms. 2.117 Exclusive licensees may sue for infringements falling within the scope of the licensed acts. Normally, the copyright owner will be joined in the action.141 In certain cases, even non-exclusive licensees may bring an action for infringement. The licence must be in writing, signed by or on behalf of the copyright owner, and expressly grant the licensee the right to bring an action. The alleged infringing act must be directly connected with a prior licensed act of the licensee.142

Licensing scheme for orphan works 2.118 The UK adopted a licensing scheme for orphan works. This is not a permitted act but a separate mechanism which allows anyone to apply for a licence to use one or more orphan works. It is administered by the UK Intellectual Property Office. The Enterprise and Regulatory Reform Act 2013 inserted the provisions in the Copyright, Designs and Patents Act 1988 to deal with orphan works.143 2.119 Licences may be obtained for orphan works of copyright and performances, such as photographs, films, music and written works. The uses may be commercial or non-commercial. Licences, if granted, are nonexclusive and last for seven years. Licences may be renewed. An application fee is payable and a licence fee if the licence is granted. The licence fees will be payable to the owner if he or she turns up and, in such a case, no further

140

A cache is a high-speed storage system used to store information which can be retrieved quickly, such as webpages so that they do not have to be loaded from the website each time the page is displayed. This can significantly speed up the browsing experience. 141 Section 102. Where the copyright owner sues for infringement, it is usual for him to join a relevant exclusive licensee in the action as co-claimant. Indeed, leave of the court is required otherwise. 142 Section 101A. The copyright owner must be joined in the action unless the court gives leave otherwise and vice versa. Before 31 October 2003, non-exclusive licensees had no right of action. 143 Section 77 of the Enterprise and Regulatory Reform Act 2013 inserted sections 116A to 116D into the Copyright, Designs and Patents Act 1988 which provide for powers to implement licensing systems for orphan works. This came into force on 25 April 2013.

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Moral rights 2.121 licences may be granted and any current licence cannot be renewed. The licences can be granted only in respect of the UK and it is the responsibility of the licensee to check whether any other permissions are required if the intended use extends to other jurisdictions, such as where the work will be made available on a website or on social media. Further information and guidance about the licensing scheme and the application procedures can be found on the UK Intellectual Property Office website.144

MORAL RIGHTS 2.120 The Copyright, Designs and Patents Act 1988 introduced a number of rights collectively known as moral rights. Authors of the original works of copyright and directors of films have a right to be identified as the author of the work or director of the film, as the case may be, under section 77. They are also given a right to object to a derogatory treatment of the work or film under section 80.145 The right to be identified as author or director must be asserted and may be waived. It does not apply to computer programs, typeface designs and computer-generated works. Nor does the right apply to works created by employees in the course of their employment, where the copyright originally vested in the employer, with respect to things done by or with the consent of the copyright owner.146 A licence agreement may provide for liquidated damages for a failure to identify the author, as in Walmsley v Education Ltd,147 where the licence contained a term to the effect that the licence fee would be doubled if the licensee failed to identify the licensor as the author of the licensed photographs. 2.121 For the purposes of the right to object to a derogatory treatment, a treatment means any addition to, deletion from or alteration to or adaptation, other than a translation of a literary or dramatic work or an arrangement or transcription of a musical work involving no more than a change of key or register. A treatment is derogatory if it amounts to distortion or mutilation of the work or is otherwise prejudicial to the honour or reputation of the author or director. A distortion of a work may be sufficient to amount to a derogatory treatment as 144

At https://www.gov.uk/guidance/copyright-orphan-works. There is a further right to not to have a work or film falsely attributed to a person as author or director and a right of privacy in respect of commissioned photographs and films. 146 That is, the owner at the relevant time. 147 Case No IP13504792, 13 March 2014, IPEC (Small Claims Track). 145

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2.122 Essentials of copyright law in Delves-Broughton v House of Harlot Ltd,148 where a photograph of a model wearing a latex costume was changed by removing the background, reversing the image and cropping to use on a website advertising latex garments. 2.122 There are a number of exceptions to the right. In particular, it does not apply in relation to computer programs and computer-generated works. There are also restrictions in the case of employee created works in respect of things done by or with the authority of the copyright owner. However, in such a case, the right may still apply if the author or director is identified at the time or previously, in or on published copies.149 2.123 Computer software comprises computer programs, databases and any other form of work in digital form. That being so, it is important to note that moral rights may apply to forms of software other than computer programs or computer-generated works. In particular, copyright databases, literary, dramatic, musical and artistic works and films in digital form may be subject to moral rights. Communicating the work or film to the public may infringe those rights where they exist if the author or director is not identified or the work or film has been subjected to a derogatory treatment.150 Where the right to be identified exists and has been asserted, the author or director may specify a pseudonym, initials or some other particular form of identification and this form must be used, otherwise any reasonable form of identification may be used.151 There are no moral rights in respect of databases protected by the database right only.152 2.124 The moral rights of being identified as author or director and objecting to a derogatory treatment endure as long as the copyright does. They may not be assigned but pass under the author’s or director’s will. Where there is no mention in the will, the moral rights pass to the person to whom the copyright passes.

148

[2012] EWPCC 29. Even then the right is not infringed if there is a sufficient disclaimer. 150 There are some differences in the acts infringing moral rights, depending on the nature of the work. 151 In Hyperion Records Ltd v Dr Lionel Sawkins [2005] EWCA Civ 565, [2005] RPC 32 the form specified by the author was not used. His contribution was acknowledged though not as author. Consequently, his right to be identified as author was infringed. 152 Without prejudice, of course, to any copyright works contained within the database. 149

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Rights related to copyright 2.126

RIGHTS RELATED TO COPYRIGHT 2.125 There are a number of rights related to copyright. An important right is the sui generis database right153 which protects databases which result from substantial investment in obtaining, verifying or presenting the contents of the database. The investment may be in terms of human, technical or financial resources. As with copyright databases, the protection does not extend to the contents of the database and is without prejudice to the protection, if any, of those contents. The database right is dealt with extensively in Chapter 6. At this stage it should be noted that, although there are some similarities with copyright, the database right is quite different in a number of respects such as the provisions for subsistence and infringement. Nevertheless, some databases may be protected by copyright and by the sui generis database right. In both cases, the contents may have their own independent protection, for example, as copyright works. In some cases, the contents may have no protection, for example, where the contents consist of raw data lacking the author’s intellectual creation in respect of compiling those data. 2.126 Another related right applies to live performances. These rights have developed into full-blown property rights and other rights for performers from what was originally a means of controlling illicit recordings of live performances by criminal sanction. Performers and persons having exclusive recording rights in respect of live performances have economic rights. Performers additionally have what are described as property rights and nonproperty rights in relation to their live performances. Performers also have moral rights. The rights are similar to the equivalent rights under copyright though there are some differences. The rights last for 50 years from the end of the calendar year during which the performance took place. However, if during that period recordings of the performance, not being sound recordings, are released, the rights last for 50 years from the end of the calendar year during which the recordings were released. In the case of a sound recording this period is 70 years. A recording is ‘released’ when it is first published, played or shown in public or communicated to the public. A good number of, though by no means all, copyright provisions have their equivalent in rights in performances. Some provisions of Directive 2001/29/EC on copyright and related rights in the information society apply also to

153

Simply referred to as the database right in UK legislation.

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2.127 Essentials of copyright law rights in performances, phonograms, first fixations of films and fixations of broadcasts.154 2.127 A publication right was introduced in 1996 by regulation 16 of the Copyright and Related Rights Regulations 1996.155 The publication right is equivalent to a copyright and applies to previously unpublished literary, dramatic, musical or artistic works and films in which copyright has expired. The right lasts for 25 years from the end of the calendar year during which the work was first published. The right gives an incentive to persons to publish for the first time older works now out of copyright. Publication means making available to the public, in particular, issuing copies to the public, making the work available by means of an electronic retrieval system, renting or lending copies to the public, performing, exhibiting or showing to the public or communicating the work to the public. No account is taken of any unauthorised act, being an act done without the consent of the owner of the physical medium in which the work is embodied or on which it is recorded. 2.128 For protection by the publication right, the work must qualify by virtue of first publication being in the EEA or the publisher being at the time of publication a national of an EEA State. Where there are joint publishers, this latter requirement is satisfied if only one of them is a national of an EEA State. The publication right is of particular importance where old works are made available online, as a great many are. It does not apply, however, to any work which has been subject to Crown or Parliamentary copyright. Most of the provisions applying generally to copyright works also apply, some in modified form, to works subject to the publication right.

154

For example, the reproduction right and the right of communication to the public under Articles 2 and 3 of the Directive. 155 SI 1996/2967. The publication right came from Council Directive 93/98 of 29 October 1993 harmonising the term of protection of copyright and certain related rights, OJ L 290, 24.11.1993, p 9, see Article 4. This Directive was replaced by Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights (codified version) OJ L 372, 27.12.2006, p 12.

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Chapter 3

Copyright and computer programs

INTRODUCTION 3.1 The design and development of computer programs and associated items of software, such as databases and other works in digital form, requires very significant and substantial investment in financial and human resources. The same applies to the ongoing maintenance of and modification to computer programs and other items of software. Computer programs are of fundamental importance to business, commerce, industry and the public sector and it is vitally important that adequate but balanced protection commensurate with that investment is afforded to computer programs. 3.2 Computer programs are unlike other works of copyright. They are not static, waiting to be read, seen, listened to or played. Computer programs are dynamic. They manipulate symbols leading to virtual or physical effects, such as accessing, downloading and playing or executing digital files, making complex calculations, displaying and manipulating information on a screen, controlling the path of a cutting lathe or a multitude of industrial processes. The possible effects that computer programs may cause or contribute to when loaded into and running in a computer are endless. Because of this, there have to be some specific permitted acts under copyright law that apply specifically to computer programs. For example, in the case of a book it is possible to discover the underlying ideas and ‘plot’ simply by reading it, without performing any act restricted by the copyright in the book. A licence is not needed to read a novel or dramatic work printed on paper. Computer programs are different. Storing a computer program is to make a copy of it and even loading a computer program into a computer or running it involves making, at the least, transient copies of the program. As we have seen, the act of copying extends to transient and incidental copies.1 Thus, at first sight, any operation of 1

Temporary transient and incidental copies are permitted in some circumstances under Article 5 of Directive 2001/29/EC of the European Parliament and of the Council of

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3.3 Copyright and computer programs a computer program requires the licence of the copyright owner. Where less than the whole computer program exists in the computer’s volatile memory at any given point in time, there is a caveat to this and the part in question must reflect the expression of the author’s own intellectual creation.2 3.3 As computer programs are generally licensed to the end user, there is a danger that terms in the licence may prevent or restrict acts which could give access to the ideas and principles underlying the program. A basic rule of copyright is that ideas and principles should not be protected as such. It is important that they should be freely deducible by and available to any person lawfully having a copy of a computer program and using it in accordance with the scope of his lawful use. 3.4 Computer programs have to interact with computer hardware, other computer programs and software such as digital works and data. It is important that interfaces should not be unduly protected otherwise others would find it difficult if not impossible to write new computer programs to interact with existing programs or hardware. The same applies to the ability to use existing data created with one computer program in another computer program, for example, by using a filter or conversion routine built into the second computer program allowing file and data transfers. A permitted act for computer programs seeks to make it possible to discover interface details allowing the creation of new ‘interoperable’ programs.

LAYOUT OF THE CHAPTER 3.5 This chapter explores the current position as to copyright and computer programs including subsistence, the exclusive rights of the owner of the copyright, infringement, the exceptions to owner’s rights including acts consistent with lawful use, observing studying and testing a computer program to obtain the underlying ideas and principles and the act of decompilation, The focus is placed on the Directive on the legal protection of

2

22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10. However, this Directive does not affect provisions relating, inter alia, to the legal protection of computer programs. Directive 2001/29/EC is the subject-matter of Chapter 7. By analogy to the ruling in Football Association Premier League Ltd v QC Leisure, Joined Cases C-403/08 and C-429/08, EU:C:2011:631.

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Background and historical context 3.8 computer programs.3 The transposition of the Directive into UK law was something less than perfect and reference to the text of the Directive, as interpreted by the recitals and rulings of the Court of Justice of the EU, is preferable. 3.6 Other aspects covered in this chapter include the remedies against the circumvention of copy-protection devices applied to computer programs, presumptions applicable to computer programs and the home-grown provisions relating to computer-generated works.4 First, the historical background to protection of computer programs is briefly described. 3.7 The following chapter looks at the application of the Directive to textual or literal copying, such as where a new program is written to emulate the operations and functions performed by an existing program without exact copying of any part of its actual coding of the target program.

BACKGROUND AND HISTORICAL CONTEXT 3.8 Prior to the Copyright, Designs and Patents Act 1988 there was no mention of computer programs in UK copyright legislation.5 When the previous Act, the Copyright Act 1956, received the Royal Assent, unauthorised copying of computer programs, though theoretically possible, was not a significant economic issue. There were relatively few computers around. They were expensive and costly to operate. Computer programs tended to be specifically written for organisations having a computer. Programs were stored on paper tape or punched cards, later on magnetic tape. Although the Copyright Act 1956 omitted any reference to computer programs, it was generally thought that they were protected by copyright as literary works,

3

4

5

Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs, OJ L 111, 05.05.2009, p 16. This codified version replaced the original Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, OJ L 122, 17.05.1991, p 42. These have no equivalent in the Directive or in other jurisdictions. They have been tentatively applied only once since their enactment in Nova Productions Ltd v Mazooma Games Ltd [2006] EWHC 24 (Ch), [2006] RPC 14 (at first instance). They are an unnecessary complication and ought to be repealed. Except by virtue of an amendment to the Copyright Act 1956 made by the Copyright (Computer Software) Amendment Act 1985.

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3.9 Copyright and computer programs especially if a listing of the program code was printed out on paper. It was only with the development of the personal computer and the advent of storage media permitting quick and easy copying of computer programs and other items of software that unauthorised copying became a serious problem requiring legislative action. Even then, the necessary changes were slow to come to fruition in the UK. 3.9 The US amended its Copyright Act 1976 in 1980 to expressly include computer programs as works of copyright.6 In the UK there had been a number of interim proceedings and applications for summary judgment where the judges considered that it was at least arguable that computer programs were protected as literary works.7 The alarm bells sounded when an Australian court held that computer programs stored in a computer in object code form were not literary works which, according to earlier English authorities, were intended to provide ‘information and instruction or pleasure in the form of literary enjoyment’.8 This was reversed on appeal9 but the original decision reinstated on a further appeal.10 Australia passed amending legislation very quickly to put it beyond doubt that computer programs were protected by copyright.11 3.10 Eventually, the matter was resolved in the UK by way of a private member’s Bill which became the Copyright (Computer Software) Amendment Act 1985. This stated that computer programs were protected by copyright as literary works. This was a temporary measure as it had already been decided to overhaul copyright law and pass a new copyright Act. The Copyright, Designs and Patents Act 1988 placed computer programs in the literary work category of copyright works. There have been numerous amendments to the Act since, principally to comply with EU Directives. For computer programs, the most important Directive is that on the legal protection of 6

Defining a computer program as a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result: § 101 Copyright Act 1976. 7 See, for example, Sega Enterprises Ltd v Richards [1983] FSR 73. 8 Apple Computer Inc v Computer Edge Pty Ltd [1984] FSR 246. The English authorities were Hollinrake v Truswell [1893] 2 Ch 377 and Exxon Corpn v Exxon Insurance Consultants International Ltd [1982] Ch 199. 9 Apple Computer Inc v Computer Edge Pty Ltd [1984] FSR 481. 10 Computer Edge Pty Ltd v Apple Computer Inc [1986] FSR 537. 11 A further appeal restored the first instance decision on the object code point but was, of course, based on the Australian Copyright Act before amendment: Computer Edge Pty Ltd v Apple Computer Inc [1986] FSR 537.

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Background and historical context 3.13 computer programs.12 The Directive was intended to harmonise protection of computer programs throughout the EU. At the time of the Directive, some Member States did not have any copyright protection for computer programs.

International conventions 3.11 The first convention covering copyright law was the Berne Convention for the Protection of Literary and Artistic Works 1886.13 Of course, there was not specific provision for computer programs, nor is there in the latest amendment dated 1979. The main thrust of the Convention is the protection of ‘literary and artistic works’ defined as ‘… every production in the literary, scientific or artistic domain, whatever be the mode or form of its expression …’.14 It is without doubt that this definition is wide enough to encompass computer programs even though it predates them by around 50 years. 3.12 The Berne Convention does not lay down any express requirement for subsistence of copyright generally. However, the phrase above suggests that something above mere labour is required. Furthermore, collections of literary and artistic works such as encyclopaedias and anthologies are required, by reason of their selection and arrangement, to be intellectual creations to be protected by copyright.15 Article 2(3) of the Convention states that translations, adaptations, alterations, etc. shall be treated as original works and the term ‘original’ occurs in other parts of the Convention. It is safe to assume that the Convention protects original works and works are deemed to be original if they constitute the author’s own intellectual creation.16 3.13 The next major international standard is the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS Agreement) 1994.

12

13 14 15 16

Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs, OJ L 111, 05.05.2009, p 16 (codified version replacing the original 1991 Directive). The International Copyright Act 1886 implemented numerous obligations in the Convention relating to protection of authors of other Contracting Parties to the Convention. Article 2(1). Article 2(5). In UK copyright law, the word ‘original’ first appears in section 1(1) of the Copyright Act 1911 which stated that ‘… copyright shall subsist … in every original literary dramatic musical or artistic work …’.

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3.14 Copyright and computer programs This has specific provisions for copyright.17 The Agreement requires Members to comply with the main provisions of the Berne Convention.18 Article 10(1) of the Agreement states that computer programs, whether in source or object code, shall be protected as literary works under the Berne Convention. Article 9(2) states the copyright protection extends to expressions, not to ideas, procedures, methods of operation or mathematical concepts as such. Article 11 provides that, at least for computer programs and cinematographic works, authors and successors in title have the right to authorise or prohibit commercial rental of their works.19 3.14 The TRIPS Agreement was soon followed by the WIPO Copyright Treaty 1996 (WCT).20 The WCT came into force throughout the EU on 14 March 2010.21 Again recognition is given to the Berne Convention. As with TRIPS, Article 2 of the WCT states that copyright protects expressions but not ideas, procedures, methods of operation and mathematical concepts, as such. It is also stated that computer programs are protected as literary works under the Berne Convention, whatever their mode or form of expression (Article 4). The WCT has other provisions relating to the rights of the owner, circumvention of effective technical measures to prevent or restrict use of works and rights management information. These were dealt with by the Directive on copyright and related rights in the information society which is considered in more detail in Chapter 7. 3.15 As a result of the international conventions and agreements, some basic principles can be stated, being: ••

computer programs are protected as literary works under the Berne Convention;

••

computer programs are protected whatever their mode or form of expression (for example, whether in source code or object code);

17 18 19 20 21

The TRIPS Agreement is Annex 1C of the Marrakesh Agreement establishing the World Trade Organisation (WTO). At the time of writing there are 159 Members of the WTO. Apart from the provisions on moral rights under Article 6bis of the Convention. TRIPs applies to EU law: see Merck Genericos Produtos Farmaceuticos Lda v Merck & Co Inc, Case C-431/05, EU:C:2007:496, a patent case. WIPO is the World Intellectual Property Organisation and administers many treaties and conventions relating to intellectual property. It was already in force in some current and some future Member States at that time, including Belgium, Bulgaria, Cyprus and the Czech Republic.

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Subsistence of copyright in computer programs 3.16 ••

ideas, procedures, methods of operation and mathematical concepts, as such, are not protected by copyright; and

••

it can be implied that a further requirement is that computer programs must be intellectual creations for protection.22

With these basic principles in mind we can now go on to examine the provisions in the Directive on the legal protection of computer programs, bearing in mind that the original Directive pre-dated both the TRIPS Agreement and the WCT.23

SUBSISTENCE OF COPYRIGHT IN COMPUTER PROGRAMS 3.16 As the protection afforded to computer programs is somewhat different to that afforded to the other original works of copyright, as we shall see, the first question might be to ask for a definition of a computer program. Article 1(1) of the Directive states that computer programs are protected by copyright as literary works under the Berne Convention but, sensibly, there is no attempt to define computer programs except to say that they shall include their preparatory design material.24 However, recital 7 to the Directive states that the term ‘computer program’ includes programs in any

22

Implied from the requirement for collective works under the Berne Convention and databases under the WCT. The author’s intellectual creation test is increasingly being accepted by the Court of Justice of the EU for the original works of copyright; see, for example in relation to photographs, Eva-Maria Painer v Standard VerlagsGmbH, Case C-145/10, EU:C:2011:798. It is, of course, the express test for computer programs as set out in the Directive on the legal protection of computer programs, infra. 23 As the EU is a member of each, in principle, the Directive should conform with both. In Società Consortile Fonografici (SCF) v Marco Del Corso, Case C-135/10, EU:C:2012:140, the Court of Justice recognised that the TRIPs Agreement was part of the legal order of the EU. The same applied to the WIPO Performances and Phonograms Treaty 1996. It must also apply to the WCT though this was not considered in that case. Recital 11 to the Directive on the legal protection of computer programs (codified version) also makes it clear that the TRIPs Agreement and the WCT apply only to the protection of expression of ideas and principles in computer programs. On the other hand, the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organisations, 1961, is not part of the legal order of the EU. 24 Recital 7 to the Directive contains a proviso in that the nature of the preparatory design material must be such that a computer program will result from it at a later stage.

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3.17 Copyright and computer programs form including those incorporated into hardware. This is to ensure that programs in both source code and object code are protected regardless of their nature, form or mode of storage providing they can be regarded as intellectual creations.25 3.17 Whether the object code form of a computer program can be considered to be the author’s own intellectual creation is a moot point. A source code program is the version as written by the programmer. Before it can be run on a computer, it has to be converted into object code.26 This is usually done by submitting the source code to a compiler program which creates the object code. If the source code is syntactically correct, there is little else the programmer needs to do. If there are errors in the source code, they will have to be corrected before resubmitting to the computer program. There may be an issue of whether an object code program can be deemed to be original, being the author’s own intellectual creation. But even if an object code program is not original in that sense, it will be protected as an adaptation of the source code program. Making a copy of an adaptation, or indeed doing any of the acts restricted by the copyright in relation to an adaptation, infringes copyright. In practice, this matter is academic. As noted earlier, TRIPs makes it clear that computer programs are protected by copyright whether in source code or object code form.

Interfaces 3.18 Computer programs usually contain interfaces which operate with computer hardware or software and with the user. These interfaces as such are not forms of expression of a computer program protected under the Directive. A graphic user interface is the means by which the user of a program accesses and uses the features of a program – it enables communication between the user and the program. The Court of Justice confirmed that graphic user interfaces are not protected under the Directive on the legal protection of c omputer programs in Bezpečnostni softwarová asociace v Ministerstvo kultury.27 25 See

infra. In a low-level language such as assembly language, the conversion may be carried out manually before entering the object code into the computer by keying it in. This would only be practicable for relatively small programs. 27 Case C-393/09, EU:C:2010:816. 26

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Subsistence of copyright in computer programs 3.19 Under Article 1(2) of the Directive on the legal protection of computer programs, source code and object code programs are protected forms of expression. A graphic user interface enables the user to make use of the features of a computer program, but it is not a form of expression under the Directive. The same reasoning must apply to other forms of interface especially as ideas and principles underlying any element of a computer program, including those underlying its interfaces are not protected by copyright under the Directive.28 However, a graphic user interface may be protected as a copyright work in its own right if and to the extent it is the author’s own intellectual creation under the Directive on copyright and related rights in the information society (see Chapter 7).

Preparatory design material 3.19 In writing a computer program, a large proportion of the programmer’s skill and judgement goes into the initial design of the computer program, its algorithms and structure, its interfaces, input and output formats and other aspects before any of the source code is written. Much of this work will be expressed in written specifications, tables of various aspects such as variables and database elements, drawings and such like. All these materials can be properly viewed as being part of the computer program whether or not they are protected in their own right. The seventh recital to the Directive on the legal protection of computer programs states that the term ‘computer program’: … also includes preparatory design work leading to the development of a computer program provided that the nature of the preparatory design work is such that a computer program can result from it at a later stage; Article 1(1) of the Directive is worded slightly differently in that it states that computer programs ‘… shall include their preparatory design material’. Nothing turns on this slight difference. However, the language of the recital suggests that protection may be afforded to the preparatory design material even though the computer program does not yet exist, providing its future existence is a possibility.

28

Article 1(2).

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3.20 Copyright and computer programs 3.20 In complying with the Directive, it was decided to class computer programs and preparatory design material for computer programs as two distinct forms of literary works. This can only be described as an imperfect implementation of the Directive.29 This could have implications in terms of substantiality for the purposes of copyright infringement or in terms of the permitted acts that apply specifically to computer programs. However, the European Commission, in noting this anomalous implementation, considered that the slightly wider UK approach was still compliant with the Directive.30 The UK goes further than the Directive which is limited to computer programs, albeit including their preparatory design material. 3.21 Although the original Directive on the legal protection of computer programs pre-dated the TRIPs Agreement, the former is not wholly in accordance with TRIPs which does not contemplate preparatory design materials as being part of a computer program. To this extent, the Directive goes further. There is no justification for this as many preparatory design materials will have their own independent copyright as literary and/or artistic works if and to the extent that they can be considered to be the expression of their authors’ own intellectual creation. 3.22 Flowcharts and diagrammatic representations such as of elements like screen displays and report layouts will be artistic works whilst written specifications, tables, compilations and other materials will be literary works.31 Many of these will be protected by copyright in their own right, being the expression of their authors’ own intellectual creations. 3.23 Where the Commission is wrong as to its view of the UK implementation of the Directive in relation to preparatory design material is that the test for infringement of the copyright in a computer program might be distorted. If the work is the computer program including its preparatory design material, infringement might require the taking of a proportionately qualitatively and/or

29

See section 3(1) of the Copyright, Designs and Patents Act 1988. Commission of the European Communities, Report from the Commission to the Council, the European Parliament and the Economic and Social Committee on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs, Brussels 10.04.2000 COM (2000) 199 final, p.9. 31 Some preparatory design materials may fall within the meaning of ‘database’ such as a look-up table of keywords or component parts and may be protected as copyright databases and/or under the sui generis database right. 30

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Subsistence of copyright in computer programs 3.25 quantitatively larger part compared with the part for infringement when looking at the computer program alone.32 For example, taking a small routine from a computer program might be considered to pass the threshold of being a substantial part of the program looked at in isolation. But when the work is the program and its preparatory design material (which in many cases could be very significant) that small routine might be considered to fall below the threshold for infringement. However, the real test is to decide whether the sub-routine is the author’s own intellectual creation. If it is, taking it without the copyright owner’s licence will infringe no matter how large the work in which it is incorporated. 3.24 The difference between the Act and the Directive relating to preparatory design material was picked up by counsel in Nova Productions Ltd v Mazooma Games Ltd33 in the application to the Court of Appeal for a reference to the Court of Justice for a preliminary ruling under Article 234 of the EC Treaty.34 The application was rejected, inter alia, because there was a real prospect that the applicant would fail whatever view of the law was taken. The judge at first instance held that the copyright in a computer program for a game of pool was not infringed. It was argued that he erred by not taking into account the preparatory design material as part of the protected matter in the computer program itself. However, the judge considered the preparatory design material as comprising little more than a series of jottings and ideas. As Jacob LJ suggested in the Court of Appeal, preparatory design material would include a detailed design specification and description. It is submitted that the material could also include drawings of screen displays, flowcharts, written items of code prior to entry into a program, tables of variables and other details. As computer programs include their preparatory design material, ideas embodied in the latter are also excluded from copyright protection.35 3.25 In the substantive appeal in Nova Productions Ltd v Mazooma Games Ltd,36 Jacob LJ again noted the difference between the Directive 32

33 34 35 36

Essentially, it is a question of whether the author’s own intellectual creation has been taken. The proportions of intellectual creation may be divided unequally between the preparatory design material and the computer program code in some cases. [2006] EWCA Civ 1044. Now Article 267 of the Treaty on the Functioning of the European Union. Nova Productions Ltd v Mazooma Games Ltd [2007] EWCA Civ 219, [2007] RPC 25 at para 50. [2007] EWCA Civ 219, [2007] RPC 25.

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3.26 Copyright and computer programs and the UK implementation and suggested that it could be relevant where one person c reated the preparatory design material, and another wrote the computer program itself. This could result in issues as to authorship and determining the duration of copyright. In such a case would the program (including its preparatory design material) be a work of joint authorship? This is difficult to predict as it depends on whether the entire work can be seen as a work of collaboration in which the contribution of each author is not distinct. The question becomes all the more difficult where, as is often the case, several persons contribute to the design and writing of computer programs. A further complication is that some of the persons may be employees but the others are self-employed consultants, again not an unusual situation. 3.26 Although the preparatory design material is properly considered to be part of the computer program, it will typically include works in which copyright is capable of subsisting. As noted above, these may be literary works or artistic works. Copyright in these things, as works in their own right, should not be compromised by their being part of the preparatory design material. Thus, where someone copies a table of variables or a drawing for a screen display, copyright will be infringed in those things without having to consider whether they form a substantial part of the computer program including the preparatory design material. Otherwise, copyright in such works would be seriously prejudiced. 3.27 If things such as drawings for screen displays have their own copyright in addition to being part of the entire work that is the computer program, this is potentially a very strong form of copyright. If such a drawing is the result of skill and judgement, then anyone copying its associated screen display will infringe the copyright in the drawing as copyright can be infringed indirectly.37 3.28 That preparatory design material may include works which are normally classified as artistic works, such as drawings for graphic screen displays, flowcharts representing algorithms and diagrams indicating the program modules and their interrelationship inter se and with databases and

37 In

Navitaire Inc v easyJet Airline Co [2006] RPC 3, Pumfrey J accepted that there was infringement of copyright in graphical user interfaces and icons displayed on the computer screen. He said that the Directive was only concerned with computer programs and did not have any impact on artistic works.

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Subsistence of copyright in computer programs 3.30 other works should not matter.38 Although classed as a form of literary work, by the inclusion of preparatory design material, it would seem reasonable to accept that a computer program is a composite work which comprises a number of individual works and materials irrespective of the independent notional classification of such works. This is contrary to the view of Jacob LJ in Nova Productions Ltd v Mazooma Games Ltd39 where he said that ‘What is protected by way of preparatory design work is that work as a literary work – the expression of the design which are [sic] to go into the ultimate program …’. However, it is possible that he may have been influenced in making this statement by the manner in which preparatory design material is protected under UK copyright as a literary work apparently independently of the resultant computer program40 though this is something he noted earlier in his judgment. 3.29 Preparatory design material for a computer material is protected, whether as such or as part of the relevant computer program, as noted above. Preparatory design material for other items of software is not protected as such. Of course, such material may be protected as other forms of the original works of copyright, such as literary, musical or artistic works. There is no point in claiming infringement of preparatory design material for items of software other than computer programs. There is no additional protection for such preparatory design material. A claim for such protection was quickly dismissed by the judge in Technomed Ltd v Bluecrest Health Screening Ltd.41

Originality 3.30 Under Article 1(3) of the Directive, a computer program is protected if it is original in the sense that it is the author’s own intellectual creation.

38

It seems strange to think that an artistic work, such as a flowchart drawing, can be considered to be part of a literary work as being part of the preparatory design materials for a computer program. 39 [2007] EWCA Civ 219, [2007] RPC 25 at para 50. 40 The Directive on the legal protection of computer programs states that ‘the term “computer programs” shall include their preparatory design material’: Article 1(1). 41 [2017] EWHC 2142 (Pat), [2018] FSR 8. There were also issues of infringement of copyright in the claimant’s database and infringement of the sui generis database right (see Chapters 5 and 6). There was also infringement of the XML file, discussed infra.

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3.31 Copyright and computer programs No other criteria are to be applied to determine the eligibility for protection.42 The term ‘original’ appears a number of times in the Berne Convention and appeared first in the UK as a requirement for protection of literary, dramatic, musical and artistic works in section 1(1) of the Copyright Act 1911.43 Since that time, there has been a significant amount of case law on the meaning of originality. Generally, it has been accepted in the UK that a work must have originated from the author and be the result of skill, judgement or labour.44 The possibility that the application of labour alone can give rise to copyright must be regarded now as incorrect.45 The creation of a work of copyright by the use of human intellect seems to be a much sounder footing on which to base subsistence of copyright. Creations of the human intellect are deserving of the reward of a right of property in the thing created. The results of the unthinking application of manual labour alone is not. The manual labourer may be entitled to payment for his labours without granting him a property right which lasts for life plus 70 years. 3.31 The Directive on the legal protection of computer programs set a standard for originality that was already the norm in some Member States such as Germany. This was that a work was original only if it was the result of the author’s own intellectual c reation.46 This test was not expressly implemented in the UK where a computer program remains eligible for protection if original.47 There is no gloss on originality for this purpose unlike the p osition

42

43

44 45

46 47

Therefore, if the creation of a program is a work of effort only, absent intellectual creativity, it will fail to be protected, no matter the measure of the effort. Nor does it matter how unusual or striking or valuable the program is. In other words: no intellectual creativity = no copyright protection. The International Copyright Act 1886 which implemented the national treatment obligations of the Berne Convention also contained the word ‘original’ but not as the basic yardstick of protection. Per Lord Reid in Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273 at 278. Different formulae have been used by judges in the past. It is not altogether clear that the expenditure of labour alone has been recognised as sufficient. The US Supreme Court rejected the possibility of copyright attracting to a work, the creation of which require effort only, in Feist Publications Inc v Rural Telephone Service Inc 499 US 340 (1991). Article 1(3) of the Directive which goes on to confirm that no other criteria shall be used to determine the eligibility for protection. For copyright purposes, a database must, by reason of the selection or arrangement of its contents, constitute the author’s own intellectual creation: Article 3(1) of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection

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Subsistence of copyright in computer programs 3.32 under the Directive. As with the defective implementation of the meaning of computer programs to include preparatory design material, the words of the Directive must take priority. These were not provisions where Member States had a discretion. The test to be applied in the UK is that a computer program is original if it is original in the sense of being the author’s own intellectual creation.48 It is beyond doubt that a judge in the UK would apply this test rather than the traditional view of judges of what originality meant, even if a common thread could be determined. Even so, most computer programs, unless trivial or made up of a selection of commonly known or public domain elements requiring no skill or judgement in their selection or arrangement, will be considered to be intellectual creations. In the Report from the Commission to the Council, the European Parliament and the Economic and Social Committee on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs, the Commission’s view was that it remained to be seen whether this difference would lead to over-extensive protection for computer programs in the UK.49 3.32 One problem with deciding whether a computer program is the author’s own intellectual creation is whether this is a subjective test or an objective test. What might be an intellectual creation to a novice programmer might not be to an experienced programmer. If it is a subjective test, this would lead to anomalies. P rograms written by an inexperienced computer programmer would be protected whilst computer programs of comparable complexity written by skilled programmers might not be protected. It is submitted that it must be an objective test based on the reasonably skilled programmer. However, ultimately, the question is one of evidence, the owner having the burden of proving that the program was a result of the author’s own intellectual creation, if this is challenged. Where the question is in issue, it will hardly help the owner’s case to claim that the programmer was inept and not very good at his job. The inclusion of the word ‘own’ indicates that it must be the programmer’s own work and not copied from someone else’s computer program. of databases, OJ L 77, 27.03.1996, p 20. Unlike the case with computer programs, this test was expressly implemented in the UK: see section 3A(2) of the Copyright, Designs and Patents Act 1988. 48 Article 1(3) of the Directive confirms that no other criteria shall be applied to determine the computer program’s eligibility for protection. 49 COM(2000) 199 final, 10.04.2000, p 10. Hereinafter, ‘the Commission’s Report on the Implementation of the Directive’.

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3.33 Copyright and computer programs 3.33 The inclusion of preparatory design material as part of a computer program may have been to make sure that the creative effort used in making it is taken into account in determining whether the computer program is a work of copyright. This could be important where the process of writing the actual code for the program alone would not be viewed as an intellectual creation. This could be the case, for example, where once all the design concepts have been worked out, it is a simple matter to produce the program, mainly using well known or public domain sub-routines. Most computer programmers have their own library of sub-routines and templates to speed up the process of program writing. It would also cover the situation where a new computer p rogram is written by another computer program to a specification written by the person who designed the functions and parameters for the new program.

Intellectual creation 3.34 Computer programs are protected under the Directive if they are original. They are original if, and only if, the program if the author’s own intellectual creation.50 No other criteria are to be used in determining the eligibility of a computer program for protection under the Directive.51 3.35 The traditional test for copyright in the UK for literary, dramatic, musical or artistic works, described in the act as ‘original’, is that they originated from the author (that is, his work, not copied from an existing work) and are the result of skill, judgement or labour.52 Again the UK failed in its implementation of the Directive and did not import the intellectual creation test into the Copyright, Designs and Patents Act 1988. Whether the two tests coincide exactly is a moot point. Certainly, any idea that labour alone is sufficient can no longer be correct. The United States Supreme Court rejected such a test in Feist Publications Inc v Rural Telephone Service Co Inc,53

50

Article 1(3). In particular, no tests as to the qualitative or aesthetic merits of the program shall be applied: recital 8 to the Directive. 52 Unhelpfully, various judges have expressed the test differently. For example, ‘skill and labour’ per Lord Templeman in British Leyland Motor Corpn v Armstrong Patents Co Ltd [1986] RPC 279 and ‘work, skill or expense’ per Lord Pearce in Ladbroke (Football) Ltd v William Hill (Football) Ltd [1964] 1 WLR 273. 53 499 US 340 (1991). 51

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Subsistence of copyright in computer programs 3.37 saying that a purely factual compilation did not qualify for protection, being the result of the ‘sweat of the brow’ only with no exercise of skill or judgement.54 In the UK, in G A Cramp & Sons Ltd v Frank Smythson Ltd, the House of Lords denied protection to a few pages in a diary comprising tables and factual information such as sunrise and setting times, on the basis that the selection of those pages left no room for taste or judgement.55 3.36 The failure to insert the ‘intellectual creation’ test into the Copyright, Designs and Patents Act 1988 is even more inexplicable as this test was added to the Act in the case of copyright databases in implementing the Directive on the legal protection of databases.56 However, this failure is probably of little consequence because: (a) in practice, originality, in the sense of skill and judgement, and intellectual creation may be broadly equivalent, and (b) in any case, judges in the UK are almost certain to apply the test in the Directive, as explained in the Court of Justice of the EU.57

Parts of computer programs 3.37 What is the position if someone takes only part of a computer program, for example, a small sub-routine that performs some particular function within the program? It may, for example, contain the format to display a report or perform a particular calculation or sort a database used by the program into alphabetical order. Typically, a computer programmer may incorporate a sub-routine as a separate and distinct part of a program where

54

The work in question was the white pages section in a telephone directory. [1944] AC 329. 56 Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases, OJ L 77, 27.03.1996, p 20. The Commission Report on the Implementation of the Directive on the legal protection of computer programs took issue with the failure use the author’s own intellectual creation test for computer programs in case this could lead to over-extensive protection for computer programs in the UK. Report from the Commission to the Council, the European Parliament and the Economic and Social Committee on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs, COM(2000) 199 final, p 10. 57 See, for example, Infopaq International A/S v Danske Dagblades Forening, Case C-5/08, EU:C:2009:465 and Eva-Maria Painer v Standard VerlagsGmbH, Case C-145/10, EU:C:2011:798. 55

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3.38 Copyright and computer programs that sub-routine is called up several times from different parts of the program. This saves the need to include the necessary code several times in different parts of the complete computer program. 3.38 The issue with sub-routines and, for that matter, any part of a computer program, is whether it is the expression of the creativity of the computer programmer. Individual words, commands and instructions, considered in isolation, cannot be intellectual creations. However, the programmer’s choice, sequence and combination of those elements may express his creativity in an original manner so that the relevant part of the program may be viewed as an intellectual creation: Infopaq International A/S v Danske Dagblades Forening.58 This will be a matter for the court to decide by applying that basic test. It may be that a relatively small part of a computer program passes that test. In Infopaq, the Court of Justice accepted that even a mere 11-word extract from a newspaper article could, potentially, be protected by copyright.59

Ideas and principles 3.39 Copyright does not generally give the owner monopoly rights to all the elements and aspects of a work. As the owner’s rights are circumscribed by the scope of the acts restricted by the copyright, others are free to create a similar or even identical work provided they do not perform one of the restricted acts in relation to the whole or a substantial part of the work.60 Many new works have some basis in existing works. Most of us are influenced by our knowledge and experience of previous works. Having read a James Bond novel, an author might decide to write a story about the adventures of a secret agent with a love of fast cars and fast women. Providing the author does not take the text, detailed plot or scenes and incidents from a James Bond novel, he will not infringe its copyright.61 Ian Fleming did not have a monopoly in

58

Case C-5/08, EU:C:2009:465 at para 43. This would be a matter of fact for the national court to determine whether such an extract constituted the author’s own intellectual creation. 60 For example, two photographers or watercolour artists may create almost identical images or paintings of the same scene purely coincidentally, each using their own intellect to compose and execute their relative works. 61 Going beyond the basic underlying ideas might infringe copyright by what is known as ‘non-textual’ or ‘non-exact’ copying, described in more detail in the following chapter. 59

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Subsistence of copyright in computer programs 3.43 stories about secret agents. The very basic ideas are available for others to use and build upon in their own work. 3.40 The ideas and principles underlying most forms of copyright work are transparent. They are available to anyone reading, looking at or listening to the work in question. If they were not readily available, this could stifle competition and provide the copyright owner with a right approaching a monopoly right. Computer programs are, however, unlike other works of copyright. First, they are not passive, they perform manipulations, calculations and transformations. They process symbols which condition or control subsequent steps in their operation. Secondly, the ideas and principles underlying computer programs are not readily accessible, unlike in the case of reading a book or watching a film. Others need access to these underlying ideas and principles in order to write computer programs to perform the same functions and operations or to write interfaces with those programs or simply maintain and correct errors in a program. 3.41 No-one would suggest that the first person to write a program used to prepare accounts would then be entitled to a monopoly in accounting software. Similarly, it seems entirely reasonable that someone using a computer program under a licence should be able to convert files produced by that program into a format compatible with other programs. Finally, it would seem reasonable that a person using a program under a licence should be free to correct errors in that program, particularly if the copyright owner declines to maintain the program. 3.42 On the question of the scope of protection for computer programs, it is notable that copyright in computer programs endures until 70 years from the end of the calendar year during which the author dies whereas a patent, which gives a true monopoly right, only lasts for a maximum of 20 years.62 3.43 The Directive seeks to balance the rights of the owner with the rights of others to write new programs which compete with existing programs, can interface with them, use them for their intended purposes without undue constraint and maintain them. It meets these objectives by providing specific permitted acts for computer programs but first, the Directive makes it clear

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Even then, the monopoly is not absolute and is subject to acts which do not infringe and, in appropriate cases, competition law: see Chapter 15.

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3.44 Copyright and computer programs that underlying ideas and principles are not protected by the copyright in the computer program. 3.44 Programmers writing new or modified programs tend to make use of modules used in their earlier programs. This is common where a new version of a program performs some of the functions of an earlier program, written by the same programmer. The new program may be an update or a newer more powerful version with additional functionality. Does this custom of reusing or modifying modules from earlier programs infringe copyright? Are modules of programs, sometimes referred to as sub-routines or building blocks, unprotected ideas or principles? This question was one of the issues in Starbuck v Patsystems (UK) Ltd.63 The defendant had an assignment of software,64 comprising numerous computer programs, written by the claimant who later wrote new software (ACE) which he used himself. The claimant admitted that he had reused certain modules from the earlier software which he described as building blocks65 to create the new software. This is common practice in computer program design, taking advantage of some of the design and coding work from earlier versions of programs. 3.45 The judge in Starbuck held that the later software did not infringe the copyright in the earlier versions assigned to the defendant. The claimant did not disclose the source code of the ACE programs and, unfortunately, the defendant failed to avail itself of an opportunity to obtain discovery of the source code of ACE later. An application had been made to HHJ Hacon who permitted limited disclosure to the defendant’s employee who undertook a three-hour visual inspection of PDF files generated from the source code. However, when the defendant asked for full disclosure some months later, this was refused as being too late. Not surprisingly, the claimant refused to give access to the source code on the basis that it was confidential. Because of the lack of legal argument on the point,66 this case does not help in determining whether modules, sub-routines or building blocks, taken from an earlier program used in the creation of a new or updated version of a program, are

63

[2017] EWHC 397 (IPEC). There was a dispute about whether the assignments included later versions of the software. This was resolved in favour of the defendant. 65 The judge, who did not seem to clearly understand what a module or building block was, considered that they were probably unprotected ideas. 66 Probably resulting from the unsatisfactory and limited disclosure of the ACE source code. 64

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Subsistence of copyright in computer programs 3.47 unprotectable ideas or principles. The ‘author’s own intellectual creation’ test does not help as ideas and principles underlying any element of a computer program may themselves be intellectual creations. Such ideas and principles are, of course, denied protection under the Directive on the legal protection of computer programs.67

Impact of inclusion of unprotected matter in a computer program 3.46 Computer programs may include parts which are in the public domain or where their form of expression is dictated by an idea or the function being performed. The approach in the US tends to be to ignore those parts of a computer program for copyright purposes.68 This has not been the approach in the UK where the inclusion in computer programs of functional elements, detailed ideas or parts for which there is little design freedom tends not to compromise the subsistence of copyright in the program, taken as a whole. In Total Information Processing Systems Ltd v Daman Ltd,69 Judge Paul Baker QC said that if there was only one way of expressing an idea that way is not the subject of copyright. Jacob J disagreed with that in Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd70 where he said that, whilst a general idea might not be protected, a detailed idea would be, and this also holds true whether the work is functional or not, and whether visual or literary. The latter view is the better one. It may be possible to write a program where the code is almost entirely dictated by its function but is protected because writing the code and creating the preparatory design material was an act of intellectual creation. 3.47 The protection of ‘detailed ideas’ as such seems to contradict the Directive on the legal protection of computer programs which denies protection to ideas and principles underlying any element of a computer program including its interfaces.71 An idea remains an idea however general or detailed it is. The intention behind the Directive is surely to protect the

67

See recital 11 to the Directive and Article 1(2). See, for example, Computer Associates International Inc v Altai Inc (1992) 982 F 2d 693 (2nd Cir). This was, however, a case on non-textual copying. 69 [1992] FSR 171 at 181. This aspect of the case concerned a program interface. 70 [1994] FSR 275 at 291. 71 Recital 13. 68

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3.48 Copyright and computer programs expression of ideas rather than the ideas themselves. In Ibcos, Jacob J, as he then was, was dealing with the issue as to whether an idea embodied in the work was protected. In Nova Productions Ltd v Mazooma Games Ltd,72 in the Court of Appeal, Jacob LJ skirted round this question though he did say that an idea which comprises a combination of ideas is not protected. Lord Hoffmann in Designers Guild Ltd v Russell Williams (Textiles) Ltd73 identified two distinct propositions concerning the distinction between idea and expression. Ideas may be expressed which are not protected because they have no connection with the literary, dramatic, musical or artistic nature of the work. This is why a literary work describing an invention does not protect the invention. Other ideas may be expressed though not protected for lack of originality or because they are so commonplace so as not to form a substantial part of the work. Designers Guild was concerned with artistic works and an argument that ideas used in a computer program were somehow different as they had nothing to do with the nature of the work was rejected by Jacob LJ in Nova.

Modification of existing computer programs 3.48 It is common for computer programs to be subject to modification from time to time. Further functionality might be added, errors that have been detected over time may be corrected, user interfaces improved and so on. Where the modifications collectively constitute a new intellectual creation, a fresh copyright will be created in the new version of the program. It may be that this applies to an accumulation of numerous modifications, each of which in themselves might not reach the standard for originality. However, even making a small modification to a computer may require the exercise of a great deal of skill and creativity. Furthermore, the programmer will have to carry out rigorous testing to ensure that the modifications perform correctly and that the effects on the existing and retained parts of the program are as intended. Even a small modification can have unpredictable consequences and end up involving far more work than originally envisaged. 3.49 Jacob J accepted that modifications to a computer program could give rise to a fresh copyright in Ibcos Computers Ltd v Barclays Mercantile

72 73

[2007] EWCA Civ 219, [2007] RPC 25. [2000] UKHL 58, [2001] FSR 113 at 121.

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Subsistence of copyright in computer programs 3.51 ighland Finance Ltd.74 He did note that there was a problem deciding H when a fresh copyright was created where a computer program underwent, as many do undergo, a continual process of modification and updating. The answer must be when the modifications collectively represent a fresh intellectual creation, including taking into account any preparatory design material for those modifications. Of course, this will inevitably involve difficult questions of fact. Although copyright lasts for a long time, this question might be important where what has been taken is part of the modifications.

Compilation copyright and computer programs 3.50 Copyright subsists in compilations as literary works. Many software applications and computer programs are comprised of numerous separate computer programs. This was common in the past. It was more efficient to break down a complex computer program into separate smaller programs. This would overcome limitations of computer memory capacity and processing speed. Now it is more likely to be a question of using relatively small modules that can be more easily understood and modified by programmers. Where a computer program or software application contains a number of separate, discrete programs, there may be two forms of copyright operating. Each program, providing it is an intellectual creation, is an individual work of copyright but the whole may be protected as a compilation. There is a potential conflict between compilations and databases for copyright purposes. A database cannot be a compilation. But a database is defined in section 3A in terms of a collection of independent works, data or other materials. Where a computer program is made up of individual modules, those modules cannot be described as independent. They work together as a whole application. Therefore, the whole may have a separate copyright as a compilation independent of any copyright in the modules as programs in their own right. 3.51 In Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd75 Jacob J recognised that a complex piece of software comprising over 100 separate programs linked together had a separate copyright as a compilation. This is a powerful form of copyright although deliberately 74

[1994] FSR 275. The case was based on the Copyright, Designs and Patents Act 1988 prior to amendment to implement the Directive on the legal protection of computer programs. 75 [1994] FSR 275.

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3.52 Copyright and computer programs breaking down a computer program into small routines to take advantage of compilation c opyright is unlikely to impress a judge. Furthermore, breaking down a complex program into individual smaller programs for the purposes of efficiency or technical considerations is unlikely, per se, to be considered to have the necessary intellectual creativity.76 Although, under the UK Act, compilations are simply required to be original, collections of literary or artistic works are required to be intellectual creations under the Berne Convention77 so the same test ought to apply to compilations of computer programs.

Command sets as compilations 3.52 Computer programs may be operated by entering commands as a shorthand or because of difficulties in writing programs that understand natural language. For example, rather than type ‘Have you any double rooms available for the 12 August’ or variants of this which the computer programmer would have to anticipate, it would be simpler to type ‘DR12AUG’. Devising a command set will require skill and judgement. It has to be easily remembered or guessed and conform to a logical set of rules. Even though each separate command may not be sufficient to be a work of copyright in its own right,78 the whole set may be protected as a compilation. 3.53 In Navitaire Inc v easyJet Airline Co,79 the issue was whether airline booking software written to emulate the claimant’s software infringed its copyright. The first defendant had the use of the claimant’s software under a licence agreement but later engaged the second defendant to write a new system which was ‘substantially indistinguishable’ in respect of its user interface. It was alleged, inter alia, that the defendants infringed the compilation copyright in the command set used by a person, such as a booking agent, to check availability or book a flight using the software. Part of the command

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Cantor Fitzgerald International v Tradition (UK) Ltd [2000] RPC 95. Article 2(5). 78 A simple word or phrase is unlikely to be a work of copyright. In Exxon Corpn v Exxon Insurance Consultants International Ltd [1982] Ch 199 it was held that the word EXXON was not an original literary work. In Sinanide v La Maison Kosmeo (1928) 139 LT 365, copyright was denied to the phrase ‘Beauty is a social necessity, not a luxury’. 79 [2004] EWHC 1725 (Ch), [2006] RPC 3. This case is discussed more fully in the following chapter on non-textual copying. 77

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Subsistence of copyright in computer programs 3.55 set comprised simple commands, an example being ‘NP’: which called up the notepad. Other commands were more complex such as ‘A13JUNLTNAMS’ which would return the availability of flights from Luton to Amsterdam on the 13 June, ‘A’ standing for availability. Pumfrey J rejected the claim that the set of commands was a compilation protected by copyright on two grounds. First, he thought they were a programming language.80 Secondly, the set was not developed under an overall design. It was not possible to identify the authors of the individual commands and the lack of an overall design meant that, as a compilation, it did not have an author or joint authors. Rather than being a compilation of commands, it was merely an accretion of commands which just grew over time. 3.54 In Navitaire, Pumfrey J made a distinction between the ‘collection of commands needed for the system’ and the collection of their names. This must be a reference to designing what types of activities the commands did within the system such as, in the above example, parsing the command and its appended syntax as entered and taking the appropriate actions. Devising their names was a matter of choosing how the user of the software should represent the command. The above availability command from the user’s perspective was A[departure date][city pair] with the user supplying the information in the square brackets. 3.55 In Anderson v Leiber Code Co81 it was held that a book containing 100,000 cyphers (five-letter words) suitable for telegraphic purposes was an original literary work. The words were selected from 450,000 generated words by rejecting those which were unpronounceable or likely to lead to errors. This can be distinguished from the command set in Navitaire and Pumfrey J did not go so far as to hold that command sets can never be works of copyright as compilations. Indeed, in Microsense Systems Ltd v Control Systems Technology Ltd,82 Aldous J accepted that it was arguable that a set of 49 relatively simple three-letter mnemonics used to program pelican crossing controllers was a work of copyright. He took account of the work in devising the functions and operation of the controllers which had to be 80

To the extent that programming languages comprise ideas and principles, those ideas and principles are not protected: recital 14 to the Directive on the legal protection of computer programs. See infra. 81 [1917] 2 KB 469. 82 (unreported) Chancery Division, 17 July 1991. This case was not mentioned in Navitaire.

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3.56 Copyright and computer programs done before the mnemonics could be written. It is possible that this is the better approach as the mnemonics could not be created at all without that prior design work which certainly did require skill and judgement. The set could be seen as an integral part of the whole creative process. However, the Microsense case preceded the implementation of the Directive on the legal protection of computer programs and it is now likely that command sets and codes used to submit queries to software applications or to control the operation of a computer program will be considered to be computer programming languages.

Programming languages 3.56 A programming language is used to write computer programs. There are a great many programming languages and new ones are being created all the time. It is not possible to provide a generalised definition of programming languages as they differ enormously. However, they do generally conform to a syntax. Some use commands and statements which are, in the main, English words, together with variable names, punctuation, letters, numbers and mathematical symbols. Many languages allow the insertion of comments by the programmer, for example, to describe the function of part of the program. Documentation for programming languages include details of the commands, statements, syntax and other information used by programmers to write computer programs. Often, other items may be available for a given language such as standard sub-routines, templates and algorithms. 3.57 Recital 14 to the Directive on the legal protection of computer programs states that to the extent that logic, algorithms and programming languages comprise ideas and principles, those ideas and principles are not protected under the Directive. The intention appears to have been that ideas and principles should be free for others to use. On this basis, a programming language itself should not be protected but, of course, a computer program expressed in a programming language can be the proper subject matter of copyright. The difficulty with the recital is that it does not say that programming languages are not protected at all. The lack of protection only relates to the extent that a language comprises ideas and principles. The meaning of that is not clear and may eventually require clarification by the Court of Justice of the EU. Nor is it entirely beyond doubt what the meaning and scope of the term ‘programming language’ is in this context. 96

Subsistence of copyright in computer programs 3.60 3.58 A programming language could be considered to be wholly idea and/or principle, certainly in relation to its complete set of individual commands and statements. For anything going beyond this such as sub-routines and examples included in documentation describing a programming language, it will be a question of whether they can be seen as intellectual creations. Many may be too small to be so considered. 3.59 A narrow view of a programming language is that it is limited to the language used by a computer programmer to write a computer program which in turn controls the computer. A wider view is that the term also includes instructions entered by a person interacting with a computer program in operation. This was the view of Pumfrey J in Navitaire. It is clear that a command set of the type used in the programs in that case could be described as a ‘language’. But can it be defined as a ‘programming language’? It may control the operation of the computer program, but it does not create a new computer program. No set of instructions capable of controlling the operation of a computer on its own is created. A complex command such as the sort in Navitaire, once typed and entered, is parsed and the results used to make the computer program perform certain functions such as retrieving information from a database and displaying it on the screen. In some cases, the information entered may be required to conform to a predetermined template to ensure that it is valid or acceptable for the purposes of processing. This is common with the entry of dates, postcodes and telephone numbers. But what a particular person enters could hardly be described as a language, let alone a programming language. 3.60 Pumfrey J’s view that the commands made up a programming language is not beyond doubt. He said (at para 87): To define a series of commands and their syntax to be recognised by the computer is to define a computer language [sic]. It is exactly the same as defining a language such as BASIC or a simple language to control a calculator program. A program consists of a statement or series of statements in that ‘language’. This suggests that even a single statement can be a computer program. But a computer program is surely a set of statements or commands.83 The use 83

The US Copyright Act 1976 defines a computer program in terms of a set of statements or instructions. Dictionary definitions also refer to programs being a set of instructions.

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3.61 Copyright and computer programs of the term ‘computer language’ is telling. It may be acceptable to describe a set of commands as a computer language, but it does not mean it is a programming language. After the user has finished interacting with the program there is no discernible program resulting from the interaction. 3.61 Even if a programming language is considered to be a form of expression over and above mere ideas and principles, it is not a form of expression for the purposes of the Directive on the legal protection of computer programs. The forms of expression of a computer program protected under the Directive are limited to the source code and object code. The functionality, data file formats, interfaces and programming language used to write a computer program are not forms of expression for the purposes of the Directive. The Court of Justice confirmed this is SAS Institute Inc v World Programming Ltd,84 building on its previous ruling in Bezpečnostni softwarová asociace v Ministerstvo kultury.85 Notwithstanding that such elements of computer programs may be outside the protection afforded by the Directive, they may be protected by other forms of copyright protection, such as compilation copyright. 3.62 HyperText Markup Language (HTML), used to format documents for display on webpages is not a programming language. It is not used to create computer programs. HTML can include links to other parts of a document, to other associated documents and files86 and to external websites and webpages. An HTML document may be designed to import into that document images and other files. Even then, it would be stretching things to claim that documents with all these features are computer programs and that HTML is itself a programming language. However, it is now possible to incorporate program code in HTML documents or include a link to some program code. In such a case, the HTML files could be said to include a computer program or link to a computer program but HTML itself does not consequently become a programming language. 3.63 Another mark-up language not dissimilar to HTML is XML which stands for eXtensible Markup Language. It is a tool for storing and

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Case C-406/10, EU:C:2012:259. Case C-393/09, EU:C:2010:816, supra. 86 Such as a cascading style sheet file containing information such as details of fonts and formatting to be referred to by an HTML file and applied to webpages. 85

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Subsistence of copyright in computer programs 3.66 t ransporting data. In Technomed Ltd v Bluecrest Healthscreening Ltd,87 the Deputy High Court judge accepted that XML format was not a computer program but could be protected as a literary work providing it was the author’s own intellectual creation. Because of the flexible nature of XML, independently created XML formats are likely to be quite different even if they describe the same type of data.88 It was held that there was infringement in the claimant’s XML format. It bore the stamp of its author, an employee of the claimant.

Logic and algorithms 3.64 Logic and algorithms are denied protection by the Directive on the legal protection of computer programs, at least to the extent that they comprise ideas and principles. They should be free for anyone to use. The intention underlying the Directive is that the code of a computer program as a form of expression is protected but this does not prevent others writing new computer programs to perform the same functions or similar (or even, theoretically, identical) programs providing they do not copy the code of the original programs.89 3.65 Logic can be described concisely as the science of reasoning. The study of logic dates back at least to Ancient Greece and it could be claimed that logic lies at the heart of computer science and programming languages specifically designed for encoding logic into computer programs such as Prolog.90 Boole’s algebraic logic is particularly prevalent in computer programs and affording protection to this and other forms of logic, simply by expressing them in a computer program, would seriously hamper the creation of new computer programs. Search engines are computer programs and are protected as such. However, the logic used by the search engine is not protected. 3.66 An algorithm is a procedure, process or set of rules to be used to perform some task such as a calculation or solving a problem. They are very 87

[2017] EWHC 2142 (Pat), [2018] FSR 8. Tags in XML are not predefined as in HTML but are selected by the designer, so the formats can look quite different even if describing the same type of data. 89 SAS Institute Inc v World Programming Ltd, supra, at paras 39 to 41. 90 The term ‘Prolog’ appears to be derived by one of its originators from ‘programmation en logique’. 88

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3.67 Copyright and computer programs common in computer science and range from methods of calculating square roots to methods of sorting data to the structure and logical flow of a computer program or suite of programs. It is common for algorithms to be expressed in flowcharts and diagrams before the relevant code or program is written. These items will be among the preparatory design material for a computer program. However, copying an algorithm after deducing it by studying a computer program in use will not infringe the copyright in such preparatory design material as all that is taken is the unprotected algorithm. This does not mean to say that copying a flowchart or diagram expressing an algorithm will not infringe copyright in the flowchart or diagram as such. Although they may be classed as part of the preliminary design material and, consequently, as part of the computer program, there is nothing to suggest that they do not have a separate copyright as artistic works. Otherwise making a direct copy of a flowchart or diagram expressing an algorithm might not infringe as it would be unlikely to be considered a substantial part of the computer program including both the program code and all the preparatory design material.

RESTRICTED ACTS AND INFRINGEMENT OF COPYRIGHT IN COMPUTER PROGRAMS 3.67 Article 4 of the Directive on the legal protection of computer programs lists the following restricted acts, subject to a number of exclusions from protection in Article 5 and the act of decompilation in Article 6 (discussed infra): ••

permanent or temporary reproduction;

••

translation, adaptation, arrangement and any other alteration;

••

any form of distribution to the public, including rental.

3.68 As could only be expected, the UK did not, in all the above cases, expressly modify the Copyright, Designs and Patents Act 1988 to reflect the precise wording of the Directive. In most cases, the restricted acts that applied to literary works generally will apply to computer programs in such a way as to comply with the Directive. Section 21 of the Act on the restricted act of making an adaptation did, however, require modification in order to provide a separate distinct meaning for computer programs.

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Restricted acts and infringement of copyright 3.71 3.69 In some cases, the restricted acts in the Act go further than in the Directive. For example, the restricted act of performing a work in public under section 19 applies to literary works though it may be hard to think how a computer program could be performed in public; arguably, this could apply where the display of the inputs and results of running a computer program is shown on a large screen in a public place. However, this would be caught anyway as it would involve at least the temporary reproduction of the computer program and, as such, would require the authorisation of the copyright owner. 3.70 Complications could arise where part only of a program is involved because of the UK’s implementation which treats preparatory design material as separate to the computer program rather than being part of it. By treating preparatory design material separately, this means that the UK has gone further than the Directive.91 But this cannot prejudice the protection afforded by the Directive to the computer program. It is possible that the copyright owner could end up with two bites of the cherry in this respect. He could claim that (a) the copyright in his computer program (which must include the preparatory design material in accordance with the Directive) has been infringed, and that (b) his copyright in the preparatory design material as a separate work also has been infringed. 3.71 In the following description of the restricted acts and infringement, we follow the Directive’s scheme with appropriate references to the UK Act and case law. There is some amount of cross-cutting, particularly in relation to the act of distribution. First, infringement by authorisation is discussed although this is not explicitly recognised in the Directive. Under the Berne Convention, it is recognised that the rights under the Convention extend to authorising the performance of the act in question.92 The Directive also picks up on this and the restricted acts under Article 4 give the rightholder the exclusive right to do or authorise these acts. In any case, a person authorising

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The Commission to the European Communities considered that this wider UK approach was still compliant with the Directive: Report from the Commission to the Council, the European Parliament and the Economic and Social Committee on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs, Brussels 10.04.2000 COM (2000) 199 final, p 9. 92 See for example, Article 8 on the right of translation, Article 9 on the right of reproduction and Article 11 on public performances and communication of works to the public.

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3.72 Copyright and computer programs infringement would be a joint tortfeasor at the least. Next the question of the threshold for infringement must be addressed where only a part of the work has been taken rather than the whole work. In the UK, this has been traditionally a question of substantiality. Now, for most works it is a question of whether the part taken can itself be seen as the author’s own intellectual creation.

Authorising infringement 3.72 As explained in the previous chapter, copyright is infringed by a person performing an act restricted by the copyright, directly or indirectly, in relation to the whole or a substantial part of a work, without the licence of the copyright owner. Authorising another to perform such an act also infringes.93 Authorisation need not be express and may be tacit. Even turning a blind eye to infringing activities may count as authorisation.94 However, selling or distributing equipment that can be used to make infringing copies in addition to having legitimate uses is not authorising others to infringe,95 unless of course the person selling or distributing the equipment encourages others to infringe copyright.96 3.73 In terms of computer programs, the most significant of the acts restricted by copyright are making copies and making an adaptation. Textual copying and making an adaptation is covered below but non-textual copying is the subject matter of the next chapter. Textual copying (sometimes described

93

Although the infringing act must be performed within the UK or other territories in which the UK Act applies, authorising such an act from outside the UK jurisdiction also infringes: see ABKCO Music & Records Inc v Music Collection International Ltd [1995] RPC 657 (a Danish company authorising infringement by a UK licensee). 94 Moorhouse v University of New South Wales [1976] RPC 151. Whether there is a duty to police the use of equipment available to others as in a library was doubted in Law Society of Upper Canada v CCH Canadian Ltd [2004] FSR 871. 95 CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] AC 1013. By the sale of its dual cassette tape machines, Amstrad was not authorising others to infringe copyright. In the US see Sony Corpn of America v Universal City Studios Inc 464 US 417 (1984) in respect of the Betamax video recorder. 96 Distributing file sharing software with encouragement to share music files was held to be secondary infringement of copyright in Metro-Goldwyn-Mayer Studios Inc v Grokster Inc 545 US 913 (2005). There have been numerous cases on ‘file-sharing’, discussed further in Chapter 7.

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Restricted acts and infringement of copyright 3.75 as literal copying) is where a direct copy is made of the whole or part of a computer program, perhaps with some modification. For the other restricted acts, there is no significant difference between computer programs and other works. 3.74 An argument that a copyright owner has a proprietary interest in the proceeds of an infringement of his copyright giving a right to a proprietary injunction was rejected in Twentieth Century Fox Film Corpn v Harris.97 Although section 96(2) of the Copyright, Designs and Patents Act 1988 includes the phrase ‘or otherwise’ in the list of available remedies, this did not extend to proprietary injunctions. If it did, this would have a chilling effect and such injunctions would have been applied for frequently, which was not the case.98

Substantiality and intellectual creation 3.75 For infringement of copyright generally, the whole or any substantial part of the copyright work must be taken for the particular restricted act to apply.99 It has already been noted that, in the UK, the courts have accepted that substantiality is more a question of quality than quantity. A small but important part may be substantial. It is also determined by reference to the work alleged to have been infringed rather than the alleged infringing work in a case where the part taken has been incorporated in a larger work. As Lord Millett said in Designers Guild Ltd v Russell Williams (Textiles) Ltd:100 But while the copied features must be a substantial part of the copyright work, they need not form a substantial part of the defendant’s work: see Warwick Film Producers Ltd. v. Eisinger [1969] Ch. 509. Thus, the overall appearance of the defendant’s work may be very different from the

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[2013] EWHC 159 (Ch), [2013] FSR 7. The defendants were responsible for operating websites such as Newzbin and Newzbin2 from which users could download infringing copies of films and sound recordings. Subsequently, there was a finding of conspiracy to infringe copyright and conspiracy to defraud against the defendant and his companies: Twentieth Century Fox Film Corpn v Harris [2014] EWHC 1568 (Ch). 98 Chapter 7 on copyright in the information society contains more material relating to online piracy and the position of internet service providers. 99 Section 16(3) of the Copyright, Designs and Patents Act 1988. The use of the term ‘substantial part’ derives originally from the Copyright Act 1911: section 1(2). 100 [2000] UKHL 58, [2001] FSR 11 at para 38.

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3.76 Copyright and computer programs copyright work. But it does not follow that the defendant’s work does not infringe the plaintiff’s copyright. 3.76 Computer programs must be written with complete precision, fully complying with all the rules inherent in the programming language. A very tiny error may prevent the program from running at all or properly. The only exception is in comment lines added by the programmer. These are used to help the programmer understand the program and may be helpful in breaking the program down into discrete parts improving the transparency of the program from the perspective of the person reading the source code (the version of the program as written by the programmer). These comment lines are not carried through to the object code version of the program as executed in a computer. Even the omission of a full stop or a misspelling of a command can prevent the program from being compiled into object code correctly. Such errors will have to be corrected in the source code before the program can be compiled to produce object code that will run successfully. 3.77 The importance of every word, name, mathematical symbol or item of punctuation to the correct operation of a computer program does not mean to say that such small items are substantial in a copyright sense. In Cantor Fitzgerald International v Tradition (UK) Ltd,101 Pumfrey J said that the correct approach was to consider the function of copyright, being to protect the author’s ‘skill and labour’ expended on the creation of the work. A part of a computer program is substantial, as with any of the other original works of copyright, if it represents a substantial part of that skill and labour. Pumfrey J described as simplistic an approach in an Australian case in which it was suggested that an essential part of a computer program would be a substantial part.102 3.78 Pumfrey J’s view in Cantor Fitzgerald must be correct. The argument that small but essential parts of computer programs were substantial parts for copyright purposes came about because very little of the claimant’s code found its way into the defendant’s bond broking software, being no more

101 102

[2000] RPC 95. Autodesk Inc v Dyason [1992] RPC 575 at 584. It is doubtful that the judgment went as far as suggested by Pumfrey J.

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Restricted acts and infringement of copyright 3.80 than 2 to 3 per cent.103 Of course, in deciding whether a substantial part of the programmer’s skill and labour104 resides in the part taken, consideration must also be given to the relevant preparatory design material as, under the Directive, this is part of the computer program. 3.79 The Directive on the legal protection of computer programs gives no real guidance as to the threshold for the determination of copyright infringement of computer programs. The word substantial does not even appear in the Directive, although under Article 6, dealing with the permitted act of decompilation, it is stated that any information obtained through the process of decompilation must not be used for ‘… the development, production or marketing of a computer program substantially similar in its expression, or for any other act which infringes copyright’.105 The reason for the lack of clear statutory guidance under the Directive may reflect that the issue of determining whether taking a part of a program infringes is very much a question of fact, rather than interpretation. 3.80 A number of points can be made about the threshold for infringement where a part only of the work is taken and substantiality ought to be evaluated accordingly: ••

It is not a simple question of the quality or quantity of the part taken in relation to the whole.106

••

Protection of a computer program is based on its expression being the author’s own intellectual creation: therefore, to infringe, the part taken must be regarded, independently, as the author’s own intellectual creation: this would not be the case, for example, in respect of a public domain routine incorporated in the program by the author.

••

Provisions on the scope of limitations and exceptions to infringement under the WCT and the Directive on copyright and related rights in the information society and the Directive on the legal protection of databases in respect of database copyright require that these limitations and

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There was infringement of the claimant’s source code programs as the defendant had taken duplicate copies of these which were used to help design and test the defendant’s software. 104 Strictly speaking, his ‘own intellectual creation’. 105 Article 6(2)(c). Nor do the international treaties and conventions assist. 106 Contrary to the traditional UK approach based on a preference for quality over quantity.

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3.81 Copyright and computer programs exceptions do not prejudice the legitimate interests of the rightholder or conflict with the normal exploitation of the work or other subject matter:107 it is submitted that, in terms of infringement, this is a useful test to apply once it has been concluded that the part taken represents the author’s own intellectual creation.

Reproduction 3.81 Under Article 4(1)(a) and subject to exceptions in Article 5 and decompilation under Article 6, the ‘rightholder’108 has the exclusive right to do or authorise the permanent or temporary reproduction of the computer program by any means and in any form, in part or in whole. The provision goes on to state that: … in so far as loading, displaying, running, transmission or storage of the computer program necessitate such reproduction, such acts shall be subject to authorisation by the rightholder; 3.82 This appears to cover all conceivable acts that could otherwise compromise the copyright in a computer program. An arcane consideration of any acts which could be done to a computer program which are outside the above list such as a manual conversion of a printed copy of a computer program into another language or the rental of a computer program would be caught by the other restricted acts. 3.83 Where an exact duplicate of a computer program is made without the copyright owner’s authorisation, there is little difficulty in finding infringement. Such copying often involves copying other items of software such as databases and computer files. It may be carried out by a pirate or

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See, for example, Article 10(2) of the WCT; Article 5(5) of the Directive on copyright and related rights in the information society and Article 6(3) of the Directive on the legal protection of databases. 108 That is, the owner. The author is the rightholder under Article 2. The employer will be the rightholder where the program was created in the execution of his duties or following the employer’s instruction unless otherwise provided by contract. The Article envisages joint authors and rightholders. Article 3 extends protection to natural and legal persons eligible under national copyright applicable to literary works. Therefore, the traditional rules on authorship and ownership under the UK Act apply.

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Restricted acts and infringement of copyright 3.86 by an employee. Except in cases of piracy, where criminal prosecution is appropriate, a good deal of unauthorised copying of computer programs and associated works is carried out by employees who reuse those programs and works for their own benefit or for the benefit of a new employer. Many reported cases involving claims for civil infringement of copyright in source code computer programs involve ex-employees. Often the original program and other works will be modified. Extra functionality might be added. Some clumsy aspects of the program might be improved. 3.84 Where the claimant’s computer program has been copied in whole or in part and incorporated into the defendant’s computer program, a finding of infringement essentially requires three things to be shown: ••

Does copyright subsist in the claimant’s program (that is, is it original in the sense of being the author’s own intellectual creation)?

••

Has the defendant copied from the claimant’s program, or performed a relevant restricted act, without the authorisation of the copyright owner?

••

Does the part copied represent a ‘substantial’ part of the claimant’s program (better stated as an inquiry as to whether the part taken can be classed as the author’s intellectual creation)?109

3.85 All but the most trivial of computer programs will be protected by copyright. Anyone who has ever written a computer program will testify to the fact that they are intellectual creations. Often, the program code itself might not look that impressive from a lay perspective but will usually be the culmination of a difficult and complex process that can only be carried out by highly trained and skilled persons.110 3.86 Given that most computer programs are protected by copyright, the first important step for the claimant is to prove copying. As normal, it is he who alleges who must prove. Sometimes a strong objective similarity may

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Per Jacob J in Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd [1994] FSR 275. There may be other issues such as whether the claimant has title to sue or whether a permitted act applies. 110 Computer programmers and other involved in software design usually have higher and further educational qualifications and professional qualifications.

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3.87 Copyright and computer programs be enough to prove copying on a balance of probabilities. This is especially so where the defendant had access to the work said to have been copied. Where, as is often the case with computer programs, the same person has been involved in the creation of the claimant’s program and the defendant’s program, a presumption of copying may be raised where the programs exhibit an objective similarity. The burden of proof ‘shifts’ to the defendant in that he will be put to giving an explanation of the similarities,111 for example, by showing they resulted from the use of public domain materials, were features dictated by the program’s function or were the result of the programmer’s own style of writing computer programs. 3.87 Sometimes a computer program will include material the presence of which will be difficult, if not impossible, for the defendant to explain without admitting copying. Some copyright owners are in the habit of putting deliberate mistakes or redundant material in their works so as to catch copyists. The parent company of the Automobile Association made an out of court settlement of £20m after it admitted copying Ordnance Survey maps.112 It was reported that the Ordnance Survey used unique stylistic features and proportions designed to detect unauthorised copies of its maps. 3.88 In Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd,113 a computer programmer, Mr Poole (the second defendant) wrote most of a computer software system including numerous programs and files which eventually came to be owned by the second claimant.114 Later, Mr Poole wrote new software for the first defendant. Both sets of programs were written in versions of the same computer programming language, COBOL. In deciding that there had been copying, Jacob J pointed to common spelling mistakes in the comment lines in the two sets of programs. The words were spelt correctly in some places, but the errors appeared in the same places in the programs. Other ‘coincidences’ were also found such as the

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LB Plastics Ltd v Swish Products Ltd [1979] RPC 551. This is an evidential burden. In Koger v O’Donnell [2013] IESC 28, the Irish Supreme Court explained this shift in the evidential burden by saying that the claimant’s evidence has raised an inference of copying which, in order to rebut that inference, the defendant will have to provide a sufficient and plausible explanation. 112 A Clark, ‘Copying maps costs AA £20m’, The Guardian, 6 March 2001. 113 [1994] FSR 275. 114 Some other persons later had a hand in further developing the software.

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Restricted acts and infringement of copyright 3.91 same comment headings and the same redundant code. The alleged infringing software included a program found in both sets of programs but was not used in the second. Mr Poole could not offer a plausible explanation for these similarities and Jacob J had no hesitation in accepting that there had been disk to disk copying. Although there were many lines in the programs that were different, Jacob J said (at 300): The statistical chance of these resemblances occurring twice in the two programs must be infinitesimal. … I am not prepared to accept that there was a fluke upon a fluke upon a fluke to the nth power. 3.89 Jacob J then went on to look at the individual programs and file records. In the case of the programs, the main similarities were in the names of variables and labels. He accepted some 20 to 30 infringed copyright. He also held that file transfer programs infringed copyright. These are programs used to transfer data from one system to another. They are important as they allow persons using one set of programs to switch to another set of programs. Jacob J accepted the submission that they could only have been written with access to the claimants’ file record layouts.

Suite of programs as a compilation 3.90 Ibcos is also important in that Jacob J accepted that a suite of computer programs could have a separate copyright as a compilation. He agreed that the process of putting together the whole package required considerable skill and labour. The defendants’ suite of programs had some differences. For example, in some cases two or three of the claimants’ programs had been combined into a single program and the defendants’ software included some additional programs. The former could be explained by improvements in hardware. Overall, Jacob J considered the compilation copyright to have been infringed by Mr Poole taking the claimants’ set of programs as a starting point and that set remained substantially in the defendants’ software. 3.91 This approach is correct, but it is important to realise that the issue here is not a question of copyright in computer programs under the Directive.115 This makes no mention of copyright in a suite of programs as a

115

Article 8 of the Directive states that the provisions of the Directive are without prejudice to the continued application of other legal provisions. Other Directives on copyright are

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3.92 Copyright and computer programs separate and additional form of copyright in computer programs. A compilation is a distinct form of literary work. A database is another form of literary work, but a work cannot be both a compilation and a database. The definition of ‘database’ under the Directive on the legal protection of databases makes it clear that a database is a collection of independent works, data or other materials.116 This cannot apply to a suite of computer programs as the separate modules are inter-dependent. Thus, when considering a suite of computer programs as an entity, it is compilation copyright with which we are concerned.

Screen images 3.92 Images created on screen during the operation of a computer program may be separately protected as artistic works. In Navitaire Inc v easyJet Airline Co,117 Pumfrey J said that the Directive on the legal protection of computer programs did not have any impact on copyright in artistic works. He accepted that graphical user interfaces designed from a set of available objects such as ‘command buttons, toggle buttons, checkboxes, scrolling lists and so forth’ were original artistic works. He said (at para 98): … the better view is that the GUI screens are artistic works. They are recorded as such only in the complex code that displays them, but I think this is strictly analogous to more simple digital representations of graphic works. 3.93 Pumfrey J also took account of the work that went into creating a uniform appearance on each screen and in creating uniformity among screen displays. This is an important aspect of the design of user interfaces. They should be attractive and easy to understand and use. Pumfrey J also accepted that the icons used on the screen displays were artistic works, albeit of a minor nature. 3.94 More lately, the Court of Justice of the EU confirmed that graphic user interfaces are not protected under the Directive on the legal protection

stated not to prejudice the protection afforded under the Directive on the legal protection of computer programs. 116 Article 1(2) of the Directive. 117 [2004] EWHC 1725 (Ch), [2006] RPC 3.

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Restricted acts and infringement of copyright 3.97 of computer programs in Bezpečnostni softwarová asociace v Ministerstvo kultury.118 They may, of course, be protected by other forms of copyright, in particular, artistic copyright. They may also be protected as designs under the Community Design Regulation or the UK Registered Designs Act 1949.119

Translation, adaptation, arrangement, etc. 3.95 Article 4(1)(b) gives the rightholder the exclusive right to do or authorise the translation, adaptation, arrangement and any other alteration of a computer program. This extends to the reproduction of the results, without prejudice to the rights of the person who alters the program. Thus, it is recognised that a person may make alterations to an existing computer program and obtain his own rights in that altered copy, assuming that the alterations can be viewed on their own account as an intellectual creation. Of course, the person making the alterations will not be able to exploit the copyright in the altered copy unless the owner of the copyright in the original program permits this. For example, the owner of the copyright in the original program might grant a licence to another person to carry out alterations and exploit the altered program. 3.96 Section 21 of the Copyright, Designs and Patents Act 1988 (making an adaptation) was modified to comply with the Directive. As first enacted, the section stated that an adaptation in relation to a literary or dramatic work meant a translation of the work.120 ‘Translation’ was further defined as follows: In relation to a computer program a ‘translation’ includes a version of the program in which it is converted into or out of a computer language or code or into a different computer language or code, otherwise than incidentally in the course of running the program.121 3.97 Following the Directive, an adaptation of a computer program was defined as ‘an arrangement or altered version of the program or a translation

118

Case C-393/09, EU:C:2010:816, supra. See Chapter 10. 120 Original section 21(3). Other meanings given to the term ‘adaptation’ had no relevance to computer programs. 121 Original section 21(4). 119

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3.98 Copyright and computer programs of it’.122 A translation is further defined as including ‘a version of the program in which it is converted into or out of a computer language or code or into a different computer language or code’.123 The present wording of section 21 does not precisely match that in the Directive but it is arguable that the overall meaning is the same and, if there is any doubt, a judge would most likely go straight to the text of the Directive.124 3.98 Under section 16(1) of the Copyright, Designs and Patents Act 1988, doing any of the other restricted acts in relation to an adaptation also is restricted by the copyright in a work. Therefore, reproducing the results of the translation, etc is covered under the UK Act as it is in the Directive. It is immaterial whether, at the time these other acts are done, the adaptation has been recorded in writing or otherwise. Therefore, a computer program could be disassembled and, before saving that version to a disk and while it exists only in a computer’s volatile memory (RAM), transmitting it to another person will infringe. 3.99 The act of making an adaptation of a computer program, because of the meaning of translation, covers acts of conversion of a computer program from source code to object code and vice versa; that is compilation and decompilation and assembly and disassembly.125 It would seem also to cover a manual conversion from assembly language to machine language and vice versa and also rewriting a computer program in one high level language

122

Section 21(3)(ab). Section 21(4). The changes to section 21 of the Act so as to comply with the Directive by the Copyright (Computer Programs) Regulations 1992 which came into force on 1 January 1993. Note the difference between section 21(4) as originally enacted and as amended, being the omission of the words, ‘otherwise than incidentally in the course of running the program’. The original wording included an exception not permitted by the Directive. 124 Jacob LJ was constantly frustrated by the habit of parliamentary draftsmen of re-writing a provision from a Directive or International Treaty rather than simply copying it out. See, for example, Rhone Poulenc Rorer International Holdings Inc v Yeda Research and Development Co Ltd [2006] EWCA Civ 1094, [2007] RPC 9 at paras 22–23 in relation to various provisions of the Patents Act 1977 stated to be framed so as to have the same effects in the UK as the corresponding provisions of the European Patent Convention, etc. 125 The pairs of phrases compilation/decompilation and assembly/disassembly are essentially the same but differ in terms of whether a high level or low-level language computer program is involved. The conversion from a source code program in a high-level language or assembly language version to the final object code version is often an automatic process using a compiler or assembly program to perform the required transformation. 123

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Restricted acts and infringement of copyright 3.102 into another high-level language. In this case, the adaptation will not look much like the original if the program listings are compared. The textual similarity may be limited or practically non-existent. It is not very likely that a person would attempt to convert a program from one high level language to another by studying the code of the first program and then rewriting it in another language. Because of differences in programming languages translating on a line by line basis is not likely to be feasible. It is more likely that the functionality of the first program would be studied and understood, including identifying and clarifying the basic ideas, principles, logic and algorithms underlying the first program. Typically, this will involve submitting test data to the first program and analysing the impacts and results obtained from such test data. This form of copying falls within the province of non-textual copying as covered in the following chapter.126 3.100 It is not clear what is meant by a version of a computer program converted into or out of a computer language or code. It could be intended to apply where a computer program expressed in object code is converted into assembly language or vice versa. It is submitted that it would have been simpler to use the formula in the Directive, being a translation, adaptation, arrangement or other alteration. 3.101 There is relatively little case law on making an adaptation of a computer program. This is probably because in most cases, the act of making an adaptation is done with a view to copying the computer program, for example, by ‘reverse engineering’ an object code version so that a version in assembly language could be used as the basis for writing a similar program. In Creative Technology Ltd v Aztech Systems Pte Ltd,127 in the Singaporean Court of Appeal, it was accepted that the defendant had infringed copyright in the claimant’s sound cards for personal computers by disassembling the program in the sound card and had copied it in developing its own compatible sound card. 3.102 In practice, this restricted act is of no great importance. It is difficult to carry out and, in most cases, the modified copy cannot be exploited with 126

Perhaps better described as creating a new program by emulating the functionality of another program without copying the code of the first program. 127 [1997] FSR 491. Under section 26 of the Singapore Copyright Act, an adaptation of a computer program is a version whether or not in the language code or notation in which the program was originally written, though not a reproduction of it.

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3.103 Copyright and computer programs the authorisation of the owner of the copyright in the original program. It does, however, set the scene for the specific permitted act of decompilation, where typically, an object code version of a program is converted into a source code or higher level version, for purposes such as understanding and making use of the program’s interfaces. This might be useful for companies wanting to develop compatible software permitting the transfer of data between the original and new programs.

Any form of distribution to the public, including rental 3.103 Article 4(1)(c) adds to the exclusive rights of the owner any form of distribution to the public, including rental of the original computer program or copies thereof. There is no further guidance as to the scope of distribution to the public, although this should be fairly self-evident, including activities such as selling copies to the public or making them available online so that members of the public can download copies of the program. However, ‘rental’ is further explained in recital 12 to the Directive as ‘… the making available for use, for a limited period of time and for profit-making purposes, of a computer program or a copy thereof.’ This does not extend to public lending and this remains outside the scope of the Directive. Article 4(2) contains an exhaustion of rights provision in relation to the sale of a particular copy of a computer program. 3.104 When the Directive on the legal protection of computer programs was first made in 1991, online delivery of copyright materials had not become the major issue it now is. The Directive sought to control the distribution of physical copies of computer programs, subject to an exhaustion of rights rider. Ten years later, the Directive on copyright and related rights in the information society128 had to specifically deal with online delivery. Article 3 of that Directive provided for a right of communication to the public by wire or wireless means which extends to a situation where works may be downloaded at a time chosen by a particular user. An example is where a website includes a download facility. Article 4 of the information society Directive provides a right to authorise or prohibit any form of distribution to the public, by sale or otherwise. 128

Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10. This Directive is examined further in Chapter 7 on copyright in the information society.

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Restricted acts and infringement of copyright 3.107 3.105 The later codified version of the Directive on the legal protection of computer programs made no changes to the right of distribution to the public and did not introduce a new right of communication to the public. However, it is the author’s view that the concept of distribution to the public under the Directive is wide enough to cover delivery by wire or wireless means in the sense of the information society Directive. In any case, the WCT expressly provides for the rights of distribution to the public and communication to the public by wire or wireless means129 and, as that Treaty is recognised as part of the legal order of the EU, the latter right must also apply to computer programs. 3.106 In terms of the UK Act, the restricted acts of issuing copies to the public, rental and lending and communication to the public are relevant.130 This latter restricted act replaced the previous act under section 20 of broadcasting the work or including it in a cable programme service. In accordance with the author’s view above, the acts of issuing to the public, rental and lending and communication to the public in the UK Act are compliant with the act of distribution to the public under the Directive on the legal protection of computer programs as interpreted by the WCT. We will look at these forms of distribution first, with reference to the UK Act, picking up the one Court of Justice case on distribution to the public.131 Finally, brief mention is made of the exhaustion of rights in copies sold to the public.

Issuing copies to the public 3.107 The restricted act of issuing copies to the public applies to every form of copyright work under section 18 of the Copyright, Designs and Patents Act 1988. It extends also to issuing the original to the public. There is no guidance in the Act as to what the term ‘issuing copies to the public means’ but it seems to apply only to copies on tangible media in distinction with the act of communication to the public, which is provided for by s ection 20.132

129

Articles 6 and 8 respectively. Article 4 of the Treaty includes computer programs as literary works. 130 The substitution was made by the Copyright and Related Rights Regulations 2003, SI 2003/2498 in compliance with the information society Directive. 131 UsedSoft v Oracle, infra. 132 See infra.

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3.108 Copyright and computer programs This view is supported by the WCT. The agreed statement applicable to Article 6 and 7 of the Treaty133 states that: As used in these Articles, the expressions ‘copies’ and ‘original and copies’ being subject to the right of distribution and the right of rental under the said Articles, refer exclusively to fixed copies that can be put into circulation as tangible objects. 3.108 In the context of computer programs and associated works, this form of infringement would be relevant to selling copies of software on physical media such as optical or magnetic disk.

Rental and lending 3.109 Under Article 7 of the WCT, inter alia, authors of computer programs are given the exclusive right to authorise commercial rental to the public of the original or copies of their works.134 Section 18A of the Copyright, Designs and Patents Act 1988 provides for both rental and lending for a number of works including literary works. It defines ‘rental’ as ‘… making a copy of the work available for use, on terms that it will or may be returned, for direct or indirect economic or commercial advantage’. This is slightly differently worded compared with recital 12 of the Directive on the legal protection of computer programs. But this should be of no consequence as the wording in the Directive must take priority.135 The definition of ‘rental’ in the Act is similar to that under Article 1(a) of Directive on rental right and lending right. However, the Directive does not contemplate that the copy might not be returned. 3.110 The Directive on rental right and lending right is without prejudice to the Directive on the legal protection of computer programs.136 However, Article 6 contemplates that the lending right may be applied to computer programs but if Member States do so provide they are to introduce a system to remunerate authors. 133

The distribution right (Article 6) and the rental right (Article 7). See also Article 11 of the TRIPs Agreement to similar effect. 135 Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (codified version), OJ L 376, 27.12.2006, p 28. 136 Article 4 of the rental right and lending right Directive. 134

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Restricted acts and infringement of copyright 3.113 3.111 In Verening Operbare v Stiching Leenrecht,137 the Court of Justice of the EU confirmed that the public lending right applies to digital copies. This applies where the lending occurs by placing the copy on a public library’s server on the basis that a user may reproduce a single copy by downloading it and, after expiry of the lending period, the downloaded copy may no longer be used by that user. This is subject to the digital copy of the book being made available to the public library, having been put into circulation by a first sale or other transfer of ownership of that copy in the EU by the holder of the distribution to the public right or with his consent. Of course, this does not apply where the digital copy was obtained from an illegal source.138

Communication to the public 3.112 The restricted act of communication of a work to the public is important in terms of making available copyright works by cable or over the internet. It applies to literary, dramatic, musical and artistic works, sound recordings and films and broadcasts. The act of communication to the public means communication to the public by electronic transmission including by broadcasting the work or by making the work available by electronic transmission so that individual members of the public may access the work from a place and at a time individually chosen by them, for example, by downloading the work from a website. The communication to the public right results from Article 3 of the Directive on copyright and related rights in the information society and section 20 of the UK Act was substituted in compliance with this Directive. 3.113 Strictly speaking, this specific restricted act is not relevant to computer programs and it is almost certain that the distribution right under Article 4(1)(c) of the Directive on the legal protection of computer programs is wide enough to provide for an equivalent, though not identical, right. This is of some importance. The Directive on copyright and related rights in the information society is without prejudice to the Directive on the legal protection of computer programs. Article 3(3) of the former Directive confirms that the right of communication to the public does not give rise to exhaustion of rights unlike the distribution right as it applies to computer programs. This means that c ompanies distributing copies of their 137 138

Case C-174/15, EU:C:2016:856. This case is discussed also in Chapter 7.

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3.114 Copyright and computer programs computer programs by online means are subject to the doctrine of exhaustion of rights.139

Exhaustion of rights 3.114 Article 4(2) of the Directive on the legal protection of computer programs exhausts the distribution right in relation to the first sale within the EU140 of a copy of a computer program as regards that copy. However, this does not exhaust the rental right. It could be thought that the draftsmen of the original Directive were thinking of the sale of a computer program on a tangible medium. For example, if a person purchased a copy of a program on a CD-ROM, he would be able to re-sell that copy in the future and the purchaser would be able to use it, effectively stepping into the shoes of the first buyer. The main justification for the doctrine of exhaustion of rights is to prevent manufacturers, distributors, retailers and importers selling their goods at different prices in different Member States, thereby compromising the working of the internal market. 3.115 In UsedSoft GmbH v Oracle International Corpn,141 Oracle supplied software to customers who could visit Oracle’s website and download software to their own computer server, free of charge. The customers then had to obtain a licence allowing them to use the software. The licences were unlimited in time and provided for the use of the software by a group of users within the customer’s organisation. These users downloaded copies of the software from the server to their own workstations.142 Typically licences allowed a group of 25 users. Where a customer wanted more than 25 users, he would have to obtain a further licence. In this way, a customer might have two licences for 25 users but only have a total of 27 users. UsedSoft bought up parts of licences and ‘secondhand’ licences and provided them to third parties. It was argued by Oracle that its delivery and licensing of the software was not a sale for the purposes of Article 4(2) and the third parties could not be lawful acquirers under Article 5(1) of the Directive.

139 See

UsedSoft GmbH v Oracle International Corpn, Case C-128/11, EU:C:2012:407. The Directive still refers to the ‘Community’. 141 Case C-128/11, EU:C:2012:407. 142 In some cases, customers would be provided with the software, which included computer programs, on CD-ROM or DVD rather than obtaining the software online. 140

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Restricted acts and infringement of copyright 3.119 3.116 The Court of Justice of the EU ruled that ‘sale’ is ‘… an agreement by which a person, in return for payment, transfers to another person his rights of ownership in an item of tangible or intangible property belonging to him’.143 Therefore, to fall within Article 4(2), there must be a transfer of ownership of the copy of the computer program in question. 3.117 The Court ruled that term ‘sale’ must be given a broad interpretation. Where the software was downloaded, it could not be used until the licence agreement was concluded. The first would be pointless without the licence and the two must be considered as a single transaction. The fact that a copy is acquired online should make no difference as recital 7 to the Directive confirms that protection applies to programs in any form, including those which are incorporated into hardware. Therefore, no distinction should be made between computer programs whether they are in tangible or intangible form. A broad meaning of ‘sale’ is also justified otherwise the owner of the copyright in a computer program would simply refer to the transaction as being a licence rather than a sale.144 3.118 Consequently, the Court of Justice ruled that: … the right of distribution of a copy of a computer program is exhausted if the copyright holder who has authorised, even free of charge, the downloading of that copy from the internet onto a data carrier has also conferred, in return for payment of a fee intended to enable him to obtain a remuneration corresponding to the economic value of the copy of the work of which he is the proprietor, a right to use that copy for an unlimited period. 3.119 A couple of points can be made about this approach. First, it is the ownership of a copy of a computer program that is transferred, with a right to use it and transfer that copy and that right to a third party.145 No rights of ownership under the copyright are involved. There may be problems where, as is often the case, software, comprising both programs and other works may be made available for downloading, together with a licence to use the software. The rights to prevent further commercialisation of the computer programs would be exhausted, except in relation to rental of the computer programs. 143

Para 42. Para 49. 145 Any issue as to whether a third party becomes a lawful acquirer for the purposes of Article 5(1) was also considered in UsedSoft v Oracle, infra. 144

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3.120 Copyright and computer programs However, the rights in items of software other than computer programs, such as other forms of literary works, graphic user interfaces and other artistic works, databases, sound recordings, etc. would not be exhausted. 3.120 In circumstances such as the present case, where the copy of a program is transferred or where the second or subsequent acquirer downloads a new copy of the program from Oracle’s website, unless the first acquirer deletes or disables access to the original copy, that copy will become an infringing copy. The Court of Justice accepted that this would be the case but also noted that the copyright owner could employ technical means to ensure that the first acquirer could not make further use of the computer programs after the licences had been transferred to third parties.146 3.121 Where a copy of a computer is made available on tangible media, such as on a DVD, the doctrine of exhaustion of rights also applies as under Article 4(2) of the Directive on the legal protection of computer programs.147 Subsequently, the person acquiring that copy may transfer it to another who then becomes a lawful acquirer of that program. This is, however, subject to contractual restriction as, recital 13 to the Directive goes on to say: In the absence of specific contractual provisions, including when a copy of the program has been sold, any other act necessary for the use of the copy of a program may be performed in accordance with its intended purpose by a lawful acquirer of that copy. [emphasis added] Section 56 of the Copyright, Designs and Patents Act 1988 also provides for, inter alia, the possibility of express contract terms prohibiting the transfer of the copy and the transfer of the assignment of any licence to use the program. 3.122 A difficulty of interpretation arises where the copy sought to be transferred is not the original purchased copy but, for example, a back-up copy, used after the original copy has become damaged or is no longer machine readable. Under the UK Act, section 56(3) anticipates that a transfer may still apply, in a case where the original purchased copy is unusable, to the transfer of a copy used in its place.148 However, this is in conflict with the ruling of the 146

Paras 78 and 79. See also, section 56 of the Copyright, Designs and Patents Act 1988. 148 The wording of section 56(3) is unclear. It seems to permit the transfer of another copy used where the original is no longer unusable and/or make the unusable original copy an 147

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Exceptions to the exclusive rights 3.124 Court of Justice in Ranks v Microsoft.149 In that case, two persons had been charged with a number of offences relating to the sale of large numbers of copies of Microsoft computer programs on non-original disks.150 The Court of Justice confirmed that the initial acquirer of a copy of a computer program made available under an unlimited user licence is entitled to resell that copy and transfer his licence to a new acquirer. However, that person may not, where the original material medium of the copy has been damaged, destroyed or lost, provide a back-up copy of the program to a new acquirer without the authorisation of the rightholder. 3.123 Where a copy of a computer program has been sold by the rightholder, or with his consent, a person having a right to use the program may make a back-up copy of the program if necessary to that use. Nevertheless, on the basis of Ranks v Microsoft, the back-up copy may not be transferred in lieu of a damaged, destroyed or lost original copy, unless the rightholder authorises the transfer. In practical terms, it makes sense to make a back-up copy and keep the original a safe place. The facts of Ranks v Microsoft were more akin to piracy than normal lawful use of computer programs. However, in the case of a reasonable and honest user of a genuine copy of a computer program, a rightholder may authorise transfer of the back-up copy or even provide a new original copy to be transferred to the new lawful acquirer. In the absence of modification of section 56, it should be read in conformity with Ranks v Microsoft.

EXCEPTIONS TO THE EXCLUSIVE RIGHTS 3.124 Article 5 of the Directive sets out three forms of exceptions to the rights of the owner of the copyright in a computer program. They can be briefly described as: ••

acts of reproduction or translation, adaptation, arrangement or other alteration by a lawful acquirer: Article 5(1);

infringing copy once the transfer of the other, usable copy takes place. It should also be noted that section 56 applies to all forms of works in electronic form and, furthermore, the section has not been modified since the Act received Royal Assent. 149 Case C-166/15, EU:C:2016:762. 150 It was estimated that over 3,000 copies had been distributed by the alleged offenders.

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3.125 Copyright and computer programs ••

making a necessary back-up copy by a person having the right to use a computer program: Article 5(2);

••

observing, studying and testing by a person having a right to use the computer program: Article 5(3).

A final exception, under Article 6 is sometimes referred to as the ‘decompilation right’,151 and permits reproduction and translation in order to obtain information to achieve ‘interoperability’ with other programs. This exception will be described later after the exceptions in Article 5 are considered. It will come as no surprise to see that the implementation of these provisions into the Copyright, Designs and Patents 1988 was less than perfect. For example, the Act uses the term ‘lawful user’, whereas the Directive uses ‘lawful acquirer’ and ‘person having the right to use’.152 The following part of this chapter primarily refers to the text of the Directive rather than the imperfectly implemented domestic legislation.153

Reproduction etc. by a lawful acquirer 3.125 Under Article 5(1), in the absence of specific contractual provision, a lawful acquirer may carry out acts of reproduction under Article 4(1)(a) and translation, etc. under Article 4(1)(b) where necessary for the use of the program in accordance with its intended purpose, including error correction, without the authorisation of the rightholder.154 A ‘lawful acquirer’ is a ‘purchaser, licensee, renter or a person authorised to use the program on behalf of one of the above’ in the view of the European Commission.155

151 152

153 154

155

It is not a right as such, merely an exception to perform certain acts that would otherwise infringe the copyright. The Commission Report on the Implementation of the Directive fudges this contradiction in the text of the Directive, pointing to possible deficiencies in implementation by some Member States though concluding that the Commission is not aware of any problems caused by the ‘shortcoming of Member States’ to implement the provision faithfully. References to provisions in the Act may be made for comparison, as appropriate. Being, of course, the owner of the copyright in the computer program. This exception was implemented in the UK by the insertion of section 50C into the Copyright, Designs and Patents Act 1988. The slight change in wording in the section is not significant. Report from the Commission to the Council, the European Parliament and the Economic and Social Committee on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs, COM/2000/0199 final, 10.04.2000, para 10.

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Exceptions to the exclusive rights 3.128 This is an entirely reasonable view, indeed a renter will be a licensee. A purchaser could be a person who has obtained a copy of a program for an unlimited term or a person to whom the copyright has been assigned.156 3.126 The right of reproduction is needed as simply running a computer program results in making copies in the computer memory. The rights of translation etc under Article 4(1)(b) are required because the program may be translated from one form to another during the process of running the computer program. Or it may be that the program is delivered in source code form and must be converted to object code before it can be operated. Alternatively, the program may be downloaded from the copyright owner’s website resulting in a copy being made on the customer’s computer. This may also involve translation as the program code will be converted into bits for transmission. 3.127 Article 5(1) can be seen essentially as a non-derogation from grant provision, although it appears that the extent and scope of the exception can be narrowed by the use of contractual terms.157 However, the validity of a contractual term which comprises the intended purpose or purposes for which the program was obtained must be doubtful. It might be relevant where the licence under which the computer program is obtained is limited to certain uses only; for example, uses for non-commercial purposes.158 In any event, any contractual limitation derogating from the original intended uses of the computer program cannot affect the rights of any third party who lawfully acquires the computer program. 3.128 In UsedSoft GmbH v Oracle International Corpn,159 it was argued that persons acquiring Oracle’s computer programs indirectly through a re-seller of licences could not be lawful acquirers of the programs and, therefore, could not benefit from Article 5(1). However, the Court of Justice ruled that subsequent acquirers could rely on the exhaustion of rights principle under Article 4(2) and were thus lawful acquirers in their own right.

156

An assignee of the copyright becomes the rightholder in any case in relation to the exclusive rights or part thereof, in the case of an assignment limited to some of the rights only. 157 By inclusion of the phrase ‘in the absence of specific contractual provisions’. 158 Even then, this cannot prevent the operation of some of the other exclusions, such as observing, studying and testing: see SAS Institute Inc v World Programming Ltd, Case C-406/10, EU:C:2012:259. 159 Case C-128/11, EU:C:2012:407.

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3.129 Copyright and computer programs 3.129 A little caution is needed with this case. First, on the facts, the licences granted by Oracle were of unlimited duration. Secondly, Oracle received a fee equivalent to the economic value of the copy in question. Had Oracle granted licences of limited duration, for example, one year, perhaps renewable on payment of an additional fee, the Court of Justice would most likely come to the opposite conclusion. It may be easy to accept that the rights of the copyright owner are exhausted where, in practical terms, the licensee has paid the full economic value of the copy of the computer program. 3.130 Where a licence is of limited duration the question of exhaustion is more difficult. One view is that a transfer made part way through the term of the licence makes the transferee a lawful acquirer and the owner’s rights are exhausted temporarily until the end of the licence term. That seems to be a step too far. In any event the contractual proviso in Article 5(1) may apply to allow the copyright owner to include a specific contractual term prohibiting transfer of the benefit of the licence. 3.131 Where the copyright owner imposes specific contractual provisions under Article 5(1), it is now clear that these cannot prevent the performance of other acts within the exceptions to the restricted acts, such as decompilation or observing, studying and testing a computer program. This is so even if the purpose of the licensee is commercial and the licence is limited to noncommercial uses.160

Error correction 3.132 Article 5(1) of the Directive on the legal protection of computer programs permits lawful acquirers to correct errors in the acquired program. This is subject to the absence of a specific contractual provision negating this. However, recital 13 is wonderfully ambiguous and, on the one hand it states that the acts of loading and running necessary for the lawful use of the program, including the correction of errors, cannot be prevented. It goes on the say ‘… in the absence of specific contractual provisions’ any other act may be performed. A number of Member States, including the UK, appear to allow owners of copyright in computer programs to prevent error correction by contractual means.161 160 See 161

SAS Institute Inc v World Programming Ltd, Case C-406/10, EU:C:2012:259. The Commission considered that the intention was to allow lawful acquirers to correct errors subject to contractual controls over the restricted acts which could be carried out.

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Exceptions to the exclusive rights 3.134 3.133 In practice, the correction of errors in a computer program is an important aspect of software maintenance. All but the most trivial computer programs are likely to contain errors, some of which may be very significant but which may not be discovered for some time. Although the UK implementation appears to allow a copyright owner to prevent error correction by the licensee or by a third party on behalf of a licensee, other areas of law may override this ‘contracting out’. Before exploring these, it is worth noting that error correction will be very difficult, if not impossible, without access to the source code. Licences covering the use of computer programs very rarely provide for delivery of a copy of the source code to the licensee. Most owners of copyright in computer programs value the source code version very highly. It may be their most important asset and they usually do all they can to keep it confidential.162 Moreover, software development companies have a vested interest in providing on-going maintenance, including error correction, to their licensees. Often this will be provided under a separate maintenance agreement. So, whatever the legal position, there are practical issues that may make error correction by licensees or others acting on their behalf not viable. That said, however, there are third party software companies that specialise in providing software maintenance and support. In this respect, it is worth recalling that Article 5(1) covers both copying and translating, etc. It may be possible to maintain a computer program in object code form if it is decompiled or disassembled into a human-readable form. 3.134 It could be argued that a licensee of a major item of software which includes numerous computer programs has a right to a free market in relation to error correction. This is analogous to the ‘right to repair’ in British Leyland Motor Corpn v Armstrong Patents Co Ltd.163 However, in Saphena Computing Ltd v Allied Collection Agencies Ltd,164 it was held at first instance that British Leyland was distinguishable in a case of the supply of a computer

Report from the Commission to the Council, the European Parliament and the Economic and Social Committee on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs, COM/2000/0199 final, 10.04.2000, para 10. 162 Where source code is not delivered to the licensee, it is common for the licence to provide for source code escrow where it is delivered to a third party who will release it to the licensee under specified occurrences such as the software company going out of business or failing to maintain the software. 163 [1986] AC 577. 164 [1995] FSR 616.

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3.135 Copyright and computer programs program supplied in object code form. In Saphena, the licensee had access to the source code and used it to correct errors which the software company had failed to correct. Under those circumstances, it was held that the licensee could use the source code to correct errors but could not use it to further improve the software. This finding was not appealed against.165 In Mars UK Ltd v Teknowledge Ltd,166 the defendant recalibrated the claimant’s coin receiving machines. Jacob J held that the ‘right to repair’ principle did not apply as recalibrating the machines was far from the concept of repair and, in any case, the expectation of persons who bought the machines was that this work and repair work would be carried out by the claimant. 3.135 The ‘right to repair’ in British Leyland is based on public policy. It is really a throwback to the position prior to the Copyright, Designs and Patents Act 1988. The Judicial Committee of the Privy Council subsequently confirmed that, whilst it still exists, it is unlikely to be extended.167 On balance, it is difficult to say with any certainty that the British Leyland right to repair can apply to error correction of computer programs. There will u sually be an expectation that the software company will correct errors and, in the vast majority of cases, a maintenance agreement will be entered into by the parties. It is often part and parcel of the original agreement. The right to repair may be available in limited cases such as where the software company is no longer willing or able to correct errors but its wider application is doubtful. It is arguable whether the right to repair is available to a third party using software licensed to it to provide repair services to others.168 3.136 Competition law may be relevant in some circumstances, such as where the copyright owner abuses his dominant position by charging excessively for maintenance and error correction or is unduly interfering with the use of the software by virtue of the draconian terms in a licence agreement. Competition law certainly can be relevant in the field of copyright and related rights. A claim that preventing the use of licensed s oftware was an abuse under Article 102 of the Treaty on the Functioning of the

165

Another important aspect of this case was that it was confirmed that were object code only has been supplied in accordance with the licence, there is no obligation on the software company to make the source code available. 166 [2000] FSR 138. 167 Canon Kabushiki Kaisha v Green Cartridge Co (HK) Ltd [1997] FSR 817. 168 Digital Equipment Corpn v LCE Computer Maintenance Ltd (unreported) 22 May 1992.

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Exceptions to the exclusive rights 3.138 European Union169 was considered in Digital Equipment Corpn v LCE Computer Maintenance Ltd,170 though it was held that it was unlikely to affect trade between Member States in the circumstances. Competition law in relation to computer software is discussed more fully in Chapter 15.

Making a necessary back-up copy 3.137 A person having the right to use a computer program may make a back-up copy in so far as that is necessary for his use under Article 5(2). This may not be prevented by contract.171 This is not a controversial exception to the restricted act of reproduction. In many cases, licensors of computer programs expressly recommend that the licensee make a back-up copy. The word ‘necessary’ is probably used in a weak sense.172 It is submitted that the usual European approach of proportionality should be applied to determine whether making a back-up copy is necessary. What could the consequences be for the lawful user if a back-up copy has not been made and the only copy of the program has become corrupted or damaged so it can no longer be used? On the other hand, would the making of a back-up copy be likely to prejudice the legitimate interests of the copyright owner? 3.138 Where a back-up copy has been made, any use of it beyond possession for back up purposes may infringe the copyright in the computer program. If the computer program is transferred to a third party, which it may be providing there are no express terms preventing this, the back-up copy must also be transferred, otherwise it becomes an infringing copy.173 If the original copy has become unusable, the back-up copy may be transferred in its place.

169

Previously Article 82 of the EC Treaty. (Unreported) 22 May 1992. 171 Article 8 declares that the contractual provisions contrary to Article 6 (decompilation) or the exceptions under Article 5(2) or (3) shall be null and void. See section 296A of the Copyright, Designs and Patents Act 1988. 172 In Sony Computer Entertainment Inc v Ball [2004] EWHC 1738 (Ch), [2005] FSR 9, it was held that there was no necessity for having a back-up copy and, therefore, no justification for having one. The media on which the programs were distributed were robust and, should the eventuality arise, the claimant would make a replacement available. 173 See section 56 of the Copyright, Designs and Patents Act 1988 which expressly provides for this. The Directive is silent on this point, but the same result must apply. 170

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3.139 Copyright and computer programs

Observing, studying and testing 3.139 In accordance with the Directive, the TRIPs Agreement and the WCT, ideas and principles are not protected by copyright.174 Unlike passive forms of copyright, such as a literary novel, it is usually possible to glean the underlying ideas and principles (that is, the plot, scenes and incidents) simply by reading the novel. This is not so with computer programs. They have to be put into operation (‘run’), this itself involving an act of reproduction and, possibly, translation or adaptation. Even then the underlying ideas and principles may not become transparent to the user without carefully studying the program in use, checking how inputs affect and condition outputs, submitting test data to the program, etc. Hence the need for an exception to the restricted acts to allow and facilitate access to these underlying ideas and principles. 3.140 Under Article 5(3), a person having a right to use a copy of a computer program is entitled, without the rightholder’s authorisation, to observe, study or test the functioning of the program in order to determine the ideas and principles which underlie any element of the program. A proviso is that, at the time, he performs any of the acts of loading, displaying, running, transmitting or storing the program which he is entitled to do.175 Again, this exception cannot be cut down by conflicting contractual terms under Article 8. 3.141 The exception does not allow the person having a right to use the program to go beyond the acts he is entitled to do. It simply allows him to do those acts for purposes that may not have been envisaged in the licence. It may, for example, permit the user to submit test data to determine a

174

Underlying ideas and principles are not protected under Article 1(2) of the Directive. Under Article 9(2) of TRIPs and Article 2 of the WCT, in terms of copyright works generally, ideas, procedures, methods of operation and mathematical concepts as such are not protected. It has long been held in a number of jurisdictions, including the UK and the USA that ideas are not protected by copyright. 175 This provision is now implemented in section 50BA of the Copyright, Designs and Patents Act 1988, inserted by the Copyright and Related Rights Regulations 2003, SI 2003/2498. Curiously, previously, the provision was buried away in section 296(1)(c) which made any term or condition in any agreement purporting to restrict or prohibit, inter alia, observing, studying or testing the functioning of a computer program so as to understands the underlying ideas and principles. The replacement of this provision by section 50BA was to better implement the Directive.

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Exceptions to the exclusive rights 3.145 athematical formula used by the program in making calculations or to glean m an understanding of the algorithms used by the program to perform its functions. This permitted act may facilitate the development of other computer programs that emulate the functioning and operations performed by the original program. 3.142 The fact that the exception may be invaluable to potential rivals is of no consequence, providing that they do not create a new program which infringes the copyright in the first program. Of course, the person carrying out the observing, studying and testing must have a right to use the program in the first place. 3.143 In SAS Institute Inc v World Programming Ltd,176 the defendant, WPL, obtained a learning edition of the claimant’s program. WPL used this and studied it in use, submitting test data and checking outputs. In this way WPL gained a thorough insight into how the program worked, its algorithms and how it manipulated data. From this information WPL was able to write its own programs to emulate the functionality of the claimant’s programs. None of the code of the claimant’s programs was copied. Indeed, it appeared that WPL did not even know what programming language had been used to write the claimant’s programs. Eventually WPL started marketing and licensing its own programs. 3.144 The Court of Justice of the EU confirmed that a person obtaining a copy of a program under a licence could rely on the exception under Article 5(3) provided that they performed acts covered by the licence and acts of loading and running necessary for the use of the program. This was subject to the licensee not infringing the exclusive rights of the owner of the copyright in that program. This must mean that the licensee must not include part of the expression of the copyright owner’s program, assuming that it could be classed as the author’s own intellectual creation. 3.145 In SAS v WPL, the learning edition licence was restricted to nonproduction purposes. The High Court had previously accepted that WPL’s use went beyond the scope of the licence agreement.177 The Court of Justice

176 177

Case C-406/10, EU:C:2012:259. SAS Institute Inc v World Programming Ltd [2010] EWHC 1829 (Ch), [2011] RPC 1 at para 290.

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3.146 Copyright and computer programs ruled that the exception in Article 5(3) applied providing a licensee performs acts permitted under the licence. Although silent on the matter is it clear that the Court dismissed any possibility of narrowing the exception on the basis of the licensee’s purpose. A basic rule if that underlying ideas and principles are not protected by copyright. That would be compromised if the exception could apply only if the licensee’s purpose was compatible with the terms of the licence. If it were otherwise, copyright owners would be able to emasculate the exception by the inclusion of contractual terms preventing the use of the underlying ideas and principles for purposes they did not approve of. 3.146 By determining the underlying ideas and principles, it may be possible to write a new program to carry out the same functions without access to the program code or any other associated material such as preparatory design material. To this extent, monopoly protection of a program’s functions, logic and algorithms is prevented. We will explore the SAS v WPL case in more detail in the next chapter.178

DECOMPILATION 3.147 Computer programs are usually written in source code and converted into object code which can be processed directly in the computer. Source code is written in a language which is r elatively easy for computer programmers to handle. Such languages are often referred to as high-level languages. Programs written in high level languages must be converted into object code form, permanently, or temporarily, so that the program can be run on a computer. 3.148 Object code programs are expressed in what to most is a meaningless list of numbers or, at the most basic level, 0s and 1s. To understand the program and to discover its interfaces with other software, hardware and with the user, an object code program must be converted into a higher level language as can be understood at least by skilled programmers. This conversion is what is meant by ‘decompilation’. 3.149 It may be possible to determine interface details from manuals published by the software developer and this was accepted by the Commission 178

This case is undoubtedly the most important case thus far on the Directive on the legal protection of computer programs and has huge significance for the software industry.

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Decompilation 3.151 to the EU as an acceptable means of acquiring the information to enable the creation of interoperable programs.179 The introduction of the decompilation provision was seen as a safety mechanism where the information was not otherwise available. 3.150 Article 6 of the Directive on the legal protection of computer programs sets out the meaning and scope of this exception to the exclusive rights of reproduction under Article 4(1) and translation, etc under Article 4(2). There is no direct definition of ‘decompilation’.180 Its meaning must be gleaned from the text of the Directive. First, it is important to understand the meaning of ‘interoperability’ which is key to the objective to be achieved by decompilation. Recital 10 describes the function of a computer program being to communicate and work together with other components of a computer system and with users. For this purpose, a logical and, where appropriate, physical interconnection and interaction is required to permit all elements of software and hardware to work with other software and hardware and with users in all the ways they are intended to function. These interconnections and interfaces are known as the program’s interfaces and this functional interconnection and interaction is generally known as ‘interoperability’ which can be defined as the ability to exchange information and mutually to use the information which has been exchanged. Thus, to achieve interoperability, information concerning the interfaces must be obtained. 3.151 Article 6(1), therefore, is couched in terms of not requiring the authorisation of the rightholder to acts of reproduction or translation, etc. if these acts are ‘… indispensible to obtaining the information necessary to achieve the interoperability of an independently created computer program with other

179

Commission’s amended proposal for a Directive on the legal protection of computer programs, as noted at para 253 of Arnold J’s judgment at first instance in SAS Institute Inc v World Programming Ltd [2010] EWHC 1829 (Ch), [2011] RPC 1. 180 Article 6 was implemented in the UK by the insertion of section 50B into the Copyright, Designs and Patents Act 1988 (the permitted act of fair dealing for research or private study was modified to exclude decompilation from its scope as new section 50B provided for decompilation). Unlike the Directive, section 50B attempts a definition, being the conversion of a computer program expressed in a low level language into a version expressed in a higher level language or incidentally in the course of so converting it to copy it: section 50B(1). It would have been better simply to leave the meaning to be interpreted from the scheme and text of the Directive.

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3.152 Copyright and computer programs programs …’.181 This is subject to conditions and restrictions on the use of the information achieved set out in the remainder of Article 6, infra. To summarise, decompilation allows the reproduction and translation, etc of a computer program if indispensible to obtain information about the program’s interfaces which can then be used to create an independent program which can interoperate with other computer programs. It seems to matter not whether those other computer programs include or are limited to the computer program which has been decompiled.

Conditions under which decompilation may proceed and caveats 3.152 There are number of conditions, set out in Article 6(1)(a) to (c) which must apply to make decompilation lawful. First, the acts of reproduction and/or translation etc must be carried out by a licensee or by another having a right to use the program. A further possibility is that the person decompiling the program is authorised to do so on their behalf. Typically, the person decompiling the program will have a licence to use it, even though the licence terms themselves may expressly prohibit decompilation.182 The second condition is that the information has not already been made available to the licensee or other person entitled to exercise the right. For example, the owner of the copyright in a computer program might have published the relevant information or is prepared to disclose it, if asked to do so. In this way, decompilation can be seen as a last resort if the owner of the copyright in the computer program is not prepared to be cooperative on this score. The third condition is a bit of a nonsense and reflects a lack of understanding of computer program practice and technology. Decompilation must be restricted to that part or those parts of the program that contain the interface details. In most cases, this cannot be predicted without decompiling all or large parts of the program. 3.153 Under Article 6(2), the information obtained through decompilation may not: ••

181 182

be used for goals other than to achieve the interoperability of the independently created computer program;

Emphasis added. Under Article 8, any contractual term contrary to Article 6 is null and void.

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Decompilation 3.156 ••

be given to others, except when necessary for the interoperability of the independently created computer program; or

••

be used for the development, production or marketing of a computer program substantially similar in its expression, or for any other act which infringes copyright.

3.154 Finally, under Article 6(3), these provisions may not be interpreted in such a way as to allow its application to be used in a manner which unreasonably prejudices the rightholder’s legitimate interests or conflicts with a normal exploitation of the computer program.183 3.155 During the lead up to the Directive on the legal protection of computer programs, the proposal to introduce an exception allowing decompilation of computer programs was a matter of substantial controversy and split the computer software industry into two. Some companies were fiercely opposed to it whilst others, particularly smaller companies, were keenly in favour of it. Important issues in favour of decompilation are standardisation and the ability of computer programs to interact with each other and other parts of computer systems. In practice, the exception is of very limited impact. First, unless the precise version of the high-level language used to write the source code is known, it is almost impossible to re-create the source code as originally written. Secondly, some software companies are cooperative and will make information about the interfaces available to other companies keen to write software which can operate with theirs. Software does not become an ‘industry standard’ if its owner refuses to cooperate with companies wishing to write software which can interface with it. 3.156 Even though the UK implementation of the decompilation permitted act can be criticised, it does not appear to have given rise to any problems. There has been no case law in the UK or before the Court of Justice of the EU where decompilation has been subject to judicial scrutiny. This is either because the provisions are understood in the software industry and work well in practice or it is not the issue it was once thought to be. It is submitted that the reality of it all is that it is extremely difficult, impossible in some cases, to retrieve the source code as written by the programmer and the permitted act

183

The UK failed to implement this provision which is important because it uses the Berne Convention ‘three-steps test’; see Article 9(2) of the Berne Convention.

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3.157 Copyright and computer programs is of little practical value. It may be possible to write file transfer programs by studying the structure of the files and embedded code rather than that of the program with which they were created and used. Consequently, the Commission to the European Communities has noted that the EU Institutions have been urged ‘not to reopen the floodgate of debate on this Directive’.184 The Commission believes that the balance found in relation to the decompilation provisions remains valid. 3.157 The availability of the act of decompilation may be illusory where, for practical reasons, it is very difficult or impossible to obtain the information to achieve interoperability by this route. In any case, failing to provide interface details may be an abuse of a dominant position under Article 102 of the Treaty on the Functioning of the EU. In 2004 the Microsoft Corporation was fined €497m for its refusal to supply its competitors with interoperability information.185 Most recently in Microsoft Corpn v European Commission,186 a fine of €860m was imposed by the General Court of the EU for periodic payments due to non-compliance.187 These and other cases are considered in more detail in Chapter 15 on information technology and competition law.

SPECIAL MEASURES OF PROTECTION 3.158 The remedies for infringing the copyright in a computer program are generally as those that apply to literary works, being ‘damages, injunctions, accounts or otherwise’ including the possibility of additional damages.188 The criminal offences under copyright law may be appropriate. The Directive on the enforcement of intellectual property rights189 is without prejudice to the special measures of protection for computer programs under Article 7

184

The Commission Report on the Implementation of the Directive, p 20. 2007/53/EC relating to a proceeding pursuant to Article 82 [EC] [now Article 102 of the TFEU] and Article 54 of the EEA Agreement against Microsoft Corp, Case COMP/C-3/37.792 – Microsoft, OJ L 32, 06.02.2007, p 23. Case T-167/08, EU:T:2012:323. This was reduced from a previous higher fine. Section 96 and 97(2) of the Copyright, Designs and Patents Act 1988. Other remedies may be available such as delivery up. Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 157, 30.04.2004, p 45.

185 Decision

186 187 188 189

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Special measures of protection 3.160 of the Directive on the legal protection of computer programs.190 Otherwise the enforcement Directive also applies to computer programs. There was little impact in the UK as most of the remedies and the assessment of remedies already available were in conformity with the enforcement Directive. Most notably, compliance did result in the adoption of a statutory test for the assessment of damages, the dissemination and publication of judgments at the defendant’s expense where required by a successful claimant191 and the introduction of the equivalent of the Norwich Pharmacal Order in Scotland.192 3.159 Article 7 of the Directive (special measures of protection) requires Member States to provide appropriate remedies in respect of a number of acts, including the circulation of infringing copies and possessing infringing copies for commercial purposes. It also requires remedies against circulating or possessing for commercial purposes any means, the sole intended purpose being to facilitate the unauthorised removal or circumvention of any technical device applied to protect a computer program. Only this last measure required legislative action and, even then, just a slight modification to the pre-existing provisions on devices designed to circumvent copy-protection. The first two special measures were already catered for by UK law on secondary infringement of copyright. Article 7(2) and (3) required Member States to provide for seizure of infringing copies and the means to facilitate the removal or circumvention of copy protection.

Circulating infringing copies 3.160 Article 7(1)(a) applies where a person circulates a copy of the computer program in circumstances where he knows or has reason to believe it is an infringing copy. The appropriate forms of secondary infringement under the UK Act are given in sections 22 and 23 and use the same form of knowledge. Having reason to believe is an objective test – would a reasonable person believe that they were dealing with an infringing copy.

190

Article 2(2) of the enforcement Directive. For an example of a publicity order, see Samsung Electronics (UK) Ltd v Apple Inc [2012] EWCA Civ 1430, [2013] FSR 10. 192 See the Intellectual Property (Enforcement, etc.) Regulations 2006, SI 2006/1028 which implemented the additional provisions required under the enforcement Directive. 191

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3.161 Copyright and computer programs Secondary infringement under section 22 applies to the importation of infringing copies otherwise than for private and domestic purposes knowing or having reason to believe that it is an infringing copy. Appropriate acts under section 23 are selling or letting for hire or, in the course of a business, distributing infringing copies, again with the same form of knowledge. A f urther form of secondary infringement is distributing other than in the course of a business to such an extent as to prejudice the owner of the copyright.193 Section 107 provides for criminal offences for these activities, some of which carry a maximum penalty on conviction on indictment of a fine and/or imprisonment for a period not exceeding 10 years.194

Possession of infringing copies for commercial purposes 3.161 A further form of secondary infringement under section 23 is the possession in the course of a business of an infringing copy. Again, knowing or having reason to believe that the copy is an infringing copy is required. As there are provisions in the UK Act generally for seizure, it can be said that the UK is fully compliant in relation to the acts of circulating or possessing infringing copies.

Circumvention of copy-protection devices applied to computer programs 3.162 Section 296 of the Copyright, Designs and Patents Act 1988 provided remedies for the circumvention of copy-protection applied to copyright works issued to the public in electronic form.195 This pre-dated the Directive on the legal protection of computer programs in its original form (Directive 91/250/EEC). Following the Directive, a slight modification was made to section 296. Further changes were made by the Copyright and Related Rights Regulations 2003196 implementing the Directive on copyright and related rights in the information society. This provided remedies for circumvention of technical measures applied to copyright works other than

193

Section 23(1)(d), again the same form of knowledge is required. There are very slight differences in wording, but the test of knowledge remains the same. 195 As originally enacted. This applied to all forms of copyright work issued to the public in electronic form to which copy-protection had been applied. 196 SI 2003/2498. 194

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Special measures of protection 3.164 computer programs. We now have two systems, one applicable to computer programs, the other for works other than computer programs. The former is discussed below but the other system, deriving as it does from the Directive on copyright and related rights in the information society, is dealt with in Chapter 7.197 3.163 Turning to the text of the Directive, Article 7(1) requires appropriate remedies to be provided against a person committing any act of putting into circulation, or possessing for commercial purposes, any means the sole intended purpose of which is to facilitate the unauthorised removal or circumvention of any technical device which may have been applied to protect a computer program. This relatively simple statement was implemented again in the light of the Directive on copyright and related rights in the information society198 and the current version of section 296 comprises no less than eight paragraphs. As there have been a number of developments after the original Directive on the legal protection of computer programs, which have not been addressed in the later codified version of the Directive, it is preferable to look at the domestic legislation which is much more specific than the Directive. 3.164 Civil liability applies in relation to the removal or circumvention of technical devices applied to computer programs under section 296 of the Copyright, Designs and Patents Act 1988.199 A technical device is one intended to prevent or restrict acts not authorised by the copyright owner which are restricted by copyright. There is nothing to suggest that the device has to be contained within the computer program and may be in hardware through which the computer program is operated. This was held in Sony Computer Entertainment Inc v Ball,200 in which consoles for playing computer

197

The two systems are quite different in many respects. The provisions applicable to computer programs do not include criminal offences, unlike those for other works of copyright. It is better to treat them separately. 198 Also taking account of the WCT. However, the Directive on copyright and related rights in the information society is without prejudice, inter alia, to the Directive on the legal protection of computer programs but it required protection of technological measures applied most, though not all, forms of copyright work. This meant separating out computer programs and giving them a different treatment compared with other works. 199 Section 296 was substituted by its present form by the Copyright and Related Rights Regulations 2003, SI 2003/2498. 200 [2004] EWHC 1738 (Ch), [2005] FSR 9.

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3.165 Copyright and computer programs games contained software for checking for codes embedded in the computer game on CD or DVD to verify that it was an authorised copy. It did not matter if the device was located in the hardware which read the program, in the program itself, or in both. Altering a computer program for the purpose of removing a ‘dongle’ (hardware lock) has been held to infringe copyright in Germany.201 Furthermore, the fact that a technical device is applied to a computer program does not, per se, indicate that the program is confidential.202 3.165 Liability occurs where a person: (a) manufactures for sale or hire, imports, distributes, sells or lets for hire, offers or exposes for sale or hire, advertises for sale or hire or has in his possession for commercial purposes any means the sole intended purpose of which is to facilitate the unauthorised removal or circumvention of the technical device; (b) publishes information intended to enable or assist persons to remove or circumvent the technical device. 3.166 A form of knowledge is required and the person concerned must know or have reason to believe that the means or information will be used to make infringing copies of the computer program to which the technical device has been applied. There is no need to show that, in fact, infringing copies have been, or will be, made. A number of persons, where they exist, have concurrent rights as if they were the copyright owner. They are the person issuing copies to the public or communicating the computer program to the public, the copyright owner or exclusive licensee, or the owner or exclusive licensee of any intellectual property right in the technical device. A typical situation is where the owner of the copyright in the computer program grants a licence to a software publisher authorising the latter to sell copies of the program to the public whether on tangible media or online or both. Both the copyright owner and the software publisher have concurrent rights. Where a copyright owner grants an exclusive licence to a software publisher who grants licences to distributors, all will have concurrent rights. 201

Karlsruhe Court of Appeals [1996] WRP 587, confirmed by the Federal Supreme Court (BGH) [1996] CR 737. 202 The same applies to other forms of work or information. The presence of encryption does not, of itself, send out a message that the subject matter is confidential. At best it says that the owner does not want third parties to access the subject matter: Mars UK Ltd v Teknowledge Ltd [2000] FSR 138.

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Special measures of protection 3.168 3.167 Certain provisions that apply generally to copyright also apply, mutatis mutandis, to circumvention of technical devices applied to computer programs. These include the ability of a defendant to raise a defence against a person with concurrent rights other than the copyright owner as could be raised against the copyright owner.203 An example might be a defence based on the claimant not being the owner or exclusive licensee or a defence of implied authorisation. Equivalent provisions also apply in relation to delivery up and seizure of certain articles and their disposal, for example, hardware or software whose sole purpose is to remove or circumvent the technical device applied to a computer program. The presumptions in sections 104 to 106 also apply.204 3.168 In Nintendo Company Ltd v Playables Ltd,205 the defendants imported and dealt in ‘game copier’ devices which when inserted into the claimant’s game consoles allowed the playing of unauthorised copies of Nintendo games.206 In giving judgment for the claimant, Floyd J accepted counsel’s view on what needed to be shown for a successful claim under section 296, being: (a) that there is a ‘technical device’ which has been applied to a computer program; (b) that the defendant: (i) has manufactured, imported, distributed, sold etc, means the sole intended purpose of which is to facilitate the unauthorised removal or circumvention of the technical device; (ii) knows or has reason to believe that that means will be used to make infringing copies of the computer program; (c) that the claimant has standing to bring the claim because: (i) it is a person issuing to the public copies of, or communicating to the public, the computer program to which the technical device has been applied, or, if not such person, it is the owner of the copyright in the computer program, or his exclusive licensee; and/or 203

Section 101(3), as modified for the purposes of section 296. Infra. 205 [2010] EWHC 1932 (Ch), [2010] FSR 36. 206 No less than 165,000 such game copiers were seized by Her Majesty’s Revenue and Customs. 204

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3.169 Copyright and computer programs (ii) it owns or holds an exclusive license to any intellectual property right in the technical device applied to the computer program. 3.169 Floyd J also considered that the definition ‘… any device intended to prevent or restrict acts that are not authorised by the copyright owner of that computer program and are restricted by copyright …’ was a wide one and covered the security measures applied to the consoles by the claimant. 3.170 Kitchen J applied the above test in Nintendo Co Ltd v Console PC Com Ltd207 where over 20,000 devices, known as game copiers, could be used with the claimant’s consoles to allow the playing of unlawful copies of the claimant’s games which could be downloaded from the internet. Kitchen J was satisfied that the sole intended purpose of the devices was to facilitate the unauthorised removal or circumvention of the technical device applied to the games consoles. The game copiers could do nothing other than circumvent the technical measures. Moreover, the defendants knew or had reason to believe that their game copiers would be used to play infringing copies of Nintendo’s games. 3.171 In Sony Computer Entertainment Europe Ltd v Peers,208 Warren J spoke of the vicious circle effect resulting from the distribution of the means to overcome technical devices to prevent unauthorised copying installed in the claimant’s PS3 consoles. Friends would ‘share’ their computer games or pirate copies could simply be downloaded from the internet. The potential damage to the claimant was enormous and its losses could not be quantified. He had no hesitation in granting the injunction sought by the claimant.

PRESUMPTIONS 3.172 The Copyright, Designs and Patents Act 1988 contains some useful presumptions which may assist a copyright owner or licensee in litigation, placing the burden of proof on the defendant in respect of certain matters such as ownership. They show the utility of placing information as to the author, publisher or copyright owner as appropriate on copies of the work. Section 104 applies to literary, dramatic, musical and artistic works and where

207 208

[2011] EWHC 1458 (Ch). [2010] EWHC 3053 (Ch).

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Presumptions 3.173 a name purporting to be that of the author appears on copies as published or when made, that person is presumed to be the author and the first owner of the copyright, until the contrary is proved.209 This also applies to each author where there are joint authors. Where the work qualifies for copyright by virtue of being first published in the UK and no name purporting to be that of the author appears on the work, but a name purporting to be that of the publisher appears on copies as first published, that person shall be presumed to be the owner of the copyright at the time of publication, until the contrary is proved. If the author is dead or his identity cannot be ascertained by reasonable inquiry, it is presumed subject to evidence to the contrary that the work is an original work and the claimant’s allegations as to what was the first publication of the work and as to the country of first publication are correct. 3.173 Section 105, confusingly headed ‘presumptions relevant to sound recordings and films’,210 contains further presumptions relevant to computer programs. Where copies of a computer program are issued to the public in electronic form bearing a statement that a named person was the owner of the copyright at the date of issue of the copies or that the program was first published in a specific country or that copies of it were issued to the public in electronic form in a specific year, that statement is admissible of the facts as stated and is presumed correct until the contrary is proved. This presumption was helpful in Microsoft Corpn v Electro-wide Ltd,211 where the defendants questioned Microsoft’s ownership of copyright in its MS-DOS and Windows software arguing that there were reasonable grounds for doubting that Microsoft owned the copyright in the software. Of course, the judge was unable to accept that in the light of the presumption. He said (at 596): It is wholly improbable that a company of the size of Microsoft which is clearly alert to the value of copyright protection would fail to take the elementary precautions necessary to ensure that it owns the copyright in its major assets. He described the defendant’s allegations on this point as an unfounded and Micawberish hope that something would turn up. 209

Section 104(2) is to the effect that it is presumed that the work was not made in the course of employment, or circumstances where Crown copyright, Parliamentary copyright or copyright of certain international organisations apply. 210 The section also contains presumptions for sound recordings and films. 211 [1997] FSR 580.

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3.174 Copyright and computer programs

COMPUTER-GENERATED WORKS 3.174 The inclusion of computer-generated works in the Copyright, Designs and Patents Act 1988 was seen by some commentators as curious. It was certainly questionable at the time whether there was any need for provisions dealing with computer-generated works. Before their appearance on the copyright scene, arguments that works generated by computer such as lists of random numbers and runners and riders for horse-races were not protected by copyright for lack of authorship had been rejected in the courts. The skill and judgement of the programmer who wrote the computer program responsible for the creation of the work was sufficient to make him the author of the lists.212 3.175 The provisions on computer-generated works are discussed here as it is theoretically possible to have a computer-generated computer program. Literary, dramatic, musical or artistic works are computer-generated under section 178 if they are generated by computer in circumstances such that there is no human author of the work. But a work in the original category of works must have an author and the identity of the author is, under s ection 9(3), the person by whom the arrangements necessary for its creation are undertaken. Copyright in a computer-generated work expires at the end of the period of 50 years from the end of the calendar year during which it is created.213 The moral rights of being identified as the author of a work or objecting to a derogatory treatment of a work do not apply to computer-generated works. Apart from these provisions, copyright applies exactly the same as for other literary, dramatic, musical and artistic works. 3.176 It is arguable whether there can be any such thing as a computergenerated work unless the skill and judgement of the programmer who wrote the computer program that generated the work is ignored. But this seems illogical. There are further problems, none the least that if that skill and judgement is ignored, how can the work be original in the copyright sense? It now seems clear that the original works of copyright must be the author’s own intellectual creation reflecting his personality and free and creative choices in

212

Express Newspapers plc v Liverpool Daily Post and Echo [1985] 1 WLR 1089 and The Jockey Club v Rahim (unreported) 22 July 1983. 213 Section 12(7).

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Computer-generated works 3.179 the creation of the work.214 No other Member State in the EU has provisions for computer-generated works.215 3.177 Computer-generated works have barely troubled judges in the UK. In Nova Productions Ltd v Mazooma Games Ltd,216 Kitchen J, at first instance said that, in as much as the composite screen displays generated during the playing of a video game of pool were computer-generated, the person who wrote the computer program to generate the display and devised the appearance of the various elements of the game and the rules and logic by which each frame is generated was the person who made the arrangements necessary for the creation of the frames. He was, by virtue of section 9(3), the author of these computer-generated works. Kitchen J did not explore this further and gave scant regard to any alternative approach based on the skill and judgement in writing the program and devising the elements, rules and logic underlying the creation of the displays.217 3.178 With the growth of artificial intelligence, it now seems, in retrospect, that the inclusion of computer-generated works in the UK Act, was an eminently sensible prophecy of things to come. The possibility of computer software which includes rules of logic and reason, together with the ability to learn from interactions with the real world and develop and adapt those rules, is now a possibility. It is not quite clear that difficulties will arise in the future, for example, in determining the borderline between a computer-generated work and one with a human author in the traditional sense. 3.179 In the highly publicised case involving a ‘monkey selfie’, the District Court of the Northern District of California dismissed a claim that a macaque monkey, called Naruto, was the author of a photograph it had taken of itself whilst holding the defendant’s camera.218 Arguments that the monkey

214 215 216 217

218

Eva-Maria Painer v Standard Verlags GmbH, Case C-145/10, EU:C:2011:798. In that case, the work in question was a photograph. As far as the author is aware. Nor does it appear that other countries have any equivalent provisions. [2006] RPC 14. The Court of Appeal, in rejecting an application for a reference for a preliminary ruling under Article 234 of the EC Treaty (now Art 269 of the TFEU), did not consider whether the displays were or were not computer-generated works; Nova Productions Ltd v Mazooma Games Ltd [2007] EWCA Civ 219, [2007] RPC 25. Naruto et al v Slater, Case No. 15-cv-04324-WHO, 28 January 2016.

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3.180 Copyright and computer programs was the author of the photograph were dismissed by the District Court. It has long been accepted that a work of copyright must have a human author as per the Express Newspapers and Rahim cases above. In Cummins v Bond,219 an argument that the spirit of a person, who was dead and buried some 1,900 years ago, was a joint author of a work transcribed by a medium at a séance was rejected. Eve J accepted that his jurisdiction did not extend to the spirit world and he had to confine himself to individuals alive at the time the work was created. 3.180 Under UK law, the monkey selfie could be considered to be a computer-generated work. A modern digital camera is bristling with computer technology and there is little doubt that it would be deemed to be a computer. The underlying facts of the creation of the photograph were that the defendant had gained the trust of the macaque and it was familiar with the noise of the shutter being released. When handed the camera the macaque pressed the shutter multiple times. It is arguable that the defendant had made the necessary arrangements for the creation of the photograph as a computer-generated work and, therefore, was the author of the photograph in dispute.

219

[1927] 1 Ch 167.

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Chapter 4

Non-textual copying of computer programs and emulating the functions of a computer program

INTRODUCTION 4.1 It has been accepted for some time that copyright is not limited to exact copying. Altered copying is where a defendant does not copy the original work exactly but makes changes. There are old cases where it has been accepted that copyright in a literary work may be infringed by taking a detailed plot together with scenes, characters and incidents.1 In terms of artistic works, it may be that the theme and elements of the design and motifs are taken to produce another work such as in Designers Guild Ltd v Russell Williams (Textiles) Ltd.2 In terms of altered copying or copying where little of the actual text of the original is taken it comes down to a question of whether the defendant’s work incorporated a substantial part of the skill and labour expended by the designer of the claimant’s work.3 This test must now be re-stated as being a question of whether the defendant has taken sufficient of the author’s own intellectual creation to count as infringement. 4.2 A computer program may be copied in a number of ways. It may be copied exactly, for example, by duplication such as where a direct copy is made by copying onto another medium or downloaded in its entirety from a website. The copy may be made by electronic means or even by writing out the code by hand on paper. A program may be copied, wholly or partly, and then modified so that the copy is not an exact duplicate. In both of these types of copying, the copy will be expressed in the same or similar computer language to that used for writing the original computer program. In these sorts 1 2 3

See, for example, Corelli v Gray [1913] TLR 570. [2000] UKHL 58, [2001] FSR 11. Ibid, per Lord Scott of Foscote at para 75.

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4.3 Non-textual copying and emulating functionality of cases, the issues are usually not controversial, it being primarily a matter of deciding whether copyright subsists in the claimant’s program, whether the defendant has copied it, wholly or partly, and, finally, whether the part taken represents the author’s own intellectual creation. 4.3 A further form of ‘copying’ is where a new program is written to perform the same functions, using the same interfaces so as to be compatible with an existing program. This may be described as emulating the functionality of an existing program and, strictly speaking, it distorts the true position to refer to it as copying or even non-textual copying. This process will be described as emulating the functionality of an existing computer program in the remainder of this chapter. 4.4 Before proceeding further, it is worth considering the limitations to copyright protection of computer programs and the desirability of avoiding monopoly protection. The TRIPs Agreement and the WCT are clear that copy right protection should be limited to the author’s expression, that is, the features of the work which reflect his act of intellectual creation and not to ideas and principles.4 The Directive on the legal protection of computer programs5 also denies protection to ideas and principles underlying any element of a computer program including its interfaces and to logic, algorithms and programming languages to the extent that they comprise ideas and principles.6 Moreover, the Directive seeks to encourage international standardisation and the accessibility of interface and interoperability information and underlying ideas and principles.7 Thus, competitors are facilitated in the creation of new computer programs which are compatible with and can interface with existing computer programs and the users of those programs. In other words, writing a new computer program which emulates the functionality and interfaces of an existing computer program is acceptable provided it does not infringe the copyright in that program by taking its expression where that expression is the author’s own intellectual creation.

4

5 6 7

See Article 9(2) of TRIPs (applies generally to copyright works) and denies protection to ideas, procedures, methods of operation and mathematical c oncepts as such. See also Article 2 of the WCT. Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (codified version) OJ L 111, 05.05.2009, p 16. See recital 11 to the Directive and Article 1(2). Hence the provisions on observing, studying and testing and decompilation.

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Brief historical perspective 4.7

LAYOUT OF THIS CHAPTER 4.5 Following a brief historical context, this chapter looks at developments in the United States where the courts there developed an over technical approach, moving from protecting the ‘look and feel’ of a computer program to a three-step test of determining whether non-textual copying infringed copyright. We then turn to the UK (and Europe) and see how the judges in the UK developed the jurisprudence here, culminating in the most important case on the Directive to be referred to the Court of Justice of the EU.

BRIEF HISTORICAL PERSPECTIVE 4.6 Judges in the UK and the US have been troubled for a long time about the distinction between non-protectable ideas and protectable expression. As Lord Hailsham noted in LB (Plastics) Ltd v Swish Products Ltd, that it all depends on what you mean by ‘ideas’.8 Earlier English cases sought to avoid restricting copyright protection to the actual text of a literary work.9 More recently, in Baigent v Random House Group Ltd,10 the Court of Appeal accepted that expression can extend beyond the language of a literary work to the original selection, arrangement and compilation of raw research material.11 4.7 A landmark case in the United States was the Supreme Court case of Baker v Selden12 in which blank forms for the recording of accounts were denied protection. In Nichols v Universal Pictures Co,13 in the US Court of Appeals for the Second Circuit, Judge Learned Hand said of the boundary between what was and what was not protected ‘Nobody has ever been able to fix that boundary and nobody ever can’. He also said: It is of course essential to any protection of literary property … that the right cannot be limited literally to the text, else a plagiarist would escape by immaterial variations. The same holds true today. 8 9 10 11

12 13

[1979] RPC 551 at 629. See, for example, Rees v Melville [1911–1916] MacG CC 168 and Coreli v Gray [1913] TLR 570. [2007] EWCA Civ 247, [2007] FSR 24. See also Allen v Bloomsbury Publishing plc [2010] EWHC 2560 (Ch), [2010] ECDR 16 in relation to an allegation that one of the Harry Potter books infringed the copyright in an earlier book about wizards entitled ‘Willie the Wizard’. 101 US 99 (1880). 45 F 2d 119 (2nd Cir, 1930). The case involved allegations of infringement of copyright in a play by making a film.

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4.8 Non-textual copying and emulating functionality 4.8 These principles are still relevant and copyright is not limited to the literal text14 of the work alleged to have been infringed but how far protection extends to the basic idea or ideas cannot be predetermined. As with altered copying, it should be a matter of asking whether a substantial amount of the author’s own intellectual creativity has been taken. This can only be done on a case-by-case basis. Before the Directive on the legal protection of computer programs, the principles to apply, where the copying did not involve directly copying the code of a program,15 were probably not too dissimilar to the principles applied in the United States.16 4.9 Since the Directive on the legal protection of computer programs, the law in Europe is significantly different to that in the US and the tests developed there are of limited assistance in Europe. This is so even though the US is a party to the TRIPs Agreement. In particular, when analysing non-textual elements of a computer program the courts in the US will consider features such as file structures and graphic user interfaces.17 However, although such features are not part of a program’s expression under the Directive, the US Copyright Act itself does deny protection to certain elements of a copyright work as will be seen, infra. Developments in the United States are considered briefly next, followed by developments in the UK in terms of non-textual copying and emulating the functionality of an existing computer program.

Non-textual copying in the United States 4.10 The first case in which the possibility of copying a computer program without copying the program code was considered in significant depth in the US was Whelan Associates Inc v Jaslow Dental Laboratory Inc.18 The same person was involved in the writing of both computer programs in issue

14 15 16 17

18

In the case of a literary work. For an artistic work, for example, protection is not limited to the finished painting, drawing, sculpture or whatever. Where copying was restricted to taking a program’s structure, sequences of operations, algorithms, file structures, interfaces and such like. Indeed, in John Richardson Computers Ltd v Flanders [1993] FSR 497, Ferris J partially applied the test in the US case Computer Associates v Altai case, infra. In the light of Bezpečnostni softwarová asociace v Ministerstvo kultury, Case C-393/09, EU:C:2010:816, such elements cannot be considered to be parts of the expression of a computer program protected under the Directive. [1987] FSR 1.

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Brief historical perspective 4.12 but they had been written in different computer programming languages. This meant that any significant literal similarity between the code of the two programs was missing. The US Court of Appeals for the 3rd Circuit considered the non-literal elements of the programs, especially the way in which the programs were structured. The court recognised that copyright protection extends beyond the literal text of a computer program to its non-literal elements. As a working rule, the court held that, where it was possible only to structure a computer program written to perform a specific function in one way, that structure was idea and not protected by copyright. However, where different structures were possible, the one chosen was protected expression and, if copied, could amount to copyright infringement. 4.11 Whelan v Jaslow was applied in a number of subsequent cases, including cases involving electronic spreadsheets. In Lotus Development Corpn v Paperback Software International,19 it was held that the menu system used for the Lotus 1-2-3 spreadsheet was protected expression as a number of other electronic spreadsheets used different forms of user interface. However, the rotated L-shaped grid referencing system giving each cell a unique reference was unprotected idea as it was almost inevitable that a programmer independently creating an electronic spreadsheet would use such a form of referencing system.20 4.12 The US Copyright Act 1976, § 102(b), expressly denies copyright protection to ‘… any idea, procedure, process, system, method of operation, concept, principle or discovery, regardless of the form in which it is described, explained, illustrated, or embodied …’. In another electronic spreadsheet case, Lotus Development Corpn v Borland International Inc,21 the Court of Appeals for the 1st Circuit held that the menu system of Lotus 1-2-3 was a method of operation, likening it to the buttons on a VCR machine. It was, therefore, not protected by copyright in the US. The subsequent appeal to the Supreme Court was unsatisfactory in that the decision was split 4:4,22 leaving the Court of Appeals’ decision intact.

19

740 F Supp 37 (D Mass, 1990). The system used A, B, C, D, E, etc for the horizontal reference and 1, 2, 3, 4, 5, etc for the vertical reference. Thus, the top left cell reference is A1. This system is still used for electronic spreadsheets, such as Microsoft Excel. 21 [1997] FSR 61. Lotus claimed the Borland’s Quattro spreadsheet infringed the copyright in the Lotus 1-2-3 menu system. 22 Lotus Development Corpn v Borland International Inc, 516 US 233 (1996). 20

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4.13 Non-textual copying and emulating functionality 4.13 The approach to non-textual copying in Whelan v Jaslow was criticised in Computer Associates International Inc v Altai Inc23 where the Court of Appeals for the 2nd Circuit argued that it had been based on an outdated opinion of computer science. A new test was proposed in Computer Associates based on three stages: abstraction, filtration and comparison.24 The first stage being to determine the non-literal elements of the program alleged to have been infringed (including its constituent structural parts).25 Filtration requires the removal of incorporated ideas, expression dictated by those ideas and public domain materials, leaving a kernel of protected material. In the final stage, that is compared to the defendant’s computer program to determine whether and to what extent it has been copied and, if it has, whether it represents a substantial part of the claimant’s program. 4.14 The Computer Associates test was refined in Gates Rubber Co v Bando Chemical Ltd26 by the Court of Appeals for the 10th Circuit. It was accepted that there could be up to six levels of abstraction (from the most general to the most specific) consisting of: ••

the basic general purpose of the program,

••

the structure or architecture of the program,

••

the program modules,

••

the algorithms and data structures,

••

the program’s source code, and finally,

••

the program’s object code.

The first is not protected and the latter two will normally be infringed by literal copying. It is at the remaining levels that the question of infringement 23

982 F 2d 693 (2nd Cir 1992). To some extent, this built upon the judgment of Judge Learned Hand in Universal Pictures, supra. 25 Unlike the position in Europe, elements such as input and output formats and file structures have been accepted as, potentially, being protected by the copyright subsisting in a computer program: see, for example, Engineering Dynamics Inc v Structural Software Inc, 26 F 3d 1335 (5th Cir 1994) and Computermax Inc v UCR Inc, 26 USPQ 2d 1001 (MD Georgia 1992). For a useful, but now dated guide to US copyright and computer programs, see Ladas & Parry LLP, Guide to Statutory Protection for Computer Software in the United States, 2000, available at http://www.ladas.com/Patents/Computer/Copyright. USA.html. 26 9 F 3d 823 (10th Cir 1993). 24

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Brief historical perspective 4.17 by non-textual copying is relevant and it at these levels that the process of filtration is likely to be performed. Things filtered out include elements dictated by efficiency considerations, where the programmer has little if any design freedom in practice, public domain materials, facts, ideas and processes, and other m aterial excluded by § 102(b) of the US Copyright Act 1976.27 In OP Solutions Inc v Intellectual Property Network Ltd,28 the court listed the filters to apply, being (a) a test for originality; (b) whether there was merger of idea and expression or whether the related scenes a faire doctrine applied and, finally (c) whether a public domain exception applies. The final part of the test is basically as before, comparing what is left after filtration, the program’s ‘golden nugget’, to see if it has been copied by the defendant and, if so, or to the extent that it has been copied, whether it represents a substantial part of the claimant’s program. 4.15 The US test for non-textual copying has proved difficult to apply in practice and will usually require a significant input from expert computer science witnesses. It is also unpredictable and will have to be modified depending on the programming language used. Furthermore, as noted above, these US cases have little if no influence on cases in Europe under the Directive as the model for copyright protection set out there is quite unlike that in the US. 4.16 The Whelan test seems to now be of historical interest only and the courts in the United States have seemed happy to apply and refine the Computer Associates test. Nevertheless, there are signs that, in applying its own copyright law, the US is moving closer to Europe in cases where the expression of a computer program is not taken and judges there are aware of the desirability of facilitating rival software companies to develop interoperable programs. 4.17 Oracle America Inc v Google Inc29 involved Java applications used in the Android operating system for tablets, smartphones and the like. The primary claim was that Google had copied the structure, sequence and organisation of the Oracle programs. In a thoughtful and comprehensive judgment, Alsup J set out the development of the copyright protection of computer 27 In

Harbor Software Inc v Applied Systems Inc, 925 F Supp 1042 (SD NY 1996) it was suggested that the protection of the selection and arrangement of a compilation of program modules was likely to be thin. 28 50 USPQ 2d (SD NY 1999). 29 Unreported, Case C 10-03561, (ND Calif) 31 May 2012.

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4.18 Non-textual copying and emulating functionality programs in the US commenting on Whelan and Computer Associates and subsequent developments. He noted that the claimant’s case really harped back to the Whelan case.30 In reviewing the authorities and jurisprudence on the copyright protection of computer programs, Alsup J said the principles that applied in the present case were: ••

under the merger doctrine, where there is only one (or only a few) ways to express something, then no one can claim ownership of such expression of copyright;

••

under the names doctrine, names and short phrases are not copyrightable;

••

under section 102(b), copyright protection never extends to any idea, procedure, process, system, method of operation or concept regardless of its form. Functional elements essential for interoperability are not copyrightable;

••

under Feist, we should not yield to the temptation to find copyrightability merely to reward an investment made in a body of intellectual property.31

4.18 Oracle’s claim was denied. Alsup J accepted that Google replicated the overall name organisation and functionality of 37 of Oracle’s Java packages. However, he accepted that others ought to be free to write their own implementation to achieve the same function as ideas, concepts and functions cannot be monopolised by copyright. He also accepted that what Google had done was necessary to achieve interoperability but that Google went no further than this in developing its own implementations.32 A key point to note from this decision, is that the concept of non-textual copying is very limited 30

In particular, the later case of Johnson Controls Inc v Phoenix Control Systems Inc, 886 F 2d 1173 (9th Cir 1989), recognising that non-literal elements including the structure, sequence and organisation and user interface components of a computer program could be protected by copyright. 31 At pp 33–34. Feist, in which the Supreme Court of the US denied copyright to works which are the result of the ‘sweat of the brow’ only is discussed in Chapter 5 on copyright in databases. 32 Oracle’s claim related to only 37 of a total of 166 Java packages and of these, 97 per cent of the program codes lines had been written by Google. The remaining three per cent were freely replicable under the merger and names doctrine. To allow Oracle’s claims would be to allow anyone to copyright one version of code to carry out a system of commands and to prevent any others from writing their own different implementation of to perform all or part of the same commands.

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Non-textual copying in the UK 4.20 and that it is important that others should be able to write competing and interoperable software, providing they only take non-protected elements. Moreover, the protection of program structure is very limited if it exists at all.33 4.19 On appeal, the Federal Circuit held34 that the declaring code, structure, sequences and organisation of the plaintiff’s 37 Java computer code were protected by copyright but, as the jury was hung on Google’s fair use defence, the case was remanded for further proceedings. The outcome of those further proceedings was that Google was successful on the fair use defence.35 At the time of writing, Oracle has mounted an appeal to the Supreme Court. It is vital that the Supreme Court rule on this as it affects the scope of copyright protection for computer programs, especially in relation to features other than source code and object code, such as whether interfaces can be protected by copyright.36

NON-TEXTUAL COPYING IN THE UK 4.20 Before looking at the case law on non-textual copying of computer programs, it is worth recalling the basic principles of copyright protection for computer programs and associated works in the UK and Europe. First, under the Directive on the legal protection of computer programs,37 computer programs, which include their preparatory design material, are protected irrespective of form providing they are original on the sense that they are the author’s own intellectual creation. Ideas and principles which underlie any element of a computer program, including its interfaces, are not protected under the Directive.38 In as much as logic, algorithms and programming languages 33

34 35

36

37 38

For an argument that US copyright protection of computer programs is moving towards that available in Europe see I Conor and I Bhattacharya, ‘Copyright protection of software: a convergence of US and European jurisprudence?’ Communications Law, 45 (2013). No. 13-1021 (Fed Cir, 2014). 26 May 2016. See C Collard and BJ Ignat, ‘Breaking the code: Google prevails in Oracle fair use battle’, Intellectual Property Magazine, July/August (2016), 32–33 and S Khan, ‘Open source software: risk or benefit?’ Compliance and Risk, 6(4) (2017), 11–14. It will be interesting to see whether the Supreme Court take account of the important case of SAS Institute Inc v World Programming Ltd before the Court of Justice of the EU, discussed infra. Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (codified version), OJ L 111, 05.05.2009, p 16. Article 1(2).

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4.21 Non-textual copying and emulating functionality comprise ideas and principles, they are not protected by copyright.39 It is the expression of ideas and principles which is protected.40 There are no other express exclusions as in the US, for example, procedures, processes and methods of operation. Other important differences compared with US law are that preparatory design material is considered to be part of the program in Europe and the inclusion of public domain materials should not affect subsistence of copyright overall, providing the remainder of the program’s expression can be classed as the author’s own intellectual creation.41 4.21 Old cases show that non-textual copying may infringe. Writing a dramatic sketch based on a novel infringed the copyright in the novel even though there was little of the text of the novel used.42 In Glyn v Weston Feature Film Co,43 the judge accepted that it was possible to infringe the copyright in a novel by making a film based on the incidents in the novel.44 In Harman Pictures NV v Osborne,45 similarities in incidents and situations in a film compared with a book about the Charge of the Light Brigade was held to afford prima facie evidence of copying. These cases indicate that the plot of a novel or play may be protected by copyright and infringed even if little of the original text is taken. The question is how does this relate to computer programs in the light of the basic principles discussed above? Does a computer program have a ‘plot’? 4.22 Pumfrey J suggested that the architecture of a computer program was analogous to the plot of a play in Cantor Fitzgerald International v Tradition (UK) Ltd46 where he said (at 134): The closest analogy to a plot in a computer program lies perhaps in the algorithms or sequences of operations decided on by the programmer to achieve his object. But it goes wider. It seems to be generally accepted 39 40 41

42 43 44

45 46

Recital 11 to the Directive. Ibid. The same applies to parts of a program where there is limited or no design freedom because of the nature of what that part of the program does. In such a case, however, it will be questionable whether it is an intellectual creation. Corelli v Gray [1913] TLR 570. See also, Rees v Melville [1911–16] Mac CC 168. [1916] 1 Ch 261. However, the judge held there was no infringement as very few of the incidents in the book were in the film and, in any case, due to its highly immoral tendency, the novel was disentitled to protection. [1967] 1 WLR 723. [2000] RPC 95.

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Non-textual copying in the UK 4.24 that the ‘architecture’ of a computer program is capable of protection if a substantial part of the programmer’s skill, labour and judgement went into it. In this context ‘architecture’ is a vague and ambiguous term. It may be used to refer to the overall structure of the system at a very high level of abstraction. 4.23 No allegation of non-textual copying at such a high level of a bstraction had been made in that case. In any case, this description of ‘architecture’ looks suspiciously like a description of the program’s algorithms which are not protected by copyright under the Directive on the legal protection of computer programs to the extent that they comprise ideas and principles. However, Pumfrey J made no reference to the Directive in his judgment in Cantor Fitzgerald. His views changed subsequently and, in Navitaire Inc v easyJet Airline Co,47 he said that the analogy with the plot of a novel was a poor one. One reason was that it was possible to emulate the function of a computer program without access to the code of the program.48 The two programs would not be identical at any level of abstraction. Furthermore, a computer program does not really have a plot as such. It has no theme, no events and no narrative flow, particularly when its behaviour is determined by the information provided by the user carrying out a particular transaction. 4.24 Before looking at the rather unsatisfactory case law in the UK on non-textual infringement of computer programs it is worth recapping that various non-textual elements will be revealed by a process of abstraction. These will exist at various levels of abstraction from the code of the program (including preparatory design material as expressed). Some, if not many or even all of these, will not be protected because: (a) they are ideas or principles; (b) they consist of logic, algorithms or programming languages which comprise wholly of ideas or principles; (c) to the extent that they do not comprise ideas or principles, they consist of logic, algorithms or programming languages which are not the author’s own intellectual creation; or (d) otherwise, individually, they are not the author’s own intellectual creation or a substantial part thereof. 47 48

[2004] EWHC 1725 (Ch), [2006] RPC 3. [2004] EWHC 1725 (Ch), [2006] RPC 3 at para 125.

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4.25 Non-textual copying and emulating functionality The existence of the exceptions to protection, such as observing, studying and testing and decompilation further dilute their protection against non-textual copying and, in particular, the process of emulating the functionality of an existing computer program without taking its actual code.

Partial application of Computer Associates in the UK 4.25 The first case to involve claims of non-textual copying of a computer program in the UK was John Richardson Computers Ltd v Flanders.49 The case was unsatisfactory in a number of respects, not least being the difficulty Ferris J had in deciding what had actually happened. The defendant had a hand in writing both the programs in issue which had been written in different computer programming languages.50 Consequently, there was almost no textual similarity between them. The function of the programs was to print labels for pharmacists and carry out stock control. Noting that there was nothing in any English case which conflicted with the general approach in the Computer Associates case, Ferris J applied a modified version of it saying: I think that in preference to seeking the ‘core of protectable expression’ in the plaintiff’s program an English court will first decide whether the plaintiff’s program as a whole is entitled to copyright and then decide whether any similarity attributable to copying which is to be found in the defendant’s program amounts to the copying of a substantial part of the plaintiff’s program.51 4.26 Importantly, Ferris J accepted that consideration should not be restricted to the text of the code but he also thought that limiting it to the structure and organisation of the program imported an unacceptable degree of uncertainty. Nevertheless, he admitted having difficulty with applying the abstraction step in Computer Associates. This was clear from his analysis of the non-textual elements which he broke down into things such as the line editor, amendment routine, dose codes, vertical arrangement of date entry and even the use of the escape key.52 In the event, Ferris J found infringement in respect of the first three. Ferris J also said that, when assessing substantiality, 49

[1993] FSR 497. The claimant’s program was written in assembly language and the defendant’s program was written in QuickBasic. In essence this was an emulation case, but it appeared the programmer went a little too far in what he copied. 51 [1993] FSR 497 at 527. 52 Altogether some 17 non-textual similarities were considered. 50

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Non-textual copying in the UK 4.29 it was relevant to ‘filter out elements dictated by efficiency, elements dictated by external factors and elements taken from the public domain’. 4.27 The judgment in Richardson v Flanders came in for some criticism, notably from Jacob J,53 where he criticised the use of US authorities, noting that US copyright law is not the same as UK copyright, particularly when concerned with functionality and compilations. Jacob J also said that the abstraction and filtration approach in Computer Associates was not helpful. In respect of the latter, the inclusion of functional elements that could only be expressed in one or a limited number of ways does not affect subsistence of copyright. However, Jacob J did agree that consideration was not limited to the text of the program code. 4.28 In any event, Richardson v Flanders is of little importance now as it has been overtaken by the changes brought in by the Directive on the legal protection of computer programs54 which had its biggest impact in relation to denying protection to ideas and principles, including those underlying algorithms and interfaces, and also provided a means of allowing lawful users to determine underlying ideas and principles by studying, observing and testing computer programs. Very few elements of the case are of any utility now.55 Protection of a computer program applies to its expression in any form and not to other elements such as graphic user interfaces, files structures and such like.56

Non-textual copying cases after the implementation of the Directive 4.29 There have been very few cases on the non-textual copying of computer programs in the UK. In Cantor Fitzgerald International v Tradition (UK) Ltd,57 Pumfrey J accepted that the architecture of a computer program 53

Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd [1994] FSR 275, discussed in Chapter 3. 54 To a lesser extent the same applies to Ibcos v Barclays. 55 An interesting aspect of the case was that the defendant carried out some work of the claimant’s program as a self-employed programmer. In respect of this, Ferris J held that the claimant was beneficial owner and entitled to the full panoply of remedies as the legal owner, the defendant, had been joined in the action. 56 See Bezpečnostni softwarová asociace v Ministerstvo kultury, Case C-393/09, EU:C:2010:816. 57 [2000] RPC 95.

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4.30 Non-textual copying and emulating functionality may be protected by copyright provided that sufficient of the programmer’s skill, labour and judgement had gone into it. In this sense what he meant by architecture was the overall structure at a high level of abstraction or the allocation of functions between various programs in a computer system comprising, as most do, a number of individual programs. However, the claimant made no allegation of copying the program’s architecture so there was no opportunity to apply this in practice. In a later case on emulation, Pumfrey J was to modify his view as to the extent of protection of the structure of a computer program.58 Apart from cases of out and out piracy of computer programs, the main issue now is the creation of competing programs by a process of emulation. This reflects to some extent, the impact of the Directive and the denial of protection to ideas and principles and, in the right circumstances, a program’s interfaces.

EMULATING THE FUNCTIONALITY AND OTHER ASPECTS OF A COMPUTER PROGRAM 4.30 At first, the courts in the UK tended to look at claims of infringement of copyright where the defendant had not copied the code of the claimant’s program as an issue of whether there had been copying of abstract elements of a program, such the structure or architecture of the program. Initially, judges failed to address fully the Directive on the legal protection of computer programs and it seemed that some judges were still influenced by looking at nontextual elements where there was no evidence of copying the program code itself. 4.31 In this part of this chapter, we look at the position prior to the watershed case of SAS Institute Inc v World Programming Ltd, focussing particularly on the careful and reasoned judgment of the late Pumfrey J in Navitaire Inc v easyJet Airline Co. Some caution is needed with this latter judgment and, although it puts more emphasis on the Directive, it does not quite go far enough. This is not a criticism of Pumfrey J as he did not have the advantage of the important rulings of the Court of Justice of the EU which were set down in SAS. The last part of this chapter focuses on SAS v World Programming

58 See

Navitaire v easyJet, infra.

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Emulating the functionality of a computer program 4.34 which is now, unquestionably, the leading case on some of the most important measures in the Directive.

Before SAS v World Programming 4.32 At the time, the most important case involving the emulation of a computer program (and other items of software) was Navitaire Inc v easyJet Airline Co.59 The first defendant, easyJet, had a licence to use the claimant’s OpenRes airline booking software. It included a program to interface with the world-wide web called TakeFlight which was integrated into easyJet’s own website. Eventually, easyJet decided to develop its own system but wanted the user interface to be indistinguishable from that as used with OpenRes so that it would appear the same to the persons using the system, such as an agent booking a flight or a private individual booking over the internet. easyJet engaged the second defendant, Bulletproof Technologies Inc which wrote the new software called eRes. The defendants did not have access to the source code of OpenRes though they did have access to the source code of TakeFlight.60 What the defendants did in effect was to emulate the operation of OpenRes. 4.33 The claimant’s allegations had three main components: copying the ‘business logic’ of OpenRes, copying the individual commands to be entered by the user to achieve particular results and copying screen displays and reports and graphic elements. Those allegations are considered below.

Business logic 4.34 It was argued that the business logic of OpenRes had been appropriated by the defendants because the functions performed by eRes were, from the perspective of the user, identical. A problem with this allegation was that the claim was ill-defined and an expert witness for the claimant admitted that it might have been a mistake to so describe it and not pin it down more precisely.

59

[2004] EWHC 1725 (Ch), [2006] RPC 3. The case is significant in that it was the first time a judge fully acknowledged the impact of the Directive on the legal protection of computer programs. 60 By modifying the TakeFlight program, easyJet was in breach of contract.

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4.35 Non-textual copying and emulating functionality It seemed to be something over and above the screen displays and commands. In other words, ‘something else’ had been copied. The lack of precision or detail was fatal to the claim. The function of the two suites of programs could be represented by the steps taken, which were: ••

check flights;

••

check availability of seats;

••

reserve;

••

take passenger details;

••

take payment details;

••

record transaction;

At some stage the seats would be marked as unavailable. Trying to use the analogy of a plot of a play was not appropriate. Pumfrey J pointed out that two completely different computer programs can produce identical results at any and every level of abstraction. This was possible even though the person writing the second program had no access to the source code of the first program but could only see the results it produced when run. Of the analogy with the plot of a play, Pumfrey J said (at para 125): To say these programs possess a plot is precisely like saying that the book of instructions for a booking clerk acting manually has a plot: but a book of instructions has no theme, no events and does not have a narrative flow. Nor does a computer program, particularly one whose behaviour depends on the history of its inputs in any given transaction. It does not have a plot, merely a series of pre-defined operations intended to achieve the desired result in response to the requests of the customer. 4.35 The steps set out above represent the computer system at a very high level of abstraction. More detailed structural aspects subsist at a lower level. These represent the arrangement of programs61 and routines within programs which have been designed to perform the various tasks to carry out the overall function of the computer system. But even if this had been identified in Navitaire, it would have afforded no protection as, without access to the

61

This itself may be protected as a compilation, as accepted by Jacob J in Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd [1994] FSR 275.

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Emulating the functionality of a computer program 4.37 source code, the defendants could not have copied such structural elements as they would be revealed only by inspecting the source code. Moreover, as the Court of Justice of the EU confirmed in SAS v World Programming, only the expression of a computer program is protected and this does not extend to structure, architecture or other non-textual elements. 4.36 Pumfrey J used the analogy of a chef who invented a new pudding and writes down the recipe. A competitor resolves to make the pudding for himself and after ‘much culinary labour’ succeeds in emulating the pudding and then writes down the recipe.62 Pumfrey J thought that, in such a case, the competitor would not infringe the copyright in the chef’s original recipe. To support this view, he quoted from Lord Hoffmann’s two propositions as to why ideas expressed in a work are not protected by copyright in Designers Guild Ltd v Russell Williams (Textiles) Ltd.63 A description of an invention in a copyright work does not protect the invention itself and certain ideas expressed in a work are not protected as they are not original or are commonplace so as not to form a substantial part of the work. The former is excluded, according to Lord Hoffmann, because it has nothing to do with the literary, dramatic, musical or artistic nature of the work. But, Designers Guild was a case on artistic copyright, not literary copyright. Furthermore, computer programs are unlike traditional forms of literary works. They are active, not passive. The application of Lord Hoffmann’s views in Designers Guild to non-textual elements of computer programs is unconvincing and, in the light of the Directive on the legal protection of computer programs, completely wrong. 4.37 A better approach would be to go straight to the exclusions to protection in the Directive on the legal protection of computer programs.64 Underlying ideas and principles are not protected.65 Logic, algorithms and programming languages are not protected by copyright to the extent that they comprise

62

Presumably Pumfrey J was thinking that the recipe was emulated by trial and error using culinary skill rather than carrying out a detailed analysis of the pudding ingredients by a form of ‘reverse engineering’. 63 [2000] UKHL 58, [2001] FSR 113 at 121. These are set out at para 3.11 in Chapter 3. 64 Pumfrey J mentioned the Directive only once in the part of his judgment on business logic but referred to it extensively in relation to other aspects of the case, especially the commands: see infra. 65 Article 1(2) and the recital 11.

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4.38 Non-textual copying and emulating functionality ideas and principles.66 That means that logic, algorithms and programming languages may be subject to protection to the extent that they do not comprise ideas and principles. To give an example, say that a programmer decides to write a computer program to work out the deflection of beams under load based on the Euler-Bernoulli equation.67 The programmer designs an algorithm on which to base a computer program to carry out the necessary calculations in response to information submitted to the program. The algorithm comprises not just the equation (this being a principle) but practical matters such as the order in which inputs will be made, the order of the constituent parts of the calculations to achieve the result and may also include some options to be selected by the user. This algorithm may be the result of intellectual creativity. Once it has been devised, the work in writing the computer program may be fairly easy and mundane. 4.38 One view of a reading of the Directive is that the above algorithm may be protected but that protection will not extend to the equation itself and a lawful user of the program may observe, study and test it to determine that equation.68 Of course, protection will depend on whether and how the algorithm is expressed in the computer program and whether it can be judged as an intellectual creation in its own right.69 4.39 In Navitaire, Pumfrey J said that he did not come to his conclusion with any regret. He said (at para 130): If it is the policy of the Software Directive [sic] to exclude both computer languages and the underlying ideas of the interfaces from protection, then it should not be possible to circumvent these exclusions by seeking to identify some overall function or functions that it is the sole purpose of the interface to invoke and relying on those instead. As a matter of policy also, it seems to me that to permit the ‘business logic’ of a program to attract protection through the literary copyright afforded to the program itself is an unjustifiable extension of copyright protection into a field where I am far from satisfied that it is appropriate. 66

Recital 11. A complex equation using differential calculus. 68 If this is a practical possibility. 69 The Directive does not use the word ‘substantial’, referring to right to do or authorise the permanent or temporary reproduction of a computer program by any means and in any form, in part or in whole: Article 4(a). It is a question, therefore, of whether the part taken itself can be considered to be an intellectual creation. 67

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Emulating the functionality of a computer program 4.41 This view was taken also by Jacob LJ in Nova Productions Ltd v Mazooma Games Ltd70 in relation to a claim to protection of what could only be described as very general ideas: If protection for such general ideas as are relied on here were conferred by the law, copyright would become an instrument of oppression rather than the incentive for creation which it is intended to be. Protection would have moved to cover works merely inspired by others, to ideas themselves.

Individual commands 4.40 A person using the OpenRes software operated it by entering commands, for example, to check the availability of seats on a particular flight. Some of these commands were in the nature of simple mnemonics such as ‘NP’ which had the effect of calling up an on-screen notepad. Others were more complex and were typically of a format in which the user supplies detail as part of the syntax of the command. An example of the syntax was ‘A[departure date][city pair]’ and a user might enter ‘A13JUNLTNAMS’ to check the availability of flights from Luton to Amsterdam on the 13 June. Such complex commands were parsed by the program for resolution of the user’s query. Appropriate routines would be called up and data extracted from a database, formatted and then displayed. 4.41 In respect of the simple commands, it was clear that they could not individually be works of copyright, as a single word cannot be a work of copyright.71 Of the complex commands, Pumfrey J considered that they represented a computer programming language and were excluded accordingly. Although he recognised that the matter was not beyond doubt, he accepted that ad hoc languages (as opposed to general languages from which all manner of programs could be written, such as BASIC) still fell within the exclusion of protection of programming languages in the recital 11 of the Directive on the legal protection of computer programs. But can a set of instructions designed for a specific function be described as a computer programming language?72 A fortiori, can it be described as an idea or principle? An idea or principle is surely something of general application, such as a scientific or mathematical 70

[2007] EWCA Civ 219, [2007] RPC 25 at para 55. Exxon Corpn v Exxon Insurance Consultants International Ltd [1982] RPC 69. 72 In Microsense Systems Ltd v Control Systems Technology Ltd (unreported) 17 June 1991, it was accepted by Aldous J that a set of mnemonics used to program pelican traffic controllers was, arguably, protected by copyright. However, this case preceded the Directive on the legal protection of computer programs. 71

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4.42 Non-textual copying and emulating functionality rule, rather than something designed for use only for a specific function. A c omputer is a universal programmable machine and programming languages such as BASIC, COBOL, C++, Java etc are intended to be used to program computers to perform whatever functions the programmer wishes, whether it be to write process control software, games software, accounting software and so on. 4.42 The underlying purpose of the exclusion of computer programming languages according to Pumfrey J was to keep languages free for use. This makes sense in relation to BASIC and other general purpose programming languages otherwise those who devise such languages would be able to claim rights in computer programs written using those languages. This does seem distinguishable from the Navitaire case where the ‘language’ was devised by the programmers for use with the specific function performed by OpenRes and with no particular intention that it be used for other applications software. 4.43 Pumfrey J also considered whether the collection of commands could attract copyright protection as a compilation. He thought that this did not overcome the problem that the collection could also be considered to be a programming language and excluded from protection accordingly. But he went on to say that, if this was wrong, then the collection of commands was not a compilation as such, merely an accretion of commands. They had not been thought up as part of some overall plan. The collection did not have an overall author or joint authors as the individual commands had been devised by a number of different persons whose contributions were distinguishable. Pumfrey J’s reasoning about the collection being a programming language suffers the same criticism as his reasoning on the complex commands taken individually. His authorship point is more telling. Of course, it is possible to have a compilation copyright in a collection of non-copyright materials providing the act of compiling the material required skill and judgement.73

Displays and graphics 4.44 The Directive on the legal protection of computer programs did not compromise other forms of copyright such as copyright in artistic works.74 73

The Judicial Committee of the Privy Council in Macmillan & Co Ltd v Cooper 93 LJPC 113 (PC) approving Macmillan v Suresh Chunder Deb (1890) ILR 17 Calc 981. 74 Recital 26 to the Directive states that ‘Whereas protection of computer programs under copyright laws should be without prejudice to the application, in appropriate cases, of other forms of protection …’.

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Emulating the functionality of a computer program 4.46 Therefore, graphic elements displayed during the operation of a computer program could, potentially, have their own independent copyright. Pumfrey J accepted that graphic user interfaces (screen displays which were more than simply text-based screen displays) were artistic works. They were ‘drawn’ from a ‘palette’ of objects such as command buttons, toggle buttons, checkboxes, scrolling lists and so forth. They were recorded in the sense that they were represented in the complex code that displayed them.75 4.45 On the other hand, Pumfrey J considered that the text-based displays were tables. They provided static frameworks from which the dynamic data produced by the software were displayed. For example, lines of the display might contain information such as particular flights, costs, agent and customer details. They could be said to be templates in which the actual data relevant to a particular enquiry would be displayed. Although tables are literary works, Pumfrey J concluded that they were not protected by copyright as they were ideas underlying the interfaces. No further explanation was given. Of course, such a display (and the same applies to graphic displays) are interfaces in that they communicate information to the user76 but whether they could properly be described as ‘ideas’ is not beyond doubt. The idea of an interface must be the decision to present data (or have it input) by a particular method, such as by the use of a text-based table or a graphic display incorporating the text or having data input from lists of options from which the user selects: all the techniques we have become accustomed to when using computer software. Once a decision has been made to design the interface using a particular method, unless trivial, the finished design must go beyond idea and be a form of protectable expression. The Directive does not say that interfaces are not protected at all but says that ideas and principles, including those which underlie the program’s interfaces, are not protected. To the extent that an interface does not comprise ideas and principles, it may be protected if it is part of the expression of computer program and can be viewed as the author’s own intellectual creation. 4.46 Computer icons are small graphic elements or pictograms. They can vary in their complexity or ingenuity. Undoubtedly very simple icons, such as many on ‘toolbars’, are not protected by copyright as they lack sufficient skill and judgement in their creation and, consequently, they cannot be regarded as 75

Unlike the other forms of original works of copyright, there is no requirement that artistic works should be recorded in writing or otherwise. 76 Or, in some cases, form a template into which the user inserts data.

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4.47 Non-textual copying and emulating functionality intellectual creations.77 In Navitaire, the icons were more complex though not exceptionally so. It was clear that a number had been copied and were duplicates of the claimant’s icons. Again, Pumfrey J did not dwell on this aspect and simply said that ‘[t]he icons are plainly copyright works, albeit minor, and the action succeeds in respect of them as well’.78 He did not address the question of whether they were ‘original’. 4.47 There seems to be some inconsistency in Pumfrey J’s judgment. Icons, which the user points to and ‘clicks on’ to make a selection or initiate some activity, are as much a user interface as any other. He considered interfaces comprising only text, whether or not in tabular form, to be ideas, being user interfaces. Graphic interfaces and other graphic elements relating to interfaces were not discounted as being ideas underlying interfaces but were deemed to be artistic works in their own right. Why, then, is not an interface comprising text set out in a tabular form a literary work in its own right? Pumfrey J’s response appears to have been that this approach would overcome the exclusion of protection for ideas underlying interfaces. But if a graphic user interface is not an idea why should a text-based user interface be an idea? It is submitted that Pumfrey J failed to distinguish between the idea of presenting the user with information in a tabular form using text only with the particular expression of that idea selected by the design of the interface. Protecting the table, as designed, does not prevent others independently designing tabular text-based interfaces, it merely prevents them copying a particular interface. Surely that is the balance the Directive sought to achieve. The defendants in Navitaire simply chose to copy the OpenRes interfaces rather than design their own, whether text or graphics based. 4.48 Pumfrey J gave no consideration as to whether the text-based displays were collectively subject to compilation copyright.79 They could not be databases, whether under copyright or the database right, as they could not be

77

Even simple icons can be protected by design law providing they are new and have individual character: see Chapter 8. 78 At para 99. 79 A collection of graphic displays, as artistic works, cannot be subject to compilation copyright as compilations, being literary works are required to be ‘written, spoken or sung’ under section 3(1) of the Copyright, Designs and Patents Act 1988.

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Emulating the functionality of a computer program 4.50 described as a ‘collection of independent works, data or other materials’.80 They must have been designed to operate together as a set and be part of an overall design. Providing the author or joint authors of the text-based displays collectively could be identified and sufficient skill and judgement was expended in the design of the compilation, there seems no reason why they should not have been protected as such by copyright.

SAS Institute Inc v World Programming Ltd81 4.49 To date, there have been only two cases on the scope of the Directive on the legal protection of computer programs. In the first, Bezpečnostni softwarová asociace v Ministerstvo kultury,82 the Court of Justice of the EU ruled that a graphic user interface was not a form of expression of a computer program for the purposes of the Directive.83 Furthermore, source code and object code versions of a program are forms of expression which include preparatory design work capable of leading to the reproduction or subsequent creation of such a computer program.84 4.50 The second, SAS Institute Inc v World Programming Ltd,85 is highly significant in that the Court of Justice of the EU ruled on important aspects of the Directive. In particular, more guidance was given as to the scope of the

80

81

82 83 84 85

This is part of the definition of ‘database’ for the purposes of copyright and the database right under Article 1(2) of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases, OJ L 77, 27.03.1996, p 20 (the ‘Directive on the legal protection of databases’). In the following discussion, reference is made to the codified version of the Directive on the legal protection of computer programs. The original Directive was applicable to the facts of the SAS v World Programming Ltd case. The codified version is not quite identical (though equivalent in relevant respects) and some references, for example, to the recitals and some of the provisions are different. Case C-393/09, EU:C:2010:816. It could, however, be protected under the Directive on copyright and related rights in the information society. Bezpečnostni, at para 37. Case C-406/10, EU:C:2012:259. The author of this book wrote legal opinions for the defendant some years ago when they were embarking upon their venture. Fortuitously, these opinions more or less correctly predicted the scope of the Directive on the legal protection of computer programs as regards the defendant’s computer programs.

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4.51 Non-textual copying and emulating functionality expression of a computer program and the validity of terms in a licence agreement which attempt to constrain the purpose for which the computer program has been acquired. Consideration was also given to the protection of user manuals under the Directive on copyright and related rights in the information society. 4.51 SAS developed over a considerable number of years, a suite of programs which enabled users to carry out data processing and, particularly, statistical analysis. The core SAS package was known as Base SAS and enabled users to write their own programs using the SAS language. World Programming Ltd (‘WPL’) lawfully obtained a ‘Learning Edition’ of the claimant’s programs and associated items of software under a licence agreement. Clause 1 of the agreement stated that the licensee could use the software for its ‘… own self-training non-production purposes only’. 4.52 WPL perceived that there was a market for a product which was compatible with the SAS package and capable of running applications written in the SAS language. WPL therefore set about writing its own software to emulate the SAS programs. It was important that the WPL programs produced the same outputs from the same inputs in most cases so that users of SAS could switch to the WPL package and re-use their own programs and scripts they had written for the SAS package. In the trial in the High Court, it was accepted that WPL did not access the SAS source code, that WPL had not copied any of the text of the SAS source code and that WPL had not copied the structure and design of that source code. Arnold J provisionally accepted that WPL had not infringed the copyright in the SAS programs but he considered that there may have been infringement of the SAS Manuals. He referred a number of questions to the Court of Justice of the EU.86 Aspects of the Court of Justice’s ruling are explored below.

Functionality and protectable expression 4.53 The Court of Justice summarised the position regarding the protection of computer programs under the Directive. Computer programs are protected as literary works under the Berne Convention.87 A computer program is protected in any form under Article 1(2) of the Directive but ideas and principles 86 87

SAS Institute Inc v World Programming Ltd [2010] EWHC 1829 (Ch), [2011] RPC 1. Article 1(1).

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Emulating the functionality of a computer program 4.55 underlying a computer program including those underlying its interfaces are not protected under the Directive. Recital 11 to the Directive confirms that, to the extent that logic, algorithms and programming languages comprise ideas and principles, they are not protected under the Directive. However, the recital continues: In accordance with the legislation and case-law of the Member States and the international copyright conventions, the expression of those ideas and principles is to be protected by copyright. 4.54 Therefore, the Directive protects the expression of ideas and principles but does not protect the ideas and principles themselves. Moreover, the Court noted that Article 2 of the WCT and Article 9(2) of TRIPs provide that copyright protection extends to expressions and not to ideas, procedures, methods of operation or mathematical concepts as such.88 The Court of Justice also referred to Bezpečnostni (at paras 35 to 37) to the effect that the object of protection under the Directive includes the expression of a computer program in any form, such as the source code and the object code, together with the preparatory design work capable of leading, respectively, to the reproduction or the subsequent creation of such a program. A graphic user interface is not part of the expression of a computer program. It does not allow the reproduction of the program but is merely one element of a program by means of which users make use of the features of the program. 4.55

Taking all the above into consideration, the Court concluded that

… neither the functionality of a computer program nor the programming language or the format of data files used in a computer program in order to exploit certain of its functions constitute a form of expression of that program for the purposes of [the Directive].89 This aspect of the ruling makes eminent sense. The Court noted what had been said by Advocate General Bot, in his Opinion (at paras 56 and 57): 56. Moreover, this analysis appears to be confirmed by the preparatory work which led to Directive 91/250. In its Proposal for a Directive, the

88

As both the WCT and TRIPs are now part of the legal order of the EU, this slightly wider exclusion from protection must now apply. 89 SAS Institute Inc v World Programming Ltd, SAS Institute Inc v World Programming Ltd, (Advocate General’s Opinion) Case C-406/10, EU:C:2011:787, Case C-406/10, EU:C:2012:259 at para 39.

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4.56 Non-textual copying and emulating functionality Commission explains that the main advantage of protecting computer programs by copyright is that such protection covers only the individual expression of the work and thus leaves other authors the desired latitude to create similar or even identical programs provided that they refrain from copying. This is particularly important because the number of available algorithms on which computer programs are based is considerable but not unlimited. 57. To accept that a functionality of a computer program can be protected as such would amount to making it possible to monopolise ideas, to the detriment of technological progress and industrial development. Furthermore, in the explanatory memorandum to the proposal for the Directive, it was stated that the main advantage of protecting computer programs by copyright was that only expression would be protected leaving it free to others to create similar or even identical programs providing they do not copy the program. However, the Court went on to conclude that the SAS programming language and data files could be protected under the Directive on copyright and related rights in the information society provided they were the author’s own intellectual creation.

Observing studying and testing and conflicting licence terms 4.56 A person having the right to use a computer program may, under Article 5(3), observe, study and test the functioning of the program in order to determine the underlying ideas and principles whilst performing the acts of loading, displaying, running, transmitting or storing the program which he is entitled to do. This exception to the owner’s rights cannot be prevented by the use of contractual provisions to the contrary, such provisions being null and void.90 So the formula for applying this exception is: ••

first, identify which of the above acts are permitted to be performed by the person having the right to use the licence.

••

observing, studying and testing the functioning of the program must be carried out by performing one or more of the rights under the mechanism under which the person has the right to use the computer program.

••

finally, any term in any agreement which attempts to prevent or restrict this exception is null and void.

90

Article 8.

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Emulating the functionality of a computer program 4.59 There is no reference to the intended purpose of the person relying on the exception even if it is to create a new program which emulates the functionality of the first which will be exploited commercially and competes with the first program, providing that program’s expression is not copied. Even if the purpose is prohibited by a licence, this is of no effect, providing the licensee does not go beyond the acts of loading and running the program permitted under the licence. 4.57 In SAS v WPL, the licence allowed WPL to ‘use the software on one (1) workstation at a time’. The purpose was then stated to be for ‘the Customer’s own self-training non-production purposes only’.91 The first phrase is relevant to the right to use the computer programs under Article 5(3). The second phrase introduces a limitation on the purpose of that use. 4.58 The Court accepted that, in accordance with the denial of protection of underlying ideas and principles, Article 5(3) seeks to ensure that those ideas and principles can be discovered by a person having the right to use the program under a licence whilst carrying out the rights to use the program under that licence.92 If this could be prevented by a term in a licence agreement, this would emasculate the exception. Therefore, a person who has obtained a copy of a computer program under a licence is entitled, without the authorisation of the owner of the copyright, to observe, study or test the functioning of that program so as to determine the ideas and principles which underlie any element of the program, in the case where that person carries out acts covered by that licence and acts of loading and running necessary for the use of the computer program. This is subject to the condition that that person does not infringe the exclusive rights of the owner of the copyright in that program. Therefore, in the present case, the restriction to non-production purposes only was not enforceable so as to deprive the licensee from the benefit of the exception in Article 5(3).

User manuals incorporated into the defendant’s programs 4.59 The Court of Justice accepted that the SAS user manual was protected by copyright under the Directive on copyright and related rights in

91 92

Clause 1(1) of the licence. Article 5(1) and recital 13 permits acts of loading and running a computer program and translating etc.

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4.60 Non-textual copying and emulating functionality the information society providing it was the author’s own intellectual creation. However, keywords, syntax, commands and combinations of commands, options, defaults and iterations consist of words, figures or mathematical concepts which, considered in isolation, are not as such, an intellectual creation of the author of the computer program. It is only through the choice, sequence and combination of those words, figures or mathematical concepts that the author may express his creativity in an original manner and achieve a result, namely the user manual for the computer program, which is an intellectual creation.93 4.60 Article 2(a) of the information society Directive94 means that the reproduction in a computer program or another user manual of certain elements of a user manual for another computer program, protected by copyright, will infringe the copyright in that user manual if the part reproduced constitutes the expression of the intellectual creation of the author of that user manual.95 In the High Court, applying the ruling of the Court of Justice of the EU, judgment was given to the defendant, save in respect of copying parts of the SAS user manual into its own user manual.96

Application of the Court of Justice ruling 4.61 There were no shocks for Arnold J when he came to apply the Court of Justice ruling97 as most of his provisional views, based largely on those of Pumfrey J in Navitaire v easyJet, were compatible with those of the Court of Justice of the EU. Nevertheless, Arnold J made some important points in his interpretation of the ruling. He accepted that the Court of Justice was being cautious so as not to exclude the possibility that a programming language could not be a work of copyright in its own right. However, he went further and said that he did not think that a programming language could be a work. A language is the material from which works may be created. The presence 93 94 95 96 97

Paras 66 and 67. See also Infopaq International A/S v Danske Dagblades Forening, Case C-5/08, EU:C:2009:465 at paras 39 and 45. The exclusive right of authors of works to authorise or prohibit direct or indirect, temporary or permanent, reproduction in any means and in any form, in whole or in part. Whether it does so is a question of fact for a national court to determine. [2013] EWHC 69 (Ch), [2013] RPC 13. SAS Institute Inc v World Programming Ltd [2013] EWHC 69 (Ch), [2013] RPC 13. Attempts by SAS to amend pleadings at this late stage, for example, to plead the programming language as a distinct work of copyright, were refused by Arnold J.

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Emulating the functionality of a computer program 4.63 of intellectual creation does not, of itself, mean the subject-matter is a work of copyright as counsel for WPL noted, things like scientific theories are not works of copyright. Also, languages such as the SAS language evolved considerably over time and lacked planning and overall design. Arnold J doubted that it could be a compilation for copyright purposes. 4.62 On the SAS licence terms, two forms of breach were identified by SAS. The first was that the Learning Edition software was used in excess of the licence which was restricted to one employee. The second breach concerned the limitation to non-production purposes only. Arnold J thought that Article 8 rendering contractual provisions null and void applied to terms limiting the use of the software by a licensed employee was still null and void if a non-licensed employee used the programs to observe, study and test the functioning of the program under Article 5(3). As regards the use for the forbidden purpose, Arnold J noted that the Court of Justice added no gloss on Article 5(3) depending on the licensee’s intended purpose. The act of decompilation under Article 6 gives access to source code. Therefore, it must be held that copyright is not infringed under Article 5(3) where access to source code is not accessed. 4.63 There followed an appeal to the Court of Appeal which, in dismissing the appeal, largely agreed with Arnold J’s judgment though not necessarily by the same logic.98 Vos and Tomlinson LJJ agreed with Lewison LJ’s judgment which drew heavily on the Court of Justice’s ruling and Advocate G eneral’s Opinion in this case as well as the rulings in Infopaq and Bezpečnostni softwarová asociace. Some particular findings of Lewison LJ are set out below (summarised, with relevant paragraph numbers from the judgment): 1.

The test for determining whether a restricted act had been performed in relation to a substantial part of a work required that parts of a work were entitled to the same protection as the whole work providing that those parts contained elements which were the expression of the intellectual creation of the author of the work (para 38).

2. The functionality of a computer program is not protected under the D irective on the legal protection of computer programs; nor is it protected under the Directive on copyright and related rights in the

98

SAS Institute Inc v World Programming Ltd [2013] EWCA Civ 1482, [2014] RPC 8.

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4.63 Non-textual copying and emulating functionality information society; the policy underlying both Directives was the same in this respect (paras 51 and 52). 3. Combinations of features such as keywords, syntax, commands and combinations of commands, options, defaults and iterations in the SAS programs were ideas rather than the expression of ideas and, consequently, not protected by copyright (paras 59 and 60). 4.

The Court of Justice left the national court to consider not whether there had been a reproduction of the intellectual creation of the author of the Manual but whether there had been a reproduction of the expression of the intellectual creation of the author, a significantly narrower test (para 61, emphasis added).

5.

It would be contrary to policy if copyright protection could be achieved for the functionality of a computer program indirectly through a Manual which simply explained that functionality (para 76).99

6.

Arnold J was wrong to suggest that a work which was created by a process of accretion could not, for that reason alone, be a work of copyright (para 80).

7. In relation to the World Programming Manual, the same principles applied with respect to the functionality expressed in the SAS Manual. Lewison LJ quoted Pumfrey J’s pudding emulation example in Navitaire Inc v easyJet Airline Co,100 where he suggested that a chef who emulates a competitor’s pudding recipe by much labour but without copying the latter’s recipe as a literary work does not infringe that copyright (paras 82 to 86). 8.

On the other hand, linguistic copying of parts of the SAS Manual into the World Programming Manual resulted in limited infringement of the former (para 83).101

9.

An argument that World Programming Ltd did not have a right to use the SAS program, as this was the actual employee who clicked through to consent to the licence, was rejected by Arnold J and confirmed

99 Although

World Programming had used information from the SAS Manuals, this did not include forms of expression of the intellectual creation of the authors of those Manuals. 100 [2004] EWHC 1725 (Ch), [2006] RPC 3 at para 127. 101 Counsel for World Programming Ltd confirmed that it intended to write a new Manual from scratch.

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Concluding remarks 4.64 by Lewison LJ. World Programming Ltd became a lawful acquirer through the medium of the employee clicking through the licence (paras 99 and 100).102 10. The purported restriction in the licence to non-production purposes was ineffective. The licence granted the performance of acts for any purpose within its scope but once that threshold is crossed, the observe, study and test exception in Article 5(3) permits the performance of those acts for the purposes within that provision; that is, to observe, study or test the functioning of the computer program in order to determine the ideas and principles which underlie any element of the program. (Of course, contractual provisions contrary to this and other exceptions are null and void under Article 9(1).) (para 101). 11. The terms of the Learning Edition licence agreement contained inconsistencies and anomalies. For example, in some places the licence suggested that ‘The Customer’ was an individual, in other places as a legal person (by the use of ‘it’). As the software was business software, it was clear that businesses would want to know how to use it and a legal person could only do so through its employees. Lewison LJ went further than Arnold J by suggesting that the contra proferentem principle tipped the balance in World Programming Ltd’s favour. This was especially so as there was no room for negotiation and the licence was available only on a take it or leave it basis (paras 106 to 108).

CONCLUDING REMARKS – EMULATING THE FUNCTIONALITY OF A COMPUTER PROGRAM 4.64 It is clear that non-textual elements of computer programs such as underlying ideas and principles, structure or architecture, associated data files (content and structure), interfaces and functionality are not protected under the Directive on the legal protection of computer programs. It is only the expression of the computer program, for example, the source code

102

There seemed to be some confusion before the Court of Justice between a ‘lawful acquirer of a computer program’ and ‘a person having a right to use a computer program’: see para 61 of the Court of Justice ruling where the term lawful acquirer is used in relation to the study, observe and test exception (cf para 56).

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4.65 Non-textual copying and emulating functionality or object code, which is protected. To this must be added the preparatory design material which results or will result in a reproduction or subsequent creation of the computer program.103 The Directive does not protect logic, algorithms and programming languages, to the extent that they comprise ideas and principles. But these things are not protected anyway under the Directive on the legal protection of computer programs (whether or not they are ideas or principles) because they are not part of the expression of a computer program. However, these things may be protected by copyright in their own right as literary or artistic works; for example, graphic user interfaces may be protected as artistic works under the Directive on copyright and related rights in the information society. 4.65 The exception that permits observing, studying and testing a computer program to determine its functionality applies where a person having a right to use a computer program, typically under a licence agreement, carries out the acts of loading, running and storing the computer program, etc. which he is entitled to do under the licence. The minimum acts which must be covered by this are loading and running the program and any incidental storage and translation.104 Conflicting contractual terms which attempt to (a) limit the licensee’s employees who may use the licence or (b) limit the licensed use to a particular purpose or purposes to the exclusion of other purposes are null and void. In other words, if you have a right to perform certain acts under a licence, you may carry out those acts to observe, study and test the functioning of the program to determine the underlying ideas and principles notwithstanding licence terms attempting to prejudice or cut down the right to perform those acts. It makes no difference if your intention is to create new competing software, providing you do not copy the expression of the computer program’s source code or object code.105 4.66 Computer software includes computer programs, databases, data files, interfaces, graphic works and so on. There are many other works in addition to computer programs that may be part of a software package. These other items may or may not be protected by other rights. For example, graphic 103

Bezpečnostni softwarová asociace v Ministerstvo kultury, Case C-393/09, EU:C:2010:816 at para 37. 104 Typically, a licence grants the licensee the right to use the program, whether or not for specific or restricted purposes. 105 Or, for that matter, anything else construed as the expression of a computer program. Though graphic user interfaces and data files are not expression of computer programs.

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Concluding remarks 4.67 works may be protected by copyright as artistic works or under design law. Databases may be protected by copyright as literary works if they are, by reason of the selection and arrangement of their contents, the author’s own intellectual creation. Databases may be protected by copyright and/or by the sui generis database right. Some computer program implemented inventions may be patentable if they are novel, involve an inventive step and can be applied industrially providing they achieve an appropriate technical effect.106 4.67 The rulings of the Court of Justice of the EU, in particular, SAS Institute Inc v World Programming Ltd, have finally come to grips with the practical reality of the Directive on the legal protection of computer programs and have achieved the most satisfactory result in that only the expression of a computer program is protected and that functionality and underlying ideas and principles are free to others to use, providing they access those ideas and principles by taking advantage of the exceptions to the owner’s rights in the Directive.107 As copyright does not generally result in monopoly protection, this reinforces the principle that other should be free to write new computer programs to emulate the functionality of existing programs with the main proviso, of course, that they do not copy the actual code of the existing program.

106

To override the basic exclusion of computer programs, as such, from the meaning of invention under the European Patent Convention. 107 Unless the functions, ideas and principles are available from public sources.

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Chapter 5

Copyright in databases

INTRODUCTION 5.1 Before the Directive on the legal protection of databases,1 it was generally accepted that databases, whether electronic or otherwise, were protected under the Copyright, Designs and Patents Act 1988 as literary works, being compilations, providing skill and judgement had been expended in their creation. It did not matter if the contents of the databases were themselves works of copyright and it was possible to have a copyright in a compilation of commonplace or public domain materials.2 In Robin Ray v Classic FM plc,3 there was no challenge to the subsistence of copyright in a database comprising information about some 50,000 music tracks.4 Previously, under the Copyright Act 1956, it was also thought that databases were subject to copyright as in Waterlow Publishers Ltd v Rose5 where the defendant did not challenge the fact of copyright subsistence in the claimant’s directory of barristers and solicitors.6 5.2 The Directive provides for two forms of protection. The first, copyright protection, is available for databases which, by reason of the selection and arrangement of their contents, constitute the author’s own intellectual creation. The protection under the Directive does not extend to the contents of the database but is without prejudice to any rights subsisting in those contents. 1

2 3 4 5 6

Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases, OJ L 77, 27.03.1996, p 20 (the ‘Directive on the legal protection of databases’). See, for example, Macmillan & Co Ltd v Cooper 93 LJPC 113 (PC). [1998] FSR 622. See also Waterlow Publishers Ltd v Reed Information Services Ltd [1992] FSR 409, again concerning a directory of barristers and solicitors. [1995] FSR 207. Under section 48(1) of the Copyright Act 1956, a literary work included ‘any written table or compilation’.

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Introduction 5.4 Many databases might fail to reach this benchmark of constituting the author’s own intellectual creation but which are nonetheless the result of a substantial investment. For such databases, a second form of protection is provided by the sui generis right, known in the UK as the database right. The introduction of this latter right, possibly, was influenced by the US Supreme Court decision in Feist Publications Inc v Rural Telephone Service Inc,7 in which it was held that the ‘white pages’ in a telephone directory were not protected by copyright as they were the result of effort alone. Similarly, in Germany, in Re the Unauthorised Reproduction of Telephone Directories on CD-Rom,8 the Bundesgerichsthof held that an electronic telephone directory did not qualify for copyright protection as, in common with other telephone directories, there was insufficient intellectual creation in their making.9 It was considered important to afford some form of protection for databases which, whilst not being intellectual creations as such, are the result of a substantial investment. Without such protection, the incentive for such investment would be prejudiced.10 5.3 The two rights in databases, copyright and the sui generis right, are not mutually exclusive and both may subsist in the same database if the requirements for subsistence of each are fulfilled. However, the criteria for subsistence and other features of the rights, such as the infringing acts, are quite different. Copyright in a database is intended to protect the structure of the database providing it represents the author’s intellectual creation in selecting and arranging the contents. The sui generis right is intended to prevent the unauthorised extraction and/or reutilisation of the contents of the database.11 The sui generis database right is the subject matter of the following chapter. 5.4 The Directive on the legal protection of databases is without prejudice to EU provisions relating to the protection of computer programs, 7

499 US 340 (1991). Case I ZR 199/96, [2000] ECC 43. The court confirmed that the directory was protected by the database right even though it had no copyright protection, giving an early example of the utility of the database right. 9 The requirement for intellectual creation was typical of civil law systems in Europe in contrast to the common law approach to protection based on skill, labour or judgment. 10 Recital 12 to the Directive states that ‘… investment in modern information storage and processing systems will not take place in the Community unless a stable and uniform legal protection regime is introduced for the protection of the rights of makers of databases’. 11 See recitals 15 and 58 to the Directive. 8

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5.5 Copyright in databases rental right, lending right and certain rights related to copyright in the field of intellectual property and the term of protection of copyright and certain related rights.12 Indeed, computer programs used in the making or operation of electronic databases are expressly excluded from the protection afforded by the Directive under Article 1(3). Such programs will, of course, be protected under the copyright provisions implementing the Directive on the legal protection of computer programs.13 5.5 In Navitaire Inc v easyJet Airline Co Ltd,14 Pumfrey J said that there was no compelling reason to view a computer program or scripts used to create a database as being part of the database even though they defined the ‘arrangement’ and ‘structure’ of the database. They were works of copyright in their own right by virtue of being computer programs. This finding was simply a reflection of the arguments of the parties in that case and, of course, simply reflects the position in the Directive on the legal protection of databases. 5.6 Article 13 states that the Directive does not prejudice copyright and related rights subsisting in the contents, patents, trade marks, design rights, protection of national treasures, laws relating to restrictive practices and unfair competition, trade secrets, security, confidentiality, data protection and privacy, access to public documents and the law of contract. Arguably, the most important proviso here is that competition law may still apply to a database protected by copyright or the database right. For example, if the owner of a database, who has a monopoly in the contents of the database, refuses to grant licences on reasonable terms he may fall foul of the provisions on abuses of dominant positions or restrictive trade agreements.15 5.7 Before looking at the copyright protection of databases in greater depth, it is worth noting that they are protected as a form of literary work

12

Article 2. Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, OJ L 122, 17.05.1991, p 42 now replaced by Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs, OJ L 111, 05.05.2009, p 16. 14 [2004] EWHC 1725 (Ch), [2006] RPC 3. 15 Under Articles 102 and 101 of the Treaty on the Functioning of the EU, respectively. 13

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Layout of this chapter 5.9 and that, apart from as expressly mentioned in this chapter, the same provisions apply as do generally for literary works. The rules on authorship, ownership and duration are the same. Infringement is also as for literary works, apart from express clarification of what the act of making an adaptation in relation to a database means.16 The fair dealing provisions for private study or non-commercial research apply to databases as to other forms of literary work, apart from computer programs for which special provision is made. There are no separate provisions for databases amongst the permitted acts relating to educational use, libraries and archives. There are, however, a number of exceptions to the permitted acts for copyright databases and a special permitted act for databases as discussed later in this chapter.

LAYOUT OF THIS CHAPTER 5.8 Following a brief description of database technology, this chapter is concerned with copyright protection for databases under the Directive. Reference is made to the provisions of the Directive where appropriate. For some aspects it will be necessary to refer to the Copyright, Designs and Patents Act 1988 as the Directive does not give a complete code and does not cover some features of database protection, such as assignment and licensing. Moreover, the Directive allows Member States to apply further exceptions to the exclusive rights which are traditionally authorised under national law. 5.9 The requirements for subsistence are considered first, followed by the rules on authorship and ownership and the duration of copyright in databases (which is the same as for other literary works). Following this, dealing with copyright databases is covered, then the restricted acts (exclusive rights of the owner) are described. The exceptions to the exclusive rights are discussed, followed by the other permitted acts which apply in addition to the exceptions in the Directive. Remedies are briefly mentioned. Finally, there is mention of moral rights, primarily to note that they apply to databases but do not apply to computer programs.

16

The meaning is also clarified for computer programs.

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5.10 Copyright in databases

DATABASE TECHNOLOGY 5.10 This part of the chapter aims to provide sufficient understanding of database technology for the purposes of the legal discussion that follows. It does not pretend to be an up to date and comprehensive description of the latest database technologies. For that other specialist works are recommended.17 At the simplest level, a database is a collection of data relating to a particular entity, for example, a list of parts for some equipment as shown in Figure 5.1. There is a set of data describing particular attributes of each entity. Fields

Part No

Description

Supplier

Stock

Price (ex VAT) £

Delivery cost £

36–080 36–081 Etc ...

Brake cable Brake blocks

Wiggins Froome

23 54

12.87 4.34

2.75 1.25

Records

Figure 5.1 Structure of simple ‘flat’ table

Each item of data for an entity is contained within a ‘field’ and the collection of data for a given entity is known as a record. A common design technique is to have a number of databases which are linked by key data, as shown in Figure 5.2. Here the ‘keys’ used to link data in the separate databases are the ‘Supplier’ data and the ‘Part No’ data. The Part No database has a one-to-many relationships with the Equipment database. By using such a structure, data from several different databases can be drawn together to produce the required output or result.

17

There are many books, some of which are very complex and intended for experienced database designers. For an accessible book, see T Teory, et al, Database modelling and design, Morgan Kaufmann, 5th edition, 2011.

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Database technology 5.10 Supplier Address Part No

Phone

Description

email

Supplier

Payment terms

Stock

Notes

Price (ex VAT) Delivery Equipment Description Part #1 No Part #2 No Part #3 No Etc

Figure 5.2 Simple relational databases

In the final figure, Figure 5.3, a more complex arrangement is shown. It can be described as a database management system and contains a number of elements such as a query language system allowing sophisticated queries to be submitted to the database, a simple example being how many entities have attributes x and y but not z. There may also be a spellchecker, thesaurus and indexing system. Other elements are a system for adding new information or modifying existing data and various output formats. There may also be network links to other databases, including online databases. In practice such systems may include other management tools and numerous other databases. There will also be a number of computer programs, built into some of the modules or encoded separately, used to operate the various systems and functions.18 It is worth thinking about these various

18

Computer programs are not protected under the Directive on the legal protection of databases and remain protected under the Directive on the legal protection of computer programs.

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5.11 Copyright in databases QUERY LANGUAGE INPUT

DATABASE

DATA FILE

INDEXING SYSTEM

OUTPUT

SCREEN PRINT

SPELLCHECK/ THESAURUS

Figure 5.3 Database management system

e lements and whether they can be classified as part of the database structure, bearing in mind that copyright in a database protects the structure of the database, expressed as the selection and arrangement of its contents, and not the contents themselves, which may or may not be protected by other intellectual property rights.

WHAT IS A DATABASE FOR THE PURPOSES OF THE DIRECTIVE? 5.11 The meaning of ‘database’ is set out under Article 1(2) of the Directive:19 … a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means.20 It is important to note that this definition applies both to copyright databases and to databases subject to the sui generis right. Further guidance is to be found in the recitals to the Directive. Recitals 14 and 15 confirm that the 19 20

The Agreement on Trade-Related Aspects of Intellectual Property Rights, 1994. The definition in section 3A of the Copyright, Designs and Patents Act 1988 is of same effect. The definition of databases applies both to copyright databases and databases protected by the sui generis database right.

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What is a database for purposes of the Directive? 5.13 rights set out in the Directive apply to collections or compilations of works, data or other materials arranged stored and accessed by electronic, electromagnetic, electro-optical or analogous processes and the protection extends to non-electronic databases. An example of the latter is a database on index cards, arranged in some way, for example, alphabetically, facilitating the location and retrieval of a particular card containing the information sought by the person consulting the card index. The content of the database must comprise independent works, data or other materials. Arguably, a conventional library is a database as it is a collection of independent works (books, journals, etc) which have been selected by the library and arranged in a systematic way such that a particular book can be easily found.21 5.12 Recital 17 states that the term ‘database’ includes literary, artistic, musical or other collections of works or collections of other materials such as texts, sounds, images, numbers, facts and data which are independent and are systematically or methodically arranged and individually accessible. However, a recording of an audio-visual cinematographic, literary or musical work does not fall within the scope of the Directive. Moreover, recital 19 makes it clear that, as a rule, a compilation of several recordings of musical performances does not come within the scope of the Directive because, as a compilation, it does not meet the conditions for copyright subsistence and because it does not represent a substantial enough investment for the database right.22 5.13 Article 1(3) confirms that protection under the Directive does not extend to computer programs used in the making or operation of the databases accessible by electronic means.23 Nor does the protection extend to the contents of the database. Where those contents are protected by other rights, including copyright, those other rights are not prejudiced by the copyright in the database and may be enforced independently by their owner. For example, if a person, without permission, copies a photograph from a database of photographs, the copyright in the photograph will have been 21

For example, using card index systems or by carrying an electronic search to find the Dewey Decimal Classification of the book in question, the books being arranged on shelving according to that system. 22 The words ‘as a rule’ suggests that there may be some cases in which such compilations may, exceptionally, meet the requirements for protection by copyright and/or the sui generis right. 23 Indeed, the Directive is without prejudice to Community provisions relating to the legal protection of computer programs, rental and lending right and the term of copyright and certain related rights: Article 2.

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5.14 Copyright in databases infringed, notwithstanding any issues of copyright, or indeed database right, subsisting in the database.24 The fact that a database contains works or materials subject to copyright or other rights belonging to persons other than the owner of the rights in the database does not compromise the protection of the database as such.25

Independent works, data or other materials 5.14 The definition of ‘database’ requires that it is a collection of independent works, data or other materials. This means that the contents are independent of each other and have their own intrinsic value. This does not mean that there is no relationship at all between the individual contents. A database of conditions, each with further data associated with them, may be sufficient. For example, an electronic database may be used to diagnose issues concerning the maintenance of a motor vehicle. It reads data from the vehicle’s onboard computer which results in a code being used to automatically consult the database which contains a list of codes, each of which has a set of information about the type of maintenance work to be performed, the urgency of the work and an explanation of how to carry out the work and what parts, if any, are required to complete the work. In Technomed Ltd v Bluecrest Health Screening Ltd,26 it was accepted that a set of information relating to physical characteristics indicated by an electrocardiogram reading, such as ventricular rate, was a database for the purposes of the Directive. 5.15 A collection of book chapters within a single book is not within the meaning of database as the chapters are not independent. However, a collection of extracts from poems written by different authors can be within the meaning of database provided that the poems are arranged in a systematic or methodical way and are individually accessible, whether by electronic or other means. The fact that the poems have a particular theme is of no consequence. Databases of football fixtures, information on runners, riders and trainers etc for horse races, databases of names and addresses, databases of legal texts and case law, may all be databases for the purposes of the definition.27

24

However, it is unlikely that the rights in the database will be infringed by taking a single item from it. 25 Medical Innovations Ltd v Eakins [ 2014] EWHC 4626 (Ch). 26 [2017] EWHC 2142 (Pat), [2018] FSR 8. 27 Protection will, of course, be subject to the conditions for protection being satisfied.

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What is a database for purposes of the Directive? 5.20 5.16 The Court of Justice had the opportunity to consider whether data about the earth’s surface falls within the definition of database in Freistaat Bayern v Verlag Esterbauer GmbH.28 The claimant produced topographical maps of the whole of Bavaria. The defendant created its own maps, for example, for cyclists and walkers, making use of data taken from the claimant’s maps. The Court of Justice ruled that the data in question, describing points on the earth’s surface, were independent materials for the purposes of Article 1(2) of the Directive. 5.17 The word ‘independent’ should not be taken too strongly and related items, facts or data, such as in the topographical map case above, should be within the scope of the meaning of database. They are independent in that each is a separate piece of information. This is not withstanding that there may be some sort of relationship such as points along the contour of a hill or along a gentle slope.29 The day or time period will have its own data.

Arranged systematically or methodically 5.18 This suggests that there is an overall plan or scheme underlying the structure of the database and how the individual works, data or other materials are placed within the database. In other words, the arrangement of the contents of the database has not grown haphazardly and without some consideration by its author or maker, as the case may be. For example, a database might contain a set of descriptors together with associated data such as conditions, seriousness, treatments and explanations. For example: Dn{Cn, Sn, Tn, En}. 5.19 Recital 21 to the Directive puts a gloss on the requirement that the works, data or other materials are arranged in a systematic or methodical manner and goes on to state that it is not necessary for those materials to have been physically stored in an organised manner. However, there must be some means, such as an index or table of contents, a particular plan or method of classification, to allow retrieval of any independent material contained with the database.30 5.20 For a copyright database, the presence of a systematic or methodical arrangement is essential, bearing in mind, as we will see, that the author’s 28

Case C-490/14, EU:C:2015:735. Though this form of relationship need not always be present, for example, where one point is at the top of a cliff and its nearest neighbouring point is at the foot of the cliff. 30 Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou, Case C-444/02, EU:C:2004:697 at para 30. 29

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5.21 Copyright in databases own intellectual creation must be directed to the structure of the database; that is, how the contents are arranged. For databases protected by the sui generis right, the requirement for the contents to be arranged systematically or methodically is a pre-requisite for protection. It is not otherwise relevant to the necessary substantial investment in terms of obtaining the contents or their verification. However, it might be relevant to the presentation of those contents.

Individually accessible by electronic or other means 5.21 Each item of the contents of a database must be individually accessible. In an electronic database, this is achieved by the use of a retrieval system, such as an electronic index or search method. It may simply be accessible by reading a screen display of the contents of a database, for example, where the database is in the form of an electronic spreadsheet. Where the database is in the form of a paper document, individual accessibility may be achieved simply by reading the document. In Technomed Ltd v Bluecrest Health Screening Ltd,31 David Stone, sitting as Deputy High Court Judge, accepted that the contents of a classification system of medical data and explanatory text, whether in electronic spreadsheet form, or printed as a PDF document, were individually accessible by reading the PDF with the human eye or by accessing the spreadsheet electronically.

SUBSISTENCE OF COPYRIGHT IN A DATABASE 5.22 Both the TRIPs Agreement and the WCT32 provide for specific protection of databases by copyright. Both are relevant to the Directive and are now part of the legal order of the EU. Article 10(2) of TRIPs states: Compilations of data or other material, whether in machine readable or other form, which by reason of the selection or arrangement of their contents constitute intellectual creations shall be protected as such. Such protection, which shall not extend to the data or material itself, shall be without prejudice to any copyright subsisting in the data or material itself. Article 5 of the WCT is of similar effect. The Directive add a requirement that the contents of a database are independent. 31 32

[2017] EWHC 2142 (Pat), [2018] FSR 8 at para 69. WIPO Copyright Treaty, 1996.

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Subsistence of copyright in a database 5.25 5.23 For copyright to subsist in a database it must be, by reason of the selection and arrangement of its contents, the author’s own intellectual creation.33 No other criteria shall be applied to determine the eligibility of databases for protection by copyright. It may seem strange to base subsistence on the selection and arrangement of the contents of a database when, as we will see, it is the structure of the database which is the focus of protection by copyright under the Directive. In effect, it is the expression of creativity in the structural design of the database, deciding what sort of works or materials it should contain and how those are arranged within the database, which is protected. 5.24 Under the UK Act, section 3(1) states that the literary work category of compilations excludes databases which are treated as a form of literary work in their own right. This is important as otherwise databases could, potentially, have dual protection under copyright law. The Court of Justice has made it clear that, subject to the operation of the transitional provision under Article 14(2) of the Directive, national legislation is precluded from granting copyright to databases otherwise than under the Directive.34 If it were otherwise, this would prejudice one of the aims of the Directive, being the removal of differences between Member States as to the legal protection of databases.35

Author’s own intellectual creation and database structure 5.25 For copyright to subsist in a database it must, by reason of the selection and arrangement of its contents, constitute the author’s own intellectual creation.36 As it is the structure of a database which is protected by copyright under the Directive, it is important to understand that intellectual creation must apply in relation to the design of the structure of the database and not to any work of a different nature, such as in creating the contents of the database.37 Recital 15 to the Directive makes it clear beyond doubt that the copyright protection of a database covers the structure of the database. 33

Article 3(1). See also section 3A(2) of the Copyright, Designs and Patents Act 1988. Football Dataco Ltd v Yahoo! UK Ltd, Case C-604/10, EU:C:2012:115 at paras 47 to 52. 35 See recitals 1 to 4 to the Directive. 36 Unlike the case with computer programs, the UK legislators felt compelled to insert this test in the UK Act for the purpose of copyright databases: section 3A(2). 37 The UK managed to omit the fact that structure was protected in implementing the Directive. Of course, judges would simply turn to the text of the Directive rather that the UK Act on such points. 34

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5.26 Copyright in databases 5.26 In the past, judges in the UK have grappled with the meaning of ‘author’s own intellectual creation’. In Football Dataco Ltd v Britten Pools Ltd,38 Floyd J accepted (at para 86) that the ‘… author must have exercised judgment, taste or discretion (good, bad or indifferent) in selecting or arranging the contents of the database’. He noted that, at that stage, the Court of Justice of the EU had not definitively ruled on the meaning in the context of databases. 5.27 In Re the Unauthorised Reproduction of Telephone Directories on CD-Rom,39 the German court considered that ‘intellectual creation’ might consist in formulating and marshalling ideas underlying the work or in the particularly ingenious form and nature of the collection, classification and arrangement of the work. The court did not consider that an electronic telephone directory reached this standard, but the Court of Appeal in Brussels applied what appeared to be a lower threshold in Noir D’Ivoire SPRL v Home Boutiques Private Ltd Co SPRL.40 In that case, the court accepted that a particular colour chart comprising 49 colours was protected by copyright.41 The colours had been selected to be in harmony with each other to produce a decorative effect characteristic of the decorator. It could be viewed as an original creation as it assumed the personality of its author.42 In SA Credinfor v Artprice.com,43 The Cour d’Appel in Paris held that: … in order to be classed as a creative work, a database must include an intellectual contribution characteristic of an original creation which must be assessed having regard to the plan, composition, form, structure, language and more generally, the expression of the personality of the author and which cannot be characterised by the mere use of automatic and restrictive logic in the design and writing of such as database.44 38 39 40 41

42

43 44

[2010] EWHC 841 (Ch), [2010] RPC 17. Case I ZR 199/96, [2002] ECC 43. [2003] ECDR 29. But not on the basis of database copyright as it was not a collection of independent works and the colours were not individually accessible (there was no search engine and a person simply looked at the chart). However, the court held that there had been no infringement. The defendant’s chart did not contain many of the claimant’s colours and, in any case, most of the colours were commonly found in other colour collections. [2006] ECDR 15. At para 9. Artprice.com failed to adduce evidence that the database was an intellectual creation. However, it succeeded on the basis of the database right.

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Subsistence of copyright in a database 5.30 The database in question contained details of artists and prices paid at auctions for their works. However, the Cour d’Appel did not accept that the database was protected by copyright as Artprice failed to adduce evidence to show that it constituted an intellectual creation. 5.28 In a case on copyright in a photograph, the Court of Justice of the EU started to address the meaning of ‘author’s own intellectual creation’. In Eva-Maria Painer v Standard Verlags GmbH,45 the Court ruled that the question of protection by copyright in a photograph depended on whether it was an intellectual creation of its owner reflecting his personality and expressing his free choice in the production of that photograph. By making choices such as framing, angle of view, atmosphere and development or software techniques employed, the author could stamp the work with his own personal touch.46 5.29 The Court of Justice of the EU was able to fully address the issue in Football Dataco Ltd v Yahoo! UK Ltd47 which involved questions submitted by the Court of Appeal48 on the meaning and scope of the ‘author’s own intellectual creation’.49 The case concerned databases of football fixtures compiled by the claimant. The creation of the database involved a considerable amount of work and a number of ‘golden rules’ had to be adhered to, for example, the fact that teams should play an equal number of home and away games during a season. The defendant argued that the databases were not protected, either by copyright or the database right, and could be used by the defendant without payment. 5.30 The Court of Justice reasoned that it was clear from Article 3(2) and recital 15 that protection was concerned with the structure of the database and not its contents. ‘Selection’ and ‘arrangement’ refer to the selection and arrangement of data through which the author gives the database its structure. The criterion of originality was satisfied when, through the selection and arrangement of the data contained in the database, the author expresses his 45

Case C-145/10, EU:C:2011:798. At paras 91 and 92. 47 Case C-604/10, EU:C:2012:115. 48 Football Dataco Ltd v Brittens Pools Ltd [2010] EWCA Civ 1380, [2011] RPC 9. 49 A further question required guidance on whether a database could be protected by copyright other than under the mechanism set out in the Directive. The Court of Justice ruled that this was not permitted except under the transitional provisions in the Directive. 46

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5.31 Copyright in databases creative ability in an original manner by making free and creative choices, thereby stamping his personal touch on the database. The requirement is not satisfied when setting up a database is dictated by technical considerations.50 Therefore and in answer to the questions posed by the Court of Appeal, the Court of Justice ruled: ••

A database, as defined in Article 1(2), is protected under Article 3(1) of the Directive if the selection and arrangement of data which it contains amounts to an original expression of the creative freedom of its author.51

••

Furthermore, an intellectual effort and skill in creating the data to be contained in the database is not relevant in the assessment of eligibility for protection. It is also irrelevant if the selection and arrangement of the data includes the addition of important significance of that data. Finally, significant labour and skill used to set up a database cannot as such justify protection if they do not express any originality in the selection and arrangement of data in the database.52

5.31 The key issue is whether the author, in selecting and arranging the contents of the database, has been able to make free choices in creating the structure of the database and has been able to express his creativity in so doing so as to stamp his personal touch on the design of that structure. This could certainly be the case where the author designs a complex relational database where there may be substantial scope for the choice of structure both within a particular database and how a number of separate databases are related together by structural considerations. On the other hand, a simple database of names and addresses would be unlikely to be considered to be an intellectual creation as the structure would be very simple and leave little or no room for the author’s creative expression.53 In determining whether a database is protected as such by copyright, there are two main questions. Once the decision was taken to create the database, was there sufficient room for the author to exercise skill and judgement in making decisions as to the nature of the 50

Paras 30 to 39. This being a question of fact for a national court to determine. 52 Paras 45 and 46. 53 In Forensic Telecommunications Services Ltd v Chief Constable of West Yorkshire Police [2011] EWHC 2892 (Ch), [2012] FSR 15, the judge held (at para 90) that the database in question, comprising lists of two hexadecimal numbers represent mobile telephone absolute addresses had no structure that merited copyright protection. 51

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Subsistence of copyright in a database 5.34 data to include in the database and the manner in which those data would be arranged in the database? Secondly, did the author actually exercise his skill and judgement by taking decisions as to the selection and arrangement of data so that he could look upon the database as carrying the ‘stamp of his personal touch’.54 5.32 The structure of a database can be seen to be the interrelationship between the contents and their ordering. It may be the design of the fields to be included in a particular record. For example, a record might be information relating to one particular item whilst the fields are the attributes of that item. To give a simple example, consider a database of spare parts for a machine, such as a lawnmower. Information about a replacement blade (a record in the database) might include fields containing the part number, description of the part, price, number in stock and bin number (its location in a warehouse). 5.33 More complex structures are possible, such as where a database is a ‘relational database’. This is where one database file relates to other database files. For example, the main database file for lawnmower parts might include a record concerning a wheel assembly which links to a secondary database containing information about each component of that assembly, such as the wheel itself, its bearing, washer and locking nut. Another example of a relational database is where one database contains details of customers which links to or relates to another database containing details of customer transactions. From these databases it is possible to produce a report listing all the transactions carried out with respect to a particular customer over a specified period of time. 5.34 In many cases, the work of designing the structure of a database, deciding what sort of information or works to include, and how to arrange the information or works, will take considerable skill and judgement. The design process may be subject to much preparatory work and prototyping before the final structure is settled on. The database will then be created and, initially, it will have little or no content.55 Even at this stage, making a copy of it56 54

The author of this book used to grant students, inter alia, licences in respect of a database of summaries of legal cases which he had built up over a number of years. Before creating the database, important decisions had to be taken as to the types of information to be included and how that information would be structured and retrieved. 55 There may be some initial content such as test data. 56 Or a part of it, such as where one database file in a relational database, comprising several records, is copied.

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5.35 Copyright in databases without the licence of the owner may infringe as it is the structure that is protected by the database copyright, not the contents of the database. 5.35 Technomed Ltd v Bluecrest Health Screening Ltd57 involved issues relating to copyright in computer programs and other works, including databases, and the sui generis right in databases. On the issue of the subsistence of copyright in a database, David Stone (sitting as a Deputy High Court Judge) held that the claimant’s database was protected by copyright and infringed by the defendant. He accepted that the test for originality was different for a database compared with the other original works of c opyright. He said that considerable intellectual effort and creativity had been expended in choosing the contents of the database and the work of selection and arrangement was the authors’ own intellectual creation. This involved the exercise of judgement and was qualitatively sufficient to attract copyright protection. However, in case this was wrong, the judge held that copyright subsisted in the PDF form of the database as a literary work. 5.36 As for the difference between the tests for originality for databases compared with other literary works, it is clear that they are different as the definition in Article 3(1) of the Directive makes clear by its very wording, being: … databases which, by reason of the selection or arrangement of their contents, constitute the author’s own intellectual creation shall be protected as such by copyright. No other criteria shall be applied to determine their eligibility for that protection. (emphasis added) Section 3(1) of the Copyright, Designs and Patents Act 1988 uses the same definition but omits that last sentence. The Directive still refers to the author’s own intellectual creation but restricted to the context of the selection of arrangement of the contents of the database. Moreover, as in Football Dataco v Yahoo!,58 the Court of Justice made it clear that it is only the structure of the database which may be protected. That being so, the judge in Technomed should have excluded consideration from the work expended in choosing the contents of the database.59 57

[2017] EWHC 2142 (Pat), [2018] FSR 8. Supra. 59 The court did not refer to Football Dataco Ltd v Yahoo! UK Ltd, Case C-604/10, EU:C:2012:115 with the important clarification by the Court of Justice on the test for copyright subsistence for databases. 58

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Subsistence of copyright in a database 5.39 5.37 The UK Act contemplates computer-generated literary, dramatic, musical or artistic works, being works generated by computer in circumstances such that there is no human author.60 This seems to fly in the face of the test for subsistence of copyright in a database under the Directive. If there is no human author, how can the database be the author’s own intellectual creation? Unless we are prepared to contemplate the creativity in writing the instructions operated by the computer as a form of vicarious intellectual creation, we are left with the result that there can be no such thing as a computer-generated copyright database61 – another reason for scrapping the computer-generated works provisions.

Rights in the contents of a database 5.38 The definition of database contemplates the contents of the database as being independent works, data or other materials.62 Under Article 3(2), the Directive makes it clear that any rights in any contents of a database are unaffected by the copyright in the database. Many databases will include numerous items subject to other rights, such as artistic works, written works, film clips, sound recordings and recordings of live performances. A database may also include software tools, computer program code,63 and old works not previously published which are subject to the publication right.64 Information recorded in a database may be confidential or subject to data protection laws. 5.39 It is theoretically possible for the contents of a copyright database not to be subject to any other intellectual property rights. An example might 60

61 62 63 64

Section 178 of the Copyright, Designs and Patents Act 1988. Bizarrely, the author of such a work is deemed to be the person by whom the arrangements for the creation of the work are undertaken: section 9(3). Clearly, making arrangements is not sufficient to be classed as the author’s own intellectual creation. As the test for subsistence in a computer program is the same as for copyright databases, the same applies in relation to computer programs. Article 1(2). For example, see Cantor Gaming Ltd v Gameaccount Global Ltd [2007] EWHC 1914 Ch, [2008] FSR 4. The ‘publication right’ is a 25-year right which comes into being on the first publication of a work in which the copyright previously expired before first publication. It is provided for under Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights (codified version) OJ L 373, 27.12.2006, p 12: see Article 4 of that Directive.

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5.40 Copyright in databases be a database of daily climate statistics such as maximum and minimum temperature, precipitation, wind speed and direction. There must be an act of intellectual creativity in the selection or arrangement of those contents but the definition of database in Article 1(2) makes it clear that the contents need not themselves be subject to rights by the use of the phrase ‘independent works, data or other materials’. Recital 17 to the Directive goes further by saying that a database may be, inter alia, a collection of texts, sounds, images, numbers, facts and data. Thus, for example, a self-employed person’s tax accounts may be within the meaning of database. Although all the data may relate to a single individual, it represents separate and independent transactions. Each item of data, per se, is unlikely to be protected by copyright or other intellectual property rights.65 5.40 Where the contents of a database are subject to other rights, the owner(s) must authorise the inclusion of those contents. Where the database is to be made available to others, the authorisation is likely to be in the form of a non-exclusive licence. The owners of those other rights must, therefore, be aware of the intended uses and restrictions on those uses and give appropriate authorisation. There may also be issues of moral rights in any copyright works included in the database, such as the right to be identified and to object to a derogatory treatment.

Other elements of databases 5.41 Databases are not simply a structure into which the contents are added. There may be many other elements associated with a database, such as input and output formats, graphic user interfaces, reports and tabular views, look-up tables, query languages and builders, relationship data, parsers, indexes, dictionaries, spell-checkers, thesauruses, etc, etc. In some cases, these elements may be regarded as part of the database structure, such as an indexing system or they may be regarded as works in their own right, such as in the case of a graphic user interface.66 Recital 20 makes it clear that the Directive may also protect materials necessary for the operation or consultation of certain databases such as a thesaurus or indexing system. That being

65

The whole collection of such data, or a part of the collection, may have the protection of the law of confidence. 66 Which may be protected as an artistic work.

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Authorship, ownership and duration 5.44 so, it is tempting to think what is protected by copyright is what is left of the database when all the contents have been stripped out of it, or alternatively, before any contents are added to it. 5.42 In all but the most trivial database (for example, a database of names and addresses) the design of the database including all the ancillary materials will require a significant amount of intellectual creativity from highly trained programmers, systems analysts and so on. In other words, most databases will be intellectual creations and many will be created by joint authors. The work will usually start with a decision to create the database, following which numerous materials will be produced, such as reports, costbenefit analyses, design briefs, layout diagrams, proposed designs, prototypes and the like. Many of these items will be works of copyright in their own right but, contrary to the position of computer programs and their preparatory materials, these preliminary works are not deemed to be part of a database.67 However, potentially, the copyright in such things may be infringed indirectly by anyone copying the database structure. That being so, it is worthwhile retaining these materials and keeping records of their creation.

AUTHORSHIP, OWNERSHIP AND DURATION 5.43 Article 4 of the Directive concerns authorship and ownership. The author is the natural person who creates the database and, where there is more than one such person they will own the copyright jointly. Although Article 4 speaks of natural persons, it goes on to accept that the author may be a legal person where the law of a Member State so allows, as the UK does. Where collective works are recognised in a Member State, the economic rights will be owned by the copyright owner. As usual with Directives harmonising national intellectual property rights, the provisions on authorship and ownership are basic to say the least. In effect, with the proviso of what is laid down in the Directive, Member States apply their traditional rules on authorship and ownership. 5.44 Under the Copyright, Designs and Patents Act 1988, sections 9 and 10 apply without alteration for copyright databases. They are treated

67

As preparatory design material.

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5.45 Copyright in databases as any other form of literary work. Thus, the author is the person creating the database. Where there are two or more authors who collaborate in the making of the database, they will be joint authors. The contribution of each must not be distinct from that of the other or others.68 There is no reference to this in the Directive which simply states that the exclusive rights shall be owned jointly where the database has been created by a group of natural persons jointly.69 This could be an issue where the contributions are distinct, for example, if one person selects the contents whilst another person is responsible for arranging those contents in the database. Assuming both acts can be seen as intellectual creations, under the Directive, those persons would be joint authors. 5.45 It is possible, being literary works for the purposes of copyright, that databases may be generated by computer in circumstances such that there is no human author. In this case, the person making the arrangements necessary for the creation of the database will be the first owner of the copyright in it. There may be a problem in identifying the author’s own intellectual creation in such a case unless it is taken to be that of the person who provided the necessary logic and other rules used to determine the structure of the database. 5.46 The normal rule that the author is the first owner of the copyright under section 11 applies, subject to the provisions relating to employeecreated works, Crown and Parliamentary copyright and copyright of certain international organisations. Thus, where an employee creates a database in the course of his employment, the employer will be the first owner of that copyright, subject to any agreement to the contrary. Such contrary agreement may be implied, for example, from past conduct.70 5.47 The Directive on the legal protection of database is without prejudice to the Directive on the term of copyright. The usual provisions

68

The Berne Convention for the Protection of Literary and Artistic Works 1886 does not contain this (or any) test for joint authorship. 69 Article 4(3). 70 For example, as in Noah v Shuba [1991] FSR 14 in which the practice of the employer had been to allow employees to retain the copyright which gave rise to an implied term in the contract of employment. In any event, it was also held that the work in question had not been created in the course of employment.

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Dealing with copyright databases 5.48 under section 12 of the Copyright, Designs and Patents Act 1988 apply.71 Thus, copyright expires 70 years from the end of the calendar year during which the author dies.72 Where there are joint authors, the 70 years runs from the end of the calendar year during which the last surviving author dies.73 As many databases are subject to updating, editing, additions and deletions, a new copyright will come into subsistence if and when the modification or accumulation of modifications can be considered a new intellectual creation.74 The same applies if, as sometimes happens, the database is converted to a new format or arrangement if this represents an intellectual creation. For example, a new version of a database may involve considerable re-structuring, to take advantage of new database techniques and more sophisticated indexing and retrieval algorithms. This may result in the new format of the database being considered as a new intellectual creation. Of course, any computer programs used in the process must be ignored in the determination of whether the author’s work can be considered to be an intellectual creation.

DEALING WITH COPYRIGHT DATABASES 5.48 As with other forms of copyright work, the copyright in a database may be assigned and licences, exclusive or non-exclusive, may be granted in relation to it. The usual formalities apply. Thus, an assignment must be in writing and signed by or on behalf of the assignor. An exclusive licence must be in writing and be signed by or on behalf of the copyright owner. Both assignments and licences may be partial and be limited in terms of the acts covered and in duration. Assignments and licences can be made in respect of future copyright in databases yet to be created.75 The concept of b eneficial ownership may apply where there has been a failure to properly provide for 71 72

73 74

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As modified in the light of the Directive on the term of copyright by the Duration of opyright and Rights in Performances Regulations 1995, SI 1995/3297. C Where the database is computer-generated and copyright subsists in the database, that copyright endures for a period of 50 years from the end of the calendar year during which it was created. The rules for determining the duration of copyright in works of unknown authorship also apply though are unlikely to be relevant for some time for electronic databases. This accords with the view of Jacob J in Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd [1994] FSR 275 at 289 where he held that a fresh copyright could arise following modifications made to a computer program. The relevant provisions on assignment and licensing are in sections 90 to 92 of the Copyright, Designs and Patents Act 1988.

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5.49 Copyright in databases ownership or the formalities for assignment have not been complied with. Alternatively, the courts may be prepared to imply an appropriate licence.76 5.49 In some cases, a copyright database will contain individual works of copyright (or the subject matter of other rights such as rights in performances), any dealing with copyright in the database must take account of these other rights. Where these rights exist, the author of the database will need permission to include the relevant items in the database unless he is the owner of those rights or has a licence so to do. In any subsequent dealing with the database, any licence in respect of the contents must be checked to confirm that it covers the anticipated form of dealing. This may include complying with any moral rights in those contents.77 5.50 The usual rules on licensing apply to copyright databases. For example, exclusive licences must be in writing and signed by or on behalf of the copyright owner.78 Non-exclusive licences are not subject to formalities but in practice will usually be in writing and include a plethora of terms on the acts which may be performed by the licensee, restrictions and warranties, etc. Exclusive licensees have a right to commence legal proceedings for forms of infringement affecting the licensed rights, as do non-exclusive licensees under certain circumstances.79

RIGHTS OF THE OWNER AND INFRINGEMENT 5.51 Article 5 of the Directive sets out the exclusive rights of the ‘author’, in this context, meaning the present owner of the copyright in the database. In respect of the protected expression of the database, the exclusive right is to carry out or authorise: ••

the temporary or permanent reproduction by any means and in any form in whole or in part;

76 See

Robin Ray v Classic FM plc [1998] FSR 622 on the appropriateness of beneficial ownership and licences in the absence of express provision to provide for ownership or licensing. 77 Bearing in mind that performers now also have moral rights in relation to their performances. See section 205C to 205H of the Copyright, Designs and Patents Act 1988. 78 Section 92 of the Copyright, Designs and Patents Act 1988. 79 See sections 101 and 101A of the Copyright, Designs and Patents Act 1988.

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Rights of the owner and infringement 5.53 ••

translation, adaptation, arrangement or any other alteration;

••

any form of distribution to the public of the database or copies thereof;80

••

any communication, display or performance to the public;

••

any reproduction, distribution, communication, display or performance to the public of the results of the acts of translation adaptation, etc.

Of course, it must be recalled that the protection is in relation to the structure of the database and not its contents, so all these acts must be performed in relation to that structure. 5.52 Recital 20 states that protection under the Directive ‘… may also apply to the materials necessary for the operation or consultation of certain databases such as thesaurus and indexation systems;’. This must apply only to copyright databases as the sui generis right applies only the extraction and/or reutilisation of the contents of the database. There is no further guidance in the Directive about how such things fall to be protected. It may be stretching things a little to suggest that a thesaurus may be part of a database structure but an indexing system certainly can be. However, if a thesaurus facility is built into the database to be applied to the contents, perhaps on demand, it must be deemed to be part of the structure. The question of infringement will depend on whether a thesaurus system or an indexing system, if only one or both of these are taken, can be seen to be the author’s intellectual creation.81 One proviso is that these things could be caught by the exception of copyright for ideas, procedures, methods of operation or mathematical concepts, as such.82 5.53 The UK simply chose to apply its usual restricted acts rather than make specific provision for copyright databases. Thus, under the Copyright, Designs and Patents Act 1988, the restricted acts are copying, issuing copies to the public, renting or lending copies to the public, performing, showing 80

Subject to exhaustion of rights in respect of the first sale of a copy of a database by the rightholder or with his consent in the EU. Of course, this applies only in relation to that particular copy. However, exhaustion does not apply where the database is made available online: recital 43. 81 An actual thesaurus rather than a thesaurus system may be protected by copyright in its own right, perhaps as a compilation. 82 See Article 9(2) of the TRIPs Agreement and Article 2 of the WCT.

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5.54 Copyright in databases or playing to the public, communicating to the public and making an adaptation. These are the acts restricted by the copyright in the database. Any person who performs, or authorises the performance of, any of those acts, directly or indirectly, in relation to the whole or any substantial part of the database infringes the copyright.83 This is without prejudice to any infringement of copyright or other rights in the contents of the database. As with other forms of copyright works, copying includes storing the work by electronic means and extends to transient and incidental copies.84 Copying an electronic database from disk to disk or by downloading it from a website falls within the meaning of copying. Accessing online is also covered as is access from an optical or magnetic storage medium without necessarily making a permanent copy. 5.54 As the test for subsistence is based on the author’s intellectual creation, it is reasonable to expect that, to count as a substantial part of a database for the purpose of infringement, the part in question should itself be the expression of the author’s free choices in selecting or arranging the contents of the database.85 However, again it must be stressed that it is the structure that is protected and not the contents.86 Whatever is taken must be viewed from that perspective. It matters not if a large part of the contents is taken if a substantial part of the author’s relevant intellectual creation in the selection and arrangement of those contents is not also captured. Indeed, the content of a database, per se, is irrelevant to the question of infringement of database copyright.87

83 84

85

86

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The Directive on the legal protection of databases does not use the word ‘substantial’ and simply refers to, inter alia, reproduction in ‘whole or in part’: Article 5(a). This is subject to a ruling awaited from the Court of Justice on whether browsing and temporary storage of a work in cache memory is covered by the temporary copy exception to reproduction under Article 5 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10. See Chapter 7. Pumfrey J made a similar point in relation to computer programs in Cantor Fitzgerald International v Tradition (UK) Ltd [2000] RPC 95. However, in that case he considered the question in terms of skill and labour rather than use the correct test of author’s intellectual creation in the Directive on the legal protection of computer programs. Protection may also apply to any thesaurus system or indexing system used: recital 20. That being so, they must be deemed to be part of the database’s structure protected by copyright under the Directive. There may be an issue of whether the copyright and other rights in the contents, independent of database copyright, are infringed.

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Rights of the owner and infringement 5.56

Making an adaptation 5.55 The restricted act of making a translation, adaptation, arrangement or other alteration to a database deserves more examination.88 First, as protection applies to the structure of the database, these acts must be seen in that light. In practice, the acts covered will include: ••

converting a database readable by one computer program to a form in which it is readable by another computer program;89

••

re-arranging the internal structure of the database, for example, by re-ordering the relative positions of the individual contents, such as, by swapping the position of the part number of each item with its description in the order they are recorded in, stored in or retrieved from the database;

••

omitting or adding one or more fields: such as by omitting the price of parts in a database of spare parts for a complex machine or by adding a new field indicating the date the part was placed into stock;

••

changing the order of the records, for example, by sorting the contents of the database using new or different criteria;

••

changing the field or fields which are indexed (key fields).

5.56 In all cases, to infringe, the adaptation must be in terms of the database as an intellectual creation. If that is so, it appears that the change may be a major or minor one, ranging from a wholesale reorganisation (perhaps including the integration of the databases with other databases and computer programs) to a simple re-ordering of the fields.90 If the structure of a database can be described as an intellectual creation, it seems possible that even a minor change may be sufficient to infringe under the restricted act of translation, adaptation, etc. Thus, any taking of the structure may infringe. Potentially, even retrieving a single record of information may infringe.

88

Section 21(3)(ac) of the Copyright, Designs and Patents Act 1988 uses a slightly different formula, being ‘… an arrangement or altered version of the database or a translation of it’. Again, the test in the Directive takes priority. 89 Thus, converting a database readable by Microsoft Access to one readable by Microsoft Excel will fall within this example. 90 Of course, the protection of computer programs is outside the scope of the Directive of the legal protection of databases: Article 2.

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5.57 Copyright in databases If the design of the data fields can be seen as an intellectual creation, taking a single record takes all the fields. Secondly, any slight modification, for example, by rearranging the fields within the record will infringe as this also falls within the restricted act. 5.57 The meaning of ‘translation’ in relation to a database is not apparent. Copyright protection is directed at the structure of the database91 and that copyright is independent of and without prejudice to any copyrights and other rights, if any, subsisting in the contents of the database. Structural changes must be in the way of changing the arrangement or altering the database as mentioned above.

Computer programs excepted from protection 5.58 The Directive on the legal protection of databases does not extend any additional protection to computer programs used in the making or operation of electronic databases.92 In the case of some forms of computer programming languages, the structure of a database is defined within the program itself.93 Copying the structure of the database will not infringe the copyright in the program under the Directive on the legal protection of databases. However, it is arguable that this could infringe the copyright in the computer program as such under the Directive on the legal protection of computer programs if that structure, as expressed in the program, is deemed to represent a substantial part of the intellectual creation used to write the program. Article 4(a) of the Directive on the legal protection of computer programs talks of the exclusive right of ‘… reproduction of a computer program by any means and in any form, in part or in whole’. It is submitted that copying a database potentially could infringe the copyright in a computer program, providing the part of the program defining the database structure is a sufficient intellectual creation and providing such non-textual copying is accepted as a possibility.94 This possibility may have been in Pumfrey J’s mind 91

Recital 58 to the Directive. Recital 23 and Article 1(3) of the Directive. 93 For example, in a COBOL program. 94 In Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd [1994] FSR 275, Jacob J (at 303) accepted that the data division of a COBOL program (defining the variables and data used by a program, including data in a database) could represent sufficient skill, labour and judgment to be considered a substantial part of the program, disapproving of Judge Paul Baker in Total Information Processing Systems Ltd v Daman Ltd [1992] FSR 171. 92

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Exceptions to the restricted acts 5.59 in Navitaire Inc v easyJet Airline Co Ltd,95 where he differentiated between programs and scripts used to create a database which may be protected as computer programs even though they defined the arrangement and structure of the database.

EXCEPTIONS TO THE RESTRICTED ACTS 5.59 Article 6 of the Directive sets out the exceptions to the restricted acts. It states: The performance by a lawful user of a database or a copy thereof of any of the acts in Article 5 which is necessary for the purposes of access to the contents of the databases96 and normal use of the contents by the lawful user shall not require the authorization of the author of the database. Where the lawful user is authorized to use only part of the database, this provision shall apply only to that part. Article 15 states that any contrary contractual provision shall be null and void.97 Section 50D was inserted in the Copyright, Designs and Patents Act 1988 to implement this exception and, as usual, involves an unnecessary re-write of Articles 6(1) and 15.98 Not only that, it is an imperfect re-write. For example, under section 50D(1), the right is a right to do anything which is necessary for the purposes of access to and use of the contents of the database. In Navitaire Inc v easyJet Airline Co Ltd (No 2),99 Pumfrey J thought that the word ‘anything’ should not be construed narrowly and covered giving access to the contents of a database to a licensee’s subcontractor. He thought that section 50D was aimed at preventing the kind of abuse of copyright ‘which arises when the user is tied to the supplier’. This is important where a customer, with a licence to use database software, has entered his own works, data or other materials into that database, and wishes to migrate those contents to database software from a new supplier.

95

[2004] EWHC 1725 (Ch), [2006] RPC 3 at para 274. The reference to databases should be in the singular. 97 This also applies to the equivalent exception to the sui generis database right. 98 For example, rather than ‘lawful user’ section 50D uses ‘person who has a right to use the database or any part of the database, (whether under a licence to do any of the acts restricted by the copyright in the database or otherwise)’. This is probably to the same effect. 99 [2005] EWHC 282 (Ch), [2006] RPC 4. 96

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5.60 Copyright in databases 5.60 This does not give cart blanche to a database licensee, for example, where the contents are provided by the database owner to the extent that the contents are protected by other intellectual property rights, such as copyright and related rights or subject to a duty of confidentiality. Furthermore, Article 6(3) applies to all the exceptions in Article 6 and prevents the exceptions being used in a manner which unreasonably prejudices the rightholder’s legitimate interests or conflicts with the normal exploitation of the database. 5.61 Article 6(1) is mandatory and allows a lawful user of a database (or copy of it) to carry out any of the restricted acts under Article 5 necessary for the purposes of access and use of the contents. However, it does not mean that all the acts under Article 5 are available to the lawful user of the database. The lawful user is given the right to do acts necessary to the access and use of the contents of the database within Article 5. This may not extend to distributing copies of the database to the public, for example. 5.62 Where the lawful user has a right to access and use only part of the database, this provision applies only to that part. For example, a database may be made available online and different subscribers may be given a right to use different parts. This could be the case with a database containing names, addresses, phone numbers and financial standing. Some users may be able to consult the database with the exception of financial standing, such data only being accessible to finance companies.100 5.63 The exception in Article 6(1) permitting a lawful user of a database to perform acts within Article 5 necessary for the purposes of access to and use of the contents of the database does not apply to a database which is not protected by copyright. Nor does Article 15 which prevents such acts being compromised by conflicting contractual provisions. All this seem self-evident. Therefore, in such a case a user of the database cannot rely on Articles 6(1) and 15, subject to any relevant national law.101 The same applies, mutatis mutandis, in respect of a database not protected by the sui generis right.102 Thus, were a database is not protected under the Directive

100

Article 6(1) can be seen, therefore, as a non-derogation from grant provision. For example, under the non-derogation from grant principle as in Browne v Flower [1911] 1 Ch 219 (England, Wales and Northern Ireland) or Huber v Ross 1912 SC 898 (Scotland). 102 See Articles 8 and 15 of the Directive on the legal protection of databases. 101

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Exceptions to the restricted acts 5.66 on the legal protection of databases, either by copyright or the sui generis right, the rights of lawful users and controls over contractual clauses set out in the Directive do not apply. The Court of Justice confirmed this position in Ryanair Ltd v PR Aviation BV.103 PR Aviation operated a website which allowed customers to search flight data of low-cost airlines and to book a flight, on payment of a commission. PR Aviation’s website linked to a dataset on Ryanair’s website. Access to Ryanair’s website was subject to terms and conditions and it was alleged that PR Aviation infringed those terms and conditions.

Optional exceptions 5.64 Article 6(2) sets out optional exceptions which Member States may, if they wished, take advantage of. They are: ••

reproduction for private purposes of non-electronic databases;

••

use for the sole purpose of illustration for teaching or scientific research, provided the source is indicated and only to the extent that the noncommercial purpose is justified;

••

use for the purposes of public security or the purposes of administration or judicial procedure;

••

other exceptions as traditionally authorised under national law without prejudice to the above three points (see infra).

5.65 Article 6(3) goes on to say that Article 6 must not be interpreted in such a way as to unreasonably prejudice the legitimate interests of rightholders or conflict with the normal exploitation of the database. Below, the UK approach to these other exceptions is examined.

UK Implementation of optional exceptions 5.66 In terms of the three specific exceptions mentioned in Article 6(2), the first (reproduction of non-electronic databases for private purposes)

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Case C-30/14. EU:C:2015:10. The Court of Justice did not decide whether Ryanair’s database was or was not protected by copyright or the sui generis right, this being a matter for the national court.

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5.67 Copyright in databases has not been implemented in the UK. Illustration for teaching or scientific research could be deemed to be covered under the fair dealing and education exceptions. 5.67 Under the Copyright, Designs and Patents Act 1988, the permitted acts that apply to literary works generally also apply to copyright databases with some differences, such as section 50D. Also, a number of the permitted acts that apply to literary works are declared not to apply to databases. Specifically, these are the acts of making temporary copies under section 28A and making accessible copies for persons with impaired vision under sections 31A and 31B.104 Apart from these the usual permitted acts that apply to literary works also apply to copyright databases. 5.68 The purposes of administration and judicial procedure is within the permitted act in section 45 in relation to Parliamentary and judicial proceedings and some subsequent sections. There is no exception in the UK Act concerning public security.

MORAL RIGHTS 5.69 Moral rights under copyright law apply to authors of copyright literary, dramatic, musical or artistic works and directors of copyright films.105 They stem from the Berne Convention for the Protection of Literary and Artistic Works.106 The moral rights are: ••

a right to be identified as author or director;

••

a right not have the work or film subjected to a derogatory treatment;

••

a right not to have a work or film falsely attributed to the author or director.

5.70 Moral rights are described in Chapter 2 in general terms but what is important to note here is that these rights may apply in the case of databases whereas, apart from the false attribution right, they do not apply to computer

104

If making the copy would infringe the copyright in the database. There is also a right to privacy in respect of copyright photographs or films commissioned for private and domestic purposes: section 85. 106 Article 6bis. The Convention has no provisions concerning the false attribution right. 105

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Moral rights 5.71 programs. Recital 28 confirms that the moral rights belong to the author but that these rights are exercised under national law and the Berne Convention. However, moral rights are outside the scope of the Directive. 5.71 The fact that some items of software, other than computer programs and computer-generated works, may be subject to moral rights could easily be overlooked by a person who commissions the creation of computer software which includes computer programs and other items of software such as databases and other works in digital form. Although the right to be identified as author or director has to be asserted by the author or director, the right to object to a derogatory treatment does not. Another important feature is that, where a database comprises works which are themselves works of copyright, moral rights may also apply to these. Of course, in the context of databases, moral rights can only apply to copyright databases and cannot apply to a database protected by the sui generis right only.

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Chapter 6

The sui generis database right

INTRODUCTION 6.1 A major reason for adopting the Directive on the legal protection of databases was the lack of harmonisation between the relevant laws of Member States and the fact that protection was insufficient in some of them.1 Copyright protection varied between Member States and there were concerns that many databases, which fell short of the requirements for protection by copyright but which involved a substantial investment in their making, would be left without protection as databases. Alarm bells started ringing after the US Supreme Court held that databases that were the result of labour only would not be protected by copyright in Feist Publications Inc v Rural Telephone Service Inc.2 One could not create a work of copyright simply by the ‘sweat of the brow’. The exercise of intellectual creativity was required. 6.2 Noting that there were great imbalances in the investment in making databases both between Member States and compared with that in third countries, the Directive on the legal protection of databases3 sought to encourage the investment in making databases within the Community by providing a stable and uniform protection for makers of databases.4 One of the specific objectives behind the Directive was to close the gap between the EU and US information markets.5 The database right is described in the Directive as a

1 2 3

4 5

See recitals 1 to 3 of the Directive. 499 US 340 (1991). Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases, OJ L 77, 27.03.1996, p 20 (hereinafter in this chapter ‘the Directive’). Recital 12. European Commission, First evaluation of Directive 96/9/EC on the legal protection of databases, 12 December 2005.

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Introduction 6.4 sui generis right and is quite different to copyright protection for databases though there are some similarities. For example, the definition of ‘database’ is the same for both rights, both are without prejudice to any rights subsisting in the contents of the database and both rights apply also to electronic and non-electronic databases. However, there are significant differences between the rights, especially in terms of subsistence, duration and infringement. Nonetheless, some databases may be subject to both copyright and the database right. 6.3 The Directive on the legal protection of databases was implemented in the UK by the Copyright and Rights in Databases Regulations 1997.6 The sui generis database right is provided for in Part III of the Regulations. The usual unsatisfactory practice of using slightly different terminology to that in the Directive for those provisions which are neither optional nor derogations has been employed by those drafting the Regulations. Consequently, as in the previous chapter, reference will be made to the relevant parts of the Directive where appropriate.7 Of course, some parts of the Regulations implement options or derogations or are free-standing and not covered by the Directive. An example of the latter are the provisions dealing with assignment and licensing of the database right and remedies for infringement. In these cases, reference must be made to the Regulations and the appropriate parts of the Copyright, Designs and Patents Act 1988. Certain provisions of that Act are applied to databases subject to the database right such as dealing with database right and the rights and remedies of the owner. 6.4 An important point to note is that the database right is retrospective and applies to databases created before commencement of the Copyright and Rights in Databases Regulations 19978 providing the making of the database was completed on or after 1 January 1983 and it would otherwise qualify by virtue of the identity of the maker of the database. This date was selected because the normal duration for the database right is based on a 15-year period. Such databases are treated generously because they are 6

SI 1997/3032. Football Dataco Ltd v Sportradar GmbH [2013] EWCA Civ 27, [2013] FSR 30, Sir Robin Jacob said, at para 19: ‘As is now standard practice counsel did not bother to refer to the UK Act implementing the Directive, for there is no point in doing so. All that matters is the language of the Directive itself’. 1 January 1998.

7 In

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6.5 The sui generis database right given 15 years’ p rotection by the database right beginning with 1 January 1998. Furthermore, if a database was made on or before 27 March 19969 and was protected by copyright immediately before the Regulations came into effect, it will continue to be protected by copyright for the usual full term.10

LAYOUT OF THIS CHAPTER 6.5 Subsistence of the sui generis database right is quite unlike that for copyright. This is covered first in some detail as it involves unfamiliar concepts, some of which have been explained in the Court of Justice of the EU. Then, the meaning of the ‘maker’ of a database is described. This is important as, normally, the maker will be the first owner of the database right which takes us on to ownership and dealing with the database right. The term of protection is next explored. This is significantly less than is the case with copyright, but it is possible that a fresh right will come about where the database has been subject to a further substantial investment over time. 6.6 The rights of the owner and infringement are, again, quite different to copyright. The key is extraction and/or re-utilisation. Again, these were new concepts when the Directive was adopted, and they have been subject to scrutiny by the Court of Justice of the EU. They are described fully before looking at exceptions to infringement and some brief notes on remedies. Specific provisions about lawful users’ rights and obligations are discussed as is the position of licensees. There are some home-grown provisions for the application of licensing schemes for the database right. The protection of databases subject to the database right against the circumvention of effective technical measures, which have their parallel to those applying generally to copyright works other than computer programs are looked at briefly in passing. A fuller description of these measures is given in the following chapter. Finally, the Commission Report on the application of the Directive and recent Evaluation Roadmap are mentioned.

9

This is the date that the Directive was published in the Official Journal of the European Communities. 10 Regulation 29 of the Copyright and Rights in Databases Regulations 1997.

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Subsistence 6.8

SUBSISTENCE 6.7 A database, for the purposes of both copyright and the sui generis right is, under Article 1(2) of the Directive:11 … a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means. Protection does not extend to computer programs used in the making or operation of databases accessible by electronic means. Both electronic and ‘manual’ databases may be protected by the sui generis right12 and the reference to data and other materials indicates that the contents need not comprise works of copyright. Recital 17 to the Directive mentions literary, artistic, musical or other works, other materials such as texts, sound, images, numbers, facts or data. It is possible, therefore, that the individual contents may be small items or pieces of information, such as a set of coordinates to locate individual features on a map or a database of names and telephone numbers. The recital goes on to confirm that single works are not included in the meaning of database and recital 19 states that collections of music on CD are generally not databases. However, this is not an absolute exclusion. Their making will not usually have involved the requisite intellectual creation for copyright or a substantial investment in the terms required for subsistence of the database right. 6.8 A key feature however, is that the contents are independent.13 In Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou14 the defendant, a Greek organisation having a monopoly on gambling in Greece, used information from fixture lists for the English and Scottish F ootball Leagues. On a reference for a preliminary ruling under Article 267 of the Treaty on the Functioning of the EU,15 the Court of Justice, a ccepting that

11

For more on the meaning of database, reference should be made also to the material in the previous chapter on the definition of ‘database’. 12 Note that under UK legislation it is referred to as the ‘database right’ whereas the Directive terms it the ‘sui generis right’. 13 In Noir D’Ivoire SPRL v Home Boutique Private Ltd Co SPRL [2003] ECDR 29, the Cour d’Appel in Brussels held that a collection of 49 colours on a colour chart was not protected by the database right as it was not a collection of independent works and the colours were not individually accessible as such. 14 Case C-444/02, EU:C:2004:697. 15 Formerly and at the time of this case, Article 234 of the EC Treaty.

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6.9 The sui generis database right ‘database’ had a wide meaning, ruled that, for the purposes of the Directive, a database is: … any collection of works, data or other materials, separable from one another without the value of their contents being affected, including a method or system of some sort for the retrieval of each of its constituent materials. Football league fixture lists of the type at issue were databases within the meaning of Article 1(2) of the Directive. The compilation of dates, times and names of teams relating to the various fixtures in a football league was a collection of independent materials. The Court of Justice also said (at para 30): While it is not necessary for the systematic or methodical arrangement to be physically apparent, according to the 21st recital, that condition implies that the collection should be contained in a fixed base, of some sort, and include technical means such as electronic, electromagnetic or electrooptical processes, in the terms of the 13th recital of the preamble to the directive, or other means, such as an index, a table of contents, or a particular plan or method of classification, to allow the retrieval of any independent material contained within it. It is the collection which is protected by the database right, not the contents of the database. In Football Dataco Ltd v Sportradar GmbH,16 Sir Robin Jacob thought that the meaning of ‘database’ in Article 1(2) together with the recital was so clear it was acte clair and it was not necessary to refer a question on this to the Court of Justice of the EU.17 6.9 A database of knitting instructions is not a collection of independent data as the whole is intended to be used to create a garment. On the other hand, a ‘look-up’ database would comply, such as a database of garden plants and their characteristics. Someone consulting the database might want to retrieve the characteristics of a particular plant, such as a species of dahlia. Where a database contains single items of information (rather than, for example, works of copyright), it is submitted that the requirement for independence cannot be construed as meaning that every single item must be completely independent of every other item. That would make no sense. In the garden plants database 16 17

[2013] EWCA Civ 27, [2013] FSR 30. He rejected counsel’s argument that there was an appalling dichotomy between Article 1(2) and recitals 45 and 46, the latter describing what was not protected (at paras 21 to 24).

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Subsistence 6.11 example, for each plant there will be a set of data which relates to that plant. The independence will be between different plants. A database may contain separate and independent works of copyright, such as a database of digital copies of watercolours by famous artists. If the database contains several paintings by the same artist, that surely would not prevent the database being a collection of independent works. The independency could be viewed from the perspective of the painting rather than the artists. Each painting would be individually accessible, presuming the arrangement of the database enabled this, for example, by keyword searching. 6.10 The requirement for the contents to be arranged in a systematic or methodical way should be easily satisfied in an electronic database unless the contents had been scanned in from existing documents and images in a haphazard way. The requirement may be more a problem with paper databases and makes it clear that a general-purpose correspondence file will fail to be considered to be a database. Although such a file may be arranged in date order, for example, the individual contents are not readily accessible by virtue of that arrangement. The arrangement should be such that it facilitates access to a particular entity among the contents, such as information relating to a named person, though the Directive is silent on that point.

Substantial investment in obtaining, verifying or presenting the contents 6.11 For the database right to subsist, it must be the result of a substantial investment.18 Under Article 7(1) of the Directive, the database right subsists where there has been ‘… qualitatively and/or quantitatively a substantial investment in either [sic] the obtaining, verification or presentation of the contents …’ of the database. The nature of the investment is not directly defined in the Directive though recital 7 speaks of investment in substantial human, technical and financial resources. The Regulations, however, define investment as including any investment, whether of financial, human or technical resources.19 It seems that the impetus in the Directive is to afford protection to databases that are the result of a substantial investment without being too

18

Article 11 sets out who can be a beneficiary of the right. This can be seen as the equivalent of qualification for copyright. The rules on beneficiaries are discussed infra. 19 Regulation 12(1).

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6.12 The sui generis database right specific about what form that investment may take. After all, as the database right may also protect manual databases such as a card index, there seems no justification for restricting the scope of protection to those where the investment involves human, technical and financial resources. It may be that a private individual spends lengthy periods of time creating a database, perhaps as a hobby or pastime, and then discovers that it is commercially attractive. Although he may not have put any direct financial investment into the making of the database, he should be entitled to protection under the database right. 6.12 In the Netherlands it was accepted that collecting and maintaining information about thousands of real estate properties involved a substantial investment, but a database of newspaper headlines did not.20 In Germany, it was held by the Federal Supreme Court that the ‘Top 10’ music hit chart (including data about placings, titles, artists, position in previous week, airtime, etc) involved a substantial investment but a website containing information about building construction did not.21 The lack of consistency in earlier national decisions was resolved, at least in part, by the Court of Justice of the EU in its preliminary ruling in the British Horseracing Board v William Hill case and Football Fixture cases discussed later in this chapter. 6.13 The investment must be substantial in terms of quality and/or quality. This can only refer to the nature and/or scale of the investment. An investment judged qualitatively may be one where scarce resources are used in making the database, such as where the database is such that its making required the use of highly qualified professionals or leading-edge information technology. Quantity obviously covers the extent of the resources used, such as the total person-hours used to make the database, the total computer time or the total expense. Either quality or quantity or a combination will suffice. It may be a mixture of both measures, such as where qualitative factors and quantitative factors both exist. Taken separately they might not be enough, but combined, they may pass the threshold. 6.14 The test of quality and/or quantity (which is also relevant to infringement) is unlike the test generally accepted for copyright purposes in the UK where the question is primarily an issue of quality rather than quantity.

20 See

NVM v De Telegraaf, 12 September 2000 and Algemeen Dagblad a.o. v Eureka [2002] ECDR 1. 21 See Re a Musical Hits Database [2006] ECC 31and baumarkt.de, 29 June 1999.

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Subsistence 6.16 In F ixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou,22 the Court of Justice gave some guidance as to nature and relevance of the terms ‘quality’ and ‘quantity’ in relation to investment. The Court said (at para 44) that the quantitative assessment referred to quantifiable resources and the qualitative assessment referred to efforts which could not be quantified such as intellectual effort and energy. The recitals to the Directive support this proposition, especially recital 40 which states that the investment to be protected by the database right ‘… may consist in the deployment of financial resources and/or the expending of time, effort and energy’. 6.15 The investment must be in relation to obtaining, verifying or presenting the contents of the database. A substantial investment in any one will suffice but in terms of obtaining and verifying the contents, these do not cover the position where the maker of the database creates those contents or verifies the accuracy of the contents so created before entering them into the database. The inclusion of contents which have been created by the maker of the database does not prevent the sui generis right applying where the database includes contents which were already in existence and collected by the maker for inclusion in the database. For subsistence of the sui generis right, any investment in the creation of contents and their verification must be disregarded, as discussed below under ‘Obtaining’.23 6.16 In Flogates Britain Ltd v Calor Gas Ltd,24 the database comprised customer details such as names and addresses. It also contained comments generated by the maker of the database. Those comments were disregarded in the consideration of whether the obtaining, verification or presentation of the contents represented a substantial investment. However, Proudman J held that, otherwise, the investment of the claimant in making the database was undoubtedly great. The database was an integral part of the claimant’s business intelligence, containing detailed customer information collected over time and requiring significant effort in creating and maintaining the database. Of course, the fact that a database is an important part of its m aker’s business is not, per se, a relevant factor in whether it is the result of a s ubstantial investment.

22

Case C-444/02, EU:C:2004:697. Presumably, this also extends to the investment in presenting those contents created by the maker of the database. 24 [2013] EWHC 3060 (Ch), [2014] FSR 34. 23

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6.17 The sui generis database right

Obtaining the contents of a database 6.17 For the purposes of the Directive, ‘obtaining’ means seeking out existing independent materials and collecting them in the database, as confirmed by the Court of Justice in British Horseracing Board Ltd v William Hill Organization Ltd.25 The Court went on to confirm that verification refers to the resources used to check the accuracy of the materials collected when the database is created and during the operation of the database. Presenting the contents must mean how those contents are displayed or made available to a person consulting the database. 6.18 On the same day that it handed down its ruling in the British Horseracing Board case, the Court of Justice also handed down rulings in a trio of cases on football fixture lists referred by courts in Finland, Greece and Sweden.26 All involved the taking of fixtures from the English and Scottish football leagues by organisations controlling gambling or offering gambling services in their respective countries. In all three cases, the Court of Justice confirmed that the investment in obtaining the contents of a database refers to the resources used to seek out existing independent materials and collect them in the database. However, even though the maker of a database creates the contents of the database, it may still be subject to the database right providing there is a substantial investment in verifying or presenting those contents, that investment being independent to the investment in creating the contents. In Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou27 the Court of Justice said of data created by the maker of the database: … the fact remains that the collection of those data, their systematic or methodical arrangement in the database, the organisation of their individual accessibility and the verification of their accuracy throughout the operation of the database may require substantial investment in quantitative and/or qualitative terms within the meaning of Article 7(1) of the directive.

25

Case C-203/02, EU:C:2004:695. Fixtures Marketing Ltd v Oy Veikkaus AB, Case C-46/02, EU:C:2004:694, Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou, Case C-444/02, EU:C:2004:697 and Fixtures Marketing Ltd v Svenska Spel AB, Case C-338/02, EU:C:2004:696. 27 Case C-444/02, EU:C:2004:697 at para 46. 26

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Subsistence 6.21 6.19 Where the contents are created by the maker of the database, any resources used in verifying them at or around that time will not be a relevant investment for the database right. However, using resources later to ensure their reliability and to monitor their accuracy when the database (as opposed to the contents) was created and during its operation will be a relevant investment. Resources used to verify contents being created for subsequent collection in a database do not fall within the meaning of investment for the purposes of the database right.28 Such an investment will be in the creation of the data not in the verification of the contents of a database. 6.20 That obtaining means seeking out existing materials and not the creation of new materials is a very controversial aspect of the British Horseracing v William Hill and the Football Fixtures cases. It seems that if the database maker creates the data, he is in a worse position than it he simply sought out and collected together pre-existing data.29 That seems illogical.30 It also brings into question the distinction between pre-existing data and created data. In Football Dataco Ltd v Sportradar GmbH,31 Sir Robin Jacob in the Court of Appeal realised that it was hard to decide whether data had been created or not. Even when the maker of a database collects existing data, he is making subjective judgements about what to include in his database and can be said to create the data he enters into his database. Jacob also referred to the situation where a scientist notes readings from apparatus such as a thermometer and other weather measuring equipment. Can that person be said to create the data or is he simply recording it? 6.21 If the act of recording data, for example, by measuring or reading a scale, could be considered to be an act of creating data, the database right would be reduced to ‘… a mere mouse of a right at best’.32 Even making a subjective judgement as to what pre-existing data to include in a database 28 29 30

31 32

British Horseracing Board Ltd v William Hill Organization Ltd, Case C-203/02, EU:C:2004:695. Notwithstanding that a database of contents created by its maker might qualify for copyright subsistence. The protection of ‘non-original databases’ appears to have been severely curtailed by the 2004 Court of Justice decisions in BHB v William Hill and the Fixtures cases. Producers of database who create their own data are left without protection under the database right, whilst producers who use pre-existing materials such as publishers of directories, listings and maps are protected. [2013] EWCA Civ 27, [2013] FSR 30. Per Sir Robin Jacob in Football Dataco Ltd v Sportradar GmbH at para 43.

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6.22 The sui generis database right could be creating the data, rather than obtaining pre-existing data. It did not exist in the database until entered by the maker. Sir Robin Jacob rejected metaphysical arguments to the effect that a temperature did not exist until someone recorded it. He said that a person going into a Turkish bath would feel hot whether or not he had a thermometer. In the present case, the database contained, inter alia, live scores of football matches. The claimant employed football analysts to attend football matches who reported to sports information processors. During the match, the analysts keep more or less contact with their processors and inform them of events such as goals and their times, scorers, fouls, cards, etc and severity of fouls and dominant players and, during the last 10 minutes, the man of the match.33 The data is fed into the claimant’s Football Live database and licensed to bodies such as the BBC. Only a metaphysicist would deny that a goal had not be scored until the analyst informed his processor.34 6.22 That databases containing data such as lists of runners and riders and football fixture lists are not protected is a matter of policy as evinced by the Court of Justice of the EU in BHB v William Hill and the football fixtures lists where the makers create the contents which did not exist previously. But this is not the same as a database containing data collected by ascertaining the data (not creating it). Such databases are very important and there is a large industry in collecting information and making it available in a database. It was surely the policy underlying the Directive to protect such databases. In the Football Dataco case, the annual cost of collecting the data and including it the Football Live database was around £600,000. The policy distinction between these databases and the lists databases where the maker also creates the data is that protecting these databases would give the maker a monopoly right. Where pre-existing data is collected together and placed in a database, there is nothing to prevent others from making similar databases.

33

Thus, much of the data is factual but some is subjective, such as man of the match and severity of fouls. 34 In Technomed Ltd v Bluecrest Health Screening Ltd [2017] EWHC 1242 (Pat), [2018] FSR 8, David Stone, sitting as a Deputy High Court Judge, followed Sir Robin Jacob in Football Dataco v Sportradar in accepting that the presence of contents created by the maker amongst pre-existing materials collected by the maker was not fatal to the requirement of ‘obtaining’. See also, Flogates Britain Ltd v Calor Gas Ltd [2013] EWHC 3060 (Ch), [2014] FSR 34.

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Subsistence 6.24 6.23 A further point in the Football Dataco case was that the data included objective facts, such as time and scorer of a goal, and subjective data, such as the identity of the man of the match. Counsel for the defendant argued that there was no ‘independent investment’ in the contents as they were part objective and part subjective. But this does not mean that the Football Live database only comprised data created by the claimant. If the database contained only objective data, it would be protected. It would be absurd if it lost that protection simply because it also contained subjective data. Sir Robin Jacob gave an example of a database of Charles Dickens references to law and lawyers compiled by a scholar. This would require significant resources and expenditure and would be protected under the database right. It would not lose that protection if the scholar also added a commentary to the entries. That commentary might be protected by copyright but this would not prejudice the existence of the database right. But, of course, the database right would not be engaged if only his commentaries were extracted. Those commentaries would not be relevant resources for the database right. Therefore, the inclusion of materials created by the maker in a database also containing independent objective data ascertained by the maker does not deprive the database of protection under the database right providing, in relation to those objective data, the requirement for investment is satisfied.

Forms of investment 6.24 Investment (and the attendant risk) is the touchstone to deciding who the maker of a database is. However, it is not limited to financial investment. The Directive is couched in terms of protecting the investment in deploying financial resources and/or time effort or energy,35 but also mentions human, technical and financial resources.36 The Copyright and Rights in Databases Regulations 1997 stick to the latter formula and define investment in regulation 12(1) as including any investment, whether of financial, human or technical resources. Thus, investment can take a number of forms, for example, simply ‘putting up the money’, using intellect, spending time and effort or tying up information technology resources, such as where computers automatically collect, process and store data or other forms of information. 35 36

Recital 40. Recital 7.

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6.25 The sui generis database right

Beneficiaries of the database right37 6.25 According to Article 11 of the Directive, entitlement to the database right is given to nationals of a Member State or persons having their habitual residence in a Member State. Also covered are companies and firms formed in accordance with the law of a Member State and having their registered office, central administration or principal place of business within the EU. Where such a company or firm has only its registered office in the territory of the EU, its operations must be genuinely linked on an ongoing basis with the economy of a Member State. The Directive has effect also in the European Economic Area (EEA), so references to Member States include references to Iceland, Norway and Liechtenstein. The database right may also be extended to databases made in other countries by Agreements. An example is the Isle of Man, to which the right was extended following such an Agreement.38 Where protection is extended to other countries, the term of protection shall not exceed that given under the Directive. 6.26 Regulation 18 of the Copyright and Rights in Databases Regulations 1997 sets out qualification by reference to the maker of the database.39 At the material time, the maker, or one of its makers if made jointly, must have been a person within the meaning of Article 11, but with references to the EEA and the Isle of Man instead. Rather than the use of the term ‘firm’ or ‘firms’, regulation 18 refers to partnerships and other unincorporated bodies. There is no need for the maker to satisfy these territorial limitations where the database was made by or under the direction of either House of Parliament.40 Of course, there is no problem where the database was made by either House but there would otherwise be an issue where the maker was, for example, a company established outside the EEA and Isle of Man.41 The ‘material time’ 37 38

39 40

41

This can be seen as a form of qualification for the right, as under copyright but with some significant differences. Agreement in the form of an exchange of letters between the United Kingdom of Great Britain and Northern Ireland on behalf of the Isle of Man and the European Community, as it then was, extending to the Isle of Man the legal protection of databases as provided for in Chapter III of Directive 96/9/EC, signed at Brussels on 26 March 2003. OJ L 89, 05.04.2003, p 12; Cm 5836 Treaty Series No 19 (2003). For the meaning of ‘maker’, see infra. Presumably this should also apply in the case of the Scottish Parliament or Welsh Assembly though no express provision is made for removing the territorial limitation on the identity of the maker in these cases. Though the definition of maker might suggest in such a case, the relevant House of Parliament might still be deemed to be the maker of the database: see infra.

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Subsistence 6.29 is the time the database was made or, if it making extended over a period of time, a substantial part of that period. 6.27 Unlike the case with copyright, there is no provision for affording protection to databases made by nationals of other countries. Where a database is subject to copyright under the laws of many other countries it will also be protected in the UK.42 This is not the case with the database right which is limited to EEA and Isle of Man database makers.

The maker of a database 6.28 The identity of the maker of a database is important, as it will normally determine who the first owner of the database right is. The first thing to note is that the maker of a database subject to the database right is not necessarily the person who carries out the work of creation. As subsistence is expressed in terms of investment, this is also the key to the identity of the maker of the database. Recital 41 to the Directive states that the maker of a database is the person who takes the initiative and the risk of investing. The initiative must be in relation to the investment in making the database, that is, the decision to invest in its making. Subcontractors, in particular, are expressly excluded. Therefore, if company A decides to make a database and pays a subcontractor, company B, to carry out the actual work of creation, it will be company A which will be considered to be the maker of the database. This should also hold true where a self-employed freelancer is engaged to create a database for a client. Because of this basic rule, there is limited possibility for beneficial ownership or implied licences to overcome failures to provide for ownership in these circumstances compared with copyright law.43 6.29 The simplicity of the Directive should be contrasted to the provisions on the determination of the maker of a database under regulation 14 42

Copyright and Performances (Application to Other Countries) Order 2016, SI 2016/1219. The countries to which ‘reciprocal protection’ is given include those members of the Berne Convention for the Protection of Literary and Artistic Works, the Universal Copyright Convention, the TRIPs Agreement, the EU and EFTA. 43 There may be later, for example, where a subsequent assignment of database right does not comply with the formalities required, being that the assignment is in writing and signed by or on behalf of the assignor: see section 90(3) of the Copyright, Designs and Patents Act 1988 which applies, mutatis mutandis, to the database right.

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6.30 The sui generis database right of the Copyright and Rights in Databases Regulations 1997. The basic test is given in regulation 14(1) as being the person who takes the initiative in obtaining, verifying or presenting the contents of a database and assumes the risk of investing in that obtaining, verification or presentation. At first sight, the Regulations seem to be significantly wider in terms of the meaning of initiative. As mentioned above, in the Directive the phrase ‘initiative and risk of investing’ suggests the initiative is in deciding to make the investment necessary to make the database. However, recital 40 confirms that the object of the database right is to protect the investment in obtaining, verifying or presenting the contents of a database. That being so, a particular database could, potentially, have three separate makers: one who takes the initiative and risk of investing in seeking out, collecting and incorporating into the database its contents; another who later takes the initiative and risk of investing in verifying those contents; and, finally, one who later still takes the initiative and the risk of investing in the presentation of the contents or, more likely, improves the original presentation (for example, by presenting retrieved contents in a Windows format rather than as a raw text file). As the investment is expressed in terms of obtaining, verifying or presenting the contents, it would seem that in such cases, the three makers would not be joint makers. Which one or more would have a right of action for infringement would depend on whether the infringing act: (a) fell within the meaning of infringement, and (b) prejudicially affected the investment made by one or more particular maker.

Joint makers 6.30 Where two or more persons collaborate in taking the initiative and the risk of the investment in the making of a database, they will be the joint makers of it. This could apply, for example, where two partners in a partnership decide to make a database for the purposes of the partnership or where two companies pool resources to make a database they can share. Where one person supplies the finance and another the intellect, time and effort, then they should be considered joint makers. 6.31 Regulation 14(5) of the Copyright and Rights in Databases Regulations 1997 states that a database is made jointly if two or more persons acting together in collaboration take the initiative in obtaining, verifying or presenting the contents of the database and assume the risk of investing in that 224

Subsistence 6.33 obtaining, verification or presentation.44 This should not mean that there can be no division of tasks between them. For example, two persons may collaborate by one seeking out and collecting together the materials that will form the contents whilst the other enters them into the database and then verifies the accuracy of those materials.

Employee database makers 6.32 The allocation of rights as between employee and employer differ for the database right compared with copyright. This is another consequence of the distinction between a maker of a database and the author of a database subject to copyright. For copyright, the allocation is at the stage where ownership is fixed whereas, for the database right, it is fixed at the preliminary stage of deciding who the maker is. 6.33 As the maker of a database is the person taking the initiative and the risk of investing, the issue of entitlement as between an employer and employee will hardly ever arise. Employees do not usually take both the initiative and the risk of investing in the creation of works, including databases, in the course of their employment. This shows the distinction between copyright and database right very clearly. As the author of a copyright work is the person creating it, there is a need to have a special rule to deal with entitlement to copyright in employee works. In a rare situation where an employee does take the initiative and the risk of investment, it is declared by regulation 14(2) that it is the employer who is deemed to be the maker of a database made by an employee in the course of employment. This is subject to any agreement to the contrary and, like copyright, it is reasonable to assume that this extends to implied agreement to the contrary.45 A possible situation where an employee could be deemed to be the maker is where he has the idea to make a database useful to his employer and does so using his own resources, perhaps by spending time and effort to do so. It may be in such a case that the employer invests financial resources so that, otherwise, the employee and employer would be joint makers. The operation of the rule would seem to result in the employer being the sole maker though there may be an issue as to whether the database was made in the course of employment. In any case, it would usual for some

44

The Directive is silent on the question of joint makers though does mention joint authors of copyright databases. 45 For example, in the copyright case of Noah v Shuba [1991] FSR 14.

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6.34 The sui generis database right agreement between the employee and employer to have been made as to the allocation of rights in the database.

Other rules as to the identity of the maker of a database 6.34 Where a database is made by or under the direction of either House of Parliament, that House will be considered to be the maker of the database. If made by or under the direction of both Houses of Parliament, each will be considered to be a joint maker of the database. Otherwise, where the database is made by Her Majesty or by an officer or servant of the Crown in the course of his duties, Her Majesty will be the maker of the database. Where a database is made by or under the direction of the Scottish Parliament, the Scottish Parliamentary Corporate Body will be the maker of the database. 6.35 Where a database is made under the direction of, for example, the House of Lords, by a company established in the United States, the House of Lords will be the maker of the database and, by virtue of regulation 18(3), the database will be protected by the database right if the other requirements for subsistence are satisfied.

OWNERSHIP AND DEALING WITH THE DATABASE RIGHT 6.36 The first owner of the database right is its maker: regulation 15. The simplicity of this rule is explained by the provisions as to the identity of the maker which effectively establish who the first owner will be. Where a database has joint makers, they will be the joint first owners of the database right. Although regulation 14(6) states that where a database has joint makers, except where otherwise stated, references to the maker are to all the makers of the database. 6.37 Article 7(3) states that the right may be transferred, assigned or granted under a contractual licence. The provisions in sections 90 to 93 of the Copyright, Designs and Patents Act 1988 (part of the provisions on dealing with copyright works) also apply to dealing with the database right. Thus, the database right can be assigned, pass by testamentary disposition or the operation of law or licensed exclusively or non-exclusively. Assignments may be partial in terms of the exclusive rights of the owner and/or the period of subsistence of the right. Assignments must be in writing and signed by or on behalf of the owner and licences are binding on successors in title of the 226

Term of protection 6.41 owner except in the case of a purchaser in good faith for valuable consideration without actual or constructive notice. Exclusive licences must be in writing, signed by or on behalf of the owner of the database right. The other provisions cover prospective ownership (making it possible to assign a future database right) and licences granted by prospective owners. 6.38 The application of section 93 of the Copyright, Designs and Patents Act 1988 to the database right will be something of a rarity. This section applies to bequests of original documents or materials embodying a work of copyright where the work has not been published. The effect is to pass the c opyright to the person taking the document or other material under a will if there is no contrary intention in any will or codicil to it. The database right, being the result of a substantial investment, is likely to be commercially exploited soon after it has been made. The nature of the right itself reinforces this, being a right to extract the contents and to make them available to the public. 6.39 As is the case with copyright, where there are joint owners, they will own the database right as tenants in common46 and may assign their rights separately. On the death of one joint owner, his rights will pass, as part of his estate, to his personal representatives. Where a company or other artificial legal person is a joint owner and goes into receivership or other form of liquidation, the share in the database right will be an asset to be disposed of along with the other assets of the body. 6.40 Where a database right has joint owners, the licence of all of them will be required in respect of any licence granted under the right. As a point of construction, section 173 of the Copyright, Designs and Patents Act 1988 on references to copyright owners must also apply to the database right as it does to sections 90 to 93. Section 173(2) expressly states that, where there are joint owners, any requirement for the licence of the copyright owner requires the licence of all of them.

TERM OF PROTECTION 6.41 The database right endures for 15 years from the end of the calendar year during which its making was completed.47 However, if it was made 46 47

Lauri v Renad [1892] 3 Ch 402. Regulation 17(1) of the Copyright and Rights in Databases Regulations 1997.

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6.42 The sui generis database right available to the public during that period, the right does not come to an end until 15 years from the end of the calendar year during which is was so made available.48 6.42 Most databases which will be subject to the database right are likely to undergo significant changes and modification during their commercial life. It may be that further works, data, information or other materials are added to the contents or that a substantial verification exercise is undertaken after the database has been in existence for a number of years.49 If the database is an electronic one, the advent of new software may enable significant improvements to be made to the presentation of the contents of the database. It will not be unusual for databases to undergo all three forms of modification. Providing the impact of the changes is such that the database is considered to be a substantial new investment, it will qualify for a new term of protection. Article 10(3) of the Directive states that: Any substantial change, evaluated qualitatively or quantitatively, to the contents of a database, including any substantial change resulting from the accumulation of successive additions, deletions or alterations, which would result in the database being considered to be a substantial new investment, evaluated qualitatively or quantitatively, shall qualify the database resulting from that investment for its own term of protection. This is more explicit than the Copyright and Rights in Databases Regulations 1997 which omit the reference to a qualitative or quantitative evaluation in relation to the substantiality of change or investment. Of course, the text of the Directive is what matters and an important aspect of this provision is that it also extends to accumulations of successive additions, deletions or alterations. 6.43 Where a database is continually undergoing modification, it may be difficult to tell at what time a new right is born. Consequently, the owner of the database right, under recitals 53 and 54 to the Directive, has the burden of proof in relation to proving the date of completion of making the database and whether the modifications are such that the database can be considered to be a new substantial investment. There are some presumptions in regulation 22 48

The Directive is the same but expressed as ending on the first of January of the relevant year: Article 10(1) and (2). 49 Recital 55 to the Directive confirms that a substantial new investment involving a new term of protection may include a substantial verification of the contents of the database.

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Term of protection 6.46 of the Copyright and Rights in Databases R egulations 199750 but none of these relate to either the date of completion of making or when the database can be considered to be the result of a new substantial investment. 6.44 In Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou (OPAP),51 Advocate General Stix-Hackl in his Opinion differentiated between static and dynamic databases. The latter is subject to continued updating in additions, deletions and verifications. The Advocate General said that it was characteristic of dynamic databases that there is only ever one database, being the most recent. Previous versions ‘disappear’. The question is, therefore, what the new term of protection covers. The object of the changes is to bring the database up to date. Thus, the whole database, being the most recent version, is the object of protection. The D irective contemplates, therefore, a ‘rolling’ sui generis right.52 An accumulation of insubstantial changes, individually representing insufficient investment to qualify for a new right, may eventually become a substantial change representing a substantial new investment for a new right to subsist. Of course, it is the maker of the database who has the burden of proof in this respect. 6.45 The Advocate General’s views may be subject to misinterpretation and he cannot be taken to mean that a previous ‘edition’ of a database ceases to be protected because it no longer exists. Previous editions will continue to be protected for the usual term of 15 years from 1 January following the year during which it was created.53

Pre-existing databases 6.46 The database right is retrospective and, where a database was made on or after 1 January 1983 and before 1 January 1998, it was protected from 1 January 1998 for 15 years providing it would otherwise have qualified for protection by virtue of its maker.54 This is a consequence of Article 14(3) and (5) of the Directive. There was a slight difference where the maker would

50

Infra. Case C-444/02, EU:C:2004:339. 52 At paras 168–172. 53 Article 10. Subject to longer duration if made available to the public during that first 15-year period. 54 Or one of its joint makers where two or more persons made the database. 51

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6.47 The sui generis database right have qualified on the basis of the Isle of Man. Here the date the database right commences is 1 November 2003, but the 15-year period still ran from 1 January 1998.55 6.47 There is also a saving for copyright in databases which existed prior to 1 January 1998 which were, immediately before that date, still subject to copyright. If a database was created on or before 27 March 199656 and would still be protected by copyright immediately before 1 January 1998, it will continue to be protected by copyright for the remainder of the full term of copyright. This is an important provision as, because the test for originality for copyright protection for databases in the Directive is different to that previously used in the Copyright, Designs and Patents Act 1988,57 some copyright owners could have been deprived of their copyright prematurely. Article 14(2) of the Directive required Member States to continue preexisting copyright protection for databases notwithstanding they would not meet the criteria for protection under the Directive, being that, by reason of the selection and arrangement of their contents, they constitute the author’s own intellectual creation. The cut-off date of 27 March 1996 is used because, after publication of the Directive, there would not be an expectation that newly created databases would enjoy copyright protection for the full term of ‘life plus 70 years’.

RIGHTS OF DATABASE OWNERS 6.48 The owner of a database right has the right to prevent extraction and/or re-utilisation of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of the database: Article 7(1) of the Directive.58 Article 7(2) goes on to define ‘extraction’ as the permanent or temporary transfer of all or a substantial part of the contents of a database

55

Member States were required to implement the Directive before 1January 1998: see Article 16(1). 56 This is the date of publication of the Directive in the Official Journal of the EU. 57 To what extent the test is different is explored in the previous chapter. 58 These are the only acts falling within the rights of the owner. It does not cover consultation (though in most cases, consultation will involve extraction where it is done electronically). However, consultation of contents printed out on paper, per se, does not involve extraction. British Horseracing Board Ltd v William Hill Organisation Ltd, Case C-203/02, EU:C:2004:695 at paras 54 to 58.

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Rights of database owners 6.51 to another medium by any means or in any form. ‘Re-utilisation’ is any form of making available to the public all or a substantial part of the contents of a database by the distribution of copies, by renting, by online or other forms of transmission. The Copyright and Rights in Databases Regulations 1997 differ for no good reason and omit the term ‘all or a substantial part’ and define re-utilisation as ‘… making [the] contents available to the public by any means’.59 6.49 The sale within the EEA (or Isle of Man) of a copy of a database by or with the consent of the owner exhausts the right to control resale of that copy within the EEA or the Isle of Man.60 This does not apply in relation to making the contents available by online transmission. Recital 43 confirms that the right to prohibit re-utilisation is not exhausted either as regards the database or a material copy of it made by the recipient of the transmission with the consent of the owner of the right.61 The Copyright and Rights in Databases Regulations 1997 are silent on this point. 6.50 The concepts of extraction and re-utilisation are so important to the scope of the rights of the owner of the database right. They have been subject to a number of rulings by the Court of Justice of the EU and are considered in more detail below followed by the meaning of ‘substantial’.

Extraction 6.51 As noted above, extraction means the permanent or temporary transfer of all or a substantial part of the contents of a database to another medium by any means or in any form.62 This is a technology neutral and a wide definition, subject to the meaning of ‘substantial’, by its use of ‘any means’ and ‘any form’.63 It does not matter if the medium to which the contents or 59

Regulation 12 (interpretation). The wording in the Regulations are unnecessarily complicated compared with the Directive: see Regulation 12(5) and Article 7(2) respectively. 61 This is in line with Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10: see recital 29 and Articles 3(3) and 4(2). 62 Public lending is not an act of extraction or re-utilisation: Article 7(2). 63 By the use of such terminology, it is clear that the legislature intended that the concept of extraction should have a wide meaning: see British Horseracing Board Ltd v William Hill Organisation Ltd, Case C-203/02, EU:C:2004:695 at para 51 and Directmedia Publishing GmbH v Albert Ludwigs- Universität Freiburg, Case C-304/07, EU:C:2008:552 at para 31. 60

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6.52 The sui generis database right a substantial part are transferred to is of a different form. In Apis-Hristovich EOOD v Lakorda AD,64 there was an allegation that the defendant had taken a substantial part of the contents of the claimant’s databases of legal materials comprising cases and legislation. The Court of Justice of the EU ruled on a number of issues relating to the act of extraction. The Court distinguished between a temporary and permanent transfer, being a question of the duration of the transfer. A permanent transfer is when the materials extracted from the database are stored in a permanent manner on a medium other than the original. A temporary transfer is where those materials are stored for a limited time on another medium, for example, in the operating memory of a computer. An example of a permanent transfer would be where the materials are stored on a magnetic or optical disk.65 The time the transfer takes place is the time at which the materials are placed on a medium other than the original medium, whether temporarily or permanently.66 6.52 By the use of the word ‘transfer’, it is not required that the part in question is removed from the original database.67 It does not matter if the part taken is arranged differently to the arrangement in the protected database. Recital 38 makes it clear that the protection extends to an adaptation of the contents extracted.68 Nor does the defendant’s motive enter into the question of transfer. It is immaterial whether the objective was to create a new database, whether or not in competition with the first, or some other purpose.69 6.53 In Executive Grapevine International Ltd v Wall,70 the claimant maintained databases of information about news and magazines, human resources information and email addresses and business contact information. It licensed others to access the database for around £5,000. The first defendant was an employee of the claimant and made copies of the databases without authorisation and offered them on eBay, for around £55. 64 65

66 67 68 69 70

Case C-545/07, EU:C:2009:132. The court did not give an example of permanent transfer, though it is arguable that there is no such thing as material stored on a disk can be erased later. Nevertheless, the distinction between ‘permanent’ storage media such as computer disks and volatile computer memory is a useful one. Apis-Hristovich at para 45. Transfer in this context means ‘copy and paste’ rather than ‘cut and paste’: see D irectmedia at para 29. Directmedia, op cit at para 39 and Apis-Hristovich at para 47. British Horseracing Board at para 47 and Apis-Hristovich at para 46. [2012] EWHC 4152 (Ch).

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Rights of database owners 6.56 The buyer’s wife71 then offered copies of the database, even offering one to the claimant for £350! The first defendant claimed that he did not intend, in offering the database for sale on eBay, that they should be so widely circulated. Norris J, referring to Apis-Hristovich, said that intention was immaterial to liability, though innocence might be relevant to the measure of damages. 6.54 Apis-Hristovich gives useful guidance as to evidence of extraction. Of course, the assessment of evidence is a matter for national courts. However, where the alleged infringing database contains the same physical and technical characteristics, this may indicate a transfer has taken place. It may be explained in some cases by the fact that both database makers have drawn their contents from identical sources in which those characteristics are present. Moreover, where the contents have been drawn from sources not available to the public, that might provide circumstantial evidence of extraction from the original database, although it might be explained, for example, by the fact that the maker of the second database has also been given permission to use the same sources.72 6.55 ‘Extraction’ and ‘re-utilisation’ do not imply direct access and it is possible to extract indirectly the contents of a database from a third party to whom those data have been made available, for example, where the third party has obtained the data from the maker of the database and then printed those data in a newspaper. In British Horseracing Board Ltd v William Hill Organisation Ltd,73 William Hill obtained part of the contents of the claimant’s database indirectly through evening newspapers in which lists of runners and riders for the following day’s races were published. The Court of Justice of the EU confirmed that the acts of extraction and re-utilisation referred to any act of appropriation and distribution to the public of the whole or part of the contents of the database and, as such, those terms did not require direct access to the database in question.74

Re-utilisation 6.56 Under Article 7(2)(b) ‘re-utilisation’ means any form of making available to the public all or a substantial part of the contents of a database by the 71

The buyer and his wife were the second and third defendants. Apis-Hristovich at paras 51 and 52. 73 Case C-203/02, EU:C:2004:695. 74 At para 53. 72

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6.57 The sui generis database right distribution of copies, by renting, by online or other forms of transmission. Where a copy of a database has been sold by or with the consent of the owner, his right to control resale within the EU is exhausted. This would apply both where the copy in question is sold on tangible media or is delivered online. The exhaustion of rights applies only where a copy of the database is sold and would not apply where a subscriber is given a right to extract and/or re-utilise the contents of the database. 6.57 In British Horseracing Board Ltd v William Hill, the Court of Justice ruled that the concept of ‘re-utilisation’ extended to any act, not authorised by the maker of the database, of distribution to the public of the whole or a part of the contents of the database thus depriving the maker of the revenue which ought to have enabled him to recoup the cost of his investment.75 As with extraction, the use of the phrase ‘any form of making available to the public’ demonstrated that, as with extraction, a wide meaning was intended. Therefore, the nature and form of the processes used was of no relevance in this respect.76 6.58 In Football Dataco Ltd v Sportradar GmbH,77 it was alleged that the defendant, without authorisation, copied data from the claimant’s Football Live service to its servers located in Germany. From there, users in the UK could access that data. A question arose as to where the infringing act took place. The claimant argued, on the basis of a ‘transmission’ and ‘communication’ theory, that the relevant acts took place in both Germany and the UK. The defendant argued that the ‘emission’ theory applied so that the relevant act took part from where the data was emitted which meant that the UK courts did not have jurisdiction to try the case. The Court of Justice of the EU noted that the mere fact that a website containing the data could be accessed from another Member State was not itself a sufficient basis for a finding that the operator of the website was performing an act of re-utilisation caught by the national law in the territory from which access could be made. However, it would be different if there was evidence to show that the website operator targeted persons in that other Member State. If, such evidence existed, where the website operator in territory A previously uploaded data from a protected database, the sending of such data at the request of a person in territory B for the purpose of storage in that person’s computer and display on its screen 75

Case C-203/02, [2004] ECR I-10415. Football Dataco Ltd v Sportradar GmbH, Case C-173/11, EU:2012:642 at para 20. 77 Case C-173/11, EU:C:2012:642. 76

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Rights of database owners 6.59 constitutes an act of re-utilisation by the person sending it.78 That act takes place, at least, in territory B.79 6.59 Providing a meta search engine which allows end users to enter a search query which is used to look up data in a number of ‘target’ databases can be an act of re-utilisation, infringing the sui generis right. In Innoweb BV v Wegener ICT Media,80 Innoweb operated an online meta search engine which permitted users to enter queries which were translated into an appropriate format and then used to search a number of databases relating to new and used cars for sale. In this way, end users were given access to data on other websites appropriate to their search, including that of Wegener. This was not an issue of extraction of the contents of a database but rather one of re-utilisation of the contents of the database. The Court of Justice ruled that the activities of an operator of a meta search engine, such as the one in question, was a re-utilisation of the whole or a substantial part of the contents of a database protected under Article 7 of the Directive on the legal protection of databases if: ••

the end user is provided with a search form which essentially offers the same range of functionality as that on a d atabase website, such as that of Wegener’s (a ‘target website database’);

••

queries from end users are ‘translated’ into the appropriate format for the search engine of the target website database in real time, so that all the information on that database will be searched through; and

••

the results are presented to the end user using the format of the meta search engine website, grouping duplications together into a

78

A similar result to that applicable to trade mark cases such as L’Oreal SA v eBay International AG, Case C-324/09, EU:C:2011:474, discussed in Chapter 14. 79 The Court of Justice did not to rule on whether the act also took place in territory A as this was not the issue in the reference. As to evidence, the fact the defendant used English for its service would be an important factor. Article 5(3) of Council Regulation 44/2001/EC of 22 December 2000 on jurisdiction and the enforcement of judgments in civil and commercial matters, OJ L 12, 16.01.2001, p 1, confers special jurisdiction for tortious liability on the courts where the harmful event occurred or may occur. This Regulation has now been replaced by Regulation 1215/2012/EU of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), OJ L 351, 20.12.2012, p 1. The new Regulation took effect on 1 January 2015. 80 Case C-202/12, EU:C:2013:850.

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6.60 The sui generis database right single block, but in an order that reflects criteria comparable to those used by the search engine of the target website for presenting results. 6.60 The Court of Justice of the EU again confirmed that the protection under Article 7 of the Directive does not extend to acts of consultation for information purposes where the maker of the database has made it available to the public.81 However, the operator of the meta search engine was not itself interested in the contents of the target website database, but it provided the end user with a form of access to that database via a different access route than that intended by its maker. Although the dedicated meta search engine resembled a database it did not contain any data itself and was close to resembling a parasitic competing product.82 In carrying out a search on the target website database, the meta search engine may search through the entire contents or at least a substantial part of the target database, thus involving a re-utilisation of those contents. Finally, the Court of Justice noted that the end user does not have to go to the target website database unless he finds a result of interest, in which case, the end user is directed to the advertisement of the target website database. As duplications are grouped together by the meta search engine, it is likely that the end user will only consult one of those duplicated advertisements. For this reason, advertising on target websites may not be seen by end users as frequently as would otherwise be the case and this could prejudice advertising revenues on those target websites. For example, in the present case, advertising on Wegener’s website might not be seen as often by end users as it would have been due to the activities of Innoweb.

Substantiality 6.61 Substantiality is an issue of subsistence, in terms of whether the database was the result of a substantial investment, and the scope of the owner’s right and infringement. But does ‘substantial’ carry the same meaning in relation to investment for the purposes of subsistence as it has for infringement? It would seem so as Article 7(1) also uses the phrase ‘qualitatively and/or quantitatively’ for the substantial investment in obtaining, verifying or 81 See

British Horseracing Board Ltd v William Hill Organization Ltd, Case C-203/02, EU:C:2004:695 at para 54 and Directmedia Publishing GmbH v Albert LudwigsUnivesität Frieburg, Case C-304/07, EU:C:2008:552 at para 51. 82 Identified in recital 42 to the Directive as something which could harm or be a detriment to the investment in making a database.

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Rights of database owners 6.63 presenting the contents. Recital 19 gives us some idea of the lower threshold as it indicates that a collection of recordings of musical performances on CD will not, as a rule, represent a substantial enough investment to be eligible for protection under the database right. In Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou AE (OPAP),83 the Court of Justice said (at para 44): Investment in the creation of a database may consist in the deployment of human, financial or technical resources but it must be substantial in quantitative or qualitative terms. The quantitative assessment refers to quantifiable resources and the qualitative assessment to efforts which cannot be quantified, such as intellectual effort or energy, according to the 7th, 39th and 40th recitals of the preamble to the directive. 6.62 Thus, the test of substantiality for subsistence is similar but not the same as that for the scope of the owner’s right as it uses different criteria in its assessment, being the resources used and/or intellectual effort or energy84 rather than looking at the part taken by an alleged infringer. In a case before the French Supreme Court, Société Ouest France Multimédia v Société Direct Annonces,85 it was accepted that gathering, classifying and presenting a very large number of property advertisements into a database implied a substantial investment.86 Finally, it should be noted that it is for the maker of the database to show that its making required a substantial investment. The right is available to a ‘… maker which shows …’. 6.63 The landmark British Horseracing case provides guidance on substantiality for the purposes of infringement. In British Horseracing Board Ltd v William Hill Organization Ltd,87 the Court of Justice ruled that, in relation to extraction and/or re-utilisation, substantiality evaluated quantitatively referred to the volume of data taken in comparison with the whole contents. Evaluated qualitatively, it referred to the scale of investment in the obtaining, verification or presentation of the part taken, regardless of whether it was a substantial part of the whole contents evaluated quantitatively. 83

Case C-444/02, EU:C:2004:697. A database, the creation of which required substantial ‘sweat of the brow’ only, thus appears eligible for the database right. 85 [2010] ECC 9. 86 But it was held that the relevant investment was in the creation of the data not the obtaining of it. 87 Case C-203/02, EU:C:2004:695. 84

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6.64 The sui generis database right

INFRINGEMENT 6.64 Recital 42 states that the right is not limited to prevent the making of parasitical competing products but also covers the situation where significant detriment is caused, evaluated qualitatively or quantitatively, to the investment.88 This is a useful touchstone and justifies the inclusion of infringement by an accumulation of insubstantial takings conflicting with the normal exploitation of the database or which unreasonably prejudices the maker’s legitimate interests, infra. 6.65 The rights of the owner of the database right are expressed in the negative, giving the owner the right to prevent the extraction and/or re-utilisation of the whole or of a substantial part, evaluated qualitatively and/or quantitatively, of the contents of the database. This describes, therefore, what acts infringe the database right if done without the consent of the owner of the database right. What has been mentioned above in relation to extraction and re-utilisation is also relevant, therefore, to the scope of the acts which infringe the database right. The Court of Justice also confirmed that, for the purposes of infringement, extraction did not have to be direct. The material could be taken from a source other than the database itself, for example, where the material was taken from parts of the database printed out by a third party. In British Horseracing Board, the defendant had taken details of runners and riders for forthcoming horse races indirectly from newspapers which carried this information which had been provided by the claimant. 6.66 It is no defence to a claim for infringement of the sui generis right to claim that the database in question contains copyright materials or other proprietary materials belonging to someone other than the database maker. Such a defence was rejected in Medical Innovations Ltd v Eakins.89 Article 1 refers to the meaning of a database being a collection of independent works, data or other materials and Article 7(4) of the Directive makes it clear that the protection afforded by the sui generis right is without prejudice to rights existing in the respect of the contents of the d atabase. If those contents are subject to other rights, the maker of the database may have the benefit of appropriate licences, otherwise the maker will infringe those 88

The fact that the defendant extracts material from a protected database and re-utilises those materials to create a database which competes commercially with the protected database would be relevant to the assessment of damages. 89 [2014] EWHC 4626 (Pat).

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Infringement 6.68 rights if, for example, a substantial part has been included in the contents of the database. 6.67 To take an example, imagine that a database has been made of poems which already exist. Making the database involved a substantial investment by its maker in obtaining the contents. The maker intends to issue copies of the database on DVDs and by downloading online. The database includes the full text of the poems and recordings of readings of those poems by famous actors before a live audience. The poems are works of copyright and the recordings are recordings of live performances. The maker of the database, the authors of the poems, the actors and the person having the recording rights all have rights in the database as a whole. Except in as much as any rights in the contents have expired, the maker of the database will need the licence of the authors in respect of their poems, the actors in respect of their performance and the persons having the right in the recordings of those performances. The licences must extend to the methods of exploitation envisaged by the maker of the database. If anyone makes a copy of the whole database without authorisation, they will infringe the sui generis right, the copyrights and the rights in performances (performers’ and recording rights). If only part of the database is copied, the sui generis right will be infringed if it amounts to a substantial part of the database contents (qualitatively or quantitatively) in addition to infringement of the other rights to the extent that they have been substantially copied.90

Accumulation of insubstantial takings 6.68 The above does not give the full picture and infringement may also come about by an accumulation of insubstantial extractions and/or re-utilisations where, collectively, they amount to a substantial extraction and/or re-utilisation. Article 7(5) of the Directive states that the: … repeated and systematic extraction and/or re-utilization of insubstantial parts of the contents of the database implying acts which conflict with a normal exploitation of that database or which unreasonably prejudice the legitimate interests of the maker of the database shall not be permitted.

90

Depending on the circumstances there may also be infringements of moral rights except in relation to the database and the maker of a database subject only to the sui generis right does not have moral rights in respect of it.

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6.69 The sui generis database right The Copyright and Rights in Databases Regulations 1997 simply say that the ‘… repeated and systematic extraction and/or re-utilisation of insubstantial parts of the contents of a database may amount to the extraction or reutilisation of a substantial part of those contents’91 (emphasis added). No further guidance is given so the only sensible approach is to go straight to the language of the Directive. It seems reasonable to assume that the point at which an accumulation of takings reaches the stage at which there is conflict with the normal exploitation of the database or unreasonable prejudice to the legitimate interests of the maker is the point at which the accumulated takings together become a substantial part of the database, evaluated qualitatively and/or quantitatively. This was confirmed by the Court of Justice in British Horseracing Board Ltd v William Hill Organization Ltd92 in which it ruled that this form of infringement refers to acts of extraction or re- utilisation which have the cumulative effect of reconstituting and/or making available to the public the whole or a substantial part of the contents of a database, thereby seriously prejudicing the investment by the maker. Defining a quantitatively substantial part in terms of its proportion to the whole contents and a qualitatively substantial part in terms of the scale of investment in obtaining, verifying or presenting the part taken (even though not necessarily a quantitatively substantial part), the Court of Justice came to the somewhat obvious conclusion that an insubstantial part was one which: … does not fulfil the definition of a substantial part, evaluated both quantitatively and qualitatively … 6.69 The extraction and/or re-utilisation must be both repeated and systematic.93 This suggests that it is carried out at regular intervals but there may be a balance between the frequency of the extraction or re-utilisation and how small the parts taken are. The more frequent the acts, the smaller the parts taken might be to conflict with the normal exploitation of the database or the prejudice to legitimate interests of the maker.94 The term ‘conflict with the normal exploitation of the database’ must be taken not only to apply in a technical sense such that the technical usability of the database is adversely affected but also relates to the purely economic effects on the maker of

91

Regulation 16(2). Case C-203/02, EU:C:2004:695. 93 The Finnish, Spanish and Swedish implementations incorrectly use the ‘or’ conjunctive. 94 See Advocate General Stix-Hackl’s Opinion in Fixtures Marketing Ltd v Organismos Prognostikon Agonon Podosfairou (OPAP), Case C-444/02, EU:C:2004:339 at para 145. 92

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Infringement 6.71 the database. The purpose is to protect the normal economic use made of the database.95 But it is not limited to the unauthorised making of competing databases and it will apply where the defendant exploits other markets not exploited by the maker. This would deprive the maker of potential licence fees and would result in an incentive to others to make use of the contents of the database without paying licence fees. This would have serious economic consequences for the maker of the database. 6.70 In Technomed Ltd v Bluecrest Health Screening Ltd,96 it was held, inter alia, that database right subsisted in the claimant’s database comprising a set of classifications of relevant physical characteristics indicated by electrocardiogram tests. The database included options, such as normal, slow(bradycardia), fast (trachycardia) and uncertain, with a traffic light system, explanatory text to provide information to the patient (Patient Definitions). The defendant used the database to produce XML files for each patient.97 This was held to a repeated and systematic extraction of the Classifications, Options, Traffic Lights and Patient D efinitions.98 However, the Patient Definitions had been created by the maker of the database and, as Sir Robin Jacob noted in Football Dataco Ltd v Sportradar GmbH,99 the sui generis right does not protect against the extraction or re-utilisation of those parts of a database that have been created by its maker.100

Vicarious liability for infringement 6.71 An infringing act or acts may be carried out by employees, without the knowledge or approval of their employer. In Flogates Britain Ltd v Calor Gas Ltd,101 a former employee of the claimant took a copy of the 95 96 97 98

99 100

101

Advocate General Stix-Hackl’s, ibid at para 147. [2017] EWHC 1242 (Pat), [2018] FSR 8. XML stands for eXtensible Mark-up Language which is similar in some respects to HTML. The Patient Definitions had been created by the claimant, but it was held that these were protected by copyright and, hence, no damages would be awarded for these under the sui generis right. [2013] EWCA Civ 27, [2013] FSR 30. Even if a substantial investment has gone into those parts of the contents created by the maker, this does not give protection to those parts under the sui generis right: see British Horseracing Board Ltd v William Hill Organization Ltd, Case C-203/02, EU:C:2004:695. This does not deprive such parts of other forms of protection, such as copyright. The database right is without prejudice to rights in the contents of a database, if any: see Article 7(4). [2013] EWHC 3060 (Ch), [2014] FSR 34.

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6.72 The sui generis database right claimant’s customer database when he went to work for the defendant. He and the marketing manager of the defendant used this database to target the claimant’s customers with an incentive to switch to the defendant’s gas supplies. When the defendant discovered what had happened, the employees were summarily dismissed after disciplinary proceedings. Proudman J summarised the general principles on the imposition of vicarious liability on employers for acts done by employees,102 and held that the extractions of the contents of the database were closely connected to the employments of the employees responsible for the extractions in that they were related to business intelligence that was closely related to the conduct of the business. The connection was so close that it would not be unjust to impose liability on the defendant for the infringing acts of extraction.

EXCEPTIONS TO THE DATABASE RIGHT 6.72 There are a number of exceptions that apply in respect of the database right. Some of these mirror the equivalent permitted acts under copyright law, but there are by no means as many permitted acts for the database right. Under the Directive the exceptions to the sui generis right, are optional, the wording in Article 9 commences with ‘Member States may stipulate that lawful users …’. There then follows three optional exceptions that apply in relation to databases made available to the public in any form, to acts of extraction and/or re-utilisation of a substantial part of the contents performed without the authorisation of the maker of the database. 6.73

The optional exceptions to the database right under Article 9 are:

••

extraction for private purposes of the contents of a non-electronic database;

••

extraction for the purposes of illustration for teaching or scientific research, providing the source is indicated and to the extent justified by the non-commercial purpose to be achieved;103

102

Although vicarious liability, being a form of strict liability, should be kept within clear limits, the question is whether the tort of the employee is so closely connected to the employment that it would be fair and just to hold the employer vicariously liable: see Lister v Hesley Hall Ltd [2001] UKHL 22, [2001] 1 AC 215 and Dubai Aluminium Co Ltd v Salaam [2002] UKHL 48, [2003] 2 AC 266. 103 Member States may limit this exception to certain categories of teaching or scientific research: recital 51.

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Exceptions to the database right 6.75 ••

extraction and/or re-utilisation for the purposes of public security or an administrative or judicial procedure.

6.74 Such exceptions must not prejudice the exclusive rights of the maker to exploit the database and, in all cases, the purpose must be noncommercial.104 Further exceptions are allowed if they are comparable to exceptions for other rights analogous to the sui generis right if already provided by Member States. This latter possibility is needed in particular so that the permitted act under copyright allowing copying from the internet by legal deposit libraries is not prejudiced.105 The implementation of these exceptions under UK law is now considered.

Fair dealing 6.75 Fair dealing is allowed only for the purpose of illustration for teaching or research under regulation 20(1) of the Copyright and Rights in Databases Regulations 1997.106 The right is not infringed by fair dealing with a substantial part of the contents where a database has been made available to the public. The part must have been extracted by a person who is otherwise a lawful user and it is extracted only for the purpose of illustration for teaching or research but not for any commercial purpose. Furthermore, there is a requirement that the source is indicated. There is no equivalent permitted act allowing fair dealing for the purpose of illustration for teaching for copyright databases. There is, however, a fair dealing provision for non-commercial research and private study.107 To the extent that they are applicable, the general principles of fair dealing under copyright law are likely to also apply here. For example, although a substantial part may be extracted, it is unlikely that the whole of the contents could be extracted under this permitted act. If the part extracted is used to an excessive extent, even if for the purpose of teaching, this is unlikely to be considered fair dealing. Similarly, if the owner’s rights are prejudiced, for example, where the circumstances are such that one would expect a further copy of the database to be obtained from the owner or, where available online, the agreed level of access to be increased. 104

Recital 50. This permitted act is under section 44A of the Copyright, Designs and Patents Act 1988, inserted by the Legal Deposit Libraries Act 2003. 106 SI 1997/3032. 107 Section 29(1) and 29(1C) of the Copyright, Designs and Patents Act 1988. 105

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6.76 The sui generis database right

Public administration 6.76 Schedule 1 to the Copyright and Rights in Databases Regulations 1997 sets out a number of other permitted acts under the description ‘Public Administration’. They are effectively the same, with appropriate modifications, to those that apply to the public administration permitted acts under copyright law.108 They include things done: ••

for the purposes of parliamentary and judicial proceedings (including the purposes of reporting such proceedings),

••

for the purposes of the proceedings of a Royal Commission or a statutory inquiry (including the purposes of reporting such proceedings),

••

in relation to material open to public inspection or on an official register,

••

in relation to material communicated to the Crown in the course of public business,

••

in relation to the contents of databases comprised in certain public records, and

••

in relation to acts done under statutory authority.

6.77 Because of the fact that there is an overlap between copyright and the database right in that some databases will be subject to both rights being the result of intellectual creation and substantial investment, the inclusion of these permitted acts is needed to prevent conflicts between the two rights. Otherwise, for example, the owner of a database might use his database right to prevent the issue to the public of a Royal Commission report containing extracts from a database by virtue of the right to prevent re-utilisation of the contents of the database.

Legal deposit libraries 6.78 Under section 15 of the Copyright Act 1911, a copy of any book, serial or other printed publication was required to be deposited in one of six nominated libraries, being the British Library, the National Libraries of Scotland and Wales, the Universities of Oxford and Cambridge and 108

Sections 45 to 50 of the Copyright, Designs and Patents Act 1988.

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Exceptions to the database right 6.80 rinity College Dublin. These libraries are known collectively as the Legal T Deposit Libraries. Not surprisingly, section 15 applied only to printed materials and extending access to publications on the internet was seen as important if these libraries were to be able to continue to maintain their accumulation of published materials. The Legal Deposit Libraries Act 2003109 gives the Secretary of State the power to extend the system of legal deposit to cover online publication, such as on the internet, and offline publication, such as on CD-ROM. A new permitted act under copyright law was provided for by inserting section 44A into the Copyright, Designs and Patents Act 1988. Copyright is not infringed by copying a work from the internet if it is of a description prescribed by Regulations made under section 10(5) of the 2003 Act, where its publication on the internet or the person publishing it there is connected with the UK in a manner to be prescribed and the copying is done in the manner prescribed. The libraries, persons acting on their behalf and readers may not use the material, copy it, adapt any accompanying computer program or database, lend or transfer to a third party or dispose of the material unless authorised by Regulations. 6.79 Equivalent provision is made in relation to the database right by regulation 20A of the Copyright and Rights in Databases Regulations 1997.110 At the time of writing no Regulations, except from a commencement Order, have been made under the 2003 Act.111

Assumption of expiry of database right 6.80 Under regulation 21 of the Copyright and Rights in Databases Regulations 1997, at a time when it is not possible by reasonable inquiry to ascertain the identity of the maker112 and it is reasonable to assume that the database right has expired, extracting or re-utilising a substantial part of the contents does not infringe the database right. The same applies in respect of extracting or re-utilising a substantial part of the contents in pursuance of arrangements made at such a time. It would appear that if the conditions apply when the arrangements are made to extract or re-utilise a substantial

109

This Act repealed section 15 of the Copyright Act 1911. Section 20A was inserted by the Legal Deposit Libraries Act 2003. 111 The Legal Deposit Libraries Act 2003 (Commencement) Order 2004, SI 2004/130. The Act was brought into force on 1 February 2004. 112 Or of all of the makers if the database was made jointly. 110

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6.81 The sui generis database right part of the contents, the later discovery of the identity of the owner and the fact that the right still subsists will not make the subsequent extraction or reutilisation an infringement providing these acts are limited to those for which the arrangements were made. There is an equivalent provision in relation to anonymous and pseudonymous literary, dramatic, musical or artistic works of copyright.113 6.81 Unlike the case with copyright, this provision could be quite tricky because of the relatively short duration of the database right, particularly if it is questionable whether they have been an accumulation of modifications such that a new term of protection may have come into being. The only person who can really determine this is the owner of the right. That is why the D irective places the burden of proof on him to show that this is so. Perhaps one effect of the assumption of expiry of the right is to encourage the placing of the name of the maker and year of publication of the database right on copies of the database made available to the public.

RIGHTS AND OBLIGATIONS OF LAWFUL USERS 6.82 The Directive uses the term ‘lawful user’ in respect of both copyright databases and the sui generis database right. There is no attempt at a definition in the Directive. Under the UK regulations, a lawful user of a database subject to the database right is any person who (whether under a licence to do any of the acts restricted by any database right in the database or otherwise) has a right to use the database.114 This is equivalent to the definition of lawful user for the purposes of sections 50A, 50B, 50BA and 50C of the Copyright, Designs and Patents Act 1988.115 Under Article 8(1) where a database has been made available to the public in whatever manner, a lawful user may not be prevented from carrying out acts of extraction and/or re-utilisation of insubstantial parts of the contents, evaluated qualitatively and/or quantitatively for any purpose whatsoever. Where the lawful user has the right to extract and/or reutilise only part of the contents, the right is so limited. Article 8(2) provides a limit on this and

113

Section 57 of the Copyright, Designs and Patents Act 1988. Regulation 12 on interpretation. 115 These sections provide for the permitted acts in relation to computer programs. 114

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Rights and obligations of lawful users 6.85 the lawful user may not perform acts which conflict with the normal exploitation of the database or unreasonably prejudice the legitimate interests of the maker of the database. This proviso also applies in respect of works or other subject matter contained in the database under Article 8(3). Article 15 protects the rights of the lawful user under Article 8 by making any contrary contractual provision null and void. Where a database is neither protected by copyright nor by the sui generis right, the mechanism provided by Articles 6(1), 8(1) and the safeguard in Article 15 do not apply. In such cases, we are left with national laws applicable to the use of a database and contractual restrictions.116 6.83 Regulation 19 of the Copyright and Rights in Databases Regulations 1997 attempts to implement these provisions but does so only imperfectly as it neglects to include any limitation based on acts of extraction and/or reutilisation by a lawful user which conflict with the normal exploitation of the database or unreasonably prejudice the legitimate interests of the maker of the database. Nevertheless, this must be taken as implicit in the Regulations. 6.84 Article 8(3) could be relevant where a lawful user further distributes works of copyright contained in the database. Databases may include works or other materials in which copyright and other rights subsist. Technically, accessing these might infringe third party rights. Recital 34 to the Directive seems to envisage this and suggests that a lawful user should not be liable for infringing these rights. It states: … once the rightholder has chosen to make available a copy of the database to a user, whether by an on-line service or by other means of distribution, that lawful user must be able to access and use the database for the purposes and in the way set out in the agreement with the rightholder, even if such access and use necessitate performance of otherwise restricted acts. 6.85 This can be read in two ways. In one sense it seems to suggest that the owner of the database right indemnifies a lawful user if his access and 116

Ryanair Ltd v PR Aviation BV, Case C-30/14, EU:C:2015:10. The Court of Justice did not decide whether Ryanair’s database was or was not protected by copyright or the sui generis right, this being a matter for the national court. Relevant national laws in the UK could include the principle of non-derogation from grant and competition law.

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6.86 The sui generis database right use of the database infringe, for example, copyright in works contained in the database. Simply accessing a work by computer necessitates making a copy of it. Where the maker of the database has failed to obtain permission of the owner of any copyright in works contained in the database, both he (by authorising infringement) and the lawful user will infringe copyright. In a weaker sense, the recital may no more than resolve any ambiguity or contradiction in the agreement with a lawful user. An example is where an agreement grants the right to extract contents but prohibits the making of permanent copies. As ‘extraction’ means the permanent or temporary transfer to another medium by any means or in any form, this is a clear contradiction. As it is unthinkable that the intention was to prejudice third party rights (as borne out by Article 8(3)), it is submitted that the recital must be taken in the weaker sense. 6.86 Article 8 can be seen as a non-derogation from grant provision. The general principle of non-derogation from grant as in British Leyland Motor Corp Ltd v Armstrong Patents Co Ltd117 does not apply to the database right. This was confirmed in Mars UK Ltd v Teknowledge Ltd118 in which the claimant designed and made coin-operated machines which had discriminators containing data used to determine whether a coin was genuine. The defendant reverse engineered storage devices to obtain the data which enabled him to provide recalibration services to owners of these machines. Jacob J, as he then was, confirmed that a defence based on the ‘right to repair’ in British Leyland was not applicable as there was no specific provision for such a defence either in EU or domestic legislation.

Rights of licensees 6.87 Exclusive and non-exclusive licences may be granted in relation to the database right. These may be partial, for example, giving the licensee a right to extract and re-utilise the contents of a database for a limited period of time or perhaps limiting the access to specified parts of the database or to works, data or information of a specified category or description. As the rights of the owner cover both extraction and re-utilisation, the licensee may be granted the right to extract and consult data but not to further make them available to the public. 117 118

[1986] AC 577. [2000] FSR 138.

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Rights and obligations of lawful users 6.89 6.88 The normal rules that apply to licensees under copyright apply, mutatis mutandis, to the database right. For example, an exclusive licensee has the right to sue for any infringement falling within the rights granted under the licence. Normally, the owner of the database right will be joined in the action.119 Regulation 23 of the Copyright and Rights in Databases Regulations 1997 applies sections 96 to 102 of the Copyright, Designs and Patents Act 1988 to the database right. These sections cover rights and remedies of the copyright owner and exclusive licensee. Since the Regulations were made, there have been some changes to this part of the Copyright, Designs and Patents Act 1988. In particular, section 101A has been added120 which provides for proceedings to be commenced by non-exclusive licensees. This is possible where the alleged infringing act falls within the licensed acts, where the licence is in writing and where it expressly grants the right to bring proceedings. It is almost beyond doubt that this provision will also apply to the database right even though introduced later. Indeed, it would not make sense if a non-exclusive licensee of a database in which both copyright and the database right subsist could only bring proceedings for infringement of copyright and not database right where the acts complained of would infringe both rights and fall within the scope of the licence. Where proceedings are brought by a non-exclusive licensee, the usual rules apply as to joining the owner in the action or vice versa.

Presumptions 6.89 As with copyright, there are a number of useful presumptions so that the owner does not have the burden of proof in relation to certain matters. It is for the defendant to prove the contrary. Under regulation 12(2) of the Copyright and Rights in Databases Regulations 1997, where a name purporting to be that of the maker of the database appears on copies when published or on the database when it was made, it is presumed that that person was the maker of the database and that it was not made in circumstances within regulation 14(2) to (4), being where the maker was an employee making the database in the course of his employment or where it was made by or under the direction of Her Majesty or either or both Houses of Parliament. 119

If the action is brought by the owner of the database right and the alleged infringement falls within the scope of the licence, the exclusive licensee will usually be joined in the action. Indeed, the leave of the court would be required for either to proceed without joining the other: section 102 of the Copyright, Designs and Patents Act 1988. 120 By the Copyright and Related Rights Regulations 2003, SI 2003/2498.

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6.90 The sui generis database right In other words, it is presumed that the named maker was the first owner of the database right. If ownership of the database right is an issue in litigation, it will be for the defendant to show that the claimant is not the owner.121 Regulation 14(4A) provides for ownership where a database was made by or under the direction of the Scottish Parliament but there is no reference to this provision in regulation 12(2).122 This is probably an oversight though unlikely to be of much practical significance. 6.90 Under regulation 22(3), where copies of a database as published bear a label or mark stating that a named person was the maker of the database or that it was first published in a specified year, then the label or mark is admissible as evidence of the facts stated and presumed correct until the contrary is proved. The presumption should only relate to the facts identifying the maker and/or year of first publication and not to any other facts stated on the label or mark. This is because the Directive places the burden of proof on the maker as to the date of completion of the making of the database and whether the criteria exist for a substantial modification of the database to be such that it attracts a new term of protection.123 6.91 Where the database has joint makers, the presumptions apply in relation to each person alleged to be one of the makers. Where a database is jointly made by a self-employed person and an employee, such as were a consultant is hired in to collaborate with an employee in the making of a database, and both are named as the makers of the database a defendant also will have the difficult task of proving that the employee maker was acting as an employee in the course of his employment. 6.92 The first presumption can apply to a database made available either online or by distributing it on physical media such as a CD or DVD as the presumption applies to copies of the database and to the database when it was made. Therefore, where a database is made available online it makes sense to state the name of the maker of the database on an opening screen display when the database is accessed. It also makes sense to place rights management information on that screen display indicating other information

121

It may be that the claimant is a licensee with title to sue and the defendant claims that the licensor is not the owner. 122 Regulation 14(4A) was inserted by the Scotland Act 1998 (Consequential Modifications) (No 1) Order 1999, SI 1999/1042. 123 Recitals 53 and 54.

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Remedies 6.95 c oncerning the author and owners of any intellectual property rights subsisting in the contents, if applicable, and the terms and conditions of use of the database. The same applies to copies published on tangible media. Such information should be built into the software to be displayed on an opening screen when the database is accessed or opened. The reason is that the provisions in section 296ZG of the Copyright, Designs and Patents Act 1988 relating to electronic rights management information also apply to the database right, mutatis mutandis.124

REMEDIES 6.93 The Directive on the infringement of intellectual property rights applies also to the database right. As seen under the section on remedies in Chapter 2 this provides a formula for the assessment of damages as well as requiring, at a successful claimant’s request, publication of the judgment at the defendant’s expense. It also brings a statutory order in Scotland equivalent to the Norwich Pharmacal Order. 6.94 The remedies for infringement of the database right are the usual ones applying to copyright works. Thus, damages, injunctions, accounts or otherwise are available as well as additional damages in accordance with sections 96 and 97 of the Copyright, Designs and Patents Act 1988. Regulation 23 applies sections 96 to 102 of the Act to the database right. There is no express mention of section 97A (injunctions against service providers) but this must be taken to be included. The other provisions in sections 96 to 102 include delivery up, the limited ‘self-help’ right of seizure, the rights of exclusive and some non-exclusive licensees to bring proceedings and the exercise of concurrent rights. The supplementary provisions in sections 113 and 114 also apply (period after which delivery up is no longer available and orders for disposal of infringing copies and other articles). 6.95 Where the person infringing the database right uses the contents he has unlawfully taken to create a competing database, that would be relevant to the issue of damages.125 Where the infringer uses the contents he has 124

The provisions on electronic rights management information are discussed more fully in Chapter 7. 125 See, for example, Apis-Hristovich EOOD v Lakorda AD, Case C-545/07, EU:C:2009:132 at para 50.

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6.96 The sui generis database right extracted from the protected database other than for producing a competing database, an assessment of damages may be based on the licence fee he would have paid had he sought the authorisation of the database owner. Other economic effects detrimental to the database owner may also be relevant. For example, others may have infringed the right by taking licences from the primary infringer or be incentivised to do likewise. Even where there is serious adverse economic impact, other factors may be relevant in the light of the enforcement directive such as the profit made by the infringer or the moral prejudice suffered by the owner. In the UK, regulation 3 of the Intellectual Property (Enforcement, etc.) Regulations 2006 could be applied directly.126 6.96 Section 98 of the Copyright, Designs and Patents Act 1988 limits an award of damages or an account where licences are available as of right, following a report by the Competition Commission under section 144 of the Copyright, Designs and Patents Act 1988, providing the defendant undertakes to take such a licence on terms to be agreed or fixed by the Copyright Tribunal. The limit is double what would have been payable under such a licence and no injunction shall be ordered. However, it is unlikely that this provision applies to the database right as section 144 is not expressly applied to the database right even though section 98 is one of those sections stated to apply to the database right.

LICENSING SCHEMES 6.97 Schedule 2 to the Copyright and Rights in Databases Regulations 1997 contains provisions for licensing schemes and licensing bodies. A licensing body is able to negotiate and grant licences in respect of databases of more than one maker. A scheme under copyright is one operated by the Copyright Licensing Agency which grants licences allowing the copying of parts of books and journals of numerous publishers to educational establishments. For example, this allows multiple copies of one chapter of a book within the scheme to be made to give to students at an educational establishment. The idea is that such schemes could be used for databases subject to the database right. 126

SI 2006/1028. Regulation 3, almost certainly, is to the same effect as the provisions for damages (including additional damages) and accounts under the Copyright, Designs and Patents Act 1988.

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Circumvention of effective technological measures 6.100 6.98 The Copyright Tribunal has jurisdiction to determine certain matters relating to proposed and existing licensing schemes, for example, to confirm or vary the scheme or settle disputes relating to licensing schemes. The jurisdiction of the Copyright Tribunal is extended to cover licensing schemes for the database right. 6.99 Existing schemes for copyright works do not yet cover works in electronic form. This has been criticised in the Gowers Review of Intellectual Property which has recommended e xtending the permitted acts under copyright to cover electronic copying.127 In this way, licensing bodies may be encouraged to extend their schemes to licensing the making of electronic copies for transmission to students by electronic mail or placing in virtual learning environments. If this happens, it is likely to apply also to the database right. Hargreaves recommended the creation of a Digital Copyright Exchange and moves towards a cross-border copyright licensing scheme.128 The European Commission is presently looking at a digital agenda for Europe which may culminate in changes to copyright law and the introduction of provisions on cross-border licensing and collective licensing.129

CIRCUMVENTION OF EFFECTIVE TECHNOLOGICAL MEASURES 6.100 Sections 296ZA to 296ZF of the Copyright, Designs and Patents Act 1988 provide civil remedies and, in some cases criminal offences, in relation to the circumvention of effective technological measures which are designed to protect a work of copyright other than a computer program. These provisions, which are described more fully in Chapter 7, also apply, mutatis mutandis, to the database right.130 Thus, where access to a database is controlled by an access protocol or by encryption or scrambling to prevent the unauthorised extraction or re-utilisation of the contents of the database

127

Gowers Review of Intellectual Property, HMSO, December 2006 at p 48. Professor Hargreaves, Digital Opportunity: A Review of Intellectual Property and Growth, May 2011 at pp 26–52. 129 See European Commission, Communication from the Commission on content in the Digital Single Market, COM(2012) 789 final, Brussels, 18.12.2012. 130 They also apply to rights in performances and the publication right. 128

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6.101 The sui generis database right and a person knowingly circumvents those measures, the owner of the database right is given a right to bring proceedings against that person. Making or importing any device, product or component primarily designed to overcome such measures and certain other acts brings criminal liability.

COMMISSION REPORT 2005131 6.101 Article 16(3) provides for regular Commission reports on the application of the Directive. So far, there has only been one. It noted that there had been some criticism of the sui generis database right. In particular, critics claimed that it was unclear in scope, that it could lock up data and information to the detriment of the academic community and industries depending on the availability of data and information and that it failed to adequately protect investors in database products. 6.102 There was some concern that the economic impact of the Directive was not proven, and it did not appear that it had encouraged an increase of the production of databases within the EU. However, the EU database industry was generally opposed to repealing the Directive and, if it was repealed, the greatest effect would be on the common law jurisdictions. On the problem of uncertainty, the Commission noted that prior to the Directive, no Member State had a comparable system of protection in place. If the sui generis right were to be repealed, there was a danger that some Member States would introduce a ‘sweat of the brow’ type of protection for databases under copyright law. This would have the negative impact of reducing harmonisation, prejudicing the Single Market to that extent. 6.103 By its rulings in cases such as the British Horseracing Board case and the Fixtures Marketing cases, the Court of Justice has allayed fears that monopoly rights could exist in data, locking up data from other users and database producers. The Commission presented three policy options, being: ••

the repeal of the whole Directive;

••

the repeal of the sui generis right; and

••

amending the sui generis right.

131

European Commission, First evaluation of Directive 96/9/EC on the legal protection of databases, 12 December 2005.

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Evaluation and Fitness Check Roadmap 6.106 6.104 Since the 2005 Commission report, there have been no further Commission reports. However, in 2017, the Commission launched a Roadmap for Evaluation of the database Directive, discussed below.

EVALUATION AND FITNESS CHECK ROADMAP132 6.105 The purpose of the evaluation is twofold. First, to assess whether the Directive still fulfils its policy goals of providing protection of databases, including those not protected by copyright, whilst taking into account of users’ legitimate interests. Secondly, to determine whether the Directive is still adapted in view of the development of new technologies and new business models based on data exploitation and other emerging data-related issues, policies and legal frameworks on data access and ownership, stemming particularly from the Digital Single Market (DSM) Strategy. 6.106 The evaluation will cover these topics from the point of view of the relevance, effectiveness, efficiency, coherence and EU added value. The issues to be examined will be: ••

the extent to which the sui generis and copyright protection of databases has been used and deemed relevant, efficient and effective;

••

the extent to which the protection offered under the Directive has helped in protecting investment in the creation of databases and has constituted an added-value for database makers;

••

whether the balance between the protection of database makers and the legitimate interests of lawful users has been achieved;

••

whether the sui generis protection regime of databases is fit for purpose in an increasingly data-driven economy;

••

what the effect is of this protection regime on access and (re-)use of databases financed from public budgets (for example, scientific research results resulting from public funding);

••

what the costs are (for example, administrative and regulatory) linked with the application of the Directive. The evaluation will also assess whether some divergences in the interpretation of the Directive have

132 European

Commission, Ref. Ares(2017)2543859 - 18/05/2017. Available at https:// ec.europa.eu/info/law/better-regulation/initiatives/ares-2017-2543859_en.

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6.107 The sui generis database right emerged across Member States, in particular as regards the sui generis right (for instance, as regards the protection of ‘spin-off’ databases (databases that derive from a primary activity which is the creation of data). 6.107 The evaluation documents notes the effects of important Court of Justice rulings, especially the British Horseracing and Football Fixtures cases which effectively cut-down the scope of protection by the sui generis right and the Ryanair case excluding the operations of the Directive’s restrictions on restrictive contractual terms for databases protected neither by copyright nor the sui generis right under the Directive. A 12-week open public consultation was invited under the Evaluation. No further information on the future of the Directive is available at the time of writing. 6.108 Given the significant changes to copyright law since the introduction of the database right, especially under the Directive on copyright and related rights in the information society, as discussed in the following chapter, most of which have had no or little impact on the sui generis right, it is timely that the scope of this right is re-evaluated and brought up to date. Exemptions to infringement are in need of reassessment and it is time to remove the distinction between the creation of the contents of a database and the collection of those contents from pre-existing materials.

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Chapter 7

Copyright in the information society

INTRODUCTION 7.1 Data, information, copyright works and other materials may be created in, converted into, stored in, disseminated and transmitted in, digital form.1 This has significant implications in relation to legal protection and control of unauthorised uses. Works in digital form may be copied at no cost and on an unprecedented scale, largely as a result of the internet. Copyright works and works subject to related rights, such as rights in performances, are now much more vulnerable than was once the case. It soon became clear that existing laws on copyright and related rights had to be adapted to address the challenges posed by communications networks and multimedia. The World Intellectual Property Organisation adopted two new Treaties, the ‘WIPO Copyright Treaty’ (WCT) and the ‘WIPO Performances and Phonograms Treaty’ (WPPT) in 1996.2 These Treaties incorporated some features already implemented on a European scale, such as the protection of computer programs and databases, but provided a number of adaptations and extensions to the scope of copyright and related rights. The Treaties, dealing with the ‘digital agenda’ and aimed at improving the fight against piracy, led to a Directive on the harmonisation of certain aspects of copyright and related rights in the information society.3

1

2 3

Images of three-dimensional works, such as sculptures, may be rendered in digital form. Alternatively, drawings or coordinates describing the object may be represented by digital code or formulae used to generate the code. Both of these Treaties and the Agreement on Trade-Related Aspects of Intellectual Property Rights (the ‘TRIPs Agreement’) are now part of the legal order of the EU. Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10 (‘Directive on copyright and related rights in the information society’).

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7.2 Copyright in the information society 7.2 Particular issues dealt with by the Directive included a reproduction right, a right of communication to the public, a distribution right and provisions to protect technological measures applied to works to prevent unauthorised uses and provisions to protect ‘rights management information’. The rights are subject to exceptions and limitations, a particular example being a specific exemption to apply to temporary acts of reproduction, for example, where the reproduction is transient and made for the purposes of onward transmission between third parties, such as, through an internet service provider’s equipment. The rights granted by the Directive apply in respect of copyright works and in respect of performances.4 The provisions on technological measures and rights management information also apply to the sui generis database right and the publication right.5 7.3 The Directive is without prejudice to the Directives on the legal protection of computer programs,6 the legal protection of databases7 and the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission.8 Modifications are made to two Directives, being the Directive on rental right and lending right, etc.9 and the Directive on the term

4 5

6

7 8

9

Other rights related to copyright such as in respect of phonograms, first fixations of films and fixations of broadcasts also are covered by some of the rights. The publication right protects old works in respect of which copyright has expired but are first published subsequently. The protection lasts for 25 years from the end of the calendar year during which the work was first lawfully published or lawfully communicated to the public: regulation 16 of the Copyright and Related Rights Regulations 1996, SI 1996/2967. The right first appeared in the Directive on the harmonisation of the term of protection of copyright and certain related rights (Article 4). Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs, OJ L 111, 05.05.2009, p 16. This codified version replaced the original Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, OJ L 122, 17.05.1991, p 42 (the original Directive is, of course, referred to in the information society Directive). Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases, OJ L 77, 27.03.1996, p 20. Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, OJ L 248, 06.10.1993, p 15. Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field

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Introduction 7.4 of copyright.10 These modifications are of no real relevance to the subject matter of this book.11 However, in Verening Operbare Bibliotheken v 12 Stiching Leenrecht, the Court of Justice ruled that the public lending right applies to digital copies of books. This requires that the copy is placed on the server of a public library from where it may be downloaded by the user onto his own computer. Only one copy may be downloaded and at the end of the lending period, that copy is no longer accessible by that user. In other words, lending e-books by public libraries is permissible where such lending mimics the position where a physical book is lent out by a public library. The digital copy of the book must have been placed in circulation by the first sale or other transfer of ownership by the holder of the right of distribution to the public, or with his consent. The digital copy must not have been obtained from an illegal source. 7.4 The Directive on copyright and related rights in the information society was implemented in the UK by the Copyright and Related Rights Regulations 2003.13 The Regulations also adjust other provisions of the Copyright, Designs and Patents Act 1988, in particular to improve compliance with the Directive on the legal protection of computer programs.14 Article 5(3)(b) of the Directive was itself modified to ensure that it was without prejudice to the Directive on permitted uses for the benefit of persons who are blind, visually impaired or otherwise print-disabled.15

10

11

12 13 14 15

of intellectual property (codified version) OJ L 376, 27.12.2006, p 28, replacing Council Directive 92/100/EEC of 19 November 1992 on rental right and on lending right and on certain rights related to copyright in the field of intellectual property, OJ L 346, 27.11.1992, p 61. Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights (codified version) OJ L 372, 27.12.2006, p 12, replacing Council Directive 93/98/EEC harmonising the term of protection of copyright and certain related rights, OJ L 290, 24.11.1993, p 9. The provisions on the term of copyright in sound recordings are modified and a provision in the latter Directive is deleted (now being redundant) and a new Article 10(3) is substituted in that Directive. These changes were made by Article 11 of the Directive on certain aspects of copyright and related rights in the information society. Case C-174/15, EU:C:2016:856. SI 2003/2498. Inserting the permitted act of observing, studying and testing of computer programs (section 50BA), replacing the previous provision under section 296A(c). Directive 2017/1564/EU of the European Parliament and of the Council of 13 September 2017 on certain permitted uses of certain works and other subject matter protected by

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7.5 Copyright in the information society

LAYOUT OF THIS CHAPTER 7.5 Before looking at the provisions of the Directive and their implementation by the Regulations, some aspects of the subsistence of copyright and the exclusive rights of the owner are discussed in relation to the internet, online access and information technology generally. Next, the provisions of the Directive will be described, with reference, where appropriate, to the implementation by the UK Regulations. In particular, the rights provided for by the Directive and exceptions and limitation to them are considered in some detail together with what is now a growing body of case law on these aspects of the Directive. 7.6 The protection of technological measures intended to prevent or restrict unauthorised access or use of protected works and related rights is considered including the introduction of associated criminal offences in the UK.16 The provisions aimed at protecting electronic rights management information are then considered. The latter part of this chapter looks at remedies followed by injunctions against internet service providers, followed by the provisions in the UK’s Digital Economy Act 2010 aimed at tackling online infringement of copyright and the mechanism to collect information about infringers and systems to deal with repeat infringers are looked at. These provisions have been subject to a legal challenge by internet service providers on a number of grounds, which largely failed to find sympathy in either the High Court or the Court of Appeal. Nevertheless, it does not look likely that the proposals will come into practice in their present form. 7.7 We finish the chapter looking at the recent EU Regulation on crossborder portability of online content services to facilitate the availability of such services to subscribers temporarily situated in another Member State, for example, persons on holiday or away from their own Member State for work or business activities. Finally, the provisions of the proposed Directive on copyright in the digital single market are summarised. copyright and related rights for the benefit of persons who are blind, visually impaired or otherwise print-disabled and amending Directive 2001/29/EC on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 242, 20.9.2017, pp 6–13. 16 The provisions relating to the circumvention of copy-protection measures applied to computer-programs are quite distinct and are described in Chapter 3.

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Subsistence and exclusive rights 7.8

SUBSISTENCE AND EXCLUSIVE RIGHTS 7.8 Principles of copyright subsistence and the exclusive rights of the copyright owner are as they apply generally. However, there are some specific characteristics of the internet and publishing online which are worth considering. Works are made available in a number of formats, for example, in HTML (HyperText Markup Language) or PDF (Portable Document Format) files. Static images, moving images and sounds may be made available in a number of other formats.17 Most of these present no atypical problems but it is arguable that an HTML file may be subject to copyright in its own right, apart from the rights in any works incorporated into or associated with the file. In many cases, a great deal of skill and judgement is expended on designing and writing the HTML file.18 In some respects, it could be seen as an electronic equivalent to a typographical arrangement of a published edition.19 PDF files are created by submitting the work in question to software which automatically creates the PDF version of the file or by saving a document in that format where this is available. Where a PDF file is created by simple conversion of an existing file in some other format, there should be no question of a separate copyright arising in the PDF version, unless the resulting file could be deemed to be a computer-generated work.20 This would seem unlikely as the potential of copyright protection for computergenerated computer programs has already been criticised by the European Commission.21 Of course, copying a PDF file created by a simple process of conversion from a file in another format will infringe the copyright in

17

For example, JPEG and MPEG (including MP3 and MP4). And associated cascading style sheet files, if any. 19 Though there is no requirement for a copyright typographical arrangement of a published edition to be either the result of skill and judgment or an intellectual creation. 20 In Nova Productions Ltd v Mazooma Games Ltd [2006] EWHC 24 (Ch), [2006] RPC 14, at first instance, Kitchen J seemed to accept that screen displays generated during the playing of a video game could be computer-generated works. The person who made the arrangements necessary for the creation of the displays (that is, its author) was the person who devised the logic and rules used in the game, wrote the programs and devised the graphic elements. It was not the person playing the game. See Chapter 3 for more on computer-generated works. 21 Report from the Commission to the Council, the European Parliament and the Economic and Social Committee on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs, COM(2000) 199 final, 10.04.2000, p 10. 18

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7.9 Copyright in the information society the original as copying can be indirect and it matters not if intervening acts infringe copyright.22

Webpages and HTML files 7.9 A website is usually a complex work which may comprise of textual works, artistic and video works, music and other works. It is a collection of data and information together with commands, formatting and other materials contained in HTML and associated files created and developed by the website designer. Copyright may operate on a variety of levels, such as copyright in individual works, in the collection as a compilation and, arguably, in the s tructural elements. In Website Layout,23 the Supreme Court of Austria accepted that copyright may subsist in the underlying files and in the user interface generated by the files. 7.10 Writing an HTML file bears some resemblance to writing a computer program. Indeed, many files include or call up small computer programs, usually written in the Java programming language and/or cascading style sheet files. There will be an overall design including consideration of the structure, the choice of works to be included and whether they will be embedded or linked to from the file. A ‘look and feel’ will be selected. Typefaces and their attributes will be chosen as will be text and image positioning and scaling. Techniques for navigating the file will be embedded. HTML tags are used throughout the file, for example, to format text, to call up images and other works, to link internally and externally, to set out tables and forms and so on.24 Even though software is usually used to assist in the creation of HTML files, they are often the result of considerable skill and judgement (or intellectual creativity) on the part of their authors. Below, Figure 7.1 shows an example of a small extract from an HTML file together with part of the resulting output.

22

Section 16(3) Copyright, Designs and Patents Act 1988. [2003] ECDR 23. 24 Source HTML files can sometimes be viewed by the person accessing the files as displayed. 23

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Subsistence and exclusive rights 7.10

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7.11 Copyright in the information society

Figure 7.1 Extract from HTML file and resulting webpage o utput

Compilation copyright 7.11 For copyright purposes, literary works include, inter alia, tables and compilations, other than databases.25 As a database is defined in terms of being a collection of independent works, data or other materials arranged in a systematic or methodical way which are individually accessible by electronic or other means,26 it is unlikely that HTML files can be classed as databases. The contents of an HTML file for a webpage (and files linked to the HTML file) cannot be said to be independent of each other. They are selected to be integral parts of a coherent whole. For compilation copyright to subsist, it is sufficient if the selection and arrangement of the contents constitute the author’s intellectual creation.27 It does not matter whether its constituent parts are commonplace or in the public domain.28 This should be the case even if

25

Section 3(1) of the Copyright, Designs and Patents Act 1988. Databases are a separate category of literary works. 26 Section 3A(1) of the Copyright, Designs and Patents Act 1988. 27 The test used in the Berne Convention under Article 2(5) whereby collections of literary or artistic works are protected. Under the sections 1 and 3(1)(a) of the Copyright, Designs and Patents Act 1988, it is sufficient for the compilation to be ‘original’. Databases, having their own distinct protection as literary works, cannot be compilations. 28 Macmillan & Co Ltd v K & J Cooper (1923) 93 LJPC 113.

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Subsistence and exclusive rights 7.14 the contents are not even works of copyright at all. That is not to say that a constituent part of a website may not be a database. 7.12 Compilation copyright is unaffected by the Directives on the legal protection of databases and the legal protection of computer programs. The test for originality should be, therefore, simply that the work originates from the author and requires the application of more than minimal labour, skill or judgement.29 On this basis it would seem that all but the most trivial of HTML files should reach the standard of originality required for copyright to subsist. Even if the selection of material to be included does not require much in the way of taste or judgement, the presentation of the material will usually require literary taste, skill or judgement in relation to both design and execution. 7.13 The protection afforded by compilation copyright may extend to ‘look and feel’. In Ibcos Computers Ltd v Barclays Mercantile Highland Finance Ltd30 Jacob J held that compilation copyright applied to software comprising over 100 separate programs linked together. Taking the overall structural linkages would appear to infringe even if the individual programs were not infringed. Copyright here is working at a different level. In this sense, a complex website comprising many pages which have been linked together in a particular way, requiring skill and judgement, should have this form of protection. Taking the structural elements (or a substantial part) will infringe even if the content is not taken. In this way, it is theoretically p ossible that the ‘architecture’ of a website may be protected, providing that sufficient skill and judgement (or intellectual creation) has gone into its making.

Artistic works and films 7.14 The screen display generated by an HTML file may be deemed to be an artistic work. ‘Artistic work’ includes ‘graphic work’ which in turn 29

The test used by Lord Atkinson in MacMillan v Cooper, op cit, at 121, was ‘knowledge, labour, judgment or literary skill or taste applied to the compilation’. This was approved in a case involving an allegation of copyright infringement in relation to a few pages of information of the sort commonly found in diaries in G A Cramp & Sons Ltd v Frank Smythson Ltd [1944] AC 329. The House of Lords held that the commonplace nature of the tables alleged to have been copied left no room for taste or judgment and, consequently, their selection did not comprise an original literary work. Whether the traditional UK approach conforms with the Berne Convention is a moot point. 30 [1994] FSR 275.

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7.15 Copyright in the information society includes ‘any painting, drawing, diagram, map, chart or plan’: section 4(1) and (2) of the Copyright, Designs and Patents Act 1988. There is no need for artistic quality. It is highly arguable that a webpage incorporating graphic elements generated by an HTML file falls within this meaning. Furthermore, the definition of ‘graphic work’ is not an exhaustive one. In Nova Productions Ltd v Mazooma Games Ltd31 the Court of Appeal accepted that each frame displayed during the operation of a computer game was a graphic work and, hence, an artistic work.32 7.15 In the case of moving images generated by an HTML file,33 the file may be considered to be a copyright film. A ‘film’ is a ‘recording on any medium from which a moving image may by any means be produced’: section 5B(1). This is a very wide definition and there is little doubt it applies to any sequence of images that give the appearance of moving. A further factor is that there is no need for a film to be ‘original’ for copyright to subsist in it.34 7.16 Copying in relation to a film includes making a photograph of the whole or any substantial part of any image forming part of the film.35 The definition is not exhaustive. A ‘photograph’ means a recording of light or other radiation on any medium on which an image is produced or from which an image may by any means be produced, and is not part of a film.36 A wide definition. A still image (freeze-frame) taken from a webpage containing moving images will infringe, whether taken by film photography, digital photography or simply by being ‘saved’ to storage media. Even taking part of a single frame will infringe providing it is a substantial part. In this case, substantiality must be considered in relation to the moving images. Where a webpage displayed on screen contains a mixture of static text and moving images, 31 32

33 34 35 36

[2007] EWCA Civ 219, [2007] RPC 25. At first instance, Kitchen J thought the frames to be graphic works as they looked very much like paintings or drawings: Nova Productions Ltd v Mazooma Games Ltd [2006] EWHC 24 (Ch), [2006] RPC 14 at para 100. However, the Court of Appeal rejected the notion that the series of artistic works generated by running a computer game was a separate artistic work going beyond the ‘freeze-frame graphics’. As Jacob LJ said (at para 16) ‘a series of drawings is a series of graphic works, not a single graphic work in itself’. Of course, moving images generated by other forms of file are subject to the same principles. It is arguable that the test of intellectual creation applies as cinematographic works are protected under the Berne Convention. Section 17(4). Noted in Norowzian v Arks (No 1) [1998] FSR 394. Section 4(2).

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Subsistence and exclusive rights 7.17 if only the static text is photographed, film copyright should not be infringed. The text, of course, may have its own copyright as a literary or dramatic work as the case may be.

Typographical arrangement and ‘look and feel’ 7.17 ‘Published edition’ in the context of the typographical arrangement of a published edition means the published edition of the whole or any part of one or more literary, dramatic or musical works.37 The author of a typographical arrangement of a published edition is its publisher.38 There is no specific guidance on what constitutes publication for the purposes of typographical arrangements though, in the context of literary, dramatic or musical works, section 175(4) states, inter alia, that it does not include communication to the public (otherwise than for the purposes of an electronic retrieval system). It is unlikely that the legislative draftsmen envisaged online publishing when drafting the Copyright, Designs and Patents Act 1988. However, section 28A, inserted by the Copyright and Related Rights Regulations 2003, makes it clear that typographical arrangements of published editions may be copied electronically (and therefore also published in this way). Section 28A provides a permitted act in relation to making temporary copies, for example, where a work is transmitted between third parties through an intermediary.39 There is no requirement for typographical arrangement copyright to be original in the copyright sense. However, according to Lord Hoffmann in Newspaper Licensing Agency Ltd v Marks & Spencer plc,40 protection is directed to the skill and labour in creating the overall design. He went on to say (at para 23): It is not the choice of a particular typeface, the precise number or width of the columns, the breadth of margins and the relationship of headlines and strap lines to the other text, the number of articles on a page and the

37

Section 8(1) of the Copyright, Designs and Patents Act 1988. Note that artistic works are not included in the meaning of typographical arrangement of a published edition. 38 Section 9(2)(c). The duration typographical arrangement copyright is 25 years from the end of the calendar year during which the edition was first published: section 15. 39 This provision is in Article 5(1) of the Directive on copyright and related rights in the information society and is discussed in more depth later. Section 28A expressly includes typographical arrangements of published editions. 40 [2001] UKHL 38, [2003] 1 AC 551. This case concerned the typographical arrangement of a newspaper.

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7.18 Copyright in the information society distribution of photographs and advertisements but the combination of all of these into pages which give the newspaper as a whole its distinctive appearance. 7.18 The overall design of a webpage, as expressed in the HTML file, for example, should be protected by typographical arrangement copyright.41 Logically, it would seem that any included artistic works should be ignored but Lord Hoffmann’s reference to photographs contradicts this. Artistic works placed within the typographical arrangement contribute to the overall design and the definition of a typographical arrangement of a published edition does not say that works other than literary, dramatic and musical works may not be included or, for that matter, other materials not subject to copyright. 7.19 If it is the skill and labour in creating the overall design of the published edition that is protected, this is not far away from saying that it is the look and feel of the edition that typographical arrangement copyright protects. If that is so, then anyone copying the overall design of a particular website will infringe that copyright even if the content is not copied but fresh material used instead. But herein lies a problem. Infringement of a typographical arrangement by copying means making a facsimile copy of the arrangement under section 17(5). A facsimile copy includes a copy which is reduced or enlarged in scale.42 This form of infringement was clearly intended to apply to photocopies and copies made by facsimile machines and, possibly, also copies scanned into a computer electronically.43 It is submitted that typographical arrangement copyright can only be infringed if the content (or a substantial part of it) is also taken. Therefore, copying the look and feel of a webpage44 (or website) without also copying a substantial part of the content should not infringe any typographical arrangement copyright.45

41

The same principles should apply to documents, such as PDF files, which can be downloaded from a website. 42 Section 178. 43 Although section 17(2) states that copying in relation to a literary, dramatic, musical or artistic work means reproducing the work in any material form which includes storing the work in any medium by electronic means, there is no equivalent provision for typographical arrangements. 44 In Newspaper Licensing Agency v Marks & Spencer, Lord Hoffmann suggested that the skill and labour in devising a typographical arrangement could not be expressed in anything less than a full page (at para 23). 45 However, infringement through a compilation copyright may yet apply.

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Subsistence and exclusive rights 7.22 7.20 The Copyright, Designs and Patents Act 1988 does not class typographical arrangement copyright among the ‘original works’. It is arguable that at least some skill, judgement or labour is required otherwise it would fail to be a ‘work’. Where a webpage or document available via a website lacks skill, judgement or labour in its overall design, it should not be subject to a typographical arrangement copyright. An example might be a PDF file created from a simple word-processed document with little or no thought given to its overall layout. It might be otherwise if the document has been created using desktop publishing software.

Linking and deep linking 7.21 It is common for links to be provided from one website to third party websites. An electronic document may also contain hypertext links to websites. In most cases, the owner of the target websites will not object to this and may positively encourage it. There may be a problem, however, if the target website is a commercial one and the link is not to the ‘front page’ of the website, which is likely to carry premium cost advertising content. This form of linking is known as ‘deep-linking’. 7.22 Case law on linking and deep linking is, unfortunately, unsatisfactory and contradictory. In the United States it has been held that deep linking infringes copyright in the material linked to. In Live Nation Motor Sports Inc v Davis,46 an interim injunction was granted to prevent linking to audio webcasts provided by the claimant. Conversely, in a German case, P layboy,47 the Bundesgerichstof held that links to material on third party websites did not infringe copyright in that material, providing it had been placed on the website without technological measures applied to the material to prevent unauthorised use. This also applied to deep-linking even if it conflicted with the owner’s interests in realising advertising revenue on the front page of his website. In Playboy, the defendant provided a search service for current news. Numerous websites were analysed and the material on them made available through a single internet address. As no technological measures to prevent unauthorised use had been applied to the material in question, 46

US Northern District Court Texas, 12 December 2006. An earlier dispute about deeplinking was settled by Microsoft Corp agreeing not to deep-link into Ticketmaster Corp’s website: New York Times, 15 February 1999. 47 [2005] ECDR 7.

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7.23 Copyright in the information society the court held that the owners of the material were to be taken to have enabled any use which an on-demand user could make. Nor was any copyright or sui generis database right in any databases on the websites infringed. This was so even though, in respect of the database right, there had been repeated and systematic extraction and reutilisation of parts of the contents of the database. 7.23 There are other conflicting cases in Europe. For example, in Danske Dagblades Forening v Newsbooster48 it has held that deep-linking infringed copyright in the material linked to but in Algemeen Daglad BV v Eureka Internetdienster49 it was held that it did not. By deep linking, the user would by-pass the home page and the advertising it carried but the decision where to place advertising was the choice of the website owner. So, if the advertising revenue was compromised by third parties providing deep links, that was the owner’s own problem. In Google Inc v Coprepresse SCRL,50 the Court of First Instance in Brussels held that linking infringed copyright51 and also infringed the authors’ moral rights. Infringement also occurred by caching the newspaper headlines which provided the links. 7.24 The only case in the UK involving copyright and deep linking was Shetland Times Ltd v Dr Jonathan Wills.52 Although an interim hearing only,53 it was held by Lord Hamilton that there was an arguable case of infringement of copyright in the headlines used to access the articles on the pursuer’s website. The headlines typically comprised some eight or so words designed to impart information. Although there may have been an issue as to whether they were, in themselves, works of copyright on the basis of the de minimis principle, the defendant conceded that they might be works of copyright.54 It was also held that the defendant infringed copyright by including the articles to which the headlines applied in a cable programme service.

48 49 50 51 52 53 54

[2003] ECDR 5. In the Copenhagen City Court. [2002] ECDR 1. In the Rotterdam District Court. [2007] ECDR 5. Particularly by providing an ‘information portal’. [1997] FSR 604. In the Court of Session Outer House, Scotland. An appeal was lodged but the case settled just before it was heard. Previous case law has suggested that simple slogans (‘Beauty is a social necessity, not a luxury’) and titles (‘The Man Who Broke the Bank at Monte Carlo’) were too trivial for copyright protection. See Sinanide v La Maison Kosmeo (1928) 139 LT 365 and Francis Day and Hunter Ltd v Twentieth Century Fox Corp Ltd [1939] 4 All ER 192 respectively.

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Subsistence and exclusive rights 7.26 Cable programmes were a separate work of copyright until their assimilation into broadcasts.55 A cable programme was any item included in a cable programme service which in turn was defined as ‘a service which consists wholly or mainly in sending visual images, sounds or other information by means of a telecommunications system’.56 Reception was to be at two or more places, whether or not simultaneously. Interactive systems were excluded. Because of changes to the Copyright, Designs and Patents Act 1988, the Shetland Times case is of little practical import nowadays. The relevant restricted act, which now potentially might apply, is that of communicating the work to the public. 7.25 The author’s view is that neither linking nor deep linking should infringe copyright in the material accessed providing the website is a ‘free access’ website. That is, the material is not on a website which can be accessed only on payment or has some form of technological measures applied to prevent or restrict access by third parties. This might be the case in a website where access is available only to those paying a subscription fee. The act of communicating a work to the public includes making it available to the public ‘by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them’.57 The owner of an open access website has carried out the act of communicating the material on the website to the public. He must also be taken to have consented to persons accessing the website making transient copies of the material in their computer random access memories, at the very least.58 A person providing links to the website merely facilitates access by the public. He does no more than this. Of course, if is a different matter is the material is copied and placed on another website. 7.26 The owner of a commercial website decides how that website is to be structured and where advertising material should be placed. The onus ought to be on him to design the website in a way which reflects that others may

55

By virtue of the Copyright and Related Rights Regulations 2003, SI 2003/2498. Cable programmes were defined in section 7 of the Copyright, Designs and Patents Act 1988, now repealed. 57 Section 20(2). The act also includes making available by broadcasting. 58 It may also be implied that the owner consents to printing or saving a copy of the relevant works unless this is expressly prohibited or restricted and this is brought to the attention of persons accessing the material. 56

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7.27 Copyright in the information society provide deep links to the website, thereby by-passing the front page (often referred to as the Home Page). 7.27 Although linking to third party websites may not infringe copyright, other areas of law may be relevant. In particular, it may amount to passing off. The basic requirements for a passing off action are that the claimant has established goodwill in relation to his name, mark or ‘get-up’, that the defendant has made a relevant misrepresentation (for example, that he is the claimant or that materials on the claimant’s website are actually his) and that there is consequential damage or a likelihood of damage.59 Especially where deep linking is used, there is a danger that persons accessing material might be deceived as to the origin of the material. Providing the owner of the website has built up goodwill associated with the website or his name, for example, this may be sufficient for a passing off action to succeed. The form of damage is not limited to actual damage, for example, in terms of loss of sales, but may extend to erosion or dilution of goodwill, for example, by unauthorised use of a famous name.60 It is arguable that, given the right circumstances, there may be issues of trade mark infringement also or even infringement of rights in designs.61

THE DIRECTIVE ON COPYRIGHT AND RELATED RIGHTS IN THE INFORMATION SOCIETY 7.28 An important aim of the Directive is that of harmonisation of the relevant laws in Member States, thereby improving the smooth functioning of the internal market. It noted that there existed legal uncertainty, a particular example being the protection of on-demand transmissions of copyright works and other subject matter.62 Apart from spelling out the rights of reproduction, communication to the public and distribution of works, the Directive dealt with difficult issues such as excluding the provision of physical facilities for enabling or making a communication not of itself being an act of communication.63 Another issue is that of exhaustion of rights and it is made 59

Reckitt & Colman Products Ltd v Borden Inc [1990] RPC 341. This form of damage was recognised by the Court of Appeal in Taittinger v Allbev Ltd [1993] FSR 641. The name objected to by the claimant was ‘Elderflower Champagne’. 61 For the protection of computer graphics by design law, see Chapter 8. 62 Recital 25 to the Directive. 63 Recital 27. 60

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The Directive on copyright and related rights 7.30 clear that it should not apply, inter alia, to the provision of on-line services so that the owner’s rights are not exhausted in relation to a material copy made by a user even if done by the owner or with his consent.64 Under certain circumstances acts of temporary reproduction and caching are permitted. In particular, this applies in the case of internet service providers and others involved in the onward transmission of works and other subject matter. It now seems it also applies to access by an end-user where the work is temporarily stored on screen and in the computer’s cache memory.65 7.29 Controls over the circumvention of copy-protection of works in electronic form already existed in the UK. The Directive on the legal protection of computer programs66 provides a form of protection against the unauthorised removal or circumvention of any technical device applied to protect a computer program.67 Before the Directive on copyright and related rights in the information society, no provisions on ‘copy-protection’ existed in relation to other forms of copyright works or other subject matter in EU legislation. The Directive on copyright and related rights in the information society provides such protection for all other forms of copyright works and for the rights related to copyright, being rights in performances, the publication right and the sui generis database right. Another important aspect of the Directive is the protection of rights management information. This protects information as to the author, owner, acts authorised in respect of the work, etc. There was no equivalent previously under UK copyright law, though removal of the author’s name might have been actionable under the author’s moral right to be identified as such.68 7.30 As mentioned earlier, it should be noted that other Directives in the field of copyright and related rights are left untouched, apart from some minor modifications to the Directives on rental right and lending right and

64

Recital 29. See, for example, Infopaq International A/S v Danske Daglades Forening, Case C-302/10, EU:C:2012:16, discussed infra on the section on the exceptions to the exclusive rights under Article 5 of the Directive. 66 Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs, OJ L 122, 17.05.1991, p 42 now replaced by Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (codified version), OJ L 111, 05.05.2009, p 16. 67 Article 7(1)(c) of the Directive on the legal protection of computer programs. 68 Section 77 of the Copyright, Designs and Patents Act 1988. 65

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7.31 Copyright in the information society on the term of copyright.69 There follows an analysis of the provisions of the Directive and their implementation into law in the UK. In some cases, Member States had some leeway, for example, as to whether to implement certain permitted acts. Any ‘home grown’ provisions in the Copyright and Related Rights Regulations 2003 will also be mentioned as appropriate.

RIGHTS PROVIDED FOR BY DIRECTIVE 7.31 The Directive on copyright and related rights in the information society contains three specific rights. Of course, these rights existed in some form previously but have been adapted and supplemented to make them more suitable to the information society. The rights are a reproduction right, a right of communication to the public and a distribution right. They are now explored in more detail.

Reproduction right 7.32 Article 2 of the Directive provides an exclusive right to authorise or prohibit the direct or indirect, temporary or p ermanent reproduction by any means and in any form, in whole or in part, of works. The right applies to copyright works, fixations of performances, phonograms, first fixations of films and broadcasts. The right is stated in terms of authors, performers, producers of phonograms or films and broadcasters, as the case may be. Of course, the right must be read as belonging to the current owner of the right in question. No real change was required to UK copyright law as this right already existed, however, and in view of the introduction of a specific right of communication to the public, the opportunity was taken to assimilate cable programmes with broadcasts and to make it clear that, generally, internet transmissions were not included in the definition of broadcast. However, where an internet transmission was in the nature of a broadcast, such as where transmission took place simultaneously; was the concurrent transmission of a live event; or a programme service transmitted at a scheduled time, it still falls in the meaning of a broadcast.70

69 70

None of which are of any real consequence in relation to the subject matter of this book. See new section 6 of the Copyright, Designs and Patents Act 1988, substituted by the Copyright and Related Rights Regulations 2003 which also repealed section 7 of the Act which defined cable programmes.

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Rights provided for by Directive 7.35 7.33 The reproduction right conforms with the exclusive right of making copies under section 17 of the Copyright, Designs and Patents Act 1988 which includes making copies which are transient or incidental to some other use of the work. Section 16(3) also states that all the exclusive rights under copyright law apply to things done to the whole or any substantial part, directly or indirectly. Copying recordings of live performance infringes under section 182A. 7.34 Where a satellite broadcast is received via a decoder to be displayed on the television screen, at any particular time, only transient fragments are held in the decoder and television screen. For the reproduction right to apply to those fragments, each must be the author’s intellectual creation. It is not appropriate to look at the accumulation of the fragments. The Court of Justice of the EU so held, inter alia, in Football Association Premier League Ltd v QC Leisure.71 Decoders intended for the Greek market had been lawfully obtained in Greece but then imported into the UK. The Court of Justice also held that even though the decoders had been obtained in Greece by persons using false identities and were subsequently imported into the UK and used in breach of the contractual limitations, they were not illicit devices.72

Exclusive right of communication to the public 7.35 The right of communication to the public, under Article 3(1) of the Directive, applies to author’s works of copyright.73 It applies where communication is by wire or wireless means including making available to the public by such means so that members of the public may access the works from a place and at a time individually chosen by them. This applies to works made available for downloading over the internet or other 71

Joined Cases C-403/08 and C-429/08, EU:C:2011:631. The Court also ruled that a live football match was not a copyright work. It also considered the exceptions to infringement under Article 5, infra. 72 The decoders were less expensive in Greece than in the UK. In one case, they were used in a public house to show the claimant’s live football matches to customers. Another issue which the court did not have to rule on was the question of freedom of movement of goods. 73 Communication to the public in relation to rights in performances under Article 8(2) of the rental right and lending right Directive should be interpreted consistently with that act in relation to copyright rights: See Reha Training v GEMA, Case C-117/15, EU:C:2016:379 at para 15.

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7.36 Copyright in the information society communications network.74 Article 3(2) provides an equivalent right in respect of fixations of performances, phonograms, first fixations of films and fixations of broadcasts.75 Recital 23 to the Directive indicates that the right should be interpreted broadly. An underlying principle of the Directive was to establish a high level of protection for authors so that they may obtain an appropriate reward for the use of their works, including the acts of communication to the public.76 For example, if the rightholders have authorised the communication of their work to a section of the public only, the communication to members of the public outside the contemplation of the rightholders when granting authorisation will be caught under Article 3(1). 7.36 Two cumulative criteria must be present for an act of communication to the public to be relevant. First, there must be an ‘act of communication’ of a work and the communication of the work must be to ‘the public’.77 In S vensson v Retriever Sverige AB,78 the Court of Justice said (at para 16) that: ‘… the concept of communication to the public includes two cumulative criteria, namely, an ‘act of communication’ of the work and the communication of that work to a ‘public’. 7.37 Where a work has already been made available to the public with the consent of the copyright owner, this must be a new public. In Sociedad v Rafeal, below, the broadcaster expected the communication to be received by private individuals on their home television sets (the intended public) and the transmission to occupants in hotel bedrooms was to a new public, outside that envisaged by the broadcaster.

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75 76 77

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The reference to wireless means would apply where the work is transmitted, on demand, by digital signals sent through the ether. An example is the digital information services provided by the BBC. ‘Fixation’ must be taken to mean the same as a recording. ITV Broadcasting Ltd v TV Catchup Ltd, Case C-607/11, EU:C:2013:147. Stichting Brein v Wullums, Case C-527/15, EU:C:2017:300, citing Reha Training v GEMA, Case C-117/15, EU:C:2016:379 and G S Media BV v Samona Media Netherlands BV, Case C-160/15, EU:C:2016:644. See also Stichting Brein v Ziggo BV, Case C-610/15, EU:C:2017:456. Case C-466/12, EU:C:2014:76. See also ITV Broadcasting Ltd v TV Catchup Ltd, Case C-607/11, EU:C:2013:147 at paras 21 and 31.

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Rights provided for by Directive 7.39

Communication to the public 7.38 If a work is communicated to the public, it must be actually communicated to a public, being an indeterminate number of persons and, in the context of a broadcast, a fairly large number of persons.79 A communication to the public is not normally made to the public at large, but is usually made to a section of the public as contemplated by the relevant rightholders and publishers or broadcasters. If a person makes a literary work available to the public on a website, the work is communicated potentially to anyone accessing the work on that website. However, if the work is copied and placed on a third-party website, that will infringe. The same would apply where a third party published links to copyright material made available on a website without the copyright owners’ permission where that third party knows that the material is infringing material and the third party is acting for financial gain.80 7.39 A wide interpretation of the act of communication to the public was taken by the Court of Justice in Sociedad General de Autores y E ditores de España (SGAE) v Rafael Hotels SA.81 The court held that the act extended to the communications through television sets placed in hotel bedrooms. The private nature of a hotel bedroom did not preclude the communication being a communication to the public. The distribution by a hotel to customers staying in its rooms fell within the meaning of communication to the public whatever means were used to make the transmission. This was so even though the mere provision of physical facilities for enabling or making a communication does not in itself amount to a communication. A distinction between hotel rooms and public areas in hotels was rejected. The Court of Justice noted that the term ‘communication to the public’ is not defined in the Directive but it must be interpreted broadly to achieve a high level of protection to authors as being a principle objective of the Directive.82 A transmission of broadcast works

79

ITV Broadcasting Ltd v TV Catchup Ltd, Case C-607/11, EU:C:2013:147 at para 32. GS Media BV v Samona Media Netherlands BV, Case C-160/15, EU:C:2016:644. A case involving hyperlinks to nude ‘Playboy’ photos stored in a third-party database, accessible prior to the publication of the relevant Playboy Magazine. 81 Case C-306/05, EU:C:2006:764. 82 See recitals 9, 10 and 23. Further factors were the need to consider the context of the provision and international law. The meaning of public has been held to include an 80

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7.40 Copyright in the information society via a television screen and speakers to customers in a public house was a communication to the public.83 However, the act of communication to the public does not apply to the radio broadcasting of phonograms in private dental practices engaged in professional economic activity for the benefit of patients who had no active choice in hearing the broadcasts.84 Unlike Sociedad, there were very few patients, normally only one at a time, and they did not necessarily listen to the same recordings. Nor was the playing of the radio broadcasts of any separate economic benefit to the dentist as it was highly unlikely that patients would choose a particular dentist because of the music played whilst being treated. 7.40 The equivalent act of communication to the public under Article 8(3) of the Directive on rental right and lending right, in relation to communication of broadcasts to the public,85 does not apply as it does in Sociedad General de Autores. In Verwertungsgesellschaft Rundfunk GmbH v Hettegger Hotel Eidelweiss GmbH,86 the Court of Justice ruled that concepts in EU law must be given the same meaning unless the EU legislature expressed a different intention. Article 8(3) contains a proviso in that the communication to the public is made in places accessible to the public against payment of an entrance fee. This proviso is missing in the Directive on copyright and related rights in the information society.87 7.41 In Football Association Premier League Ltd v QC Leisure,88 a number of publicans in England obtained decoders from Greece so that customers could watch satellite broadcasts of English premier league football matches. The Court of Justice accepted that showing broadcasts to customers in a public house fell within the meaning of communication to the public. H owever, under UK law, section 72(1) of the Copyright, Designs and Patents Act 1988 provides a defence in respect of showing or playing

83 84 85

86 87 88

indeterminate number of potential television viewers: see Mediakabel BV v Commissariaat voor de Media, Case C-89/04, EU:C:2005:348. Football Association Premier League Ltd v QC Leisure, Joined Cases C-403/08 and C-429/08, EU:C:2011:631, following the Sociedad General de Autores case. Società Consortile Fongrafici v Marco del Corso, Case C-135/10, EU:C:2012:140. Directive 2006/115/EC of the European Parliament and of the Council of 12 December 2006 on rental right and lending right and on certain rights related to copyright in the field of intellectual property (codified version), OJ L 376, 27.12.2006, p 28. Case C-641/15, EU:C:2017:131. It originates from Article 13(d) of the Rome Convention 1961. Joined Cases C-403/08 and C-429/08, EU:C:2011:631.

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Rights provided for by Directive 7.43 a broadcast to an audience who have not paid for admission to the place where the broadcast is seen or heard. This does not infringe the copyright in the broadcast, or any sound recording (other than an excepted sound recording).89 The satellite broadcasting Directive90 did not attempt to achieve complete harmonisation of national laws, hence section 72(1) is not contrary to EU law. 7.42 In ITV Broadcasting Ltd v TV Catchup Ltd,91 the defendant supplied live internet streams of the claimants’ broadcasts. The streams could be watched on computers, phones and tablets. The Court of Justice of the EU ruled that the act of communication to the public included acts of retransmission of works included in terrestrial television broadcasts. The fact that the re-transmission was funded by advertising and was, therefore, profit making, was irrelevant as was the fact that the defendant was acting in direct competition with the claimants. 7.43 A commercial organisation which transmits television programmes it has made to distributors who then make those programmes available to their subscribers does not generally communicate those programmes to the public within Article 3 of the Directive. In SBS Belgium NV v SABAM,92 SBS produced and marketed Dutch-language television programmes. It transmitted those programmes to distributors by a secure ‘point-to-point’ private line. The distributors then transmitted the TV programme signals to subscribers, using satellite, cable or xDSL lines,93 as appropriate. SABAM claimed that SBS communicated the broadcasts to the public within Article 3 and claimed compensation of around €1m on behalf of the copyright owners. The Court

89

90

91 92 93

An excepted sound recording is one for which the author is not the author of the broadcast and which is a recording of music with or without words spoken or sung: section 72(1A). Section 72(1) also used to apply to or any film included in the broadcast. Films were excluded by the Copyright (Free Public Showing or Playing) (Amendment) Regulations 2016, SI 2016/565, with effect from 16 June 2016. However, under section 72(1B), the copyright in a film or excepted sound recording, included in a broadcast played or shown in public under section 72(1), is not infringed if necessary for the purpose of, inter alia, repairing or demonstrating equipment for reception of broadcasts. Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, OJ L 248, 06.10.1993, p 15. Case C-607/11, EU:C:2013:147. Case C-325/14, EU:C:2015:764. A DSL line is a digital subscriber line. xDSL means any of the several forms of DSL.

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7.44 Copyright in the information society of Justice ruled that SBS did not itself communicate the works to the public unless the intervention of the distributors was no more than just a technical means. This would be the case, for example, where the distributors merely provided the technology to communicate the programmes to the public, acting as a mere conduit.

The public and a new public 7.44 Where a copyright work is communicated to the public without the authorisation of the owner of that copyright, that will infringe the communication right. If, for example, a third party uploads the work onto a website without the copyright owner’s authorisation that act will infringe the communication right. Where another third party provides hyperlinks to that work, he will also infringe the communication right if he knows or ought to know that the work in question is an infringing copy.94 In Land NordrheinWestfalen v Dirk Renckhoff,95 a photograph was published on a website with consent of the author and with no restriction on downloading. The photograph was of a view of Cordoba in Spain. A school pupil copied and included the photograph in his work which was then posted by the school on another website. The Court of Justice of the EU ruled that this infringed the copyright in the photograph by communication to a ‘new public’. 7.45 Where a work is communicated to the public by the copyright owner or the owner’s licensee there is no infringement of the communication right provided those members of the public whom the copyright owner contemplated would have access to the work. However, where the work is communicated to a new public, not in the contemplation of the copyright owner, this will infringe the communication right. This could be the case, for example, where broadcasts are recorded by a third party without the broadcaster’s authorisation, to be made available to subscribers of the third party’s internet streaming service, at a later time. In Airfield NV v SABAM,96 a case on the exclusive right of communication to the public by satellite,97 a satellite package provider encrypted broadcasts from a number of 94

Svensson v Retriever Sverige AB, Case C-466/12, EU:C:2014:76. Case C-161/17, EU:C:2018:634. 96 Joined Cases C-431/09 and C-432/09, EU:C:2011:648. 97 Under Article 2 of Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission, OJ L 248, 06.10.1993, p 15. 95

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Rights provided for by Directive 7.48 b roadcasters to supply to its subscribers. The Court of Justice ruled that the satellite package provider’s activities and intervention made the broadcasts available to a new public. That being so, the authorisation of rightholders must be obtained in respect of the communication through the satellite package provider. Where the rightholders have agreed with the original broadcasters for the subsequent retransmission, the satellite package provider must not make the protected works available to a new public. 7.46 Where a work is placed on an internet website which, potentially, can be accessed by any internet user without restriction, making a copy of that work and placing on another website would not seem to infringe the right of communication to the public. Advocate General Sanchez-Bordona was of this opinion in Land Nordrhein-Westfalen v Renckhoff,98 where a professional photographer’s photograph of Cordoba was placed on a travel magazine’s website without any restrictions as to its use. A student copied the photograph and included in his work which was then placed on the school’s website with an indication of the source of the photograph. 7.47 The communication to the public right was inserted into the Copyright, Designs and Patents Act 1988 in a new section 20 headed infringement by communication to the public.99 The works to which the section applies are literary, dramatic, musical and artistic works, sound recordings, films and broadcasts. The infringing act is described as broadcasting the work or making it available to the public by electronic transmission in such a way that members of the public may access it from a place and at a time individually chosen by them. The equivalent provision for performers’ rights is contained in section 182CA. The right seems fairly straightforward. Certainly, one will infringe by capturing a third-party broadcast and making it available to one’s own subscribers over the internet.100 7.48 Arnold J usefully summed up the Court of Justice rulings on the meaning of communication to the public in an 18-point summary in P aramount 98

Case C-161/17, EU:C:2018:279. The ruling of the Court of Justice is expected later in 2018. 99 This replaced the old section 20 which covered infringement by broadcasting a work or including it in a cable programme service. A new ‘making available right’ for p erformers in respect of recordings of live performances was added under section 182CA of the Copyright, Designs and Patents Act 1988. 100 Summary judgment was given in respect of such acts in Union des Association Europeenes de Football v Brinscomb [2006] EWHC 1268 (Ch).

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7.49 Copyright in the information society Home Entertainment International Ltd v British Sky Broadcasting Ltd.101 That summary remains of some utility and later Court of Justice rulings are not inconsistent with it.

Nature of authors’ rights of reproduction and communication to the public 7.49 The rights of authors to authorise the reproduction of their works and the communication of their works to the public are enshrined in Article 5(2) of the Berne Convention for the Protection of Literary and Artistic Works which states that the enjoyment and existence of these rights shall not be subject to any formality. In Soulier v Ministre de la Culture et de la Communication,102 Articles L.134-1 to L.134-9 of the French Intellectual Property Code were amended to provide that collecting societies could make available in digital form ‘out-of-print’ books.103 A publicly accessible database of such books was to be created and provided online free of charge. Once the database was published, authors were given six months to object. After this period arrangements could be made to publish the book in digital form, primarily, by the original publisher. After the six-month period, an author and the original publisher could jointly object. However, an author could object on his own but only by providing evidence that he alone held the relevant rights. 7.50 Two authors objected to the scheme, claiming that it was an exception to the exclusive right of reproduction within Article 2(a) of the Directive on copyright and related rights in the information society without being provided for by the limited exceptions under Article 5 of that Directive. The Court of Justice agreed. The Court noted that, where the Directive gave rights and benefits to third parties,104 those rights and benefits must not harm the

101

[2013] EWHC 3479 (Ch), [2014] ECDR 7, para 12. Case C-301/15, EU:C:2016:878. 103 An out-of-print book was one published in France before 1 January 2001, but which is no longer published in print or digital form. The amendment was made by Law No 2012-287 of 1 March 2012 on the digital exploitation of out-of-print twentieth century books. 104 Particularly in respect of the exceptions and limitations under Article 5, paragraph (5) of which confirms that the exception and limitations under paragraphs (1) to (4) may only be applied in special cases which do not conflict with the normal exploitation of the work and do not unreasonably prejudice the legitimate interest of the rightholder. 102

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Rights provided for by Directive 7.51 exclusive rights of authors under the Directive.105 The rights in the Directive corresponding to Article 5(2) of the Berne Convention were the rights of reproduction and communication to the public under Articles 2(a) and 3(1) of the Directive. Making the exercise of those rights subject to any formality was in conflict with Article 5(2) of the Berne Convention.106 The Court of Justice ruled that an author must be able to put an end to the exercise of his rights of exploitation in digital form by a third party without having to submit beforehand to the formality of proving that no other person holds other rights in the work, for example, the right to exploit the work in printed form.107 7.51 The author’s rights of reproduction of a work or communication to the public of a work are exclusive108 and may not be compromised except as provided for by exceptions set out in legislation but only in special cases which do not conflict with the normal exploitation of the work and do not unreasonably prejudice the legitimate interests of the author.109 Indeed, the rights of an author of a work are a form of property right under the Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms, Article 1 of Protocol 1. This was confirmed by the European Court of Human Rights in Balan v Moldova.110 Mr Balan’s photograph of a castle in Moldova had been used, without his permission, by the State of Moldova as a background for its national identity cards. The Court of Human Rights awarded Mr Balan €5,000 compensation.

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107 108

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Hewlett-Packard Belgium SPRL v Reprobel SCRL, Case C-572/13, EU:C:2015:350 at paras 47 to 49. This case was concerned with the exceptions under Article 5(2)(a) and (b) in respect of certain forms of reproduction subject to authors receiving fair compensation. An important issue was the possibility of the compensation being payable to publishers without any guarantee that it would be passed on to the authors. Thus, the formality of objecting within six months of the publication of the database of out-of-print books would compromise the authors’ exercise of those rights or objecting thereafter subject to proving no other person has other rights in respect of the work. Such as in the case of a publisher having an exclusive licence to publish the original work. Article 9(1) of the Berne Convention for the Protection of Literary and Artistic Works states that authors of literary and artistic works protected under the Convention have the exclusive right to authorise the reproduction of those works, in any manner and form. See Article 9(2) of the Berne Convention. As a result of the WIPO Copyright Treaty, all Contracting Parties to that Treaty are required to comply with the substantive provisions of the Berne Convention (Articles 1 to 21 and the Appendix). [2009] ECDR 53.

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7.52 Copyright in the information society 7.52 Of course, the exclusive rights are alienable with the agreement of the author,111 such as by way of an assignment, in whole or in part, or by the grant of licences. Where the economic rights belong to someone other than the author as the creator of the work, the author may have moral rights in relation to the work, such as the right to be identified as author or the right to object to a derogatory treatment of the work.

File sharing and communication to the public 7.53 File sharing on the internet has been very popular. For example, by using appropriate software, individuals have been ‘sharing’ popular music online. There have been a number of cases in the United States involving what is termed ‘peer to peer file sharing’, or ‘P2P’. Rather than bring an action against private individuals using such software to share files, action was brought by music and film companies against those companies providing the file sharing software. There was, however, an awkward precedent in Sony Corp of America v Universal City Studios Inc.112 In that case objection was taken to the introduction of the Sony Betamax video recorder. It was claimed that these machines were used predominantly, by persons acquiring them, to make infringing copies of films. The Supreme Court rejected a claim that Sony was guilty of contributory infringement of copyright. The machines could be used for legitimate purposes and Sony had no knowledge of specific infringements nor had it encouraged infringement of copyright. However, eventually in Metro-Goldwyn-Meyer Studios Inc v Grokster Inc,113 the Supreme Court distinguished Sony v Universal and held the defendant guilty of contributory infringement of copyright. The difference was that Grokster had actively encouraged infringement. The file sharing software had been advertised as suitable for making copies of music and films and persons acquiring the software had been given appropriate instructions on how to use the software for that purpose. 7.54 In the UK, the music industry started pursuing individuals who used P2P software to share music files. In Polydor Ltd v Brown,114 a father installed 111

Copyright Directives tend to use the term ‘author’. This is appropriate where the author is the first owner of the copyright and remains the owner. However, it can be taken to refer to the present owner of the economic rights in the work in question, subject to any of the author’s existing moral rights. 112 464 US 417 (1984). 113 545 US 913 (2005). 114 [2005] EWHC 3191 (Ch).

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Rights provided for by Directive 7.56 file sharing software on his son’s computer. Approximately 400 music files were placed in a directory which could be shared by third parties. It was held that he infringed copyright by the act of communicating the music files to the public under section 20. It clearly fell within the restricted act. He was also liable for infringement of copyright by authorising others to make unauthorised copies of the music.115 7.55 In Neij & Sunde Kolmisoppi v Sweden,116 the applicants operated the Pirate Bay website, one of the world’s largest file sharing sites, from which unauthorised copies of music, films and computer games could be downloaded. They were convicted under the Swedish Copyright Act and sentenced to custodial sentences and fined approximately €3.3m. They brought a case before the European Court of Human Rights, arguing that this was contrary to their Article 10(1) right of freedom of expression under the Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms, 1950. In particular, it was claimed that their right to receive and impart information was infringed. However, the European Court of Human Rights held that the interference with their Article 10 right was necessary in a democratic society, under Article 10(2). The court noted that Article 1 of Protocol No 1 to the Convention protects property and this includes intellectual property. Furthermore, the court held that the imposition of custodial sentences and a heavy fine, in the circumstances, could not be considered disproportionate.

Exhaustion of rights not applicable 7.56 A general principle of EU law is that the rightholder cannot use his right to prevent the further commercialisation of an article which has been placed on the market within the EU by him or with his consent.117 Thus, where the owner of the rights in a computer program, for example, sells copies of the program on CD-ROMs or DVDs, he cannot object to their

115

Section 16(2) extends infringement to authorising another to perform an infringing act. (2013) 56 EHRR SE19. 117 There is a whole line of cases on the principle, commencing with Centrafarm BV v Sterling Drug Inc, Case 15/74, EU:C:1974:114. Express provision for exhaustion of rights is made in section 18(2) of the Copyright, Designs and Patents Act 1988 in relation to copies of works issued to the public. 116

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7.57 Copyright in the information society subsequent resale.118 The same applies in respect of copies sold by a licensee or distributor of the owner of the rights. However, the doctrine does not apply in respect of copies sold outside the European Union and the rightholder can still object to those copies being imported into a Member State of the European Union. 7.57 A challenge was made to the validity of Article 4(2) on an impressive number of grounds in Laserdisken ApSII v Kulturministeriet.119 The Court of Justice confirmed that national rules providing for exhaustion of the distribution right in respect of originals or copies of a work placed on the market outside the EU by the rightholder or with his consent are not allowed. As the Court of Justice has confirmed in respect of other intellectual property rights, the doctrine of exhaustion of rights only applies where the objects in question have been placed on the market within the EU.120 7.58 The situation is different where the work in question is communicated to the public by means of the internet. Otherwise a person could access the work in question on-line, download it, make copies of it and sell those copies without restriction. This could clearly be very prejudicial to the owner of the rights involved. Consequently, Article 3(3) of the Directive on copyright and related rights in the information society states that the rights of communication to the public and making available to the public, as the case may be, are not exhausted by such communication or making available. No express mention of this is made in the Copyright, Designs and Patents Act 1988 as it is unnecessary to do so. In effect, therefore, the owner of a copyright in a work made available online may still exercise his or her rights to prevent the further importation or resale of the copies of the work made by downloading the work.121

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Assuming, of course, that the person previously acquiring the copy does not retain a copy (if he does, that copy would become an infringing copy) and any licence allows transfer. See section 56 of the Copyright, Designs and Patents Act 1988 which deals with transfer of copies of works in electronic form. 119 Case C-479/04, EU:C:2006:549. 120 See, Zino Davidoff AG v A & G Imports Ltd, Joined Cases C-414/99 to C-416/99, EU:C:2001:617. Strictly speaking, the doctrine extends to the European Economic Area because of equivalent provisions in the Agreement on the EEA. 121 Unless, of course, the owner has consented to this. It is likely that only express consent will do unless the circumstances are such that the only explanation is that it is implicitly given or an estoppel arises in the circumstances.

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Exceptions and limitations 7.61

Distribution right 7.59 Under Article 4 of the Directive on copyright and related rights in the information society, the distribution right applies to distribution by sale or otherwise of the original or copies of the work in question. The distribution right applies to the original or copies of a work distributed on physical media and not to electronic transmission. The normal rule on exhaustion of rights applies. Thus, where the original or copies are sold, or ownership otherwise transferred by or with the consent of the owner of the copyright, the distribution right is exhausted in respect of that original or those copies.122 No changes were required to the copyright provisions in the Copyright, Designs and Patents Act 1988. 7.60 The distribution right only applies, otherwise than by sale, where there is a transfer of ownership of the subject-matter. It does not apply where a work is exhibited in public or the right to make reproductions of a work protected by copyright is granted: Peek & Cloppenburg KG v Cassina SpA.123 In that case, Cassina made chairs to the designs of Le Corbusier. Peek & Cloppenburg displayed a chair to one of the designs in its shop window and placed others in its rest areas in its retail outlet. They had been obtained in Italy but were not made by Cassina. At the relevant time, the chairs were not protected by copyright in Italy.

EXCEPTIONS AND LIMITATIONS 7.61 Article 5 of the Directive on copyright and related rights in the information society provided for a number of exceptions and limitations to the right of reproduction and the right of communication to the public. All but one of these exceptions and limitations were optional. The permitted acts under the Copyright, Designs and Patents Act 1988 were modified to implement most of the optional exceptions and limitations. The majority of the amendments are relatively minor and of no particular significance for computer software.124

122

The equivalent provision is under section 18 of the Copyright, Designs and Patents Act 1988. 123 Case C-456/06, EU:C:2008:232. 124 For example, fair dealing for research is limited to non-commercial purposes and requires a sufficient acknowledgement.

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7.62 Copyright in the information society Generally, where a copy of a work or part of a work is made in accordance with an excepted act, if it is subsequently dealt with, it is treated as an infringing copy. This is extended to cover the act of communicating the copy to the public. 7.62 The compulsory exception was contained in Article 5(1) and applied to temporary reproduction in relation to the right to communicate a work to the public under Article 2. This is the only one of particular relevance in the context of computer software and online transmission. However, in relation to all the exceptions in Article 5(1) to (4), there is an added proviso in Article 5(5) being that the exceptions and limitations may only be applied in certain special cases which do not conflict with the normal exploitation of the work or other subject matter and do not unreasonably prejudice the legitimate interests of the rightholder.125

Temporary reproduction 7.63 Article 5(1) permits acts of temporary reproduction which are transient or incidental and are an integral and essential part of a technological process where the sole purpose is to enable either a transmission in a network between third parties by an intermediary or a lawful use. The temporary reproduction must have no independent economic significance.126 The former case applies, typically, where a copy of a copyright work is transmitted through an internet service provider or a telecommunications system provider. A copy of the work will be made transiently in the provider’s computer servers. A copy may be ‘cached’ in the computer’s temporary memory.127 As the act of making a copy of a work extends to making transient or incidental copies,128 the provider would otherwise infringe copyright if the temporary copy was made without the copyright owner’s licence. A use is lawful where

125

We will see that, in the case of temporary reproduction under Article 5(1), it can be presumed that, if the requirements under Article 5(1) are satisfied, that Article 5(5) adds nothing further. 126 This provision was implemented by inserting section 28A into the Copyright, Designs and Patents Act 1988. Section 182(1A) contains an equivalent for performances. Recital 33 to the Directive gives browsing and caching as examples of temporary reproduction. 127 A cache is an automatic, intermediate and temporary store. 128 In the United Kingdom, see section 17(6) of the Copyright, Designs and Patents Act 1988.

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Exceptions and limitations 7.65 it is authorised by the rightholder or not restricted by law.129 An example of the latter is an act falling within one of the permitted acts. 7.64 As neither the Directive on the legal protection of computer programs nor the Directive on the legal protection of databases have an equivalent exception and because the Directive on copyright and related rights in the information society is without prejudice to the two former Directives, acts of temporary reproduction may still infringe copyright in computer programs and databases.130 This seems to be an unfortunate omission. However, ‘information society service providers’131 have a specific defence in respect of illegal information where they act as a mere conduit or cache or host the material in question under Articles 12 to 16 of the Directive on electronic commerce.132 7.65 The operation of Article 5(1) and the impact of Article 5(5) has been considered in some depth by the Court of Justice. First, the court paraphrased the exception in Article 5(1) as requiring that: ••

the act is temporary;

••

it is transient or incidental;

••

it is an integral and essential part of a technological process;

••

the sole purpose is to enable the transmission in a network between third parties by an intermediary or a lawful use of a work or other subject-matter;

••

the act has no independent economic significance.133

129

Recital 33 to the Directive. Section 28A expressly excludes computer programs and databases from the permitted act. 131 The term is very widely defined and includes internet service providers, telecommunications service providers, e-commerce websites, online information services, search engines and many more. In Bunt v Tilley [2006] EWHC 407 (QB), the court confirmed that internet service providers were included in the term. 132 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, OJ L 178, 17.07.2000, p 1. These defences were implemented in the United Kingdom by regulations 17, 18 and 19 of the Electronic Commerce (EC Directive) Regulations 2002, SI 2002/2013. 133 See Infopaq International A/S v Danske Dagblades Forening, Case C-5/08, EU:C:2009:465 at para 54. 130

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7.66 Copyright in the information society 7.66 In Infopaq International A/S v Danske Dagblades Forening,134 Infopaq operated a media monitoring and analysis business. It drew up summaries of selected articles from daily newspapers and other periodicals on the basis of criteria provided by customers which it then sent to its customers by email. The data capture process involved scanning to produce TIFF files which were then converted to a text file by OCR software. A search was then performed and extracts of 11 words based on the search terms produced. Finally, a cover sheet was printed out. The Court of Justice ruled that the process of capture and storage were within the reproduction rights only if the elements extracted were intellectual creations (this being a question for determination by the national court). The court further ruled that the process was not transient because it depended on human intervention to erase the extracts. As there was no system of automatic erasure, there was a risk that the extracts would be retained longer than necessary for the technological process. 7.67 The scope of Article 5(1) also came up for examination in Football Association Premier League Ltd v QC Leisure.135 For the purposes of the fourth condition, the reproduction in q uestion136 was not to enable transmission between third parties by an intermediary. Therefore, the issue was whether it was a lawful use. Although the reproduction was not authorised by the rightholder, the mere reception of the broadcasts in private circles was not prohibited by EU law or by UK law.137 It was, therefore, a lawful use. As regards the fifth condition, the Court noted that the economic significance had to be independent. This did not mean that there could not be any economic significance. But, it must go beyond the mere reception of the broadcasts, beyond the advantage from simply picking up the broadcasts and their visual display.138 As far as the proviso in Article 5(5) was concerned, the court appeared to consider that this would be satisfied if the conditions under Article 5(1) were met. 7.68 A second reference to the Court of Justice was made in the case in Infopaq International A/S v Danske Dagblades Forening Infopaq.139 134 135 136 137 138 139

Case C-5/08: EU:C:2009:465. Joined Cases C-403/08 and C-429/08, EU:C:2011:631. Ephemeral acts of reproduction to enable the decoder and television screen to function correctly. See section 72(1) of the Copyright, Designs and Patents Act 1988. Had the pub landlady charged customers to view the broadcasts, that might have been viewed as having independent economic significance. Case C-302/10, EU:C:2012:16.

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Exceptions and limitations 7.70 The Court of Justice of the EU clarified its earlier ruling (Infopaq I) in that the data capture process must fulfil the condition that it is an integral and essential part of a technological process even if the process steps to initiate and terminate the process and involve human intervention.140 Furthermore, the acts of reproduction must be solely for a lawful process141 and do not generate additional profit going beyond the lawful use or do not modify the work in question. The court went on to confirm that, if the conditions under Article 5(1) are met, then the acts of reproduction occurring during the data capture process must be regarded as not conflicting with the normal exploitation of the work or unreasonably prejudicing the legitimate interests of the rightholder. In other words, if all the conditions under Article 5(1) apply then the proviso under Article 5(5) is also taken to be satisfied. 7.69 In Public Relations Consultants Association Ltd v Newspaper Licensing Ltd,142 a case with facts not that far removed from the Infopaq cases, Lord Sumption in the Supreme Court made some useful comments on the Court of Justice rulings in Infopaq I, Football Association v QC Leisure and Infopaq II (as he referred to the second Infopaq case). Lord Sumption said that at first sight it might appear, from the ruling in Infopaq II, that Article 5(5) was redundant. However, he noted that Article 5(5) derived from Article 9(2) of the Berne Convention which allows Contracting Parties to allow copying which would otherwise infringe copyright in special cases providing they do not conflict with the normal exploitation of the work or unreasonably prejudice the legitimate interests of the author. Article 5(1) is, therefore, one of those special cases and the inclusion of Article 5(5), in accordance with Berne ensures that Article 5(1) is to be narrowly construed in the light of its purpose. 7.70 Lord Sumption, in Public Relations Consultants Association (at para 26), set out a useful summary of the three key Court of Justice rulings as follows: (1) Subject to the limitations [below], the exception in article 5.1 applies to copies made as an integral and necessary part of a ‘technological process’, in particular the digital processing of data. 140

For example, a human being starts the process by scanning the newspaper article in question. 141 Of course, the alternative condition, to enable the transmission between third parties by an intermediary, was not relevant in this case. 142 [2013] UKSC 18, [2013] RPC 19.

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7.71 Copyright in the information society For this purpose, the making of copies is a ‘necessary’ part of the process if it enables it to function ‘correctly and efficiently’: Infopaq II, at paras 30, 37. (2) These copies must be temporary. This requirement is explained and defined by the words which follow, namely that the making of the copies must be ‘transient or incidental and an integral and essential part of a technological process’. It means (i) that the storage and deletion of the copyright material must be the automatic consequence of the user’s decision to initiate or terminate the relevant technological process, as opposed to being dependent on some further discretionary human intervention, and (ii) that the duration of the copy should be limited to what is necessary for the completion of the relevant technological process: see Infopaq I, at paras 62 and 64. (3) The exception is not limited to copies made in order to enable the transmission of material through intermediaries in a network. It also applies to copies made for the sole purpose of enabling other uses, provided that these uses are lawful. These other uses include internet browsing: Infopaq I, at para 63 and Infopaq II, at para 49. (4) For the purpose of article 5.1, a use of the material is lawful, whether or not the copyright owner has authorised it, if it is consistent with EU legislation governing the reproduction right, including article 5.1 itself: Premier League, at paras 168–173, Infopaq II, at para 42. The use of the material is not unlawful by reason only of the fact that it lacks the authorisation of the copyright owner. (5) The making of the temporary copy must have no ‘independent economic significance’. This does not mean that it must have no commercial value. It may well have. What it means is that it must have no independent commercial value, i.e. no value additional to that which is derived from the mere act of digitally transmitting or viewing the material: Premier League, at para 175, Infopaq II, at para 50. (6) If these conditions are satisfied no additional restrictions can be derived from article 5.5. 7.71 The scope of Article 5(1) is of the utmost importance. Simply reading text or looking at works contained in tangible media such as a book, magazine 292

Exceptions and limitations 7.72 or newspaper does not involve any act restricted by copyright. However, the equivalent act performed using a computer involves making transient copies of the work in question on screen and in the computer’s cache memory. This is an act of reproduction which can only be lawful if it is authorised by the copyright owner143 or is otherwise permitted by law. In some cases, the owner may be happy with end users browsing the work but might object to other uses which go beyond this as in the Infopaq cases and the Public Relations Consultants Association case. Recital 33 to the Directive mentions browsing and caching as acceptable acts providing they conform with the exception allowing temporary reproduction. However, some doubts were expressed in Public Relations Consultants Association as to whether this applied in all cases. After all, parts of a work may be displayed on screen for a long period of time until the browsing session is ended and may remain in the cache memory for a long period of time until it is overwritten. A part of a work may exist in cache memory for days and survive the computer being switched off and on a number of times, until it is finally overwritten by fresh data. Although Lord Sumption thought there should be no distinction between reading from tangible media and reading from a computer screen, he considered that a reference should be made to the Court of Justice for a preliminary ruling.

Ruling of the Court of Justice in the Public Relations case144 7.72 On the reference to the Court of Justice by the Supreme Court, the issues to be considered were whether the reproduction was (a) was temporary; (b) was transient and incidental; and (c) an integral and essential part of a technological process.145 The Court of Justice then considered whether the restrictions on the exceptions and limitations under Article 5(5) applied.

143

By placing material on the internet without any access restrictions, the owner of the copyright and related rights can be taken to have impliedly licensed access by browsing or making temporary copies in the computer’s cache memory. It would be different if the end user printed a copy or saved a permanent copy in which case, the licence of the owner would be required. 144 Public Relations Consultants Associates Ltd v Newspaper Licensing Agency Ltd, Case C-360/13, EU:C:2014:1195. 145 The Court of Justice noted the finding of the Supreme Court on the facts of the case that the sole purpose was a lawful use and was one which had no independent economic significance. Indeed, the Supreme Court did not refer questions about these aspects to the Court of Justice.

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7.73 Copyright in the information society 7.73 First, the Court of Justice noted that the conditions in Article 5(1) must be interpreted strictly as it is a derogation from the general rule that the copyright holder must authorise the reproduction of his protected work. However, it was important to strike a fair balance between the rights and interests of the holders of and users of protected works and the development and operation of new technologies.146 7.74 On the question as to whether the reproduction was temporary, the Court of Justice confirmed that it was. The on-screen copies were deleted when the internet user moved away from the website viewed. Cached copies were normally automatically replaced by other content after a certain period of time. The length of time depended upon the capacity of the cache and the extent and frequency of internet usage by the internet user concerned. 7.75 It seems tolerably clear that the Directive was intended to allow internet users to browse materials on websites which are freely accessible in the absence of any security arrangements limiting access to specific individuals. The issue in the Infopaq and Public Relations cases is how far users can go in making further use of the information on websites, whether it is available with or without specific permission. In Infopaq II, the Court of Justice contemplated that the integral and essential technological process could be started and terminated by human intervention. Therefore, the length of time information is displayed on a computer screen before the user decides to move on to look at something else or switch off the computer would not seem to prevent the use being lawful. 7.76 The Court of Justice accepted that the conditions laid down in Article 5(5) were satisfied.147 The on-screen and cached copies were created for the purpose of viewing websites was a special case. Although it was possible for internet users to access works displayed on a website without the copyright holders’ authorisation, those copies did not unreasonably prejudice their legitimate interests.148 In respect of works made available to internet users by publishers of websites, those publishers were required to obtain the copyright holders’ authorisation under Article 3(1), as making them

146

Recital 5 to the Directive mentions the need to adapt and respond to the economic realities of new forms of exploitation. 147 At paras 54 to 62. 148 Of course, if permanent copies were made by those users, that would infringe the copyright.

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Exceptions and limitations 7.78 a vailable in this way constituted a communication to the public. Therefore, the legitimate interests of the copyright holders were properly safeguarded. There was no justification in requiring internet users obtaining a further authorisation over that obtained by the publishers of websites. The creation of on-screen and cached copies did not conflict with the normal exploitation of the works.

Other exceptions under Article 5 7.77 Article 5(2) and (3) contains a host of other exceptions that are optional. Member States may or may not choose to implement them. Consequently, there are considerable variations between Member States in their approaches to these exceptions. The exceptions and the UK approach to them are discussed briefly below. First, it should be noted that Article 5(2) provides for exceptions to the reproduction right under Article 2 whilst Article 5(3) provides for exceptions to both the reproduction right and the communication to the public right under Article 3. Finally, Article 5(4) permits similar exceptions to be applied also to the distribution right under Article 4.149 As is the case with Article 5(1), the ‘three-step test’ under Article 5(5) also applies to these other exceptions.150

Article 5(2) exceptions 7.78 Article 5(2) provides optional exceptions to the reproduction right under Article 2. They are: (a) the reproduction on paper or similar media by any photographic technique providing the rightholder receives fair compensation. This does not apply to sheet music; (b) reproduction on any media for private use by a natural person, being not for direct or indirect commercial use. Rightholders were to be given fair 149

For an analysis of the implementation of the Directive in the Member States, including that of the exceptions: see G Westcamp, The Implementation of Directive 2001/29/EC in the Member States, 2007. This report was commissioned by the European Commission’s Internal Market Directorate General. 150 The three steps are that limitations to the exclusive rights may be applied (i) in certain special cases, (ii) that do not conflict with the normal exploitation of the work, and (iii) that do not prejudice the legitimate interests if the author. It derives originally from Article 9(2) of the Berne Convention for the Protection of Literary and Artistic Works.

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7.79 Copyright in the information society compensation to be taken into account whether technological measures had been applied to the work or other subject matter;151 this exception was inserted into section 28B of the Copyright, Designs and Patents Act 1988.152 However, this was challenged in R (on the application of British Academy of Songwriters, Composers and Authors) v Secretary of State for Business, Innovation and Skills (No.2),153 on the basis that there was no provision for an equitable remuneration as required by the Directive and the court quashed Regulation 3 of SI 2014/2361 which inserted section 28B into the Act on 17 July 2017 and, thus, section 28B is effectively repealed; (c) specific acts of reproduction by publicly accessible libraries, educational establishments, museums and archives for no direct or indirect economic or commercial advantage; (d) the preservation in archives of ephemeral recordings of works, because of their exceptional documentary character, made by broadcasting organisations by means of their own facilities and for their own broadcasts; (e) reproduction of broadcasts by social institutions pursuing noncommercial purposes, such as hospitals and prisons on condition that rightholders receive fair compensation. 7.79 In most Member States, a levy is imposed on blank media to provide fair compensation for authors. In Padawan SL v Sociedad General de Autores y Editores España (SGAE),154 the Court of Justice explained that ‘fair compensation’ was intended to cover the harm caused by the introduction of a private copying levy.155 However, the indiscriminate application of the levy was incompatible with the Directive as it should only apply in relation to private individuals who were permitted to make copies for their own use.

151 In

152 153 154 155

Luksan v Petrus van der Let, Case C-277/10, EU:C:2012:65, the Court of Justice of the EU confirmed that an assignment of all copyright and related rights did not deprive the principal director of a cinematograph film of his right to an equitable remuneration when the film in question was eventually made available online. Regulation 3(1) of the Copyright and Rights in Performances (Personal Copies for Private Use) Regulations 2014, SI 2014/2362, as from 1 October 2014. [2015] EWHC 2041 (Admin), [2015] RPC 27. Case C-467/08. EU:C:2010:620. The claimant was a Dutch collecting society. Thereby permitting private copying.

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Exceptions and limitations 7.82 It should not be levied on media or recording equipment distributed to others such as undertakings and for professional purposes who obtain the media and recording equipment for purposes other than private copying.156 7.80 An argument that the customers in the Netherlands buying blank media online from a German company were actually the importers of the media, and hence responsible for paying the levy, was rejected by the Court of Justice in Stichting de Thuiskopie v Opus Supplies Deutschland GmbH.157 Both Germany and the Netherlands impose a levy on blank media which has to be paid for by the manufacturer or the importer. In this case, no levy had been paid by the German company which also arranged delivery of the media. 7.81 In EGEDA v Administracion del Estrada,158 the Court of Justice ruled that paying fair compensation for private copying through a General State Budget was not permissible as it was not possible to ensure the cost of the compensation was borne by the users of private copies. The provision of cloud storage facilities whereby a commercial undertaking allows users to select TV programmes and have them saved to the user’s cloud storage was ruled impermissible under the private copying exception in VCAST Ltd v RTI SpA.159 This was done without the consent of rightholders. As private copying is an exception to the rights of rightholders, it must be construed narrowly. 7.82 As far as the UK was concerned, some provisions of the Copyright, Designs and Patents Act 1988 already existed and some were modified. No change was made in respect of (a) above and the time-shifting permitted act under section 70 was modified to further limit it to recording on domestic premises for private and domestic purposes only. Section 71 allows photographs to be taken of broadcasts, similarly limited for private and domestic purposes. Only libraries and archives are permitted to make the copies under (c) above. Some permitted acts already apply to broadcasts but the UK does have significant provisions for collective licensing. Section 72 allows free public showing or playing of broadcasts where no admission charge is made. 156

Some countries impose a levy also on recording equipment. Case C-462/09, EU:C:2011:397. 158 Case C-470/14, EU:C:2016:418. 159 Case C-265/16, EU:C:2017:913. 157

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7.83 Copyright in the information society

Article 5(3) exceptions160 7.83 Article 5(3) sets out a comprehensive list of acts that do not infringe the communication to the public right which Member States may take advantage of. These include uses for illustration for teaching or scientific research, uses for the benefit of disabled persons,161 certain uses by the press, uses for criticism or review, quotation, reporting current events, public security, use for the performance or reporting of administrative, parliamentary or judicial proceedings, use of political speeches and public lectures,162 uses during religious or official celebrations, incidental inclusion, etc. Many require that the source is indicated, including the author’s name, unless this proves impossible, and the exception only applies to the extent justified by the purpose to be achieved. Most of these were already provided for under the UK Act but some changes were required to comply more precisely with the scope of the exception in the Directive.163 For example, the limitation of some of the fair dealing provisions to non-commercial research and the requirement for indication of the source. The fair dealing exception for criticism, review or news reporting was modified to include quotation where the work has been made available to the public; the use of the quotation is fair dealing with the work; the extent of the quotation is no more than is required by the specific purpose for which it is used; and the quotation is accompanied by an acknowledgement unless this would be impossible for reasons of practicality or otherwise. 7.84 A new exception in section 29A of the Act covers making a copy by a lawful user of a work for the purpose of computational analysis by that lawful user of anything recorded in the work for the sole purpose of research for a non-commercial purpose. The copy must be accompanied by

160

The following description of legislative changes is not completely exhaustive. Initially, the UK implemented this only in respect of visually impaired persons but it was modified to apply to disabled persons generally by the Copyright and Rights in Performances (Disability) Regulations 2014, SI 2014/1384. To Article 5(3)(b) of the Directive was added ‘without prejudice to the obligations of Member States under Directive (EU) 2017/1564 of the European Parliament and of the Council.’ This Directive required compliance by 11 October 2018. 162 In the UK, this would probably fall within the fair dealing for criticism or review provisions. 163 See the Copyright and Related Rights Regulations 2003, SI 2003/2498 which makes the relevant changes. 161

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Exceptions and limitations 7.86 a sufficient acknowledgement unless this is impossible for reasons of practicality or otherwise. This exception appears to permit data-mining, subject to the limitations under the exception. It does not appear to have a direct link to the Directive although it could be argued that this falls under the scientific exception in Article 5(3)(a). 7.85 Further exceptions include use for caricature, parody or pastiche: Article 5(3)(k). This was implemented in the UK under section 30A which provides that fair dealing with a work for the purposes of caricature, parody or pastiche does not infringe copyright in the work. A term of a contract which purports to prevent or restrict this exception is unenforceable. Section 30A came into force on 1 October 2014.164 Demonstration or repair of equipment lawfully used for free public showing or playing of broadcasts under section 72 is permitted.165 Article 5(3)(m) permits the use of drawings for the purposes of the reconstruction of buildings.166 Article 5(3)(n) allows communication or making available for the purposes of research or private study to individual members of the public by dedicated terminals on premises, such as libraries, educational establishments, museums and archives, of works or other subject matter which are not subject to purchase or licensing terms and which are contained in their collections. This was implemented by the insertion of section 40B. A final potential exception is uses in other cases of minor importance where exceptions or limitations already exist in Member States providing they only affect analogue works, do not compromise the free movement of goods or services within the EU, and are without prejudice to other exceptions or limitations under Article 5. 7.86 The exceptions and limitations in Article 5 are subject to the ‘threestep test’. Article 5(5) states that the exceptions and limitations shall only be applied in special cases which do not conflict with a normal exploitation of the work or other subject matter and do not unreasonably prejudice the legitimate interests of the rightholder.

164

It was inserted into the Copyright, Designs and Patents Act 1988 by regulation 5(1) of the Copyright and Rights in Performances (Quotation and Parody) Regulations 2014, SI 2014/2356. Note that the exceptions under Article 5(3) were not mandatory. 165 See Article 5(3)(l) of the Directive and section 72(1B) of the Copyright, Designs and Patents Act 1988. 166 See section 65 of the Copyright, Designs and Patents Act 1988.

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7.87 Copyright in the information society

PROTECTION OF TECHNOLOGICAL MEASURES 7.87 Previously, section 296 of the Copyright, Designs and Patents Act 1988 provided protection against the circumvention of copy-protection applied to copyright works issued to the public in electronic form. The making, ‘dealing with’167 or advertising of devices or means designed or adapted to overcome copy-protection was actionable by the copyright owner as if it was an infringement of copyright. The same applied in respect of publishing information intended to enable or assist persons to circumvent that form of copy-protection. One minor difference for computer programs was that the provision also applied to possessing such a device or means in the course of a business.168 This was a result of Article 7(1)(c) of the Directive on the legal protection of computer programs which required appropriate remedies against any person who committed ‘… any act of putting into circulation, or the possession for commercial purposes of, any means the sole intended purpose of which is to facilitate the unauthorised removal or circumvention of any technical device which may have been applied to protect a computer program’ (emphasis added). As regards other forms of works of copyright, section 296 was a ‘home-grown’ provision. 7.88 The Directive on copyright and related rights in the information society provides for protection of all forms of work of copyright, except computer programs,169 for performances, works or copies of works subject to the publication right and databases subject to the database right. The position with computer programs is unchanged by the Directive on copyright and related rights in the information society and is discussed in Chapter 3. What follows is a description of the provisions in the Directive that apply to works of copyright (other than computer programs), performances, the sui generis database right and the publication right.

Technological measures applied to copyright works, other than computer programs, and other subject matter 7.89 Article 6 of the Directive on copyright and related rights in the information society provides for protection of technological measures designed to 167

For example, makes, imports, sells, lets for hire, etc. 296(2A): inserted by regulation 10 of the Copyright (Computer Programs) Regulations 1992, SI 1992/3233. 169 Computer programs are still subject to their own form of protection afforded as a result of the Directive on the legal protection of computer programs: see Chapter 3. 168 Section

300

Protection of technological measures 7.90 prevent or restrict unauthorised acts in relation to works of copyright other than computer programs. These provisions also apply, mutatis mutandis, to other forms of subject matter, being performances, works subject to the publication right170 and databases in respect of which the sui generis database right applies. It is perhaps unfortunate that the provisions differ as between computer programs and other copyright works and subject matter as computer software invariably includes programs and other works subject to c opyright and the database right. Furthermore, it is illogical that criminal liability applies to everything except computer programs.171

Effective technological measures 7.90 A ‘technological measure’ is any technology, device or component that, in the normal course of its operation, is designed to prevent or restrict acts, in respect of works or other subject-matter, not authorised by the owner of the relevant right. Technological measures are ‘effective’ where the use of a protected work or other subject-matter is controlled by the owners of the right in question through the application of an access control or protection process, such as encryption, scrambling or other transformation of the work or other subject-matter or a copy control mechanism, which achieves the protection objective.172 In Nintendo Co Ltd v Playables Ltd,173 Floyd J held that the technological measures do not have to be totally effective and it was enough if the measure provided a physical barrier to copying.174 Furthermore, the fact that the circumvention technology could also be used for legitimate purposes (however unlikely) is not relevant.175

170

171 172 173 174

175

The publication right protects works first published after expiry of copyright. It is now provided for by Article 4 of Directive 2006/116/EC of the European Parliament and of the Council of 12 December 2006 on the term of protection of copyright and certain related rights (codified version) OJ L 372, 27.12.2006, p 12. Of course, the introduction of criminal penalties is a matter for the UK. Article 6(3). [2010] EWHC 1932 (Ch), [2010] FSR 36. However, in R v Higgs [2008] EWCA Crim 1324, [2008] FSR 34, the Court of Appeal held that effective technological measures did not cover measures which merely provided a general discouragement of copying. However, this case is unsatisfactory as the prosecution failed to put their case adequately. See also, Nintendo Co Ltd v Console PC COM Ltd [2011] EWHC 1458 (Ch). The devices were advertised to be used to play counterfeit games. In any case, to play legitimate games

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7.91 Copyright in the information society 7.91 The concept of an ‘effective technological measure’ is a wide concept and applies not only to the housing system containing the work in question, such as a computer game, with a recognition device to protect against unauthorised acts, but extends also to portable equipment or consoles intended to ensure access to those games and their use. The Court of Justice so ruled in Nintendo Co Ltd v PC Box Srl.176 PC Box marketed original Nintendo consoles, but which included additional software designed to overcome the technological measures in the consoles.177 This permitted unauthorised copies of games to be played on Nintendo consoles. PC Box claimed that this would prevent the playing of independent software which did not infringe copyright. 7.92 The Court of Justice, in the light of this claim by PC Box, went on to consider the impact of technological measures on third-party activities. This was a matter for the national court to consider – in particular, whether other technological measures which were not installed on consoles could cause less interference with the activities of third parties, whilst still providing comparable protection for the rights of the rightsholder. Factors to be taken into account included the relative costs of different types of technological measures, the technological and practical aspects of their implementation, and a comparison of the effectiveness of different types of technological measures in protecting the rights of the rightsholder. The Court noted that the effectiveness of the measures did not have to be absolute. Consideration also had to be given to the purpose of devices, products or components capable of circumventing the measures. Evidence of the uses to which third parties actually make of them will be particularly relevant. Finally, the national court may examine how often the devices, products or components are, in fact, used to infringe copyright compared with uses for purposes which do not infringe copyright. 7.93 The console/game cartridge system was and remains very popular and can provide a level of security against the use of pirate copies of games. (‘Homebrew Games’) on the Nintendo Consoles would still require the effective technological measures to be overcome. On the relevance of non-infringing uses, see Nintendo v PC Box, infra. 176 Case C-355/12, EU:C:2014:25. 177 Nintendo consoles contained a recognition system in the consoles which interacted with encrypted code in the game housing to ensure only genuine Nintendo games could be played on the consoles.

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Protection of technological measures 7.96 This system locked in users to purchase games published only by the company making the console, companies such as Microsoft, Sega and Nintendo. However, this business model appears to be changing and now it is important to have a good range of games software, including games made by independents, available at the time of launching a new console. This may lead to the development and use of new technological measures to prevent or restrict the use of infringing material. Ultimately, all technological measures can be vulnerable to circumvention. Hence, the protection for effective technological measures under Article 6 of the Directive.

Scope of protection 7.94 Under Article 6(1), protection is required to be afforded by Member States against any person who knows or has reasonable grounds to know that he is pursuing the objective of circumventing effective technological measures. This applies to the person who is carrying out the act of circumvention. Arguably, it could also apply to a person who pursues that objective indirectly, such as where another actually carries out the act of circumvention on his behalf. 7.95 Adequate legal protection is also required in respect of the manufacture, import, distribution, sale, rental, advertisement for sale or rental, or possession for commercial purposes of, devices, products or components or the provision of services which: (a) are promoted, advertised or marketed for the purpose of circumvention of, or (b) have only a limited commercially significant purpose or use other than to circumvent, or (c) are primarily designed, produced, adapted or performed for the purpose of enabling or facilitating the circumvention of,

any effective technological measures.178

7.96 By protecting effective technological measures applied to works and other subject matter, there is a danger that the acts permitted under

178

Article 6(2).

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7.97 Copyright in the information society copyright and related rights will be compromised. For example, access to a work without payment may be denied by the owner of the copyright, preventing any use of the work for the permitted acts applicable to educational use, use by libraries and archives, etc. Under Article 6(4) of the Directive, Member States are required to ensure that persons who would be allowed to carry out the relevant permitted acts are nonetheless entitled to exercise those acts unless the relevant rightholders have taken appropriate voluntary measures. However, these provisions do not apply to works and other subject matter made available to the public on agreed contractual terms for online access.179 7.97 Under Article 8 of the Directive, Member States are required, inter alia, to provide appropriate sanctions and remedies in respect of infringements of the rights and obligations set out in the Directive. The sanctions are to be effective, proportionate and dissuasive. As regards technological measures, the UK decided to implement the Directive by providing a civil remedy in relation to circumvention, criminal offences and civil liability in relation to activities, mostly of a commercial nature, such as importing or selling devices and such like to be used to circumvent effective technological measures. There are also provisions for search warrants and forfeiture. The main provisions as implemented in the UK are described below.

Civil remedy in respect of circumvention 7.98 Under section 296ZA of the Copyright, Designs and Patents Act 1988180 a civil remedy is provided, where effective technological measures are applied to a copyright work other than a computer program, against a person who circumvents those measures knowing, or with reasonable grounds to know, that he is pursuing that objective. It is safe to assume that having ‘reasonable grounds to know’ is an objective test by analogy to the test of having reason to believe in respect of the criminal offences and certain of the secondary infringements which apply generally to copyright works.181 Circumvention must actually take place, there is no remedy against an attempted circumvention and there is no liability under this

179

That is, where members of the public can access the work in question from a place and at a time individually chosen by them. 180 Inserted by the Copyright and Related Rights Regulations 2003, SI 2003/2498. 181 See, for example, LA Gear Inc v Hi-Tec Sports plc [1992] FSR 121.

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Protection of technological measures 7.101 section against a person authorising circumvention. The civil remedy under section 296ZA does not apply in relation to research into cryptography unless by doing so or by issuing information derived from that research, the person carrying out the act of circumvention prejudicially affects the rights of the copyright owner.182 7.99 As with the protection of technical devices applied to computer programs, a number of persons, where they exist, have concurrent rights as if they were the copyright owner. They are the person issuing copies to the public or communicating the work to which technological measures have been applied to the public and, unless either of these persons has the relevant right, the copyright owner or his exclusive licensee. Unlike the case with computer p rograms, there is no mention of the owner or exclusive licensee of any intellectual property right in the technological measure. General copyright provisions as to concurrent actions apply as do the presumptions under sections 104 to 106 of the Copyright, Designs and Patents Act 1988. 7.100 The civil remedy also applies, mutatis mutandis, to rights in performances, the publication right and the sui generis database right. In respect of the latter, the presumptions relevant to the right apply in proceedings based on the database right.183 These are broadly equivalent to those applying to copyright works. 7.101 Section 296ZA speaks of technological measures being applied to a copyright work, as does section 296ZD described later. In Sony Computer Entertainment Inc v Ball,184 Laddie J held that the technological measures did not have to reside in the work in question. He said (at para 43): … there is nothing in [the legislation] which requires the technology be only on the software. Third, it appears to me that there is nothing to support the suggestion that Mr Kime’s approach was what was intended by the legislature. On the contrary, I can see no reason why the legislature should have been concerned where the copy protection system resides. What counts is that there is copy protection, not where it is.

182

Recital 48 to the Directive on copyright and related rights in the information society states that the protection of technological measures should not hinder research into cryptography. 183 The presumptions are set out in regulation 22 of the Copyright and Rights in Databases Regulations 1997, SI 1997/3032. 184 [2004] EWHC 1738 (Ch), [2005] FSR 9.

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7.102 Copyright in the information society This is confirmed by the language of the Directive which is silent on where the technological measures physically exist. The main point is that the technological measures are designed to prevent or restrict acts not authorised by the copyright owner. They may be applied to the copyright work, such as where it is in encrypted form, or they may be in the form of a copy-control mechanism, for example.185

Criminal offences 7.102 Carrying out certain acts, mostly of a commercial nature, in relation to devices and services designed to circumvent technological measures are criminalised under section 296ZB of the Copyright, Designs and Patents Act 1988.186 The offences apply in respect of devices, products or components which are primarily designed, produced or adapted for the purpose of enabling or facilitating the circumvention of effective technological measures. Under section 296ZB(1), an offence is committed by a person who, in relation to such a device, product or component: (a) manufactures for sale or hire, or (b) imports otherwise than for his private and domestic use, or (c) in the course of a business– (i) sells or lets for hire, or (ii) offers or exposes for sale or hire, or (iii) advertises for sale or hire, or (iv) possesses, or (v) distributes, or (d) distributes otherwise than in the course of a business to such an extent as to affect prejudicially the copyright owner. 7.103 It is also an offence to provide, promote, advertise or market in the course of a business, or otherwise than in the course of a business to

185 186

See Article 6(3) of the Directive on copyright and related rights in the information society. The relevant acts are almost the same as apply to the criminal offences under copyright generally contained in section 107 of the Act.

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Protection of technological measures 7.105 such an extent as to affect prejudicially the copyright owner, a service, the purpose of which is to enable or facilitate the circumvention of effective technological measures.187 7.104 In R v Gilham188 (at para 14), the Court of Appeal set out the requirements for an offence, for example, under section 296ZB(1)(c)(i), in relation to a computer game, the prosecution must prove: ••

that the game is or includes copyright works;189

••

that the playing of a counterfeit DVD on a game console involves the copying of a copyright work;

••

that such copying is of the whole or a substantial part of a copyright work;

••

that the game consoles and/or genuine copies (ie copies of the copyright work or works created by or with the licence of the owner of the copyright) include effective technological measures within the meaning of section 296ZF designed to protect those copyright works;

••

that in the course of a business the defendant sold or let for hire a device, product or component which was primarily designed, produced, or adapted for the purpose of enabling or facilitating the circumvention of those technological measures. It is to be noted that this issue does not depend on the intention of a defendant who is not responsible for the design, production or adaptation of the device, product or component: his intention is irrelevant.

7.105 In R v Gilham, the appellant had been convicted of a number of offences under section 296ZB in relation to commercial dealing with ‘modchips’ which allowed the playing of counterfeit computer games in Microsoft Xbox, Nintendo Gamecube and Sony Playstation 2 consoles. It was argued that the playing of a counterfeit DVD involved copying a substantial part of the game. The trial judge had directed the jury that ‘substantial’ meant more than minimal.190 One problem was that only small parts of the game 187

Section 296ZB(2). [2009] EWCA Crim 2293, [2010] ECDR 5. 189 Or other protected subject matter such as a database protected by the database right. 190 This is clearly a misdirection by a Crown Court judge who was not well versed in copyright law. However, the appeal was dismissed as the Court of Appeal considered that no useful purpose would be served by a re-trial which would almost certainly result in conviction. 188

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7.106 Copyright in the information society existed in the computer memory at a given time.191 Although Jacob LJ did not consider this a problem in R v Higgs192 as copying extends to transient copies, this is now a real issue. That is, does the whole work or a substantial part of it have to exist in temporary memory at any given point in time? But, in R v Gilham, the games in question were not single works of copyright but included other works, such as artistic works, music and other works. For example, in one game, Tomb Raider, screen displays showed Lara Croft. Although what was seen on screen was not necessarily an exact copy of the artwork for the game, it was clearly a substantial copy of it and it did not matter that it was a transient copy.193 7.106 Liability for the offences is strict in as much as there is no requirement for intent or other forms of knowledge on the part of the defendant. However, there is a defence under section 296ZB(5) which applies where the defendant proves that he did not know and had no reasonable ground for believing that the device, product or component enabled or facilitated the circumvention of effective technological measures. In many cases, the prosecution’s case will be relatively easy, requiring little more than proof of the relevant act and the nature of the device or service. In effect, the defendant is under a reverse burden of proof and has to show, on a balance of probabilities, that he ‘did not know and had no reasonable ground for believing’. In a trade mark case, R v Johnstone,194 the House of Lords accepted that such a reverse burden of proof was not necessarily incompatible with the presumption of innocence under Article 6 of the Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms 1950. There must, however, be compelling reasons justifying denying the defendant the safeguard of the presumption of innocence. The most compelling reasons in Johnstone were, according to Lord Nicholls of Birkenhead (at para 52): … (4) Those who trade in brand products are aware of the need to be on guard against counterfeit goods. They are aware of the need to deal

191

See the problem this caused in Football Association Premier League Ltd v QC Leisure, Joined Cases C-403/08 and C-429/08, EU:C:2011:631, supra. 192 [2008] EWCA Crim 1324, [2008] FSR 34. 193 Stanley Burnton LJ made the point that hitting the ‘pause’ button reinforced the fact that a substantial copy was made of the artistic works embedded in the game. 194 [2003] UKHL 28, [2003] FSR 42.

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Protection of technological measures 7.109 with reputable suppliers and keep records and of the risks they take if they do not. (5) The section 92(5) defence relates to facts within the accused person’s own knowledge: his state of mind, and the reasons why he held the belief in question. His sources of supply are known to him. (6) Conversely, by and large it is to be expected that those who supply traders with counterfeit products, if traceable at all by outside investigators, are unlikely to be co-operative. So, in practice, if the prosecution must prove that a trader acted dishonestly, fewer investigations will be undertaken and fewer prosecutions will take place. 7.107 Similar reasons apply in the case of circumvention of copy-protection and a further factor is that the maximum penalties are lower for the offences under section 296ZB. The property rights of owners of copyright and related rights would be seriously compromised by requiring the prosecution to prove that the defendant knew the purpose of the device or service. This could have the knock-on effect of discouraging the wider dissemination of works and other subject matter by online delivery. 7.108 Of course, in many cases the offender will know the nature of the device and will intend it to be used for circumvention because of the circumstances. A clear example is where someone actually makes the device in question or obtains it for resale from a questionable source. In most cases, the manner in which the device is described or advertised will indicate knowledge of its purpose. The defence may be relied on in cases such as where the device has one or more legitimate uses and the defendant does not realise that it may also be used for the purpose of circumvention. In such cases, there may be an issue as to whether the device was primarily designed, produced or adapted for the purpose of enabling or facilitating the circumvention of effective technological measures. There is no mention of a service being primarily for the purpose of enabling or facilitating circumvention. It is sufficient if it simply has that purpose. But ‘purpose’ in this context suggests that the person providing the service intends that it will be used for circumvention. 7.109 There is no definition of ‘device, product or component’ in the Act. One question is whether computer software, whether or not comprising or including computer programs, is a device, product or component. The phrase implies something having a physical presence. The Directive uses the phrase ‘technology, device or component’ which is wider and should include both 309

7.110 Copyright in the information society hardware and software. In practice, it should not matter as services are covered and if software is not deemed to be a device, product or component, providing software to overcome copy-protection can reasonably be described as providing a service. 7.110 The above offences are not applicable in relation to anything done by or on behalf of law enforcement agencies or any of the intelligence services or for the purpose of the prevention or detection of crime, the investigation of an offence, or the conduct of a prosecution. ‘Intelligence service’ means the Security Service, the Secret Intelligence Service or GCHQ.195 7.111 The offences are triable either way.196 On conviction on indictment, the maximum penalty is a fine or imprisonment for a term not exceeding two years or both. On summary conviction, the maximum is imprisonment for a term not exceeding three months or a fine not exceeding the statutory maximum or both.197

Civil remedies relation to devices and services 7.112 Section 296ZD contains civil remedies in respect of devices and services designed to circumvent technological measures. It closely follows the wording in Article 6(2) of the Directive on copyright and related rights in the information society. Where effective technological measures have been applied to a copyright work other than a computer program, a civil remedy is available against any person who manufactures, imports, distributes, sells or lets for hire, offers or exposes for sale or hire, advertises for sale or hire, or has in his possession for commercial purposes any device, product or component, or provides services which– i.

are promoted, advertised or marketed for the purpose of the circumvention of, or

ii.

have only a limited commercially significant purpose or use other than to circumvent, or

195

Section 81 of the Regulation of Investigatory Powers Act 2000. That is, in the Crown Court or a magistrates’ court. 197 Section 296ZB(4). 196

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Protection of technological measures 7.114 iii. are primarily designed, produced, adapted or performed for the purpose of enabling or facilitating the circumvention of,

those measures.

7.113 Liability is strict. Simply being in possession for a commercial purpose is sufficient. There is no need for any act of circumvention to take place. Once an effective technological measure exists, carrying out any of the above acts brings liability. Even though liability does not depend on an actual act of circumvention, Laddie J suggested that there should be potential for circumvention within jurisdiction. In Sony Computer Entertainment Inc v Ball,198 in respect of a device called Messiah2, he said (at para 40): Thus, if the Messiah2 device is ‘primarily’ designed to enable or facilitate the circumvention of the Sony system, that circumvention to take place within the jurisdiction, there is a breach of Sony’s rights. 7.114 It seems somewhat artificial to consider jurisdiction in this way. It may have been better to think of liability occurring subject to the existence of effective technological measures having been applied to a copyright work which is situated within jurisdiction, though even this is not beyond doubt. For example, one can be in possession of devices in the UK to be sold only to persons outside the UK who will carry out acts of circumvention outside the UK. Should this attract civil liability in the UK? As the provisions in the Directive are directed towards harmonisation, particularly to ‘… avoid fragmented legal approaches that could potentially hinder the functioning of the internal market …’, it seems reasonable to limit the civil remedy under section 296ZD to situations where effective technological measures protect works which are present within Europe, whether they exist elsewhere also. In Nintendo Co Ltd v Playables Ltd,199 Floyd J did not follow Laddie J on the jurisdiction point. He said that there was a distinction between the provisions on effective technological measures applied to works other than computer programs and the provisions in section 296 which apply to computer programs. The latter refers to infringing copies to which the meaning in Part I of the Act applies. In the case of section 296ZD, there is no requirement that

198 199

[2004] EWHC 1738 (Ch), [2004] FSR 9. [2010] EWHC 1932 (Ch), [2010] FSR 36.

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7.115 Copyright in the information society circumvention actually occurs. For example, section 296ZD(1)(b)(ii) requires that the device only has a limited commercial purpose other than to circumvent. There is no requirement for circumvention to actually take place. Therefore, it is enough that the device is within jurisdiction not that it must be used to circumvent in the UK. 7.115 As with the civil remedy for the act of circumvention, a number of persons, where they exist, have concurrent rights. They are the person issuing copies of the work to the public or communicating it to the public, the copyright owner or his exclusive licensee, if not the person issuing copies of the work to the public or communicating it to the public, and the owner or exclusive licensee of any intellectual property right in the effective technological measures applied to the work. General copyright provisions for the exercise of concurrent rights apply as do the presumptions. The withdrawal of the privilege against self-incrimination in proceedings relating to intellectual property applies.200 7.116 In terms of copyright infringement, damages are not available (without prejudice to other remedies) where the defendant did not know and had no reason to believe that copyright subsisted in the work in q uestion.201 Similar provision is made under section 296ZD(7) in respect of devices and services designed for circumvention. In this case, damages are not available if the defendant did not know and had no reason to believe that his acts enabled or facilitated an infringement of copyright. Note that the wording refers to an infringement of copyright rather than circumvention of the technological measures. The latter will almost certainly result in the former. For example, once the measures have been circumvented, the person carrying out the circumvention will at least access the work electronically. It may be feasible, however, that the person carrying out the act of circumvention goes no further and does not go on to make a copy of a substantial part of the work.202 The civil remedies also apply, mutatis mutandis, to rights in performances, the publication right and the database right.

200

Section 72 of the Supreme Court Act 1981 and equivalent legislation in Scotland and Northern Ireland. This also applies to sections 296 and 296ZA. 201 Section 97(1). 202 Or carry out any of the other acts restricted by copyright in relation to a substantial part of the work.

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Protection of technological measures 7.119

Remedy where permitted acts are prevented 7.117 Certain acts are permitted in relation to a work of copyright w ithout the permission of the copyright owner. These permitted acts include fair dealing, limited educational use, copying by libraries and archives and making accessible copies for persons with impaired vision. Although the permitted acts are generally fairly limited in their scope, using copyprotection or access controls may compromise or negate these permitted acts. The permitted acts are an important feature of copyright protection and act as a balance between the rights of the owner and what might be termed the public interest in certain limited free uses of works of copyright. The permitted acts derive originally from the Berne Convention for the Protection of Literary and Artistic Works.203 Copyright owners, exclusive licensees, persons issuing copies to the public or communicating the work to the public may enter into voluntary measures or agreements by which persons are enabled to carry out a permitted act. Where the application of an effective technological measure to a work of copyright (other than a computer program) prevents a person from carrying out a specified permitted act204 in relation to that work, that person or a person representative of a class of persons prevented from carrying out a permitted act may complain by notice to the Secretary of State.205 7.118 Most though not all the permitted acts that apply generally to copyright works are covered by these provisions. They are set out in Schedule 5A to the Copyright, Designs and Patents Act 1988. Excepted from the list are a number of permitted acts including those relating to computer programs and databases, fair dealing for criticism, review or fair dealing for reporting current events. Some of the others excepted are not relevant such as incidental inclusion of a work in an artistic work, sound recording, film or broadcast. 7.119 Following the issue of a complaint, the Secretary of State may give the copyright owner or exclusive licensee written directions as appear to the Secretary of State to be requisite or expedient for the purpose of establishing whether any relevant voluntary measure or agreement exists or, if not, ensuring that the owner or exclusive licensee makes available to the complainant

203

The Convention dates back to 1886. The permitted acts covered by these provisions are specified in Schedule 5A to the Act. 205 Section 296ZE(2). 204

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7.120 Copyright in the information society the means of carrying out the permitted act the subject of the complaint to the extent necessary to exercise the permitted act in question.206 The Secretary of State may also give written directions as to the form and manner in which the complaint may be delivered to him, the form and manner in which evidence of any voluntary measure or agreement may be delivered to him and, generally, procedures to be followed. Such directions shall be published in such a manner as, in the Secretary of State’s opinion, will secure adequate publicity for them. The Secretary of State may subsequently vary or revoke directions given under section 296ZE. The obligation to comply with directions is owed to the complainant or, where appropriate, the representative and each person in the class represented. Failure to comply is actionable as a statutory tort. The provisions apply, mutatis mutandis, to rights in performances, works subject to the publication right and databases protected by the database right. 7.120 These provisions only apply where a complainant has lawful access to the protected work.207 They do not apply to works made available to the public on agreed contractual terms in such a way that members of the public may access them from a place and at a time individually chosen by them: section 296ZE(9). At the time of writing no directions have been given by the Secretary of State. 7.121 The Gowers Review of Intellectual Property recommended that it should be made easier to file a complaint by providing an accessible web interface on the UK Intellectual Property Office website, permitting complaints to be submitted by email.208 It was optimistically hoped that this would be available during 2008. In response to a Freedom of Information Act request,209 in January 2010 the UK Intellectual Property Office confirmed that 9 complaints had been submitted but none had been passed on to the Secretary of State as the necessary follow up information was not submitted in any one of them.210

206

Section 296ZE(3). Or where a person is a member of a class of persons having lawful access to the work. 208 Para 4.106, p 73. HMSO December 2006. Andrew Gowers was asked to lead an independent review of intellectual property rights in the UK by the Chancellor of the Exchequer in December 2005. 209 Under section 1 of the Freedom of Information Act 2000. 210 Notice under the Freedom of Information Act as at 22 January 2010. 207

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Electronic rights management information 7.123 7.122 There have been some concerns about the impact of the US D igital Millennium Copyright Act 1998 which, inter alia, also implemented the WIPO Copyright Treaty of 1996. There are some strong similarities, therefore, between the provisions in the US and Europe. The Act inserted §§ 1201 to 1205 into the US Copyright Act 1976. Both civil and criminal liability is provided for the circumvention of technological measures. The criminal penalties are higher than those in the UK and, for a first offence, the maximum fine is $500,000 and/or imprisonment for a maximum of 5 years.211 For subsequent offences the maxima are a fine of $1,000,000 and imprisonment for a maximum of 10 years.212 The circumvention provisions in the Digital Millennium Copyright Act 1998 have come in for some criticism as they are perceived to pose a threat to the Constitution right of freedom of speech. For e xample, the Electronic Frontier Foundation points to the negative effects that the Act has had in the US in respect of lawful activities and suggests that a defence be introduced to financial and criminal penalties where a person who, acting for non-commercial purposes had a reasonable, good faith belief that his activity did not infringe and was within the exemptions applicable to circumvention. The Foundation submitted a response to the Gowers Review in 2006.213

ELECTRONIC RIGHTS MANAGEMENT INFORMATION 7.123 In the past, the vast majority of publishers placed copyright notices on physical copies of their publications. Normally, there is the usual copyright statement and a warning about unauthorised uses and, more recently, an assertion of the moral rights of the author or authors. Where copies of works are made available electronically, in digital form, it is easy to remove such notices and related information. A person who subsequently comes across a copy of a work with such information removed may think that he can carry out acts that would conflict with the exclusive rights of the owner or the moral rights of the author. These rights would be made more vulnerable

211

Of course, in England and Wales, on conviction on indictment, there is no upper limit of the fine. 212 § 1204. 213 Electronic Frontier Foundation, Electronic Frontier Foundation Submission to the Gowers Review of UK Intellectual Property Law, San Francisco, 2006. Available at http://www. hm-treasury.gov.uk/media/E/7/electronic_frontier_foundation_p1_175_313kb.pdf.

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7.124 Copyright in the information society if such information was removed or modified. Owners of copyright and related rights might be less willing to make their works available online. 7.124 Section 296ZG of the Copyright, Designs and Patents Act 1988 implements Article 7 of the Directive on copyright and related rights in the information society which protects electronic rights management information. ‘Rights management information’ is defined as any information provided by the copyright owner or the holder of any right under copyright which identifies the work, the author, the copyright owner or the holder of any intellectual property rights, or information about the terms and conditions of use of the work, and any numbers or codes that represent such information. 7.125 A civil remedy is provided against a person who knowingly and without authority, removes or alters electronic rights management information which: (a) is associated with a copy of a copyright work, or (b) appears in connection with the communication to the public of a copyright work, and where he knows, or has reason to believe, that by so doing he is inducing, enabling, facilitating or concealing an infringement of copyright. There is also a civil remedy against a person who, knowingly and without authority, distributes, imports for distribution or communicates to the public copies of a copyright work from which electronic rights management information: (a) associated with the copies, or (b) appearing in connection with the communication to the public of the work, has been removed or altered without authority and where he knows, or has reason to believe, that by so doing he is inducing, enabling, facilitating or concealing an infringement of copyright. 7.126 Thus, civil remedies are available against a person who removes or alters electronic rights management information and against a person who distributes, imports for distribution or communicates to the public copies 316

Injunctions against information society service providers 7.129 from which the information has been removed or altered. The defendant must know or have reason to believe that his act will induce, enable, facilitate or conceal an infringement of copyright. Again, having reason to believe is almost certainly an objective test based on a reasonable person having knowledge of the same facts known to the defendant.

REMEDIES 7.127 Under Article 8(1), Member States must provide appropriate sanctions and remedies for infringements of the rights and obligations set out in the Directive, and ensure the sanctions and remedies are applied. They are to be effective, proportionate and dissuasive. Article 8(2) requires the sanctions and remedies to include damages, injunctions and seizure as well as devices, products and components used for the circumvention of effective technical measures. The Directive on the enforcement of intellectual property rights214 is without prejudice to the rights and obligations set out in Article 2 to 6 and Article 8 of the Directive on copyright and related rights in the information society. 7.128 Apart from the usual remedies that apply generally to copyright, section 97A was inserted into the Copyright, Designs and Patents Act 1998 to provide for injunctions against service providers, discussed in the following section, and there are civil remedies and criminal offences in the circumvention provisions, discussed supra.

INJUNCTIONS AGAINST INFORMATION SOCIETY SERVICE PROVIDERS 7.129 Article 11 of the Enforcement Directive215 provides for injunctions to be available against intermediaries whose services are being used to

214

Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 157, 30.04.2004, p 45. 215 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 195, 02.06.2004, p 16. Article 11 is expressed to be without prejudice to Article 8(3) of the Directive on copyright and related rights in the information society.

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7.130 Copyright in the information society infringe intellectual property rights. In Tommy Hilfiger v Delta Center a.s.,216 the Court of Justice ruled that the same conditions for injunctions against intermediaries as applied in the case of online infringement217 using the services of an intermediary also applied in other cases. In Tommy Hilfiger the intermediary was letting sales points in a market hall to traders, some of which were selling infringing goods. The Court of Justice appeared to take a wide view of the scope of the meaning of ‘intermediary’. 7.130 Under Article 8(3) of the Directive on copyright and related rights in the information society, Member States must ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe a copyright or related right. To comply with this, section 97A was inserted into the Copyright, Designs and Patents Act 1988 to allow injunctions to be granted against service providers who have actual knowledge of another person using the service to infringe copyright.218 In determining whether a service provider has actual knowledge a court shall take into account all matters which appear in the particular circumstances to be relevant. Amongst other things, the court shall have regard to whether the service provider has received a notice and, if so, the extent to which the notice includes the full name and address of the sender of the notice and details of the infringement in question. The notice must have been sent through a means of contact made available in accordance with regulation 6(1)(c) of the Electronic Commerce (EC Directive) Regulations 2002,219 being details of the service provider, including his email address, which make it possible for him to be contacted rapidly and to be communicated with in a direct and effective manner. Although the details of the infringement in question should be given, some information society service providers have a policy of removing or disabling access to information where they have been informed that it may infringe copyright or other rights or be illegal in some

216

Case C-494/15, EU:C:2016:528. As in L’Oreal SA v eBay International AG, Case C-342/09, EU:C:2011:474, discussed in Chapter 14. 218 An equivalent provision was inserted in respect of performances: section 191JA. Article 8(3) of the Directive on copyright and related rights in the information society is the basis of injunctions against intermediary service providers. 219 SI 2002/2013. These regulations implement parts of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, OJ L 178, 17.07.2000, p 1. 217

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Injunctions against information society service providers 7.132 other way. This makes sense as service providers are unlikely to be able to evaluate such claims on a one by one basis without involving a considerable effort.220 7.131 Article 15(1) of the Directive on electronic commerce221 prevents the imposition of a general obligation on information society service providers to monitor information which they transmit or store, in relation to their acting as a mere conduit or in relation to their caching or hosting activities. Furthermore, in these contexts, service providers may not be subject to a general obligation to seek facts or circumstances indicating illegal activity.222 The reason for preventing the imposition of obligations to monitor data and information handled by service providers is that it would be extremely costly to do so and could significantly interfere with the technical operation of the internet. However, there have been attempts to impose such positive obligations on internet service providers. 7.132 In Scarlet Extended SA v SABAM,223 Scarlet was an internet service provider. SABAM, a Belgian management company representing authors, composers and editors of musical works was concerned that Scarlet’s internet service was being used for peer-to-peer file sharing involving works from SABAM members’ repertoires. SABAM sought injunctive relief in the form of requiring Scarlet to block illegal file sharing. This would require Scarlet to filter its internet traffic and block offending transmissions. The Court of Justice ruled that this was unacceptable on the basis of a number of Directives224

220

221

222

223 224

eBay, for example, has a VeRo (Verified Rights Owner) Programme and has a policy of removing listings alleged to infringe intellectual property rights without further investigation. The case of Quads 4 Kids v Colin Campbell [2006] EWHC 2482 (Ch) describes how the policy operates. Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, OJ L 178, 17.07.2000, p 1. This assumes that the service provider is not aware of any illegal activity and does not modify the data and, if the service provider becomes aware of the illegal nature of information, he acts expeditiously to disable or remove it. Case C-70/10, EU:C:2011:711. The Directive on electronic commerce, the Directive on copyright and related rights in the information society, the Directive on the processing of personal data, the Directive on the enforcement of intellectual property rights and the Directive on privacy in electronic communications.

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7.133 Copyright in the information society read and construed in the light of the fundamental freedoms under the Charter of Fundamental Rights of the European Union.225 In particular, a national court was precluded from imposing by injunction an obligation to require an internet service provider installing a system for filtering: ••

all electronic communications passing through its services, in particular, those involving peer to peer file sharing;

••

which applies indiscriminately to all of its users;

••

as a preventative measure;

••

exclusively at its expense; and

••

for an unlimited period.

7.133 Similarly, in SABAM v Netlog NV,226 the Court of Justice came to the same conclusion on similar facts. As before, the Court stressed the need for a fair balance to be struck between the rights to intellectual property, the freedom to conduct business, the right to protect personal data and the freedom to receive or impart information. In the UK, in EMI Records Ltd v British Sky Broadcasting Ltd,227 the claimant record companies sought injunctions under section 97A of the Copyright, Designs and Patents Act 1988 against a number of internet service providers requiring them to block three peer-topeer file sharing sites. In applying the fair balance test, Arnold J considered the various rights and the proportionality of imposing the injunctions sought. He came in favour of granting the injunctions. In terms of proportionality, the cost of complying was a factor as was the fact that such orders could be circumvented, for example, by setting up new websites for file sharing. However, the evidence was that targeted blocking injunctions were relatively effective. Furthermore, the freedom to receive and impart information was clearly subordinate as (a) users could obtain music legally from a host of websites and (b) service providers were benefitting from file sharing sites ‘on an industrial scale’.

225

OJ C 83, 30.03.2010, p 389, in particular, the Article 8 right (protection of personal data) and the Article 11 right (freedom of expression and information). This Charter takes account of, inter alia, the rights and obligations under the Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms, 1950. 226 Case C-360/10, EU:C:2012:85. 227 [2013] EWHC 379 (Ch), [2013] FSR 31.

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Injunctions against information society service providers 7.136 7.134 Arnold J set out four requirements for a court to have jurisdiction under section 97A in Football Association Premier League Ltd v British Sky Broadcasting Ltd.228 They are that: (a) the defendant is a service provider;229 (b) users and/or operators of the site for which the blocking injunction is sought (the target site) infringe the claimant’s copyright; (c) such users and/or operators use the defendant’s services to infringe copyright; and (d) the defendant has actual knowledge of (b) and (c). 7.135 In that case, the target website was known as FirstRow which operated as an indexing and aggregation portal to stream broadcasts of sporting events which were provided by third party streamers using user generated content websites. FirstRow did not itself transmit any of the streams but enabled persons in the UK including some public houses to use FirstRow to watch unauthorised streams of broadcasts, including during the Closed Period for football matches. This period was set by FIFA between 2.45pm and 5.15pm on Saturdays to encourage attendance at football matches. 7.136 The US Copyright Act230 has broadly equivalent measures in relation to online infringement of copyright and service providers under § 512 of the US Copyright Act.231 This section includes a ‘safe harbor’ defence at § 512(i)(1)(A) which applies where a service provider has adopted and

228

[2013] EWHC 2058 (Ch), [2013] ECDR 14. See also Paramount Home Entertainment International Ltd v British Sky Broadcasting Ltd [2013] EWHC 2479, [2014] ECDR 7 and the earlier case of Dramatico Entertainment Ltd v British Sky Broadcasting Ltd [2012] EWHC 1152 (Ch) at para 4. Issues of freedom of expression may arise in some cases but are unlikely to justify the denial of the grant of an injunction: see para 8. 229 There is no doubt that internet service providers are service providers under regulation 2 of the Electronic Commerce (EC Directive) Regulations 2002 for the purposes of section 97A of the Copyright, Designs and Patents Act 1988. Arnold J, who deals with most applications under section 97A, has no doubt: see, for example, Dramatico Entertainment Ltd v British Sky Broadcasting Ltd [2012] EWHC 1152 (Ch) at para 5. 230 17 USC. 231 Inserted by the Online Copyright Infringement Liability Limitation Act (part of the Digital Millennium Copyright Act 1998) in 1998. The provisions include those applicable to service providers in relation to infringing material, for example, no express duty to monitor for illegal material. The section title is Limitations on liability relating to material online.

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7.137 Copyright in the information society reasonably implemented, and informs subscribers and account holders of the service provider’s system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers and accommodates and does not interfere with standard technical measures (being technical measures used by copyright owners to identify or protect copyright works). 7.137 In BMG Rights Management (US) LLC v Cox Communications Inc,232 BMG owned copyright in musical compositions. The defendant was a service provider. BMG brought an action against Cox for contributory infringement in respect of infringement of BMG’s copyrights by subscribers of Cox’s internet service.233 Cox ran a safe harbor defence under § 512 of the US Copyright Act but this was not accepted at first instance and Cox appealed to the Court of Appeals (Fourth Circuit). The appeal was dismissed as regards the safe harbor defence.234 Cox had a policy to deal with repeat infringers using its internet service, but it could only be described as weak. After numerous warnings, a subscriber’s service would be terminated but only after being suspended on three occasions when, after speaking with a technician who explained the reasons for the suspension and recommended erasure of infringing material, and then reactivated the account. The policy was based on 13 strikes and only then was final termination of the subscription contemplated.

Blocking injunctions and live streaming servers 7.138 Live streaming of infringing material normally only available on subscription has been a major problem for organisations such as football leagues, rugby union, world darts and others. The use of technologies such as set-top boxes and streaming devices such as the Amazon Fire Stick has facilitated access to streaming servers providing infringing transmissions. Streaming presents an alternative source of infringing material compared with downloading such material from a website.

232

No 16-1972 (Court of Appeals, 4th Cir., 1 February 2018). A number of subscribers used a peer-to-peer copying system on the basis of BitTorrent software which enables pieces of infringing material on individual’s computers to be assembled into a whole work. 234 A retrial was ordered because of the trial judge’s misdirection to the jury. 233

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Injunctions against information society service providers 7.140 7.139 The first case involving an application for blocking injunctions under section 97A of the Copyright, Designs and Patents Act 1988 against streaming servers used to deliver infringing material was Football Association Premier League Ltd v British Telecommunications plc.235 The judge, Arnold J, was well experienced in granting conventional blocking injunctions. He granted the injunction sought by the claimant. The injunction had some features related to the nature of streaming servers. It was an Order for live blocking which was to be effective only at times when live Premier League match footage was being broadcast by Sky, BT and other subscription broadcast services. The list of target servers was to be reset weekly during the Premier League season.236 This enabled new servers providing infringing Premier League footage to be identified and blocked each week, whilst removing blocked servers that no longer provided infringing footage. The Order was for a short duration, being until the end of the 2016–2017 Premier League season. It required that notices be sent to each hosting provider each week to one of its internet provider (IP) addresses subject to blocking. 7.140 Arnold J held that the Order sought by the claimant was appropriate and proportionate, considering the competing rights of those affected by it. The court had to consider the comparative importance of, and justification for interfering with, on the one hand, the claimants copyright and, on the other hand, the defendants’ rights to carry on business and the rights of internet users to impart and receive information. To the limited extent that the Order interfered with the rights of internet users to impart and receive information,237 that was justified by a legitimate aim of preventing infringement of the claimant’s copyrights on a large scale and was proportionate to that aim. Moreover, the Order would be effective and dissuasive, and no other equally effective but less onerous measures were available to the claimant. Finally, the Order was not unduly complicated or costly in practice and contained safeguards against misuse. The Order had a confidential Schedule containing criteria for blocking streaming servers as it was thought that such information could prejudice the effectiveness of the order.

235

[2017] EWHC 480 (Ch), [2017] ECDR 17. British Telecommunications plc and some of the other defendants offered some Premier League matches to subscribers under a licence with the claimant, such as the BT Sports package, also were internet service providers. 236 Arnold J later changed this period to every two weeks on 10 May 2017. 237 Under Article 11 of the Charter of Fundamental Rights of the European Union, OJ C 83, 30.03.2010, p 389.

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7.141 Copyright in the information society 7.141 Football Association Premier League Ltd had learnt the lessons from the Court of Justice ruling in Football Association Premier League Ltd v QC Leisure,238 and now recorded the match footage as a film prior to broadcasting and which also included copyright images, to ensure there could be no question of subsistence of copyright. Now, improvements in technology shifted the emphasis from infringing material stored on websites to streaming but this was countered by developments in blocking technologies and the ability to identify and block streaming servers providing live access to infringing footage of sports events and suchlike. 7.142 Arnold J granted a similar Order to take effect during the 2017–2018 season in Football Association Premier League Ltd v British Telecommunications plc.239 Some amendments were made to the original Order in relation to the confidential Schedule and some technical amendments were made which were not made public because of the danger of circumventing the Order. The evidence indicated that the First Order had been very effective in blocking access to target servers and there was no evidence of over-blocking. Arnold J was satisfied that the court had the jurisdiction to make the new Order and that it was justified in the circumstances.

Costs of implementing blocking injunctions 7.143 The standard practice was that court orders for blocking injunctions under section 97A required that the service provider would bear the costs of implementing the order. This was seen by Kitchen LJ as the quid pro quo for the immunities provided to, and the exclusion of a general monitoring duty imposed on, information society service providers240 such as internet service providers (ISPs), under the e-commerce Directive.241 At least 17 blocking injunctions have been granted under section 97A, all of which required the service provider to bear the costs of implementing the injunctions. 238

Joined Cases C-403/08 and C-429/08, EU:C:2011:631, supra. [2017] EWHC 1877 (Ch). 240 Cartier International AG v British Sky Broadcasting Ltd [2016] EWCA Civ 658, [2017] RPC 3. Kitchen LJ also noted that, in terms of the profits made by internet service providers, costs of implementing blocking orders could be seen as part of the costs of carrying on a business. 241 Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the internal market (Directive on electronic commerce), OJ L 178, 17.07.2000, p 1. 239

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Injunctions against information society service providers 7.146 7.144 This practice was questioned in relation to blocking injunctions in a trade mark case in the Supreme Court in Cartier International AG v British Telecommunications plc.242 Although there is no legislative provision equivalent to section 97A for online trade mark infringement, the Supreme Court considered the position in relation to blocking injunctions for copyright infringement under section 97A. Lord Sumption, with whom the other Lordships agreed, gave the judgment of the court. The main issue for the Supreme Court was who should bear the costs to internet service providers of implementing website blocking orders. 7.145 An important factor is that ISPs are legally innocent. They are acting as mere conduits under Article 12 of the e-commerce Directive and are normally not aware of the use of the communications systems by third parties to distribute infringing material. Even if an ISP is made aware of this, it does not have a proactive duty to prevent access to the infringing material,243 and its only duty is to comply with an order of the court requiring it to block access. Lord Sumption said (at para 33) that there was no legal basis requiring a party to ‘… shoulder the burden of remedying an injustice if he has no legal responsibility for the infringement and is not a volunteer but is acting under the compulsion of an order of the court’. The argument that ISPs benefit financially from the volume of content available on the internet, including content infringing intellectual property rights, and should bear some of the costs of enforcement is mistaken. It assumes a degree of responsibility on the part of an ISP which does not correspond to a legal duty under English law. 7.146 Lord Sumption went on to note that intellectual property rights holders apply for blocking injunctions for their own commercial interests, protecting their legal rights. The entire benefit of these injunctions falls to the rights holders. The protection of intellectual property rights is ordinarily and naturally a cost of the rights holders which have the interest in asserting them. It is not ordinarily or naturally a cost of the business of an ISP which

242

[2018] UKSC 28. This case is discussed in more detail in Chapter 14 in respect of online trade mark infringement. 243 Unlike the position under Articles 13 and 14 of the e-commerce Directive (the caching and hosting defences). These Articles require that a service provider acts expeditiously to remove or disable access to offending material upon obtaining actual knowledge of the illegal information.

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7.147 Copyright in the information society has nothing to do with the intellectual property rights in question but is merely providing a network which has been abused by others. Consequently, there is no reason why the rights holders should be entitled to look for contribution to the cost of defending their rights to anyone other than the infringer. There was nothing in relevant EU Directives to the contrary, although cases in some other Member States tended to impose the costs of compliance with blocking injunctions on the ISPs. 7.147 Although Cartier v British Telecommunications was a case about online infringement of trade marks, it was clear that Lord Sumption intended the same principle should apply to injunctions under section 97A, being that ISPs should not bear the costs of compliance with orders for blocking injunctions. However, in Cartier v British Telecommunications, Lord Sumption agreed with Arnold J, at first instance,244 where he ordered the ISPs to bear the costs of litigation as the ISPs had strenuously resisted the application and had engaged in the litigation as a test case. 7.148 ISPs generally do not object to the costs of (i) acquiring and updating hardware and software used to block target sites and (ii) the cost of managing the blocking system as these costs are incurred to prevent access to child pornography and providing parental controls. Other costs which ISPs argued they should not be subject to are: (iii) the costs of implementation, processing the applications and configuring blocking systems; (iv) the costs of updating the block, responding to notifications from rights holders, configuring the blocking system to accommodate the migration of websites from blocked locations; and (v) if blocking malfunctions without the fault of the ISP, for example, as a result of over-blocking because of errors in notifications or malicious attacks provoked by blocking. In Cartier v British Telecommunications, Lord Sumption varied the orders made by Arnold J so that the trade mark holders indemnify the ISPs reasonable costs of processing and implementing the costs associated with (iii) to (v) mentioned above. The ISPs would remain liable for the costs under (i) and (ii) above. Overall, the result in terms of the costs of implementing blocking orders was as the ISPs had sought. 7.149 The position now is that ISPs will remain responsible for the costs under (i) and (ii) above but not otherwise. The costs of litigation will n ormally 244

Cartier International AG v British Sky Broadcasting Ltd [2014] EWHC 3354 (Ch), [2015] RPC 7.

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Digital Economy Act 2010 7.151 remain with the applicant for a blocking injunction where, as in most cases, the ISPs do not oppose the order of the court. The present case was exceptional in that the ISPs strenuously resisted the application and treated it as a test case. It is interesting to note that ISPs do not act without a blocking order so as to protect themselves from regulatory restrictions on interfering in network communications and complaints from third parties on various grounds.

DIGITAL ECONOMY ACT 2010 7.150 Article 15(2) of the Directive on electronic commerce allows Member States to establish obligations requiring service providers to inform competent public authorities of alleged illegal activities or information provided by recipients of their services or obligations to communicate to competent authorities, at their request, information identifying the recipients of their service with whom they have storage agreements. This caveat to the basic principle of non-interference with service providers in respect of information passing through, stored or hosted on their servers and over which they normally have no control appears to permit a mechanism to deal with online infringement of copyright. In the UK, this mechanism is set out in sections 3 to 18 of the Digital Economy Act 2010 which inserts section 124A to 124N into the Communications Act 2003.245 7.151 The provisions concerning online infringement set out a mechanism whereby copyright owners inform ISPs of apparent infringements of their copyright by means of copyright infringement reports (CIRs). ISPs will then notify the relevant subscribers of the alleged infringement and will keep lists of these alleged infringements by the individual subscribers in question. Thus, it will be possible to determine which subscribers appear to habitually infringe copyright and distinguish between those who may only do it once or infrequently. For example, a subscriber may try file-sharing once and once only. Others may be regular infringers of copyright. Until now it has not been easy to distinguish between those who infringe copyright on

245

The Digital Economy Act 2010 also allows the Secretary of State to make regulations g overning blocking injunctions under section 17 of that Act subject to Parliamentary scrutiny under section 18.

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7.152 Copyright in the information society a large scale and those who did so on a small number of occasions only. This may have deterred copyright owners from commencing expensive litigation against online infringers. The new provisions make it possible for copyright owners to target the most serious repeat infringers. 7.152 An ISP may be required to make available lists of alleged infringements by subscribers to copyright owners submitting CIRs. These will be in anonymised form to comply with data protection and privacy laws. A threshold may be set which, when reached, will trigger the furnishing of lists to copyright owners. However, copyright owners will only be able to discover the identity of a subscriber suspected of copyright infringement by applying for a court order. 7.153 Provision will be made for subscriber appeals as well as the possibility of the Secretary of State being given the power to make blocking orders requiring ISPs to limit internet access available to particular subscribers after asking OFCOM to assess whether such measures should be used. If so, OFCOM must adopt a code regulating the measures. ISPs may adopt codes governing the procedures to be used; such codes (known as initial obligations codes) will be subject to approval by OFCOM. In the absence of an approved industry code, OFCOM must formulate an initial obligations code. 7.154 A draft code was prepared following a consultation period but things have been delayed somewhat because of a legal challenge to the provisions in the Digital Economy Act 2010 brought by British Telecommunications and others. The latest proposal for an initial obligations code was published in June 2012.246 The legal challenge, in R (on the application of British Telecommunications plc) v Secretary of State for Culture, Olympics, Media and Sport,247 was based on numerous issues, including lack of notification to the Commission of the provisions in the Act required by the technical standards Directive,248 in relation to the processing of personal data and

246

OFCOM, Online Infringement of Copyright and the Digital Economy Act 2010, 26 June 2012. 247 [2012] EWCA Civ 232, [2012] 2 CMLR 23. 248 Directive 98/34/EC of the European Parliament and of the Council of 22 June 1998 laying down a procedure for the provision of information in the field of technical standards and regulations, OJ L 204, 21.07.1998, p 37, as amended by Directive 98/48/EC of the

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Cross-border portability of online content services 7.155 p rivacy in telecommunications. It was also argued that the draft costs order249 was contrary to Article 12 of the authorisation Directive250 as it would place a disproportionate burden on ISPs which would be required to pay a contribution to subscriber appeal fees. This latter challenge was the only one to succeed and the Court of Appeal widened its scope. Unless there is a further appeal, a new costs order will have to be made before the initial obligations code can come into effect.

CROSS-BORDER PORTABILITY OF ONLINE CONTENT SERVICES 7.155 It is frustrating to travel to another EU Member State to find that an online content service you have subscribed to in your own Member State, whether or not for payment, is unavailable to you whilst in that other Member State. You may be there for leisure, work or business or you may be just travelling through that Member State. The Regulation on cross-border portability of online content service in the internal market251 seeks to remedy this by introducing an obligation on providers of online content services to enable access to their subscribers who are temporarily in another Member State. The seamless access to online c ontent services is seen as important to the functioning of the internal market and the freedom of movement of persons and services.252 The mechanism for providing online content services in other Member States differs depending whether the service is provided for monetary payment or not. Subscribers may have to verify their Member State of residence.

249 250

251

252

uropean Parliament and of the Council of 20 July 1998 amending Directive 98/34/EC E laying down a procedure for the provision of information in the field of technical standards and regulations, OJ L 217, 05.08.1998, p 18. The draft Copyright (Initial Obligations) (Sharing of Costs) Order 2011. Directive 2002/20/EC of the European Parliament and of the Council of 7 March 2002 on the authorisation of electronic communications networks and services, OJ L 108, 24.04.2002, p 21. Regulation 2017/1128/EU of the European Parliament and of the Council of 14 June 2017 on cross-border potability of online content services in the internal market, OJ L 168, 30.06.2017, p 1. The Regulation applies from 1 April 2018, changed from 20 March 2018 by a Corrigendum. Recital 1 to the Regulation.

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7.156 Copyright in the information society 7.156 An online content service is defined in Article 2(5) as an audiovisual media service within the meaning given in Article 1(a) of Directive 2010/13/EU, being ‘a service as defined by Articles 56 and 57 of the Treaty on the Functioning of the European Union which is under the editorial responsibility of a media service provider and the principal purpose of which is the provision of programmes, in order to inform, entertain or educate, to the general public by electronic communications networks within the meaning of point (a) of Article 2 of Directive 2002/21/EC. Such an audio-visual media service is either a television broadcast as defined in point (e) of this paragraph or an on-demand audio-visual media service as defined in point (g) of this paragraph’.253 Also included in the definition is a service the main feature of which is the provision of access to, and the use of, works, other protected subject-matter or transmissions of broadcasting organisations, whether in a linear or an on-demand manner.

Paid for subscriptions 7.157 Under Article 3(1) an obligation is placed on the provider of an online content service provided to a subscriber for payment of money to enable the subscriber, temporarily present in a Member State other than his Member State of residence, to access and use the service in the same manner as in his own Member State. Such access must be provided to the same content, on the same range and number of devices, for the same users and with the same range of functionalities. No additional charges may be imposed on the subscriber. 7.158 Unless otherwise agreed, the obligation under Article 3(1) does not extend to quality requirements applicable to the delivery of the service. This could be relevant in the case of subscription broadcasts where the footprint of the broadcast does not fully cover the other Member State or the quality

253

Directive 2010/13/EU is the Audiovisual Media Services Directive, OJ L 95, 15.04.2010, p 1. Article 56 of the Treaty on the Functioning of the European Union provides for no restrictions on the freedom to provide services, Article 57 of which defines services as being normally provided for remuneration and include activities of an industrial or a commercial character, of craftsmen or the professions. Directive 2002/21/EC is the Framework Directive.

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Cross-border portability of online content services 7.161 of reception is affected by the distance from the source of the broadcast or satellite. However, the provider must not take any action to reduce the quality of the service. The provider is required to give the subscriber with information about the quality of the service provided to the subscriber under Article 3(1) prior to the provision of the service, based on information in the possession of the provider. The means of providing the information must be adequate and proportionate. Under Article 4, the provision of the service is deemed to be provision in the subscriber’s Member State of residence. 7.159 Article 5 covers verification of the subscriber’s Member State of residence. No more than two forms of verification may be sought by the provider and the means used must be reasonable, proportionate and effective. The forms of verification include identity cards, payment details (bank account or debit or credit card numbers), place of installation of a set-top box or other apparatus, payment of a licence fee for a public service broadcast, an internet or telephone supply service, a utility bill linking the subscriber to the Member State, etc. The final three forms of verification are the billing address or postal address of the subscriber, a declaration by the subscriber confirming the Member State of residence or the subscriber’s internet protocol address check confirming the Member State of residence. One of these last three forms of verification must be used in conjunction with one of the other forms of verification unless the subscriber’s postal address is in a public register. 7.160 If the provider has reasonable doubts about the subscriber’s Member State of residence during the contract for the provision of the online content service, the provider may repeat the verification and may use only the IP address check as the sole means of verification, in which case, data collected may be stored in binary form only. If the subscriber fails to provide the information to permit verification of his or her Member State of residence and, as a result, the provider is unable to determine the Member State of residence, the provider shall not enable access to the service to that subscriber when temporarily in another Member State. 7.161 Holders of copyright, related rights and other rights in the content of an online content service may authorise the use or their works or other subject-matter without verification of subscribers’ Member States of residence; the contract between the provider and subscriber being sufficient 331

7.162 Copyright in the information society for this purpose. However, such rightholders may withdraw their authorisation for the use of their content in the online content service on giving reasonable notice to the provider. The contract between the provider and the holder of rights in the content of the online content service must not restrict the possibility of the holders or rights in the content withdrawing their authorisation.

Services available without payment of money 7.162 Providers of online content services may decide to allow their subscribers access to the service when subscribers are temporarily in a Member State other than the Member State of their residence on the condition that the subscriber verifies his Member State of residence in accordance with the Regulation.254 Subscribers and holders of rights in the content must be informed of the decision to make the service available to subscribers temporarily in another Member State prior to its being made available. The information must be provided by means that are adequate and proportionate. In effect, the Regulation allows providers of not paid for online content services to opt to be within the Regulation. Because of the potential costs of doing so, such providers are not required to be within the Regulation and remain free to provide their service to subscribers temporarily in another Member State, without going through the verification process.

Other provisions 7.163 Article 7 of the Regulation makes unenforceable terms in contracts, whether between providers and subscribers or providers and holders of rights in the content of online content services, which are contrary to the Regulation or which prohibit cross-border portability of online content services or limit such portability to a specific time period. 7.164 The Regulation applies irrespective of the law applicable to such contracts. Article 8 requires that the processing of personal data under the Regulation, in particular in relation to the verification of a subscriber’s Member State of residence, must comply with data protection and privacy

254

Article 6.

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Cross-border portability of online content services 7.166 in electronic communications laws.255 Data collected for the purpose of verifying a subscriber’s Member State of residence under Article 5 must not be communicated, transferred, shared, licensed or otherwise transmitted or disclosed to holders of copyright or related rights or any other rights in the content of online content services, or to any other third parties. Furthermore, data collected under Article 5 must not be stored by a provider of an online content service longer than necessary to complete the verification. On completion of the verification the data must be immediately and irreversibly destroyed. 7.165 The Regulation applies to pre-existing contracts concluded and rights acquired if relevant for the provision of online content services, whether payable in money or not.256 By 2 June 2018, the provider of an online content service provided against payment of money must verify, in accordance with the Regulation, the Member States of residence of their subscribers who concluded contracts for the provision of the service before that date. Within two months of the date upon which the provider of an online content service first provides the without payment service in accordance with Article 6, it must verify the Member States of residence of those subscribers who concluded contracts for the provision of the service before that date. 7.166 The Commission to the EU is required to submit a report to the European Parliament and the Council by 2 April 2021.257 The report is to assess the application of the Regulation in the light of technological and economic developments. It will also include, inter alia, an assessment of the verification means under Article 5, taking into account newly developed technologies, industry standards and practices and, if necessary, consider the need for review. Special attention is to be given to the impact of the Regulation on small and medium-sized enterprises (SMEs) and the protection of personal data. If appropriate, Commission reports may be accompanied by legislative proposals.

255

The Regulation expressly mentions Directive 95/46/EC (the Data Protection Directive) and Directive 2002/58/EC (the processing of personal data and privacy in electronic communications Directive). The former has, of course, been replaced by Regulation 2016/679/ EU (the General Data Protection Regulation) as from 25 May 2018. 256 Article 9. 257 Article 10. After the first report, subsequent reviews may be carried out as required.

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7.167 Copyright in the information society

THE PROPOSED DIRECTIVE ON COPYRIGHT IN THE DIGITAL SINGLE MARKET 7.167 The proposal for a Directive of the European Parliament and of the Council on copyright in the Digital Single Market258 attempted to further harmonise copyright and related rights in the internal market in the light of digital and cross-border uses of works and other subject-matter. This included exceptions and limitations for text and data mining by research organisations; for uses of works and other subject-matter in digital and cross-border teaching activities by educational establishments; for the use of out-of-commerce works by cultural heritage institutions; and for access and availability of audio-visual works on video-on-demand platforms. The proposed Directive also provided for the protection of press publications in the digital environment; placing obligations on internet service providers with respect to infringing material; and for the transparency of authors’ and performers’ contracts for fair remuneration. 7.168 Certain parts of the proposal proved very controversial and drew much criticism from no less than Sir Tim Berners-Lee, and included numerous academics, software designers, internet companies, the Electronic Frontier Foundation, the Creative Commons, Wikimedia, a number of MEPs including Julia Reda, a German MEP and Vice Chair of the Greens/European Free Alliance. The EU Legal Affairs Committee passed the proposed Directive on 20 June 2018 but the European Parliament rejected the proposal on 5 July 2018. The proposal was open to further debate by the European Parliament. However, following some amendments, the European Parliament adopted the proposed Directive on 12 September 2018. There follows a brief description of the main provisions in the proposed Directive as it stood as rejected. We start with text and data mining.

Text and data mining 7.169 Text and data mining is defined under Article 2259 as meaning any automated analytical technique aiming to analyse text and data in digital form in order to generate information such as patterns, trends and correlations.

258 259

COM(2016) 593 final – 2016/0280 (COD). Article 2 contains definition of a number of terms used in the proposed Directive.

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The proposed Directive on copyright 7.171 At the present time, it is not always clear as to what extent this activity is permitted under a licence arrangement providing access to a database containing data, information or works. Some licences may expressly or impliedly prohibit or limit text and data mining. Under Article 3, reproduction and extraction by research organisations to perform text and data mining for the purposes of scientific research would be exempt from the reproduction right260 and from the restricted act of temporary and permanent reproduction for a copyright database and the rights of the maker of a database subject to the sui generis database right.261 A further exception is in relation to Article 11(1) of the proposed Directive which would provide rights in respect of press publications, being the reproduction right and the right of making available to the public by wire or wireless means under Articles 2 and 3(2), respectively, of Directive 2001/29/EC. 7.170 The exception would apply to research organisations, as defined in Article 2, having lawful access to the works or other subject-matter. A ‘research organisation’ is a university, a research institute or any other organisation having the primary goal of conducting scientific research or to conduct scientific research and provide educational services: (a) on a non-for-profit basis or by reinvesting all the profits in its scientific research; or (b) pursuant to a public interest mission recognised by a Member State; in such a way that the access to the results cannot be enjoyed on a preferential basis by an undertaking exercising a decisive influence on such an organisation. 7.171 Contractual provisions contrary to the text and data mining exception would be unenforceable. Although rightholders may apply measures to ensure the security and integrity of the networks and databases hosting the works or other subject matter, these measures must not go beyond what is necessary to

260

Article 2 of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10. 261 Articles 5(a) and 7(1), respectively, of Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases, OJ L 77, 27.03.1996, p 20.

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7.172 Copyright in the information society achieve that objective. Member States would be required to encourage rightholders and research organisations to define commonly-agreed best practices concerning the application of such measures.262

Digital and cross-border teaching activities 7.172 Exceptions or limitations to various rights under the Directives on copyright and related rights in the information society,263 the legal protection of databases,264 the legal protection of computer programs265 and Article 11(1) of the proposed Directive266 must be provided to allow for the digital use of works and other subject-matter for the sole purpose of illustration for teaching to the extent justified by the non-commercial purposes to be achieved, provided that the use: (a) takes place on the premises of the educational establishment or through a secure electronic network accessible only by the establishment’s pupils, students and teaching staff; (b) is accompanied by the indication of the source, including the author’s name, unless this turns out to be impossible.267 7.173 Member States may provide that the above exception does not apply generally or for specific types of works or other subject-matter where adequate licences are available in the market. In this case, necessary measures must be taken to ensure the appropriate availability and visibility of the licences for educational establishments. The use of the works and other

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263 264 265 266 267

For the views of ‘Copyright for Knowledge’, on the provisions on text and data mining and other aspects, see the response paper on the proposed Directive, available at https://www. ucl.ac.uk/library/docs/copyright/views-proposed-directive-copyright-dsm.pdf. Directive 2001/29/EC. Directive 96/9/EC. Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (codified version), OJ L 111, 05.05.2009, p 16. Rights given to the publishers of press publications. Where identification of the source is possible, failure to indicate it and identify the author could also infringe the author’s moral rights, apart from loss of the benefit of the exception in that case, leading to vulnerability to a copyright infringement action or equivalent action in relation to other subject-matter.

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The proposed Directive on copyright 7.177 subject-matter under this exception will be deemed to occur solely in the Member State where the educational establishment is established. Member States may provide for fair compensation for the harm to rightholders caused by the use of their works or other subject-matter under this exception. 7.174 The importance of the exception is that it will facilitate the use of distance learning even where the student is located in another Member State. For example, students from other Member States who are enrolled in a French University will be able to carry out their studies, accessing teaching materials, submitting coursework and even taking examinations through secure online means.

Cultural heritage institutions 7.175 Two separate provisions that apply to cultural heritage institutions are proposed. The first, under Article 5, allows making copies of works or other subject-matter for the purpose of preservation and the second, under Article 7, concerns the use of out-of-commerce works. A ‘cultural heritage institution’ is defined in Article 2 as a publicly accessible library or museum, an archive or a film or audio heritage institution. 7.176 Copies of works or other subject-matter permanently in the collection of a cultural heritage institution, in any format or on any medium for the sole purpose of preservation may be made by cultural heritage institutions, to the extent necessary for that purpose. This would allow, for e xample, making a digital copy of a document, the physical condition of which is deteriorating quickly or making a digital copy of an old celluloid film which is disintegrating. From the strict wording of the exception, it would seem that enhancing or ‘improving’ the work in question is outside the scope of the exception as such modifications would go beyond the ‘extent necessary for such preservation’. The exception would be from the right of reproduction under Directive 2001/29/EC; the right of reproduction and rights under the sui generis database right under Directive 96/9/EC; temporary or p ermanent reproduction of a computer program under Directive 2009/24/EC and Article 11(1) of the p roposed Directive. 7.177 Article 7 of the proposed Directive would apply where a cultural heritage institution takes a non-exclusive licence for non-commercial 337

7.178 Copyright in the information society purposes,268 of ‘out-of-commerce’269 works from a collective management organisation, on behalf of its members. The works or other subject-matter must be p ermanently in the collection of the institution. The non-exclusive licence may be extended or presumed to apply to rightholders of the same category as those covered by the licence who are not represented by the collective management organisation under the following conditions: (a) the collective licensing organisation, on the basis of mandates from rightholders broadly representative of rightholders in the category of works or other subject-matter and of the rights subject to the licence; (b) equal treatment is guaranteed to all rightholders in relation to the terms of the licence; (c) all rightholders may at any time object to their works or other subjectmatter being deemed to be out-of-commerce and exclude the operation of the licence with respect to their works or other subject-matter. 7.178 A number of safeguards are proposed including adequate publicity measures in respect of the deeming of works as out-of-commerce, the licence, in particular as applies to unrepresented rightholders and the possibility of rightholders objecting to their works or other subject-matter being deemed to be out-of-commerce. Article 8 proposes that licences under Article 7 will apply to all Member States and a single online portal would be established to identify the works or other subject-matter covered by licences together with information about the possibility of rightholders objecting. The portal would be established and managed by the E uropean Union Intellectual Property Office (EUIPO). There should be at least six months after entry on the portal before the acts of digitisation, distribution, communication to the public or making available in all Member States other than the one where a licence under Article 7 is granted. Article 9 proposes a stakeholder dialogue in respect of the licensing arrangements and ancillary matters.

Audio-visual works on video-on-demand platforms 7.179 Under Article 10, where parties desire to conclude an agreement to make audio-visual works available on video-on-demand platforms, Member 268 269

For the digitisation, communication to the public or making available to the public. ‘Out-of-commerce’ means when the whole work or other subject-matter, in all its translations, versions and manifestation, is not available to the public through customary channels of commerce and cannot reasonably be expected to become so available.

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The proposed Directive on copyright 7.181 States would be required to nominate an impartial body to assist with negotiation where the parties face difficulties concerning the licensing of rights with a view to reaching agreement. In the UK, a possible candidate for the impartial body could be the Copyright Tribunal.

Protection of digital uses of press publications 7.180 Article 11 proposes the extension of the rights of reproduction and making available to the public by wire or wireless means270 to the publishers of press publication in respect of the digital use of those publications. These rights are subject to Articles 5 to 8 of Directive 2001/29/EC.271 The publishers’ rights thus provided will last for 20 years from the end of the calendar year of publication. Under Article 2, a ‘press publication’ is: a fixation of a collection of literary works of a journalistic nature, which may also comprise other works or subject-matter and constitutes an individual item within a periodical or regularly-updated publication under a single title, such as a newspaper or a general or special interest magazine, having the purpose of providing information related to news or other topics and published in any media under the initiative, editorial responsibility and control of a service provider.272 7.181 The rights of authors and rightholders of rights in other subject-matter incorporated in a press publication would not be affected and they would be able to exploit their works or other rights independently from the press publication in which they are incorporated. This is, of course, subject to any licence agreement between the author or other rightholder and the publisher of the press publication. Under Article 12, Member States would be able to provide that, where an author has transferred or licensed a right to a publisher, such a transfer or a licence constitutes a sufficient legal basis for the publisher to claim a share of the compensation for the uses of the work made under an exception or limitation to the transferred or licensed right. For example, 270

Article 2 and Article 3(2) of Directive 2001/29/EC, respectively. 5 contains exceptions and limitations to the rights under Articles 2 and 3, Articles 6 and 7 provide for the protection of technological measures and rights management information, and Article 8 covers sanctions and remedies. 272 Under recital 33, periodical publications published for scientific or academic purposes, such as scientific journals, should not be covered by the protection granted to press publications. 271 Article

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7.182 Copyright in the information society where the digital use of the press publication falls within the exception for caricature, parody or pastiche under Article 5(3)(k) of Directive 2001/29/EC, a publisher who has taken an exclusive licence from an author of work incorporated in the press publication would be entitled to a share in any compensation scheme provided by the Member State in question. 7.182 The aims of the proposed right for publishers of press publications, at first sight, appear reasonable. Recital 31 notes that, in the transition from print to digital, publishers of press publications are facing problems in licensing the online use of their publications and recouping their investments. Moreover, in the absence of recognition of publishers of press publications as rightholders, licensing and enforcement in the digital environment is often complex and inefficient. 7.183 The proposed right for publishers of press publications is poorly drafted, does not take account of the realities of news aggregators, such as Google News, the use of licensing arrangements with rightholders of incorporated content and could result in a tax on ‘linking’.273 The proposal could prejudice European start-ups which would struggle to conclude all the licensing arrangements necessary.274 It is argued that the right is unnecessary and could do more harm than good. 7.184 In the UK, typographical arrangements of published editions have copyright protection for 25 years. This can apply to newspapers, magazines and journals and the same principles apply in the EU generally, though under normal copyright law.275 Infringement applies to digital copying and this new proposed right appears to provide a further layer of protection without convincing justification. It is interesting to note that the Berne Convention for 273

However, recital 33 to the proposed Directive, the protection of press publications does not extend to acts of hyperlinking which do not constitute communication to the public. The distinction between a link and a hyperlink is vanishing, especially from a user’s perspective. 274 See the criticisms and recommendations of COMMUNIA International Association on the public domain, available at https://www.communia-association.org/2016/12/14/ commissions-proposal-new-rights-press-publishers-terrible-solution-good-no-one/. 275 See, for example, Newspaper Licensing Agency Ltd v Marks & Spencer plc [2001] UKHL 38, [2003] 1 AC 551, Infopaq International A/S v Danske Dagblades Forening, Case C-5/08, EU:C:2009:465 and Infopaq International A/S v Danske Dagblades Forening, Case C-302/10, EU:C:2012:16.

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The proposed Directive on copyright 7.186 the Protection of Literary and Artistic Works does not apply to ‘news of the day or to miscellaneous facts having the character of mere items of press information’.276

Use of protected content by information society service providers277 7.185 This is arguably the most contentious part of the proposed Directive as it could impose proactive obligations on service providers, such as ISPs, who store and give access to users of large amounts of infringing material. Under Article 13(1): [i]nformation society service providers that store and provide to the public access to large amounts of works or other subject-matter uploaded by their users shall, in cooperation with rightholders, take measures to ensure the functioning of agreements concluded with rightholders for the use of their works or other subject-matter or to prevent the availability on their services of works or other subject-matter identified by rightholders through the cooperation with the service providers. For example, the owner of copyright in an audio-visual work may allow users to download or stream copies in return for payment (transaction 1). If someone places a copy online and allows third parties to make copies without payment to the owner (transaction 2), the ISP, working with the copyright owner, must ensure that transaction 1 is concluded properly and transaction 2 is prevented. 7.186 The measures, such as the use of effective content recognition technologies, shall be appropriate and proportionate. The service providers would be required to provide rightholders with adequate information on the functioning and the deployment of the measures, as well as, when relevant, adequate reporting on the recognition and use of the works and other subject-matter.

276 277

Article 2(8) of the Berne Convention. An ‘information society service’ is defined in terms of ‘… any service normally provided for remuneration, at a distance, by electronic means and at the individual request of a recipient of services’. Article 1(1)(b) of Directive 2015/1535/EU of the Parliament and of the Council of 9 September 2015 laying down a procedure for the provision of information in the field of technical regulations and of rules on Information Society services (codification), OJ L 241, 17.09.2015, p 1.

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7.187 Copyright in the information society Member States would be required to ensure that the service providers put in place complaints and redress mechanisms that are available to users in case of disputes over the application of the measures. Stakeholder dialogues would be established to define best practices, such as appropriate and proportionate content recognition technologies, taking into account, among others, the nature of the services, the availability of the technologies and their effectiveness in light of technological developments. 7.187 Under Article 14 of the Directive on electronic commerce,278 information society service providers have a ‘hosting defence’ in respect of information uploaded by recipients of their service. The defence is available if the provider has no actual knowledge of illegal activity of information and, in relation to claims for damages, is not aware of facts or circumstances from which the illegal activity or information would be apparent. Should the provider obtain such knowledge or awareness, he must act expeditiously to remove or disable access to the activity or information. The result of this conditional defence was that information society service providers were not expected to be proactive in monitoring their hosting activities to look for illegal activity or information, such as material infringing copyright. 7.188 Article 8(3) of Directive 2001/29/EC provides that rightholders can apply for injunctions against intermediaries, such as information society service providers, whose services are being used by third parties to infringe a copyright or related right.279 Blocking injunctions have proved reasonably successful at combatting copyright piracy and service providers do not generally object to them, apart from issues of costs.280 7.189 With these two provisions, it might be considered that there is no need for further mechanisms for dealing with material infringing copyright,

278

Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, OJ L 178, 17.07.2000, p 1. Information society service providers also have defences in respect of acting as a ‘mere conduit’ for information transmitted through their service or in respect of caching information under Articles 12 and 13 respectively. There are some conditions for these defences, such as lack of knowledge of the illegal nature of the information. 279 See section 97A of the Copyright, Designs and Patents Act 1988 which provides for such blocking injunctions. 280 See the section on injunctions against information society service providers, supra.

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The proposed Directive on copyright 7.192 especially as they work against smaller service providers and, potentially, negatively impact on freedom of expression. The latter is recognised as a possibility in the Explanatory Memorandum to the proposed Directive under the sub-heading ‘Fundamental Rights’ which states that: … the Directive has a limited impact on the freedom to conduct a business and on the freedom of expression and information, as recognised respectively by Articles 16 and 11 of the Charter.281 7.190 Following the defeat of the proposed Directive in the European Parliament on 5 July 2018, if and when an amended proposal sees the light of day, it is probable that Article 13 will be deleted or at least watered down.

Transparency of fair remuneration 7.191 Under Article 14, Member States would be required to ensure that authors and performers regularly receive, taking into account the specificities of each sector, timely, adequate and sufficient information on the exploitation of their works and performances from those to whom they have licensed or transferred their rights, notably as regards modes of exploitation, revenues generated and remuneration due. This would apply, typically, to collecting management organisations282 such as PRS for Music and Phonographic Performance Ltd. 7.192 This provision and associated provisions seem to have been overtaken retrospectively by Directive 2014/26/EU on collective management of copyright and related rights283 which was required to be implemented by Member States by 10 April 2016.284

281

Charter of Fundamental Rights of the European Union, OJ C 83, 30.03.2010, p 389. The Explanatory Memorandum also argues that the proposal will have a positive impact on copyright as a property right, protected under Article 17 of the Charter. 282 The term now tends to be used for what were previously known as collecting societies. 283 Directive 2014/26/EU of the European Parliament and of the Council of 26 February 2014 on the collective management of copyright and related rights and multi-territorial licensing of musical works for online use in the internal market, OJ L 84, 20.03.2014, p 72. 284 The Directive was implemented in the UK by the Collective Management of Copyright (EU Directive) Regulations 2016, SI 2016/221.

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7.193 Copyright in the information society

Final provisions 7.193 The proposed Directive would make some necessary changes to Directives 96/9/EC and 2001/29/EC. There are also some transitional arrangements and a requirement to process personal data in compliance with Directive 95/46/EC285 and Directive 2002/58/EC.286 There are the usual provisions on implementation and review.

285

The data protection Directive now repealed and replaced by Regulation 2016/679/EU of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regards to the processing of personal data and of the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation), OJ L 199, 04.05.2016, p 1. 286 The Directive on privacy in privacy and electronic communications.

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Chapter 8

Design law, computer graphics and typefaces

INTRODUCTION 8.1 Computer graphics include but are not limited to, screen displays, whether static or moving, patterns, icons, software fonts and graphical user interfaces. They may be created from running computer software such as images displayed during the playing of a computer game. They may be displayed in numerous ways, such as on a computer screen or the display of a smartphone or other handheld device. The data for the images may be built into a computer program or held in a file or database. Photographs, video clips and films are often stored in digital form to be viewed on an appropriate device or they may be broadcast via television or communicated by transmission over the internet, for example, by streaming. 8.2 Computer graphics may have legal protection in several ways. We have already seen that copyright protects artistic works, films and broadcasts. Databases, which include artistic works in their contents, may have literary copyright and/or be protected by the sui generis database right, in both cases, without prejudice to any rights in the contents of the databases.1 Some images may have protection as trade marks, irrespective of whether they are fixed to goods or packaging, included in a corporate logo or marketing material or displayed on a computer screen or other device. Design law may also be very effective at providing monopoly protection for graphical images following registration. As we will see in Chapter 11, patent law is largely irrelevant because artistic works, aesthetic creations and presentations of information, as such, are excluded from the meaning of ‘invention’ for the purposes of patent law. 1

For example, the contents of some databases contain artistic works and other works of copyright. Database law presents no particular issues for computer graphics and reference should be made to Chapters 5 and 6 for copyright in databases and the sui generis database right.

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8.3 Design law, computer graphics and typefaces

LAYOUT OF THIS CHAPTER 8.3 There are a number of forms of protection of designs by design law. In this chapter, we will look at registered design law (especially Community registered design and, briefly, the UK registered design system) and the Community unregistered design. There is a UK unregistered design right which will be described in the following chapter. This right does not protect computer graphics as such but a modified version of it does protect the topography of semiconductor products. 8.4 We then turn to the recently introduced remedy of unjustified threats of infringement proceedings, which replaced the groundless threats action, and which applies to both the UK design and the Community design. This is followed by a description of the criminal offences under design law, some of which apply to the registered Community design. Then, the implication of design law for computer graphics, image and software fonts is considered followed by thoughts on Brexit and design law. However, before looking at the specific forms of design protection available to protect computer graphics and typefaces, we will look at other forms of protection which may apply or be available to protect computer graphics and typefaces.

COPYRIGHT PROTECTION FOR COMPUTER GRAPHICS AND TYPEFACES 8.5 Copyright protects original artistic works. In the past, originality has been equated with the fact the work has originated with the author and has been the result of a modicum of skill and labour. The better view now is that an artistic work protected by copyright must be the author’s own intellectual creation. The artistic work category is breath-taking in its width and includes: ••

graphic works, photographs, sculptures or collages, irrespective of artistic quality;

••

a work of architecture being a building or model for a building; or

••

a work of artistic craftsmanship.2

Graphic works are widely defined as including paintings, drawings, diagrams, maps, charts or plans and engravings, etchings, lithographs, woodcuts or 2

Section 4(1) of the Copyright, Designs and Patents Act 1988.

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Copyright protection for computer graphics and typefaces 8.7 similar works.3 A photograph is a recording of light or other radiation on any medium from which an image may be produced or from which an image may be by any means produced and is not part of a film.4 This definition will cover any form of electronic storage and the display of photographs on computer screens, smartphones, tablets and the like. 8.6 We can see, therefore, that most images produced on a computer screen or other electronic display will fall into these d efinitions. For example, in R v Gilham5 it was accepted that playing the Tomb Raider computer game involved, inter alia, reproducing artistic works being the original drawings of the scenes and characters in the game, including the main character Lara Croft.6 Most graphic works appearing on screen, whether on computers, mobile phones, tablet computers and other electronic devices will be protected by copyright. The only proviso is that very basic works, such as a simple icon, may fail to be protected for lack of intellectual creativity.7 8.7 In Navitaire Inc v easyJet Airline Co,8 Pumfrey J accepted that a graphical user interface (GUI) was an artistic work. The fact that the programmer did not have to produce the program code himself as the software used generated the code automatically to the programmer’s design did not alter this fact. He said (at paras 97 and 98): Although composed of elements made available by the manufacturer of the interface builder program, I can see that the screen resulting from such an operation might properly be considered to be an artistic work. What the programmer ultimately produces is code that depends upon a large number of complex graphic routines that draw the background, the boxes 3 4

5 6 7 8

Section 4(2). Article 2(1) of the Berne Convention for the Protection of Literary and Artistic Works 1886 gives a wide definition and artistic works including drawing, painting, architecture, sculpture, engraving and lithography; photographic works to which are assimilated works expressed by a process analogous to photography; works of applied art; illustrations, maps, plans, sketches and three-dimensional works relative to geography, topography, architecture or science. This is not an exhaustive definition. [2009] EWCA Crim 2293, [2010] ECDR 5. The fact that the original drawings were not necessarily reproduced identically was not an issue as what appeared on screen were at least substantial copies of the original artwork. Refer to Chapters 2 and 7 for the implication of copyright protection for graphic works displayed on screen. [2004] EWHC 1725 (Ch), [2006] RPC 3. This case concerned flight reservation software and is discussed more fully in Chapter 4.

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8.8 Design law, computer graphics and typefaces and the shading in the places selected, and act appropriately when the mouse moves over them or they are selected. The programmer does not write this code: it is the scaffolding for his or her own window design. … the better view is that the GUI screens are artistic works. They are recorded as such only in the complex code that displays them, but I think that this is strictly analogous to more simple digital representations of graphic works. The code constructs the screen from basic elements, and is so arranged to give a consistent appearance to the individual elements. I think, nonetheless, that to arrange a screen certainly affords the opportunity for the exercise of sufficient skill and labour for the result to amount to an artistic work. 8.8 The Court of Justice of the EU accepted that a graphic user interface could be protected under the Directive on copyright and related rights in the information society in Bezpečnostni softwarová asociace v Ministerstvo kultury9 although it was not a form of expression protected under the D irective on the legal protection of computer programs. 8.9 One issue which has not yet been fully explored is that artistic works created for use with computer programs, whether graphic user interfaces or other artistic works such as a flowchart showing the structure and flow of a computer program, can be seen as preparatory design materials, providing they lead to the creation of a computer program.10 Such works may have dual protection, as artistic works and as part of the computer program. Questions of substantiality will differ, and the best approach may be to claim indirect copying as an artistic work where a person copies the program code used to generate the graphic user interface or which represents the structural and flow aspects of the flowchart or other diagrams setting out aspects of a computer program. 8.10 Typefaces are artistic works. They are not listed as such in the classification of artistic works given in section 4 of the Act. However, section 54 9 10

Case C-393/09, EU:C:2010:816. See recital 7 to the Directive on the legal protection of computer programs which states that the nature of the preparatory design material must be such that a computer program can result from it at a later stage. In Bezpečnostni softwarová asociace v Ministerstvo kultury the Court of Justice said (at para 37) that preparatory design material must be capable of leading to the reproduction of, or the creation of, a computer program. Consequently, a GUI was not preparatory design material for a computer program.

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Copyright protection for computer graphics and typefaces 8.12 of the Copyright, Designs and Patents Act 198811 contains a permitted act that applies to an artistic work consisting of the design of a typeface.12 This puts the question beyond doubt that, subject to originality, the design of typefaces are artistic works. There is no apparent limitation to require that they cannot be in software form apart from the fact that the language of the Act seems to envisage that typefaces are applied to an article, though ‘article’ itself is not defined in the Act. It is submitted that protection is not limited to tangible articles as the restricted act of copying applies to reproductions in any material form including storing the work in any medium by electronic means.13 Typefaces are registrable as designs under the UK registered design and the registered Community design and may be protected by the unregistered Community design, subject to the requirements for protection.

Nature of copyright in moving graphic images 8.11 A static image is protected as a graphic work. A moving image is protected by a film. But how does one evaluate a moving image made up of individual ‘freeze frames’? In Nova Productions Ltd v Mazooma Games Ltd,14 a case involving allegations of infringement of copyright in video games, Jacob LJ rejected the submission that there was a separate copyright in a series of drawings distinct from film copyright. Each frame has its own copyright as an artistic work15 and the whole may have a film copyright. There is no separate copyright in the series of frames as an artistic work. The series cannot be considered to be a copyright compilation as a compilation is a form of literary work and a literary work is a work which is written, spoken or sung.16 8.12 As infringement of copyright in a film includes making a photograph of the whole or any substantial part of any image forming part of the film,17 this form of copyright is very strong. Taking a still frame from a film infringes its copyright. Furthermore both ‘film’ and ‘photograph’ are widely defined

11 12 13 14 15 16 17

However, the definition of graphic work in section 4 is not exhaustive. The permitted act allows use of a typeface in the ordinary course of printing. See also section 55. Section 17(2). This applies to literary, dramatic, musical and artistic works. [2007] EWCA Civ 219, [2007] RPC 25. Assuming each is the result of skill and labour. Section 3(1). Section 17(4).

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8.13 Design law, computer graphics and typefaces in the Copyright, Designs and Patents Act 198818 so, for example, digitally capturing a frame from a film or a still from a series of artistic works will infringe the copyright in the film or graphic work as the case may be.

Computer-generated works 8.13 Literary, dramatic, musical and artistic works may be classified as computer-generated works with their own rules as to authorship. For such works, the author is the person by whom the arrangements necessary for the creation of the work are undertaken.19 The duration of copyright is also limited to 50 years from the end of the calendar year during which the work was created. A work is computer-generated if it is generated by computer in circumstances such that there is no human author of the work. It is arguable that there is no such thing as a computer-generated work as it is always possible to identify the person or persons responsible for the creation of the work and who set out the parameters from which the work was designed.20 In Nova Productions Ltd v Mazooma Games Ltd,21 at first instance, Kitchen J unquestionably accepted the notion of a computer-generated work. He held that the composite frames produced during the playing of a video game based on the game of pool were either c reated by the designer of the game or were computer-generated. The designer undertook the arrangements necessary for the creation of the frames because he devised the various elements of the game, the rules and logic by which each frame is generated, and he wrote the relevant computer program. For another possible example of a computergenerated work, see the discussion of the ‘monkey-selfie’ case in Chapter 3.22

18

19 20

21 22

A photograph is a recording of light or other radiation on any medium on which an image is produced or from which an image may by any means be produced, and which is not part of a film; section 4(2). A film is a recording on any medium from which a moving image may by any means be produced; section 5B(1). Section 9(3). This was the approach taken prior to the Copyright, Designs and Patents Act 1988. See, for example, Express Newspapers plc v Liverpool Daily Post and Echo [1985] 1 WLR 1089 and The Jockey Club v Rahim (unreported) 22 July 1983. [2006] EWHC 24 (Ch), [2006] RPC 14. Naruto et al v Slater, Case No. 15-cv-04324-WHO, Court for the Northern District of California, 28 January 2016.

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Design protection 8.16

TRADE MARK PROTECTION 8.14 Trade marks are so familiar that it is easy to overlook the scope of things that can be registered as trade marks. Many trade marks consist of names, often stylised, which may be the name of a company or a particular product. Some trade marks are graphical designs and images which may or may not include words, names or phrases. Many trade marks are registered as such in the UK, as European Union trade marks and/or as trade marks in many other countries. 8.15 Protection may be afforded to trade marks that have not been registered as such by the law of passing off. Registration carries certain advantages. For example, the use in the course of trade of a sign which is identical to a registered trade mark in relation to identical goods or services infringes, per se. There is no need to prove confusion on the part of consumers: it is presumed. In other cases, where there is not complete identity of the offending sign and the registered trade mark, it is necessary to show confusion on the part of the public. In another case, unfair advantage or damage to the reputation of the trade mark must be shown. For an action to succeed in passing off, it is necessary to prove that the owner of the trade mark or name, etc23 has a goodwill in that mark or name, that the defendant has made a relevant misrepresentation and that the owner has suffered or will suffer damage as a result.24 The protection of trade marks and their use and abuse online are discussed in Chapter 14 on trade marks, goodwill and the internet.

DESIGN PROTECTION 8.16 At one time, design law in the UK was directed towards protecting designs applied to physical articles, such as a design applied to furniture, kitchen appliances, toys, carpets, wallpaper, lace and industrial products. 23

The law of passing off may protect trade marks, trade names or general ‘get-up’ of a business. 24 Often referred to as the classic trinity of passing off, being goodwill, misrepresentation and damage. See, Reckitt & Colman Products Ltd v Borden Inc [1990] 1 All ER 873 which involved passing off a yellow plastic lemon container for lemon juice as the famous ‘Jif’ lemon.

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8.17 Design law, computer graphics and typefaces In some cases, the articles would be three-dimensional, but designs applied to two-dimensional articles were also protected if in the form of a pattern or ornament. Generally, computer graphics, icons and such like were not registrable as designs, with very few exceptions. 8.17 Before amendment, the Registered Designs Act 1949 defined ‘design’ in terms of ‘… features of shape, c onfiguration, pattern or ornament applied to an article by any industrial process …’ and the definition of ‘article’ as ‘… any article of manufacture and includes any part of an article if that part is made and sold separately’. The definition of ‘article’ together with the requirement that a design had to be applied to an article by an industrial process prevented the registration of most computer-generated images and icons. A very small number of computer-generated images were accepted for registration, particularly if the computer code which generated the images was hard-wired into a computer or other device such that the code could be considered to be an intrinsic part of the computer or device. 8.18 Practice at the UK Designs Registry was to consider that a graphic symbol displayed on a computer screen, per se, was not an article, following Xerox Corpn.25 However, in the earlier case of Suwa Siekosha’s Design Application,26 it was accepted by Falconer J that icons displayed on a digital watch were registrable and were applied by an industrial process. An important feature was that the symbols were built into the watches. This was a factor that influenced Jacob J in the Registered Designs Appeal Tribunal in Apple Computer Inc’s Design Applications27 in which the applicant sought to register computer icons as designs. 8.19 In Apple Computer, the application was expressed to be in relation to a ‘set of user interfaces for computer display’. The hearing officer at the Designs Registry did not consider that applying a design to a computer screen by means of a computer program was an industrial process, nor was a user interface an article. However, Jacob J thought the issue was basically one of semantics and a change to the description of the article to which the design was applied should overcome the objection. An example of the form of words that could be used was suggested by counsel for Apple, being ‘a c omputer

25

(Unreported) Designs Registry, 10 June 1992. [1982] RPC 166. 27 [2002] FSR 38. The facts of this case pre-dated the changes made by the 2001 Regulations. 26

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Design protection 8.21 with an operating system which displays the icons concerned’. Jacob J thought that, in a case where the icons were inherently built into the operating system, the requirement for industrial application would be satisfied, distinguishing the display of icons produced by running a particular computer program. The case was remitted back to the Registry and the statement of the article submitted by Apple was ‘computer display screens with computergenerated icon’.28 8.20 Two things happened to change all this. First, registered design laws in Member States of the EU were harmonised under the Directive on the legal protection of designs29 and a Community-wide design protection (registered and unregistered) was introduced.30 In the UK, the harmonising Directive made sweeping changes to the Registered Designs Act 1949, resulting in a form of design protection unlike that which had existed p reviously.31 The result was that the basic model for registered design protection in the UK became almost the same as that for registered designs under the Community Design Regulation.32 8.21 Design registration is an inexpensive means of obtaining monopoly protection for images produced by computer software such as computer icons, screen displays and webpage designs. Graphical user interfaces (GUIs) are also potentially protectable, even down to little symbols displayed on mobile phones and, indeed, any image displayed on equipment with a visual display. Of course, not every such image can be registered as a design and there are a number of requirements for registration, such as novelty and individual character but any new and striking design for icons, screen displays, typefaces, etc.

28

See UK registered design number 2094032. Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs, OJ L 289, 28.10.1998, p 28. 30 Council Regulation 6/2002/EC of 12 December 2001 on Community design, OJ L 3, 05.01.2002, p 1 amended by Council Regulation No 1891/2006 of 18 December 2006, OJ L 386, 29.12.2006, p 14 (to give effect to the accession of the EC to the Geneva Act of the Hague Agreement concerning the international registration of industrial designs). 31 Yet rather than sweep away the 1949 Act and replace it with a new Act, the legislators persisted in yet again modifying the 1949 Act which now bears little resemblance to its original form. 32 There are some differences of course. For example, tests for subsistence are the same but based on the territory of the UK only and the rules for dealing and licensing and, in some Member States (though not the UK) spare parts such as body panels for motor cars may be protected under registered design law. 29

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8.22 Design law, computer graphics and typefaces are potentially protected by registration either as a UK registered design or a Community registered design. Failing registration, images may be p rotected by the unregistered version of the Community design. 8.22 The availability of reasonably priced monopoly protection for up to 25 years, generally easy to obtain, sounds too good to be true. Initially, there seemed to be a general lack of awareness of this form of protection and for a while, there were relatively few registrations either at the UK Design Registry33 under the Registered Designs Act 1949, as amended,34 or the European Union Intellectual Property Office (EUIPO),35 which started accepting applications to register Community designs on 1 January 2003 under the Community Design Regulation.36 A possible reason for the slow take up of the registered design system as a means of protecting images as registered designs is the fact that previously, certainly in the UK, it was very difficult to register them as designs because of the requirements for registration under the 1949 Act before the changes made to implement the harmonising Directive which took effect on 9 December 2001. It is fair to say that nowadays, most designers look to the Community design system for protection and the numbers of applications to register a design under the Registered Designs Act 1949 remained disappointingly low until recently.37

33

Part of the UK Intellectual Property Office (the trading name of the UK Patent Office). The changes to the requirements for registrability were the result of the Registered Designs Regulations 2001, SI 2001/3949 which came into force on 9 December 2001. The Regulations implemented Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs, OJ L 289, 28.10.1998, p 28. The Regulations survived an attack that they were ultra vires in Oakley Inc v Animal Ltd [2005] EWCA Civ 1191, [2006] Ch 337. Questions had been referred to the Court of Justice of the EU though the case was later withdrawn and ordered to be removed from the register: OJ C 154, 01.07.2006, p 14. 35 Formerly known as the Office for the Harmonisation of the Internal Market (Trade Marks and Designs) (OHIM). The EUIPO is responsible for the registration of the EU trade mark and the Community design (this has yet to be rebadged as the EU Design). 36 OJ L 3, 05.01.2002, p 1 (the ‘Community Design Regulation’). 37 In 2012, there were less than 5,000 applications to register designs, but this has picked up to over 19,000 applications in 2017: Intellectual Property Office, Facts and Figures, 2011 and 2012 Calendar Years, April 2013 and Summary of all registered rights 2017, 30 May 2018. The increase may be influenced by Brexit. In comparison there were over 105,000 filings for the Community design in 2016: EUIPO, Facts and Figures Report 2016, 29 February 2017. (The figures for 2017 are not yet available.) 34

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The Community design 8.25

THE COMMUNITY DESIGN38 8.23 There are two forms of Community design: registered and unregistered. The former is the most desirable as it provides a monopoly right and can last for up to 25 years. However, the unregistered right will apply anyway. It is automatic and runs for three years from the time products to the design are first made available to the public. The general requirements for subsistence of the two forms of protection are the same but the unregistered right is not a monopoly right and requires proof of copying for a finding of infringement. 8.24 The Community design protects designs that are applied to products. Under Article 3(a) of the Community Design Regulation, a ‘design’ is ‘… the appearance of the whole or a part of a product resulting from the features of, in particular, the lines, contours, colours, shape, texture and/or materials of the product itself and/or its ornamentation’. Article 3(b) defines ‘product’ as ‘… any industrial or handicraft item, including inter alia parts intended to be assembled into a complex product, packaging, get-up, graphic symbols and typographic typefaces, but excluding computer programs’.39 It is clear to see that the definitions are all-embracing and can apply to all manner of designs. Also note that the definition of design is not an exhaustive one and, coupled with the inclusion of graphic symbols and typographic typefaces among the list of products, it is clear that many on-screen designs, potentially, may be protected by the Community design subject to the rules as to subsistence and, of course, registration if monopoly protection is sought. 8.25 The registration process is quite simple. An applicant may request deferred publication which means that the initial fees are reduced until such time as the design is published. This might be useful to prevent competitors

38

The following description of the Community design is not comprehensive and focuses on those provisions which are particularly relevant to computer graphics and software typefaces and fonts. Furthermore, much of the fine detail and many of the more complex provisions, such as proceedings, appeals and jurisdiction are not covered. For a full description of design law, reference should be made to a specialist text such as D Stone, European Union Design Law: A Practitioner’s Guide, Oxford University Press, 2nd edn, 2016. 39 A ‘complex product’ is one ‘… composed of multiple components which can be replaced permitting disassembly and re-assembly of the product’: Article 3(c). This definition is of no consequence in relation to screen displays, icons, typefaces and graphic works displayed on screens.

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8.26 Design law, computer graphics and typefaces becoming aware of the design prior to its commercialisation. Deferred publication can last for up to 30 months from the application to register, or priority date if there is one.40 8.26 Before looking at the Community design in more detail, it is worth noting that the right, whether registered or unregistered or both, has a unitary nature and applies throughout the EU and may not be registered, transferred or surrendered, declared invalid or its use prohibited except in relation to the entire EU.41 This does not prevent the Community design being licensed separately in different territories of the EU. It simply means that the design applies as an indivisible whole throughout the EU and can only be owned by one person or by joint owners. If it comes to grief, for example, if it is shown to be invalid for lack of novelty in one Member State, it falls throughout the EU.

Subsistence of Community design 8.27 For Community design, whether registered or unregistered, the design must be new and have individual character under Article 4(1) of the Community Design Regulation. Both these requirements have a special meaning and although novelty is a fairly well understood notion, the test of individual character had no earlier pedigree. Before looking at these requirements, it should be noted that the rights cannot subsist where the design is dictated by technical function or in respect of the design of interconnections.42

Technical function 8.28 Under the ‘multiplicity of forms’ theory, the technical function exception is to be narrowly construed and will only apply in exceptional 40

Article 50 of the Community Design Regulation. Failure to apply for publication before the end of the term of deferment will result in the application being treated as not having the effects specified in the Community Design Regulation, that is, it will be treated as if the application had never been made. The maximum period of deferment in the UK is 12 months (see Designs Form DF2C). The maximum term of deferment under the Hague Agreement for the International Registration of Industrial Designs is 30 months. However, any application under the Hague Agreement specifying the UK will be published in the UK at the earlier period of 12 months, with no allowance for priorities. The UK ratified the Hague Agreement on 13 March 2018, with effect from 14 June 2018 but retains the 12-month deferment period. 41 Article 1(3) of the Community Design Regulation. 42 Article 8.

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The Community design 8.30 circumstances. Its purpose is to prevent the monopolisation over technical solutions which should be obtained through the more stringent requirements of patent law. If a technical solution can be achieved by two different methods, then neither is dictated by function. The Third Board of Appeal rejected the ‘multiplicity of forms’43 theory in Nintendo Co Ltd v Compatinet SLU44 in which Nintendo sought to register the design of a computer game cartridge; the important features, in terms of functionality, was the interconnection between the cartridge and the games console into which it was to be inserted so that the game could be played. Article 8(1) of the Community Design Regulation denies protection for those features of a product’s appearance selected exclusively for the purpose of the product’s function as opposed to features chosen to enhance a product’s visual appearance. 8.29 The test is that of the reasonable observer who looks at the design and asks himself whether anything other than purely functional considerations could have been relevant when a specific feature was selected. In the present case, the reasonable observer would consider whether anything other than functional features could have been relevant when the specific feature of the overall shape of the cartridge was chosen to enhance its appearance. The reasonable observer does not see the product until after purchase and, when put to use, will not see the relevant features apart from one edge, when the cartridge is inserted into the console to play the game. All that matters is the content of the cartridge and that it works correctly with the console.

Novelty 8.30 A design is new if no identical design has been made available to the public.45 However, a design will not be taken into account if it could not reasonably have become known in the normal course of business to the 43

This theory stems, in the UK from the House of Lords decision in Amp Inc v Ultilux Pty Ltd [1971] FSR 572. The UK moved away from the ‘multiplicity of forms’ theory in Dyson Ltd v Vax Ltd [2010] EWHC 1923 (Pat), (see Arnold J at paras 29 to 32) taking account of the decision of the Third Board of Appeal at OHIM in Linder Recyclingtech GmbH v Franssons Verkstader AB, Case R 690/2007-3, [2010] ECDR 1. 44 Case R 1772/2012-3, [2015] ECDR 3. 45 Article 5. For the registered Community design, this is date of filing the application for registration (allowing for the priority of applications made elsewhere) but for the unregistered right it is the date products to the design were first made available to the public.

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8.31 Design law, computer graphics and typefaces circles specialised in the sector concerned operating in the Community.46 Disclosures made in breach of confidence are not taken into account. A design may be held to lack novelty if designs which only differ in immaterial differences have been made available to the public. For example, a design for pretzel-shaped biscuits was not new because of the familiar shape of pretzels. 8.31 Novelty is a difficult concept to apply to computer graphics and typeface fonts. What may be a new design will, in many cases, be very similar to what is already known to software designers. The ‘immaterial differences’ test is a useful one where the design overall looks the same as a pre-existing design but some minor details of the design are new. For example, a computer game might feature a character which looks like a cartoon rabbit and a new design looks very similar but is wearing a bow tie and is carrying a lit cigar in one hand. It may be a fine line between what is new and what is not new but the second requirement, individual character, goes further in denying protection to familiar designs which may otherwise be ‘new’. 8.32 In Microsoft Corpn’s Design; Application for a Declaration of Invalidity by Heidelberger Druckmaschinen AG,47 Microsoft Corporation obtained a Community Design registration for type and typefaces. Following an application for invalidity, the Invalidity Division of the Design Division of OHIM (now EUIPO) declared the design invalid. The evidence was that the applicant for invalidity had sold copies of a font called ‘Frutiger NEXT’, including on CD-ROMs before the filing date of the registered Community design. The similarities between the registered design and Frutiger NEXT were striking, being identical in many respects.48

46

Green Lane Products Ltd v PMS International Group Ltd [2008] EWCA Civ 358, [2008] FSR 28. The design in question was for spiky laundry balls. It was held that the prior art also included spiky balls used for massaging the human body. The rationale for not taking account of designs which could not reasonably have been known to circles specialised in the relevant sector in the Community was to address concerns that designs could be invalidated a false certification that the design had previously been known in some obscure prior art in a third country. Prior art should extend to all manner of goods, except prior art obscure even in the sector it came from. 47 Case ICD 000000743, [2006] ECDR 29. 48 Both Frutiger NEXT and the registered design were for sans serif font typefaces.

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The Community design 8.34

Period of grace 8.33 There is a 12-month period of grace so that disclosures made by the owner of the Community design may market products made to the design for 12 months before applying for registration without compromising novelty.49 This is very useful if the owner is not sure whether the design will be a commercial success and not worth the effort and expense of registration. In the meantime, the unregistered right will protect the design, though this will only protect against copying. If it turns out that the design is successful and the owner wants more than three years’ protection, he can apply for registration within that period of grace.

Individual character 8.34 Under Article 6 of the Community Design Regulation, a design has an individual character if ‘the overall impression which it produces on the informed user differs from the overall impression produced on such a user by any design which has been made available to the public’.50 The informed user is a person who is familiar with the design field in question. He is someone who is familiar with the basic features of the products in question and, when assessing the overall impression of the design, will take into account whether there are any limitations on the freedom of the designer and will weigh the various features consequently. More attention will be paid to similarities of non-necessary features and dissimilarities of necessary ones. The informed user is aware of the prior art known in the normal course of business to the circles specialised in the sector concerned. However, he is not a designer or technical expert but possesses a certain degree of knowledge of the features which such designs normally include. The informed user is not able to distinguish, beyond the experience gained by using the product concerned, the 49 50

Article 7(2). Conflicting designs do not need to be protected as such and may be protected by other rights, such as trade mark rights and copyright. A three-dimensional trade mark may still be a design for the purposes of novelty and individual character: see Mafin SpA’s Design [2005] ETMR 106. In Dyson Ltd v Vax Ltd [2012] FSR 4, Sir Robin Jacob pointed out that recital 14 uses the expression ‘the design clearly differs’ whereas Article 6 simply uses ‘differs’. This difference in wording is merely the result of sloppy drafting. The same applies to the Directive on the legal protection of designs (recital 13 and Article 9 of the Directive).

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8.35 Design law, computer graphics and typefaces aspects of the appearance of the product which are dictated by the product’s technical function from those which are arbitrary.51 8.35 In Procter & Gamble Co v Reckitt Benckiser (UK) Ltd,52 the registered Community design was for a sprayer used for air fresheners. The Court of Appeal held that the ‘informed user’ was not the ‘average consumer’ of trade mark law. He would be more discriminating and what mattered was what stuck in his mind when looking at the design, not after. The role of imperfect recollection was, therefore, a limited one. The informed user would also be aware that some designs were influenced by limitations on design freedom. In such cases, smaller differences might be sufficient to create a different overall impression. The more restricted the design freedom, the more likely minor differences between the designs at issue will be sufficient to produce a different overall impression on the informed user.53 8.36 In PepsiCo Inc v Grupo Promer Mon Graphics SA,54 a case involving the design of a disc with concentric indentations and a raised edge, commonly known as a ‘pog’, ‘rapper’ or ‘tazo’ used as promotional articles, the Court of Justice of the EU clarified the characteristics of the informed user. He is particularly observant because of his personal experience and extensive knowledge of the relevant design sector though he is not an expert or specialist capable of observing minimal differences between the designs in conflict. He pays a relatively high degree of attention when he uses the product to which the design has been applied. Although one would expect the informed user to make a direct comparison between the products concerned, the circumstances may be such that this is impracticable or uncommon. There is nothing in the Regulation to prevent an indirect comparison in appropriate circumstances. In the present case, the Court of Justice accepted the General Court’s view that the informed user could be a child aged between five and 10 years or a marketing manager whose company promoted its goods by giving away ‘pogs’, ‘rappers’ or tazos’. 8.37 In terms of computer graphics and software fonts, the informed user would be someone who is familiar with computer software as a user though 51

Shenzhen Taiden Industrial Co Ltd v OHIM, Case T-153/08, EU:T:2010:248. [2008] FSR 8. 53 Gruper Promer Mon Graphic SA v OHIM, Case T-9/07, EU:T:2010:96. 54 Case C-281/10P, EU:C:2011:679. This was an appeal from the General Court in Case T-9/07 cited in footnote 47, supra. 52

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The Community design 8.39 not as a designer. It would seem reasonable to assume that the identity of the informed user would depend on the type of software which incorporates or generates the images of the fonts in question. Most users of software are familiar with office systems, photographic image manipulation software, computer games, desk-top publishing software, websites and the like. But where the software is more specialised, such as computer-aided design software, professional publishing software or subscription database software, the informed user could be limited to the sort of person who might use such specialised software.

Term of protection 8.38 The term of protection for the registered Community design is, initially, five years from filing the application to register the design. This may be renewed for further five-year periods for the maximum term of 25 years. The fee for registering a single design is €350.55 The fees are less for additional designs applied for in the same application. Renewal fees range from €90 per design for the first renewal to €180 for the final renewal. The unregistered right only lasts for three years from the time the design was first made available to the public. Of course, if the design is registered, it will continue to be protected also by the unregistered design for that three-year period.56

Entitlement and dealing 8.39 Under Article 14(1) of the Regulation, a Community design vests in the designer or his successor in title. Where a design is jointly developed by two or more persons, the Community design vests in them jointly. In the case of designs developed by employees in the execution of their duties or following instructions given by the employer then, unless otherwise agreed or specified under national law, the Community design vests in the employer.57 There is no provision for ownership of designs created under a commission. 55

This includes the fee for publication of the design. Publication can be deferred reducing the fee in the first instance. During the period of deferred publication proof of copying is needed to show infringement. 56 During the time such dual protection exists, it would make no sense to sue on the basis of the unregistered design as registration gives a monopoly right and proof of copying is not required. 57 Article 14(3).

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8.40 Design law, computer graphics and typefaces In these cases, the basic rule applies and the designer is the person entitled to the design.58 8.40 A Community design is an object of property to be dealt with in its entirety for the whole area of the EU unless otherwise provided for in the Regulation.59 Thus, assignments (transfers of ownership) must be in respect of the entire EU. A Community design may also be licensed but this can be in respect of part only of the EU. For example, the owner of a Community design might grant a licence to X to exploit the design in France, Italy and Spain and also grant a licence to Y to exploit it in Germany, Finland, Sweden and Denmark. The owner might decide to exploit the design himself in the other Member States. Details of transfers of the Community design and the grant of rights under it should be registered. 8.41 Of course, where the design relates to computer graphics and other software generated images, some thought must be given to the fact that territorial limitations in licences might be inappropriate, for example, where the image is displayed on a website which can be accessed from anywhere in the world. In such cases, consideration might also need to be given to protection outside the EU.60

Rights and infringement 8.42 The right under the Community design is the right to use the design and to prevent third parties from using it without the owner’s consent. Infringing acts are, in particular making, offering, putting on the market, importing, exporting or using a product in which the design is incorporated or to which it

58

This was confirmed by the Court of Justice in relation to the design of a cuckoo clock in Fundación Española para la Innovación de la Artesanía (FEIA) v Cul de Sac Espacio Creativo SL, Case C-32/08, EU:C:2009:418. The Registered Designs Act 1949 provided for the person commissioning a design to be its owner. This was repealed by the Intellectual Property Act 2014 with effect from 1 October 2014 to bring the entitlement provision in line with those under the Community Design Regulation. 59 Article 27. Of course, bearing in mind the date of the Regulations, references in it are to the Community. This must be taken now to be references to the EU. 60 There is an international treaty which facilitates the application to register a design in other countries. It is known as the Hague Agreement Concerning the International Registration of Industrial Designs. There are presently 68 Contracting Parties including the EU. The UK became a Party during 2018.

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The Community design 8.43 is applied or stocking a product for those purposes.61 The use of the phrase ‘in particular’ indicates that the description of infringing acts is not exhaustive. Article 10(1) of the Community Design Regulation also states that the scope of protection includes any design which does not produce on the informed user a different overall impression. Under Article 10(2) design freedom is taken into account, therefore the less the design freedom, the smaller the differences which may produce a different overall impression. 8.43 Actions for infringement of the Community design are brought before the national Community design courts, such as the Chancery Division in the High Court on England and Wales, the Court of Session in Scotland and the High Court in Northern Ireland.62 In Procter & Gamble Corp v Reckitt B enckiser (UK) Ltd63 the Court of Appeal held that, for the purposes of infringement, the notional informed user was taken to be familiar with the ‘existing design corpus’.64 What mattered was whether the alleged infringing design created a different overall impression. It was not correct to say that it had to create a clearly different overall impression. Furthermore, the informed user would be familiar with design issues. Jacob LJ made a number of additional observations on the application of the statutory test for infringement, being: ••

The court should ‘don the spectacle of the informed user’ and compare the designs with a reasonable degree of care.

••

The court should then identify the overall impression produced by the registered design with care. Care must be taken not to descend to too general a level of generality. The appropriate level is that which would be taken by the informed user.

••

Do the same for the alleged infringement.

••

The final step in the test is to ask whether the overall impression of each design is different. Jacob LJ said that this is almost the equivalent of asking whether they are the same, adding that the difference is nuanced, probably, involving a question of onus and no more.

61

Article 19(1). At least prior to Brexit. In England and Wales, appeals go to the Court of Appeal. 63 [2008] FSR 8. 64 Recital 14 to the Community Design Regulation. This is the same as in the case of determining whether a design has individual character for registration. 62

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8.44 Design law, computer graphics and typefaces 8.44 It is important to bear in mind that infringement requires comparison of the design of the alleged infringing products with the design as set out in the registration and images showing representations of the registered design. It is not a question of comparing the alleged infringing products and the claimant’s actual products which may differ from the design as registered. The Supreme Court confirmed this in Magmatic Ltd v PMS International Group plc65 in relation to a child’s ride on suitcase in the shape of a horned animal, known as the ‘Trunki’. The images in the design registration did not show any decoration to the body of the case, apart from the horns. Lord Neuberger said that, in principle, the absence of decoration could be a feature of a design. However, that did not mean that an alleged infringement which had surface decoration would escape liability; it was merely a factor to be taken into account. The same principle should apply to computer graphics and products such as smartphones, tablets and such like. 8.45 In Samsung Electronics (UK) Ltd v Apple Inc,66 Apple’s design registration for a tablet computer looked considerably different from its iPad tablet computers. The Court of Appeal confirmed that the Samsung table computers looked different from the perspective of the informed user than the registered design which showed a much thicker design with edges which were mainly vertical compared with Apple’s tablets which were considerably thinner and had bevelled edges. This case is also of interest in the court granting a publicity order in accordance with the Directive on the enforcement of intellectual property rights.67 Due to some inaccuracies in compliance, a further publicity order was granted.68 8.46 Under Article 19(2), the owner of an unregistered Community design (or a registered design currently subject to deferred publication) may prevent the above infringing acts only if the use in question results from copying.

65

[2016] UKSC 12, [2016] RPC 11. The registered design had been described as innovative and Lord Neuberger expressed some regret at the decision, but he went on to say that the case was not about an idea or invention, it was about a design. 66 [2013] FSR 9. At first instance, the judge famously described the Samsung tablets as being not as ‘cool’ as the iPad. To many, that was a good reason to choose the Samsung tablet. 67 Article 15 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 157, 30.04.2004, 45. 68 Samsung Electronics (UK) Ltd v Apple Inc [2013] FSR 10.

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The Community design 8.49

Exceptions and limitations 8.47 Article 20 of the Regulations sets out a number of limitations to the rights in a Community design. The rights are not infringed by: ••

acts done privately and for non-commercial purposes;

••

acts done for experimental purposes;

••

acts of reproduction for the purposes of making citations or teaching if they are compatible with fair trade practice, do not unduly prejudice the normal exploitation of the design and mention is made of the source;

••

in relation to equipment on ships and aircraft registered in a third country temporarily in the territory of the Community, importing spare parts into the Community to repair such craft and executing repairs on such craft.69

8.48 The doctrine of exhaustion of rights applies under Article 21.70 Thus, the rights cannot be used to prevent further commercialisation of any products, in which the design is incorporated or to which it has been applied, which have been put on the market in the EU by or with the consent of the holder of the Community design. For example, a smartphone which has been sold in the EU by or on behalf of the manufacturer who also holds the rights in designs applied to the phone, such as the design of the external shape of the phone and the design of screen displays and icons, cannot object to its subsequent resale in the EU based on the Community design rights.71 8.49 There is a right to continue use of a design where that use commenced before the filing date, or priority date if there is one, of a registered Community design or where serious and effective preparations had

69

There are other defences and grounds for invalidity. There is also a defence in respect of spare parts which must be a particular shape to restore a complex article to its original appearance buried deep in the Regulations in Article 110. This would apply, in particular, to spare body panels for motor cars. 70 Exhaustion of rights is considered in more depth in Chapter 15. 71 This doctrine also applies to other intellectual property rights which may subsist in the smartphone such as patent rights, trade mark rights and s emiconductor topography rights. The doctrine prevents holders of intellectual property rights selling their products at different prices in different Member States, thereby fragmenting the single market.

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8.50 Design law, computer graphics and typefaces been made before that date. This only applies to the registered Community design.72 So if someone commenced applying a graphic design to a website under construction but not yet made available to the public, that person can continue to use the design and publish his website notwithstanding the subsequent registration of the design, or one only differing in immaterial respects by another person. In this way, a person who has already created a design which, coincidentally, is the same as one registered in ignorance of it, should not be prevented from continuing to use it.73 Of course, if that first person had previously made his design available to the public, that could be a reason to invalidate the registration. The right of prior use does not extend to the granting of licences, but where the prior user is a business, the right can be transferred with that part of the business entitled to the right of prior use.

Remedies 8.50 The usual remedies apply to infringements of the Community design, being injunctions (including interim injunctions), damages, accounts, seizure, etc. The Directive on the enforcement of intellectual property rights74 also applies and what has been said about the provisions of the Directive in apply here also. 8.51 Under section 24B of the Registered Designs Act 1949, damages are not available against infringers who were not aware at the time of the infringement and had no reasonable grounds for supposing that the design was registered. The burden of proof lies with the infringer in this respect. Although the Community Design Regulation contains no direct equivalent, this must also be the position as regards infringement of the registered Community design within the UK. This is one reason why it is important to mark products with a notice that the design is registered which includes the design registration number. This now extends to a relevant internet link, being a reference to an address of a posting on the internet which is accessible to the public free 72

Article 22. An equivalent right of prior use now also applies to the UK registered design under section 7B of the Registered Designs Act 1949, inserted by the Intellectual Property Act 2014, with effect from 1 October 2014. 73 One should be able to bring to fruition something lawfully planned and in preparation prior to the registration. 74 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 157, 30.04.2004, p 45.

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The Community design 8.53 of charge and which clearly associates the product with the number of the design.75

Unjustified threats 8.52 Under UK law there was a remedy for groundless threats of infringement proceedings. The remedy was intended to prevent or discourage intellectual property right holders from threatening legal actions, in particular, against alleged secondary infringers such as distributors and retailers. As a retailer threatened with legal action would be inclined to stop stocking or selling products alleged to infringe an intellectual property right without challenging the right, this was seen as an important remedy. It was available for designs, registered and unregistered, trade marks and p atents.76 It also applied to the Community design and the EU trade mark. However, there were some important differences in the action, depending on the intellectual property right in q uestion. Therefore, a more harmonised form of action for ‘unjustified threats’ replaced the groundless threats actions with effect from 1 October 2017.77 8.53 Unjustified threats actions are, in effect and mutatis mutandis, the same for each of the intellectual property rights to which the action applies. The action will be described here in general terms. Later chapters covering rights for which the action is available will include a brief summary of the action and reference to the relevant statutory provisions. The provisions for the Community design are set out under section 6 of the Intellectual Property (Unjustified Threats) Act 2017 which substitutes regulations 2 and 2A to 2F in the Community Design Regulations 2005.78

75

The extension to relevant internet links was inserted by section 33 of the Digital Economy Act 2017, with effect from 1 October 2017. 76 An example of a successful groundless threats action in relation to a registered Community design was Quad 4 Kids v Dr Colin Campbell [2006] EWHC 2482 (Ch). 77 The unjustified threats provisions were inserted into the relevant legislation by the Intellectual Property (Unjustified Threats) Act 2017, which also amends accordingly the Community Design Regulations 2005, SI 2005/2339 and the Community Trade Mark Regulations 2006, SI 2006/1027. The old groundless threats provisions continue to apply in respect of threats made before 1 October 2017. 78 The equivalent provisions for the UK registered design are sections 26 to 26F of the Registered Designs Act 1949.

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8.54 Design law, computer graphics and typefaces

The threat of proceedings 8.54 First, we need to identify whether there is a threat of proceedings. Such a threat exists if a reasonable person in the position of a recipient79 would understand from the communication in question that: (a) a relevant intellectual property right exists; and (b) a person intends to bring proceedings against another person for infringement by an act done, or if done, would be done in the UK. 8.55 The action for unjustified threats must be brought by any person aggrieved by the threats. This could be the recipient of the threats or any other person who is aggrieved by the threats. The term ‘primary infringement’ is used to describe the acts normally described as primary infringement. For the Community design and the UK registered design this is making a product for disposal or importing a product for disposal. A primary infringer should be taken to mean a person who has or will carry out an act or primary infringement. 8.56

Three forms of threats are not actionable, per se. These are:

(a) where the threat of infringement proceedings concerns an act of primary infringement or would do, if done (the identity of the person to whom the threat is made is irrelevant); (b) where the threat is made to a primary infringer, who has done or intends to do an act of primary infringement, and is a threat of proceedings for an infringement alleged to consist of doing anything else in relation to the subject matter of the primary infringement (such as using a product to which the design is applied); and (c) the threat of infringement proceedings is not an express threat but is contained in a ‘permitted communication’.

Permitted communication 8.57 The threat must not be express but could be implied such as a reasonable person in the position of the recipient of the communication would 79

A recipient includes, in the case of a communication directed to the public or a section of the public, a person to whom the communication is directed. This clumsy definition means that it is not possible to avoid an action for unjustified threats simply by publishing a threat of proceedings without reference to any particular recipient.

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The Community design 8.60 understand that the design right exists and a person intends to bring infringement proceedings against another. Moreover, a permitted communication is one which, as far as it contains information relating to the threat is made for a ‘permitted purpose’ and the person making the communication reasonably believes is true. 8.58

The permitted purposes are:

(a) giving notice that the relevant design right exists; (b) discovering whether or by whom an act of primary infringement has occurred or will occur; (c) giving notice that a person has a right in or under the relevant design right, where another person’s awareness of the right is relevant to any proceedings that may be brought in respect of the relevant design right.80 8.59

However, the following are declared not to be permitted purposes:

(a) requesting a person to cease doing, for commercial purposes, anything in relation to the subject matter of the relevant design right; (b) requesting a person to deliver up or destroy the subject matter of the relevant design right; or (c) requesting a person to give an undertaking relating the subject matter of the relevant design right. 8.60 The information relating to the threat must be necessary for the permitted purpose. The following information is necessary for the permitted purpose: (a) a statement that the relevant design right exists and is in force or an application for registration of the design has been made; (b) details of the design right, or any right in or under it (such as an exclusive licence), are accurate in all material respects and are not misleading in any material respect; (c) information enabling the identification of the subject matter of the relevant design right in respect of which it is alleged that acts infringing the right have been carried out. 80

This list is not exhaustive as a court may, having regard to the above purposes, treat any other purpose as a permitted purpose if it considers that it is in the interests of justice to do so.

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8.61 Design law, computer graphics and typefaces 8.61 Unless the threat is one of the below, it is actionable by any person aggrieved: (a) a threat of infringement proceedings in respect of primary infringement; or (b) made to a primary infringer where the threat of proceedings for infringement is alleged to consist of anything else in relation to the subject matter of the design right; or (c) not express and contained in a permitted communication;

Remedies 8.62 The remedies available for an unjustified threat of infringement proceedings are a declaration that the threats are unjustified, an injunction against the continuation of the threats and damages for any loss sustained by the person aggrieved. These are the same remedies that were available under the groundless threats action.

Defences 8.63 A person against whom unjustified threats proceedings are brought has two defences. The first is to show that the act for which infringement proceedings were threatened is or would be an infringement of the relevant intellectual property right. The second defence is to show that, despite having taken reasonable steps, the person making the threat has not identified any person who has done an act of primary infringement and has notified the recipient of those steps before or at the time of making the threat.

Immunity for professional advisers 8.64 Professional advisers acting on behalf of a client could find themselves subject to threats proceedings. Therefore, proceedings for unjustified threats cannot be brought against professional advisers (or any person vicariously liable for the actions of the professional adviser) providing certain conditions apply. First, a professional adviser, in relation to making the communication containing the threat, means a person acting in a professional capacity in providing legal services or the services of a trade mark 370

The Community design 8.66 a ttorney or patent attorney and is regulated by one or more regulatory bodies. Secondly, in making the communication the professional adviser is acting on the instructions of another person and, when the communication is made, the professional adviser identifies the person on whose instructions he is acting. The burden of proof lies with the professional adviser in respect of the above conditions. However, the liability of the person on whose instructions the professional adviser is acting in unaffected by these provisions.

Criminal offences 8.65 There are several criminal offences under the Registered Designs Act 1949, some of which also apply in relation to the Community design. Of those that apply only to the UK registered design, under section 33, it is an offence to fail to comply with a secrecy direction under section 5 of the Act.81 Section 34 makes it an offence to falsify an entry in the design register and related offence such as making a writing falsely purporting to be an entry in the register.82 There are equivalent offences in respect of the registered Community design under regulation 3 of the Community Design Regulation 2005.83 Section 35 of the Registered Designs Act 1949 applies only to the UK registered design and makes it an offence to falsely represent that a design is registered, subject to a maximum penalty of a fine on level 3 or, to falsely represent that the design is registered after the registration has expired, a fine on level 1 of the standard scale. 8.66 Of more significance are the offences under section 35ZA of the Registered Designs Act 1949 which cover certain acts in relation to a registered design in the course of a business. These offences were introduced by the Intellectual Property Act 2014 and also apply in respect of a registered Community design.84 They carry a maximum penalty on conviction on

81

This is a direction prohibiting or restricting publication of information with respect to the design where it appears to the registrar that the design is one of a class notified to him by the Secretary of State as being relevant for defence purposes. The maximum penalty on conviction on indictment is a term of imprisonment not exceeding two years and/or a fine. 82 The maximum penalty on conviction on indictment is a term of imprisonment not exceeding two years and/or a fine. 83 These offences are triable summarily and carry a maximum penalty of a fine. 84 With effect from 1 October 2014.

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8.67 Design law, computer graphics and typefaces indictment of a term of imprisonment not exceeding 10 years and/or a fine.85 There is a basic offence of intentionally copying a registered design and an ancillary offence of offering, putting on the market, importing, exporting, using or stocking for one or more of those purposes, a registered design. The offences are described in more detail below. 8.67 The basic offence is, in the course of a business, intentionally copying a registered design so as to make a product exactly to the design or with features which differ only in immaterial details from that design.86 The person must know or have reason to believe:87 (a) that the design is a registered design, and (b) that he copied the design without the consent of the registered proprietor of the design. 8.68 For the ancillary offence, there is a qualification to the meaning of ‘using a registered design in the course of a business’. In this case, this does not include using the design for a purpose which is merely incidental to the carrying on in the course of a business. The offence applies where a registered design has been intentionally copied and a person, in the course of a business offer, puts on the market, imports, exports, or stocks it for one or more of those purposes. These acts must be without the consent of the registered proprietor of the design and the person concerned must know or have reason to believe (a) that the design has been intentionally copied without the consent of the registered proprietor to make a product exactly to the design or with features differing only in immaterial details from the design and (b) that the design is a registered design. 8.69 There are two forms of defence. The first is that the person alleged to have committed an offence under section 35ZA reasonably believed that the

85

On summary conviction the maximum penalty in England, Wales and Northern Ireland is imprisonment for a term not exceeding 6 months and/or a fine not exceeding the statutory maximum. Curiously, in Scotland the maximum term of imprisonment on summary conviction is 12 months. 86 The formula exactly to the design or with features differing only in immaterial details is also used in relation to the tests of novelty and individual character under the UK Act (see section 1B(2)) but under the Community Design Regulation the test is relevant only to novelty (see Article 5). 87 Having reason to believe is an objective test.

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The UK registered design 8.72 registration was invalid. The second defence is that the person did not infringe the rights in the design and reasonably believed that he did not do so. In both cases, the burden of proof lies with the person alleged to have committed the offence to show that the defence is made out. 8.70 Section 35ZB provides for enforcement. For example, in England and Wales by a local weights and measures authority. Section 35ZC covers forfeiture in England, Wales and Northern Ireland whilst section 35ZD applies to forfeiture in Scotland.

THE UK REGISTERED DESIGN 8.71 There is little point in setting out the provisions of the UK’s R egistered Designs Act 1949 in detail as the UK registered design is, for the purposes of this book, very similar to the registered Community design.88 The only significant difference to what has been said above is that the UK registered design applies only in respect of the territory of the UK and any other countries to which it has been extended, such as the Isle of Man, Jersey and Guernsey.89 In fact, until the Brexit vote, there seemed little point in applying to register a design in the UK when the registered Community design is available at relatively little additional cost. There has been a significant increase of the number of applications for the UK registered design since the Brexit referendum, particularly in the last year. 8.72 It is worth noting that the UK unregistered design right is completely different to the registered design and the unregistered Community design. The UK unregistered design right is useful to protect the shape or configuration of articles, including industrial articles having no eye-appeal whatsoever. In terms of information technology, the UK unregistered design right is important in protecting the topography of semiconductor products and this is the subject matter of the following chapter.

88

The Registered Designs Act 1949 was substantially modified to comply with Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs, OJ L 289, 28.10.1998, p 28. 89 The latter two require local re-registration.

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8.73 Design law, computer graphics and typefaces

IMPLICATIONS OF DESIGN LAW FOR COMPUTER GRAPHICS, IMAGES DISPLAYED ON WEBSITES AND SOFTWARE FONTS 8.73 Given the phenomenal range of computer graphics and images displayed on computer devices and websites and the numerous software typefaces available, the two main hurdles to registration are the two requirements of novelty and individual character. It will often be a simple matter to find some prior art design that looks very similar to that for which registration is sought or to challenge a registered software design. Where the design in question and the design used to challenge it on the basis of lack of novelty are not exactly the same, it will be a question of whether the features of the two designs differ in immaterial details. This is a question of fact to be resolved by reference to the evidence. Where an individual character is in issue, the question is whether the overall impression it produces on the informed user differs from the overall impression produced on such a user by any design which has been made available to the public, taking into account the degree of freedom of the designer when developing the design. 8.74 The informed user must be someone familiar with information technology, especially graphics in computer games, on websites and so on. He will also be familiar with and have reasonably wide experience of screen displays, graphical user interfaces, software fonts, etc. depending on the type of design in question. The informed user will not be an expert or a designer of such images and graphics. Given the nature and pervasiveness of computer images, graphics and fonts, the notional informed user may have very wide experience in information technology imagery and this may result in many registered computer graphics and images being vulnerable to challenge. 8.75 As registration of a design, rather than relying on the u nregistered Community design right, gives a monopoly, this is to be preferred as infringement of the unregistered right requires proof of copying. The costs of registration are not high and can give a monopoly right that can last for up to 25 years. A shortcoming in the registered design systems is that it is not possible to register a moving image as a design.90 This limits its usefulness for things like computer games. However, careful choice of a number of

90

Up to 12 images can be included in an application to register a design but this is intended to take various views of the design from different angles and perspectives.

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Brexit and design law 8.78 r epresentations of an important screen shot, say of the central character, such as Super Mario, may make it difficult to avoid infringement.

BREXIT AND DESIGN LAW 8.76 As far as the UK Registered Act 1949 is concerned, it is most likely that future changes will track changes in EU design law, for example, if a new harmonising Directive comes along. Whatever the Brexit deal, even if there is no deal, it will be in the interest of UK industry, including the IT industry, to conform with developments in the EU. Any differences between the UK and the EU will most likely result in barriers in trade between the UK and its biggest trading partner. 8.77 For those sectors of UK industry that operate in the UK and within the EU, Brexit means that registered design protection will require registration of a design under the UK system and under the Community Design Regulation, increasing the costs of acquisition and maintenance of design protection. A great many UK businesses apply for design protection under the Community design system, but after Brexit, this will not give protection automatically in the UK without some special deal which looks highly unlikely.91 If the UK decides to go it alone with its own forms of design protection (as it already does under the UK unregistered design right), this will isolate UK designers and who will be faced with the administrative burden of applying for protection under two different regimes of protection, first under the Community Design Regulation, and, secondly under what might become a sui generis UK registered design. 8.78 A further impact is that automatic and free protection in the UK under the unregistered Community design will come to an end. Unless, that is, the UK brings in new legislation to provide for an equivalent right effective in the UK. It cannot, however, apply to the EU countries in the absence of special agreement by Treaty with the EU.

91

The protection of the Community design does not apply to the European Economic Area (EEA) countries.

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Chapter 9

Semiconductor topography right

INTRODUCTION 9.1 A right which protects the internal patterns of semiconductor products, such as computer processing silicon integrated circuits was introduced by the Directive on the legal protection of topographies of semiconductor products.1 It was implemented twice in the UK! First by means of the Semiconductor Products (Protection of Topography) Regulations 1987.2 This pre-dated the UK Copyright, Designs and Patents Act 1988 which did not come into force until 1 August 1989. This Act includes a system of protection for unregistered designs in Part III of the Act and it seems that the inspiration for this form of protection was the Directive itself. The result is that the UK implementation of the Directive is based on Part III of the Act with some modification for semiconductor topographies by means of the Design Right (Semiconductor Topographies) Regulations 1989,3 which also came into force on 1 August 1989. 9.2 The recitals to the Directive noted that the development of semiconductor products was of fundamental importance to the industrial development of the Community.4 The development of semiconductor products required 1 2

3

4

Council Directive 87/54/EEC of 16 December 1986 on the legal protection of topographies of semiconductor products, OJ L 24, 27.01.1987, p 36. SI 1987/1497. The Regulations came into force on 7 November 1987. This was the last date for transposition into national law in the Directive: Article 11(1). An unusually short period for implementation. SI 1989/1100, as amended by the Design Right (Semiconductor Topographies) (Amendment) Regulations 2006, SI 2006/1833. The amendment was to the list of qualifying countries for the purposes of the right which was extended to The Isle of Man, Gibraltar, the Channel Islands and any colony. Following Council Decision 94/824/EC, the protection is extended to persons from Members of the World Trade Organisation. (OJ L 349, 31.12.1994, p 201). Now the EU of course. Reference will be made to the EU in this chapter even though it was the European Economic Community at the time of the Directive.

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Layout of this chapter 9.6 considerable investment, but they could be copied easily and at little cost. The existing protection in the EU was patchy and lacked harmonisation and this had negative impacts on the functioning of the common market. Therefore, the implementation of the basic principles set out in the Directive was an urgent necessity. 9.3 A notable aspect of the Directive is that it allowed Member States to require registration and even, if they wished, deposit of material identifying or exemplifying the topography.5 The UK chose an informal approach whereby the right comes into existence on the creation of the topography in a manner not unlike copyright protection but with the protection commencing from the first commercial exploitation or the first time the topography is recorded in a design document. 9.4 The protection of the layout of integrated circuits is set out in the Treaty on Intellectual Property in Respect of Integrated Circuits6 and the Agreement on Trade Related Aspects of Intellectual Property Rights (the TRIPs Agreement)7 which refers to the Washington Treaty in Part II, Section 6 of TRIPs – Layout-Designs (Topographies) of Integrated Circuits. 9.5 As well as protection under a modified form of the UK unregistered design right, a semiconductor topography may be patentable if it is new, involves an inventive step and has an industrial application. The latter almost goes without saying in this context. Novelty and inventive step may be difficult to show unless the topography is significantly different from the state of the art. Of course, the process of manufacture of semiconductors may be patentable in its own right.

LAYOUT OF THIS CHAPTER 9.6 First, the background to the protection of semiconductor topographies is discussed. Then the main provisions of the Directive on the 5 6 7

Most Member States require registration. The UK and Sweden do not. Adopted at Washington on 26 May 1989 (the Washington Treaty) but not yet in force. The TRIPs Agreement applies to all the Members of the World Trade Organisation and resulted from the Uruguay Round of the General Agreement on Trade and Tariffs (GATT) in 1994. TRIPs came into force on 1 January 1995 and is administered by the WTO (World Trade Organization).

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9.7 Semiconductor topography right legal protection of topographies of semiconductor products are described. Where appropriate, the UK implementation of the Directive is referred to. Then there is some discussion of the experiences of semiconductor topography protection. Finally, the draft Right (Semiconductor Topographies) (Amendment) (EU Exit) Regulations 2018 are briefly described. The purpose of the draft Regulations is to make amendments to UK domestic law and retained EU law relating to the protection of semiconductor products. It is an example of numerous regulatory changes that will have to be made because of Brexit in the field of intellectual property.8

BACKGROUND 9.7 Concerns were being expressed about the lack of protection of the internal layout of semiconductor products. Computer ‘chips’ are made of semiconducting material into which electronic components and electrical connections are formed by depositing and etching processes in metallic, insulating and semiconducting materials using photographic masks. The result is layers of material containing patterns representing the electrical circuitry within the chip. 9.8 It was possible that the intellectual property laws in some countries already provided some sort of protection for these patterns in semiconductor products. For example, in the UK, they may have been protected indirectly through the copyright in the photographic masks used in their manufacture. Patent protection may have been available in some countries. However, given the importance of the semiconductor industry, it was seen as desirable that specific protection for semiconductor topographies should be introduced. The US was the first country to legislate for semiconductor protection and it did so by way of the Semiconductor Protection Chip Act of 1984.9 The US granted reciprocal protection to a number of countries including the UK and Australia. Other countries followed by bringing in specific protection, such as Japan.10 The EU adopted the Directive on the 8

Many other areas of law which have been affected by EU Directives, Regulations and Decisions will also need this treatment. 9 Inserting Chapter 9, Protection of Semiconductor Chip Products, into the US Copyright Act 1976, 17 USC. 10 The provisions in §914 of Chapter 9 of the US Copyright Act 1976 for International transitional provisions were repealed on 1 July 1995 (in accordance with §914(e)) and it was no

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Background 9.11 legal protection of topographies of semiconductor products in 1986, which was to be implemented by Member States no later than 7 November 1987. 9.9 Internationally, there was the Washington Treaty 1989 by which Contracting Parties agree to protect the layout of integrated circuits. Article 2 of the Treaty defines an integrated circuit as: a product, in its final form or an intermediate form, in which the elements, at least one of which is an active element, and some or all of the interconnections are integrally formed in and/or on a piece of material and which is intended to perform an electronic function. and a ‘layout-design (topography)’ means: the three-dimensional disposition, however expressed, of the elements, at least one of which is an active element, and of some or all of the interconnections of an integrated circuit, or such a three-dimensional disposition prepared for an integrated circuit intended for manufacture. 9.10 The TRIPs Agreement of 1995 required the protection of layout designs (topographies) of integrated circuits under the Washington Treaty.11 Article 36 sets out the scope of protection being importing, selling or otherwise distributing for commercial purposes, a protected layout design, an integrated circuit in which a protected layout design is incorporated or an article incorporating such an integrated circuit only in as far as it continues to contain an unlawfully reproduced layout design. 9.11 Although the Washington Treaty and the TRIPs Agreement use the term ‘integrated circuit’ which is technologically the most appropriate term, the US Act uses ‘semiconductor chip product’ and the Directive uses ‘semiconductor product’. Nothing turns on this though it is probably better to use the term ‘integrated circuit’ from a computer science perspective. The US Act takes an unnecessarily complicated approach. It inserted into the US Copyright Act 197612 and §901 defines a ‘semiconductor chip product’ as the final or intermediate form of any product: (a) having two or more layers of metallic, insulating, or semiconductor material, deposited or otherwise placed on, or etched away or otherwise longer necessary given the coming into force of the TRIPs Agreement on 1 January 1995 which extends protection to all Members of the WTO. 11 Article 35. 12 17 USC.

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9.12 Semiconductor topography right removed from, a piece of semiconductor material in accordance with a predetermined pattern; and (b) intended to perform electronic circuitry functions. A ‘mask work’ is a series of related images, however fixed or encoded: (a) having or representing the predetermined, three-dimensional pattern of metallic, insulating, or semiconductor material present or removed from the layers of a semiconductor chip product; and (b) in which series the relation of the images to one another is that each image has the pattern of the surface of one form of the semiconductor chip product.13 9.12 It is the mask work which is protected, subject to registration on the Register of Copyrights.14 Protection does not extend to non-original designs of mask works or designs that are staple, commonplace or familiar in the semiconductor industry or non-original variations of such designs. Protection does not extend to ideas, procedures, processes, systems, methods of operation, concepts or principles.15 The definitions in the US Act should be compared with those in the Directive on the legal protection of topographies of semiconductor topographies to which we turn to later. 9.13 In the US, as under the Directive, there is a reverse analysis ‘defence’. Under §906(a) of the US Copyright Act 1976 it is not an infringement for: 1.

a person to reproduce the mask work solely for the purpose of teaching, analysing, or evaluating the concepts or techniques embodied in the mask work or the circuitry, logic flow, or organisation of components used in the mask work; or

13

Mask work was described by Judge Hug in Altera Corpn v Clear Logic Inc, 15 September 2005, Court of Appeals, Ninth Circuit, as consisting of glass disks etched with the pattern for each layer of a chip. These glass disks, called masks, are printed onto each layer of the chip one layer at a time by photolithography. Generally, there are eight to 12 layers, each having a separate mask. The collection of these masks is known as the mask work. 14 §908. 15 §902(b) and (c). Under Article 2(2) of the Directive where the topography of a semiconductor product consists of elements commonplace in the semiconductor industry, it will only be protected to the extent that the combination of such elements is the creator’s own intellectual effort and not commonplace in the semiconductor industry.

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Background 9.16 2. a person who performs the analysis or evaluation described in paragraph (1) to incorporate the results of such conduct in an original mask work which is made to be distributed. 9.14 This defence, which is quite similar to the equivalent exception to infringement under the Directive was run in the US case on the right, Brooktree Corpn v Advanced Micro Devices Inc.16 The case was heard before a jury which held that the defendant had infringed the right but rejected the defendant’s claim that it could rely on the reverse engineering defence in creating its own semiconductor topography. The US Court of Appeals accepted that there was a legally sufficient evidential basis such that a reasonable jury could have found infringement and the defendant’s appeal failed. 9.15 An important aspect of the case is that the concept of substantial similarity in relation to a material part of the claimant’s mask design for its chips.17 The claimant’s computer chip contained a core cell which was repeated over 6,000 times in the chip in an array covering around 80 per cent of the area of the chip. Each core cell contained 10 transistors and metal connectors electrically connecting the transistors in a three-dimensional lattice in the multi-layered chip. The Brookfield case is important, therefore, in showing that copying a core cell can infringe even though the defendant’s chip design was different in a number of respects otherwise. Clearly, the test was that of whether the part taken was an important part in a qualitative sense. 9.16 In Altera Corpn v Clear Logic Inc,18 Altera made programmable logic devices (PLDs) which were computer chips, containing thousands of transistors, that could be programmed to perform various functions. Customers used Altera’s software to program PLDs to perform the customers’ desired functions. It could take several months to perfect the programming of the PLD with the customer working with Altera. Clear Logic made Application Specific Integrated Circuits (ASICs). These could be programmed to perform one function and could not be reprogrammed. Some customers would start with Altera’s PLDs then switch to ASICs once they had determined exactly what they needed the chips to do. To do this, the customers sent bitstreams to Clear Logic which then made ASICs compatible to the 16

977 F 2d 1555 (1992). The substantial similarity test was applied as the mask designs were protected under the US Copyright Act. 18 15 September 2005, US Court of Appeals, Ninth Circuit. 17

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9.17 Semiconductor topography right p rogrammed Altera chips. Generally, ASICs used less power, were smaller and, in the case of large orders, were cheaper. Altera brought an action for infringement of its mask design under the semiconductor chip product protection.19 At first instance, Altera was granted an injunction and damages in the order of $36m. 9.17 Clear Logic appealed, primarily, on the basis of the reverse engineering defence under §906, claiming the judge at first instance misdirected the jury as to the defence. It also argued that the placement of the transistors in the PLDs was a system or an idea and, consequently, not entitled to protection. As to the difference between idea and expression, Judge Hug said, referring to Computer Associates International Inc v Altai Inc,20 that in each step in the process of the design of a semiconductor product, ideas became more concrete until finally expressed in the layout of the transistors in the chip. He then went on to say (at Part II): The customer’s idea is at the very highest level of abstraction and the schematics and floor plans covey more concrete ideas, designating how the chip may be structured or organized. These drawings are preliminary sketches that would not be protected under conventional copyright principles … It is not until the level of the mask work … that there is an expression of that idea. Those ideas that are physically expressed in the mask work are subject to protection under the SCPA.21 9.18 On the reverse engineering defence, Clear Logic argued that the judge had misdirected the jury. The Court of Appeals did not accept this. It noted that the trial judge made a non-prejudicial error in defining what constituted legitimate reverse e ngineering22 but went on to give extremely thorough instructions to the jury who held that Clear Logic could not avail itself of the reverse engineering defence. The jury decided that the defence of reverse engineering was not proved.

19

There were also claims relating to the customers’ software licences with Altera and for unlawful interference with contract, in respect of those licences. 20 982 F 2d 693 (2nd Cir 1992), discussed in Chapter 4. 21 Semiconductor Chip Protection Act. 22 The District Court initially defined ‘legitimate reverse engineering’ to allow copying and analysing only ‘non-protectable concepts or techniques’. The Court of Appeals noted that the reverse engineering provision allows copying of the entire mask work provided this is done for the purposes of teaching, evaluating or analysing the chip.

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The Directive on the legal protection of topographies 9.21 9.19 Subsequent instructions to the jury by the district judge correctly stated the law applicable to the defence of reverse engineering and remedied the initial incorrect statement. They explained that it is permissible to reproduce ‘a registered mask work’ as a step in the process of creating an original chip, provided that the purpose of reproducing the chip is appropriate. The district judge correctly explained that only minimal ingenuity is necessary for a second chip to qualify as original, and he emphasised the distinction between substantial identity and substantial similarity. As the court in Brooktree discussed, the similarities in a chip may outweigh the differences. The Court of Appeals said that the reverse engineering provision protects industry practices and encourages innovation. Judge Hug said (at Part III), citing Brooktree: The second mask work must not be ‘substantially identical to the original,’ and as long as there is evidence of ‘substantial toil and investment’ in creating the second mask work, rather than ‘mere plagiarism,’ the second chip will not ‘infringe the original chip, even if the layout of the two chips is, in substantial part, similar. 9.20 In cases where a new original chip is developed using information gleaned from an existing chip, it is important for the person carrying out reverse engineering to keep a paper trail of the work expended in creating a new original chip.23 The US approach seems more generous than that under the Directive as the question is whether the chips are substantially identical (infringing) or substantially similar (not infringing), whereas the Directive requires that the new chip must be the creator’s own intellectual effort and not be commonplace.24

THE DIRECTIVE ON THE LEGAL PROTECTION OF TOPOGRAPHIES OF SEMICONDUCTOR PRODUCTS 9.21 Article 1(1) of the Directive contains the main definitions. First, a semiconductor product is the final or an intermediate form of any product: (i) consisting of a body of material which includes a layer of semiconducting material; 23

Unfortunately, in Altera, Clear Logic’s paper trail submitted in evidence pointed the other way. 24 See Article 5(3) and (4) read in conjunction with Article 2(2).

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9.22 Semiconductor topography right (ii) having one or more other layers composed of conducting, insulating or semiconducting material, the layers being arranged in accordance with a predetermined three-dimensional pattern; and (iii) intended to perform, exclusively or together with other functions, an electronic function. The topography of a semiconductor product is a series of related images, however fixed or encoded: (i)

representing the three-dimensional pattern of the layers of which a semiconductor product is composed; and

(ii) in which series, each image has the pattern or part of the pattern of a surface of the semiconductor product at any stage of its manufacture. 9.22 It is the topography so defined that is the subject of protection. It is a series of related images each of which comprises the pattern of a surface of the semiconductor product. The patterns may be temporary in that they can exist at any time during the manufacturing process. For example, a number of patterns may be overlain consecutively during the manufacturing process, building up the final pattern on the surface of a layer. A semiconductor product is one intended to perform an electronic function which has more than one layer arranged according to a predetermined three-dimensional pattern, at least one of which is of a semiconducting material. The electronic function may be the exclusive function or may be one of a number of functions performed by the product. 9.23 Article 4 of the Directive allows Member States to require that an application to register the topography to be filed in a public office (normally the national patent office) with two years of the first commercial use of the topography. The UK decided not to require registration as did Belgium, both of which chose an informal form of protection. Most Member States decided on registration. These include France, Germany, Greece, Italy, Portugal and Spain. As mentioned above, the US system of protection for semiconductor chip products requires registration.25

Subsistence of topography right 9.24 The topography, so defined above, is protected in as much as it represents the creator’s own intellectual effort providing it is not commonplace 25

Under §908, 17 USC.

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The Directive on the legal protection of topographies 9.25 in the semiconductor industry.26 Where a topography comprises elements which are commonplace it will be protected if the combination of those elements is the creator’s own intellectual effort and that combination itself is not commonplace in the semiconductor industry. Thus, subsistence depends on a two-stage approach. Under the UK approach, first, it must be original in the copyright sense, being an intellectual creation.27 Secondly, it must not be commonplace. This imposes a higher standard than normally applies to copyright works but appears to fall short of the requirement for novelty as used for registered designs.28

Commonplace 9.25 The term ‘commonplace’ was new to UK legislation. Although there have been no cases on the semiconductor topography right in the UK, nor before the Court of Justice of the EU, it has come under judicial scrutiny in a number of cases on the design right.29 Designs protected by the unregistered design right are required to be original but they are not original if they are commonplace in the design field in question.30 The meaning of commonplace in the design field in question was considered in Dyson Ltd v Qualtex (UK) Ltd,31 a case involving the design of spare parts for vacuum cleaners. Clearly a new design that had in time become very well-known would not for this reason be commonplace as the question had to be considered at the time of the creation of the design. Where a designer had copied an old design, it would not be original and the question of whether it was commonplace would not arise. It would be relevant where the designer created a new design without copying an existing design. Perhaps the best interpretation of commonplace was that suggested by counsel and accepted by Laddie J 26 27

28 29 30 31

Article 2(2). This now appears to be the appropriate test for originality for the purposes of copyright law. It is explicit in EU Directives on the legal protection of computer programs and databases (for copyright purposes). The term ‘intellectual creation’ derives originally from the Berne Convention for the Protection of Literary and Artistic Works, 1886; see Article 2(5) on collections of literary or artistic works. The subsistence of copyright does not depend upon the coincidental existence of similar or even identical works. Indicating that the pedigree of the design right owes something to the Directive on the legal protection of topographies of semiconductor products. Section 213(1) requires a design to be original but under section 213(4) a design is not original if it was commonplace in the design field in question at the time of its creation. [2006] EWCA Civ 166, [2006] RPC 31.

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9.26 Semiconductor topography right in Ocular Sciences Ltd v Aspect Vision Care Ltd,32 being a design that was ‘trite, trivial, common-or-garden, hackneyed or the type which would excite no peculiar attention in those in the relevant art’.33 9.26 For semiconductor topographies, the design field in question must be the semiconductor industry generally, notwithstanding that semiconductor products are used in all sorts of industries, ranging from computers to watches and from mobile phones to children’s toys.34 This is not the problem it can be in relation to the design right as it applies to other forms of design where the question is whether the design is commonplace in the ‘design field in question’. It may be no easy matter to decide just what the extent of the design field is. For example, where the design is for a wooden bookcase, is the design field limited to wooden bookcases, desks and chairs normally found in libraries or studies or is it limited to wooden furniture generally or does it cover all types of furniture?35

Concepts, etc. not protected 9.27 Article 8 of the Directive prevents the topography right extending protection to any concept, process, system, technique or encoded information embodied in the topography other than the topography itself. This does not prevent such things being protected by other rights, such as copyright, patents or the law of confidence, as appropriate.

Other rights not prejudiced 9.28 Article 10 of the Directive confirms that it is without prejudice to other rights such as patents and utility models and copyright restricting the reproduction of drawings and other artistic representations of topographies by copying them in two dimensions. Rights conferred in pursuance of international obligations are also not prejudiced. Any rights in topographies already 32

[1997] RPC 289. At page 429. Laddie J noted that the origin of ‘commonplace’ was the Directive and that the test was there to prevent any well-known combination being protected. 34 Whatever the technology, the basic technological and manufacturing principles in the semiconductor industry are the same or very similar. 35 Jacob LJ, in the Court of Appeal in Lambretta Clothing Ltd v Teddy Smith (UK) Ltd [2004] EWCA Civ 886, [2005] RPC 6, said that what mattered is the sort of design that a notional designer of the article would be familiar with. 33

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The Directive on the legal protection of topographies 9.30 existing prior to the national implementation of the Directive, though in any event not later than 7 November 1987, are not affected.

Entitlement to topography right 9.29 The creator is entitled to the topography right, subject to being a national of, or habitually resident in, a Member State.36 The Directive permitted Member States to adopt one or both of the two main exceptions to this basic rule. These are optional but the UK implemented both of the exceptions. The first, under Article 3(2)(a), is where the topography is created by an employee in the course of employment in which case, unless the terms of the employment provide to the contrary, the employer will be entitled to the right. Article 3(2)(b) applies to topographies created under a contract, not being under a contract of employment. In this case, the person commissioning the creation of the topography will be entitled to it, unless the contract provides to the contrary.37 However, the rules on entitlement to commissioned designs were repealed by the Intellectual Property Act 2014.38 If no right to protection applies otherwise, then the person who first commercially exploits the topography in a Member State will be entitled if exclusively authorised to do so by the person entitled to dispose of it.39 Member States were given the power to make agreements with third countries and to enter into international agreements in relation to the topography right. There was an obligation to notify the European Commission which could issue proposals to the Council which could make appropriate decisions.40 9.30 Article 4 allows Member States to insist on registration of topography rights and, if they wish, deposit of material identifying or exemplifying the topography. Where deposit is required, it is not to be made available to the public if it is a trade secret. Where registration is required by a Member State, it may also require registration of transactions such as transfers of the right. 36

Article 3(1). For the purposes of Article 3(2) the person entitled must be a national of, or habitually resident in, a Member State or be a company or other legal person having a real and effective industrial or commercial establishment in a Member State: Article 3(3). 38 With effect from 1 October 2014. 39 Article 3(4). The topography must not have been previously exploited commercially elsewhere. 40 See Article 3(5) to (8). However, the coming into force of the TRIPs Agreement on 1 January 1995 made those provisions largely redundant. 37

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9.31 Semiconductor topography right As mentioned earlier, the UK did not implement a registration system and the right remains an informal right in the UK. Most Member States adopted a registration system as did the US.

Duration of the topography right 9.31 The time for the commencement of the topography right depends on whether the Member State concerned requires registration. Where it does, the right starts at the earliest of the two following times: (i) the time it was first exploited commercially anywhere in the world; or (ii) the date the application to register the design was filed in due form: Article 7(1). Where, as in the UK, registration is not required, the time is the earliest of: (i) the time it was first exploited commercially anywhere in the world, or (ii) the time it was first fixed or encoded. 9.32 The right expires 10 years from the end of the calendar year during which it was first exploited commercially anywhere in the world. Where registration is required the 10 years runs from the earliest of: (i) the end of the calendar year during which it was first commercially exploited anywhere in the world, or (ii) the end of the calendar year during which an application to register the design in due form was made. There is a long stop in cases where the topography has not been commercially exploited anywhere in the world. In that case, the right expires 15 years from the end of the calendar year during which it was first fixed or encoded. However, in Member States were registration is required, if it has not been commercially exploited anywhere in the world, it can be protected by applying to register it during that 15-year period. In that sense, it is possible to acquire longer protection in countries permitting registration. 9.33 Remedies are available under the Directive where the topography design is made available to the public fraudulently before it is commercially exploited. In the UK disclosures in breach of confidence are ignored in determining qualification and ownership by virtue of first marketing in the EU and the duration of the right. 388

The Directive on the legal protection of topographies 9.36

Exclusive rights and exceptions 9.34 The exclusive rights are the right to reproduce the topography in as much as it is protected under Article 2 and to commercial exploitation or importation for those purposes of a topography or semiconductor product containing the topography: Article 5(1).41 The Directive is silent about whether infringement requires the taking of the whole or a substantial part of topography, defined as a series of images representing patterns on the surfaces of the semiconductor product. Under section 226(2) of the Copyright, Designs and Patents Act 1988 reproduction means copying the design so as to produce articles exactly or substantially to that design.42 9.35 Referring back to the US case of Brookfield v Advanced Micro Devices, where substantial similarity was found on the basis of a core cell repeated over 6,000 times in the claimant’s computer chip, it seems reasonable to apply the same sort of test in the UK and EU, with necessary modification. Therefore, it seems reasonable to accept that the topography of a semiconductor product can be infringed by reproducing a small though important part whether or not that part is repeated many times in the semiconductor product, providing that it represents the intellectual effort of the creator of the topography.

Exceptions 9.36 There are numerous exceptions to the topography right. Under Article 5(2) Member States may allow reproduction for private and noncommercial purposes. Although this exception is optional, the UK chose to implement it.43 As noted above, Article 8 prevents the protection of concepts, etc. In the light of this, Article 5(3) allows reproduction for the purposes of

41

Under section 226 of the Copyright, Designs and Patents Act 1988 as substituted for the purposes of the semiconductor topography right, primary infringement includes reproducing the design by making articles to it and recording the design in a design document for the purposes of enabling such articles to be made. Secondary infringement under section 227 is unaffected and covers importation and commercial dealing. 42 Although section 226(1) is substituted for the purposes of semiconductor topographies, section 226(2) is left untouched and, therefore applies to semiconductor topographies as Part III of the Act is applied to semiconductor topographies except as modified by the Design Right (Semiconductor Topographies) Regulations 1989, SI 1989/1100. 43 See section 226(1A)(a).

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9.37 Semiconductor topography right analysing, evaluating or teaching the concepts, processes, systems or techniques embodied in the topography or the topography itself.44 Article 5(4) permits the creation of new topographies based on that analysis or evaluation, provided they are the creator’s intellectual effort as under Article 2(2). 9.37 The doctrine of exhaustion of rights applies in respect of topographies or semiconductor products put on the market in the EU by or with the consent of the right owner.45 9.38 Persons acquiring semiconductor products who do not know and have no reasonable grounds to believe that the product is protected by the topography right may commercially exploit it. However, if such a person becomes aware of the fact of protection or subsequently has reasonable grounds for believing that the products were protected, he may be required to pay adequate remuneration to the rightholder. 9.39 Under section 237 of the Copyright, Designs and Patents Act 1988, licences of right are available in respect of articles in which the design right subsists during the last five years of the subsistence of the right. However, Article 6 of the Directive does not allow this, so section 237 does not apply to topography designs.46

EXTENSION OF PROTECTION TO NATIONALS OF THIRD COUNTRIES 9.40 The extension of protection to non-EU countries has already been mentioned. Originally, the protection in the UK was afforded to the US, Japan, the Isle of Man, the Channel Islands and Gibraltar. Soon after Switzerland and Australia were added to the list.47 The Washington Treaty still has not entered into force but, in effect, it was incorporated into the TRIPs

44

See section 226(1A)(b) of the Copyright, Designs and Patents Act 1988. Article 5(5). In the UK, see section 226(4) of the Copyright, Designs and Patents Act 1988 as it applies to semiconductor topographies. 46 Regulation 9 of the Design Right (Semiconductor Topographies) Regulations 1989, SI 1989/1100. 47 As were other countries such as Austria, Sweden and Finland prior to their entry into the EU. 45

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Experiences of semiconductor topography protection 9.42 Agreement. Consequently, protection has now been extended to all the WTO countries for the purposes of qualification for the right.48

EXPERIENCES OF SEMICONDUCTOR TOPOGRAPHY PROTECTION 9.41 Amazingly, there has been very little case law on the protection of topographies of semiconductor products, apart from the US cases of Brookfield v Advanced Micro Devices and Altera Corpn v Clear Logic Inc.49 The author is not aware of any cases before the UK courts or the Court of Justice of the EU. Considering the perceived need for this form of protection in countries with electronic technology industries, this seems quite strange. There may be a number of reasons for the paucity of litigation. It may be that the technology is so fast-moving that copyists cannot keep up with the pace of development. It may be that the market is dominated by major electronics and computer companies who would only deal with reputable manufacturers and suppliers. Noting that the US semiconductor Chip Protection Act influenced foreign legislation and international treaties on chip protection, Radomsky claimed that the Act failed to provide real and effective chip protection. Rather, chip manufacturers have been protected from piracy by technological advances, market changes, and improvements in industry practice.50 9.42 Modern manufacturing processes require very expensive plant and machinery to manufacture chips. This has made it almost impossible for pirates to compete as the initial investment now runs at huge sums, notwithstanding the skills and expertise to reliably manufacture computer chips. Even reverse engineering is now a much more expensive and difficult task, given the c omplexity of modern semiconductor technology. Finally, to some 48

See the Design Right (Semiconductor Topographies) (Amendment) Regulations 2006, SI 2006/1833 and the Design Right (Semiconductor Topographies) (Amendment) (No 2) Regulations 2008, SI 2008/1434. Currently, there are 164 Members of the WTO. 49 In an Australian case, Nintendo Co Ltd v Centronics Systems Pty Ltd [1994] HCA 27, the defendant acquired infringing chips from China before the legislation came into force but sold them or offered to sell them after the Australian Circuit Layouts Act 1989 came into force. The defence of innocent acquisition failed. 50 L Radomsky, ‘Sixteen Years after the Passage of the US Semiconductor Chip Protection Act: Is International Protection Working?’ 15(3) Berkeley Technology Law Journal 1049 (2000).

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9.43 Semiconductor topography right extent, it may be that the chip industry has become self-policing in that major manufacturers will only work with reputable companies and sub-contractors. Together with the much greater complexity of computer chip design and manufacture, most pirates have probably turned to easier and more lucrative forms of activity such as pirating films and music.

THE 2018 DRAFT REGULATIONS 9.43 In anticipation of Brexit, there are some draft Regulations, the Design Right (Semiconductor Topographies) (Amendment) (EU Exit) Regulations 2018. These make minor amendments to the Design Right (Semiconductor Topographies) Regulations 1989,51 to make minor amendments to adjust the Regulations to remove references to the European Economic Community and Member States in regulation 4 of the 1989 Regulations which applies to qualification for the semiconductor Regulations. For the meaning of ‘qualifying country’ under paragraph (2) ‘another member State’ becomes ‘a member State’. In paragraph 4(a) which modifies section 220 of the design right provisions in the Copyright, Designs and Patents Act 1988 (qualification by reference to first marketing), the reference in section 220(a) to ‘every member State of the European Union’ becomes ‘the United Kingdom’.52 The reference to ‘the territory of any member State’ in section 220(b) becomes ‘the United Kingdom’. The remainder of section 220(1) is omitted, as already is the case with conventional designs. The most significant change is that qualification by first marketing will be restricted to the territory of the UK or any other country.

51 52

SI 1989/1100. There is a mistake here in that the draft Regulations refer here to the ‘European Economic Community’ which was changed to the ‘European Union’ by the Treaty of Lisbon (Changes in Terminology) Order 2011, SI 2011/1043, with effect from 22 April 2011.

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Chapter 10

Confidential information, trade secrets and information technology

INTRODUCTION 10.1 The action of breach of confidence developed in equity as a way of protecting confidential information from misuse by a person to whom the information has been given under an express or implied obligation to keep it secret. It can be said that the conscience of the recipient of the information was fastened with an obligation of confidence. Although of older pedigree, the action became popular in Victorian times and was used by Prince Albert to prevent a public exhibition of engravings made by himself and Queen Victoria.1 The action was also effective in cases involving secret recipes and the like.2 10.2 The action of breach of confidence has become very useful in relation to information of a technical nature, such as details of inventions and business information, for example, databases of commercially important information, such as customer databases and ideas for computer software. A feature of breach of confidence is its wide scope. Its protection can range from personal information of a sensitive nature, to business and commercial information or secret industrial processes. 10.3 Computer programs which have been made available to others, for example, by licensing copies, are only usually d istributed in object code form. The source code for a computer program is usually regarded as extremely important and will be kept secret by its owner. The law of confidence will also protect software such as computer programs, databases and other information used internally, within an organisation or business. Protection may extend to features beyond the actual code, data or information and may 1 2

Prince Albert v Strange (1849) 1 Mac & G 25. See, for example, Morison v Moat (1851) 9 Hare 241.

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10.4 Confidential information, trade secrets and IT p rotect ‘non-textual’ features, such as functionality, tasks and uses made of the software. In some cases, data protection law may also be relevant. 10.4 Often, breach of confidence is important in relation to ex-employees and others, such as consultants, to whom confidential information has been disclosed and used by them in the course of their duties. It may be very tempting for employees to make copies of an employer’s computer software to use subsequently for their own purposes. This is an area where breach of confidence is particularly important, as we will see later in this c hapter. A common scenario is for employees to make copies of their employer’s confidential files onto moveable media such as USB drives for later use after they have left to start up a new business or take up new employment with a competitor of their previous employer.3 This is less easy to trace than where an employee sends his employer’s confidential information to a private email address. Such cases often involve a breach of the employee’s duty of fidelity owed to their employer and may also be a breach of the contract of employment, the terms of which often impose obligations on employees not to misuse their employer’s trade secrets and confidential information. 10.5 The Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms 1950 was brought into force effectively in the UK by the Human Rights Act 1998.4 There are overlaps with the law of breach of c onfidence, especially where privacy and freedom of expression are concerned. The courts in the UK have accepted that the law of confidence, as it has developed in the UK, informed by the Convention, is now compatible with the Convention. There are other related areas of law, relevant to the rights of privacy and freedom of expression including data protection law,5 freedom of information law and the law relating to privacy in telecommunications. They are mentioned very briefly towards the end of the chapter. 10.6 The ‘trade secrets Directive’6 required implementation by Member States by 9 June 2018. The UK implemented the Directive by virtue of the 3

See, for example, Marathon Asset Management LLP v Seddon [2017] EWHC 300 (Comm), [2017] FSR 36. 4 Even though the UK was one of the initial signatories of the Convention, it did not formally bring it into UK law until the relevant parts of the Act came into force on 2 October 2000. 5 Recently changed by the EU General Data Protection Regulation and the UK’s Data Protection Act 2018. 6 Directive 2016/943/EU of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure, OJ L 157, 15.06.2016, p 1.

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Basic requirements for an action in breach of confidence 10.8 Trade Secrets (Enforcement, etc.) Regulations 2018, which came into force on 9 June 2018.7 Trade secrets were already protected under the law of breach of confidence but the Regulations provide focussed protection for trade secrets and the remedies for unauthorised acquisition, use and disclosure.

LAYOUT OF THIS CHAPTER 10.7 First, the basic nature of confidential information and the action of breach of confidence are set out and explored.8 Then the situation relating to employees and ex-employees is considered, followed by the position of consultants and freelancers. A significant number of computer programmers, software and w ebsite designers are either self-employed or operate under the auspices of limited companies. Covenants in restraint of trade are common in the software industry and these are discussed next. Consideration is then given to the remedies available for breach of confidence. We look at the right to respect for private and family life and the often-conflicting right of freedom of expression under the European Convention for Protection of Human Rights and Fundamental Freedoms9 and the implications of this Convention for the action of breach of confidence. We then turn to the specific legislation relating to trade secrets under the Directive and the UK Regulations, followed by an overview of data protection and freedom of information law.

BASIC REQUIREMENTS FOR AN ACTION IN BREACH OF CONFIDENCE 10.8 The leading case on the basic requirements for the modern law of breach of confidence was set out by Megarry J in Coco v AN Clark (Engineers) Ltd.10 They are as follow: (a) the information must have the necessary quality of confidence about it;11 7

SI 2018/597. The term ‘confidential information’ is very wide in its scope and applies to all sorts of information which is secret or not widely known including, but by no means limited to, personal and private information, government information, business information and trade secrets. 9 Mention is also made of the Charter of Fundamental Rights of the European Union. 10 [1969] RPC 41 at 45. This case involved the design for a moped engine which had been disclosed to the defendant and which the inventor feared would make use of it without payment. 11 Borrowing the definition of Lord Greene MR in the earlier case of Saltman Engineering Co Ltd v Campbell Engineering Co Ltd (1948) 65 RPC 203. 8

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10.9 Confidential information, trade secrets and IT (b) the information must have been imparted in circumstances importing an obligation of confidence; (c) there must be an unauthorised use of that information to the detriment of the party communicating it. These three elements are considered below in further detail.

Quality of confidence 10.9 Put simply, information will have the necessary quality of confidence if it is not in the public domain or well known in a particular circle. For example, techniques and ‘wrinkles’ developed by and used by a particular computer programmer which are not in general use and are not known by computer programmers generally are likely to have the necessary quality of confidence if they are not easily deducible by skilled programmers. It appears that the information does not have to be an absolute secret and it has been suggested that something of a subjective test may be r elevant in some circumstances. For example, in Thomas Marshall (Exports) v Guinle,12 Sir Robert Megarry VC (as he became) suggested the following formula: (a) the information must be such that the owner believes that its release would be injurious to him, or would be advantageous to his rivals or to others; (b) the owner of the information must believe it to be confidential or secret and not already in the public domain; (c) the owner’s belief in (a) and (b) above must be reasonable; and (d) the information must be judged in the light of usages and practices of the particular trade or industry concerned. It is important to note, however, that Megarry VC was concerned only with information or secrets of a commercial or industrial nature. Furthermore, the information at issue related to details of customers and suppliers and did not apply generally to confidential information.13 In respect of this type 12

[1979] Ch 227 at 248. R v Department of Health, ex parte Source Informatics Ltd [2001] FSR 8, Simon Brown LJ accepted that there were four main classes of information normally regarded as confidential, being trade secrets, personal confidences, government information and artistic and literary confidences.

13 In

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Basic requirements for an action in breach of confidence 10.12 of information, it appears that the collection may be protected by the law of confidence even though the individual contents are mundane and could be sought out and collected together without any particular act of creativity. This fact is important in relation to databases of the type commonly used by organisations, such as databases of customers and suppliers. 10.10 An idea for a computer game may be protected by the law of confidence even if none of the individual elements are novel provided the combination of elements was original, not being in the public domain. The Chancery Division held that an idea for a video game which involved moving a ball along a track improvised from randomly created sections of track, overcoming obstacles on the way, was potentially protectable under the law of confidence even though single elements of the game were wellknown at the time.14 Knowledge derived by a consultant engaged to compile, analyse and identify keywords for use on Google Adwords which would generate the greatest return on investment by converting search clicks into completed sales was deemed to be information protected by the law of confidence in Media Agency Group Ltd v Space Media Agency Ltd.15 10.11 Information pertaining to a method of doing business may have the necessary quality of confidence but the fact that the method has previously been used in overseas countries may prejudice that quality of confidence where the method is first used in another country. In some cases, this may be an issue of evidence and the existence of a similar method used overseas could mean that a defendant has simply derived his method from knowledge of those pre-existing uses rather than copy the claimant’s method. However, it was accepted, per curiam, in Paymaster (Jamaica) Ltd v Grace Kennedy Remittance Services Ltd,16 that a breach of confidence could be made out by the subconscious use of information obtained in confidence as a springboard to activities detrimental to the owner of the information. 10.12 The fact that information is clearly marked ‘Confidential’ does not necessarily mean that it will be viewed as such by the courts.17 14

Burrows v Smith [2010] EWHC 22 (Ch). However, the court held that there was no obligation of confidence fixed on the defendant. 15 [2018] EWHC 1434 (QB). 16 [2017] UKPC 40. 17 Dalrymple’s Application [1957] RPC 449. A technical document marked as confidential but distributed to numerous bodies which were members of a trade association was held not to be confidential.

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10.13 Confidential information, trade secrets and IT Conversely, lack of a notice warning of the confidential nature of information is not fatal to a finding that the information is confidential. In Collag Corpn v Merck & Co Inc,18 the court noted that operators of manufacturing processes usually considered their process to be confidential and took measures to keep their process secret, for example, by imposing obligations of confidence on suppliers and the like. However, that alone did not mean that the information was protected by the law of confidence. The three-step test in Coco v Clark had to be satisfied. 10.13 A secret industrial process which involved an inventive step in its devising is obviously capable of being a trade secret. However, the position is more uncertain where the information comprises confidential price lists or details of customers or suppliers. Information about customers such as their credit-worthiness and their buying preferences may be commercially valuable and can be protected by the law of confidence. In PSM International plc v Whitehouse & Willenhall Automation Ltd19 drawings, quotations, price costing and business strategies were considered to be trade secrets. In Cantor Fitzgerald International v Tradition (UK) Ltd,20 it was held that a technique used for testing computer software which was readily derivable by a skilled man from public sources was not a trade secret. It was no more than a useful technique or ‘wrinkle’ which an ex-employee may use after termination of his employment. On the other hand, the use by the defendants of the claimant’s computer program source code was held to be a breach of confidence even though it had only been used for the purposes of checking that the defendants’ programs worked properly. 10.14 In Heythrop Zoological Gardens Ltd v Captive Animals Protection Society (CAPS),21 drawing on OBG v Allen, Birss J accepted that photographs could be treated as confidential information protected by the law of confidence even if the events portrayed in the photographs were not confidential. It all depends on the facts. Heythrop ran a private zoo and provided animals for the film and television industries. It held open days occasionally at which the public could attend, allegedly subject to a restriction that photographs could be taken for personal use only and must not be uploaded to the internet. Investigators working for CAPS attended one of these open days and took 18

[2003] FSR 16. [1992] FSR 489. 20 [2000] RPC 95. 21 [2016] EWHC 1370 (Ch), [2017] FSR 10. 19

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Basic requirements for an action in breach of confidence 10.16 photographs and video footage. These were placed on the internet by CAPS together with some photographs taken by a member of the public and others obtained from a former employee of Heythrop. In Douglas v Hello, an important feature was that the images had commercial value. The same applied in the present case as Heythrop sold images of its animals. However, there were some differences, for example, a large number of photographs had been placed on the internet by visitors to the zoo. It was not clear whether the restriction on the use of photographs had been brought to the attention of those visitors. Moreover, CAPS had an arguable public interest defence. Heythrop’s application for an interim injunction was not granted.22 10.15 Publication of confidential information may be acceptable if it is in the public interest for it to be published. This is unlikely to be an issue where the information is of a commercial or industrial nature but could be relevant where the information concerns price-fixing or other illegal conduct. The public interest defence may be available if, for example, the information concerns a defect in a product23 or a plan to unleash malicious software.

Obligation of confidence 10.16 An obligation of confidence may be imposed expressly, whether or not by contract. In many cases it will be implied, such as in the relationship between doctor and patient or solicitor and client. An obligation of confidence will be implied, if not express, as between an employee and his employer. This duty will usually be less extensive after termination of the employment though an ex-employee may be subject to a covenant in restraint of trade which may apply for a period of time. A duty of confidence will not be implied where it would be reasonable to expect that the subject matter has already been legally protected in other ways, such as by registration as a design or by application for a patent.24 Making it difficult to access information, for example, by distributing it in encrypted form only does not necessarily mean that it will be held to be confidential. In Mars (UK) Ltd v Teknowledge Ltd,25 22

Birss J accepted that a handler standing next to an animal and speaking enthusiastically about it fell within the meaning of a live performance under section 180(2) of the Copyright, Designs and Patents Act 1988. However, it was arguable that a fair dealing defence applied. 23 Such as a defective breathalyser device in Lion Laboratories Ltd v Evans [1984] 2 All ER 417. 24 Carflow Products (UK) Ltd v Linwood Securities (Birmingham) Ltd [1996] FSR 424. 25 [2000] FSR 138.

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10.17 Confidential information, trade secrets and IT the defendant reverse engineered a computer chip to gain access information contained within it. An argument that encrypting the information meant it was confidential was rejected by Jacob J who said (at 151): The [customer] is an intended recipient of the article containing the information … There is nothing obviously confidential about the machine he gets. There is no marking ‘confidential’ and indeed there is not even any indication of encryption. By the time one gets to find out about the encryption it is, in my judgment, far too late to impose a duty of confidence.26 Jacob J thought that the message sent out by encryption was that the owner does not want another person to gain access to it. That itself was not sufficient to impose an obligation of confidence. However, if a machine has been distributed under a contract with an express obligation not to dismantle it to see how it works, that may be effective to impose an obligation of confidence.27 10.17 Source code for a computer program is generally regarded as confidential unless it is published. Normally, only the object code version of a computer program is distributed, as software developers do not want others to see the source code version of their programs. The confidentiality of source code is not an absolute rule because lawful users (typically licensees) of computer programs expressed in a low-level programming language (object code) are permitted to convert them into a higher-level language (source code)28 to enable then to write a new program that will operate with that or another program.29 10.18 In Burrows v Smith,30 the claimant was a senior games designer employed by a computer games company. He later claimed that the defendant, a successor in title, had infringed his copyright and was in breach of confidence. However, the court failed to find that an obligation of

26

27 28

29 30

Jacob J distinguished Attorney-General v Guardian Newspapers (No. 2) [1990] 1 AC 109 where Lord Goff spoke of an obviously confidential document wafted by an electric fan out of a window into a crowded street. KS Paul (Printing Machinery) Ltd v Southern Instruments Ltd [1964] RPC 118. It may not always be possible to obtain the original source code as non-executable remark lines in programs are not compiled into the object code form of a program. Usually only an assembly language version of the program will be obtained. This is the ‘decompilation’ permitted act under section 50A of the Copyright, Designs and Patents Act 1988. [2010] EWHC 22 (Ch).

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Employees 10.21 c onfidence existed. The claimant’s job was to come up with ideas for computer games and, if he did, to share those ideas with his employer. He was merely doing what he was paid to do. 10.19 Software written by a husband prior to entering into a formal partnership with his wife was considered by the court to have become a partnership asset. When the husband left the partnership, his continued use of the software infringed its copyright and was a breach of confidence.31

Unauthorised use 10.20 It will normally be apparent when the use or further disclosure of confidential information is unauthorised and has or will result in detriment to its owner. If the information has been given over under a contract, it will be a matter of construing the contract. In the three-step test in Coco v Clark, Megarry J suggested that detriment to the owner of the information was a requirement but other parts of his judgment implied that it need not always be an essential element. In Attorney-General v Guardian Newspapers (No. 2),32 Lord Goff said that he would like to keep the point open even though it will almost always be present. In many cases, the justification for protecting confidences is that they are tied up with commercial activity, investment and marketing and industrial manufacture. Such confidences have economic value.

EMPLOYEES 10.21 The basic rules for ownership of copyright and entitlement to a patent are set out in Chapters 2 and 11. As regards confidentiality, present employees are under a fiduciary duty to their employers. After termination of employment, there may remain a continuing duty of confidence. The extent and scope of that duty is partially dependent upon the nature of the information. In F accenda Chicken Ltd v Fowler,33 at first instance, Goulding J identified three classes of information, being: 1

information which, because of its trivial character or its easy accessibility from public sources, cannot be regarded as confidential;

31

Coward v Phaestos Ltd [2013] EWHC 1292 (Ch). [1990] 1 AC 109. 33 [1985] 1 All ER 724. 32

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10.22 Confidential information, trade secrets and IT 2

information which an employee must treat as confidential, but which, once learned, reasonably remains in the employee’s head and becomes part of his skill and experience; and

3

specific trade secrets so confidential that a continuing duty of confidence applies even beyond the termination of employment or the service contract.

10.22 The employer does not have to explicitly spell out to the employee what is confidential34 and it may prove difficult to draw a line between Goulding J’s classes 2 and 3 in practice. Of course, employers value skill and experience in new employees and this is particularly true in the software industry and there is a public interest in allowing ex-employees to make use of their skill and experience for new employers. In the absence of an express confidentiality term in the contract of employment, it was said in Printers and Finishers Ltd v Holloway35 that there would be nothing improper in an employee putting his memory of particular features of his previous employer’s plant at the disposal of his new employer. In any case, even if there is an express term, it would have to be shown that the information was over and above the employee’s normal skill in the job and amounted to a trade secret. 10.23 In Northern Office Microcomputer (Pty) Ltd v R osenstein,36 concerning copyright and trade secrets relating to computer programs, the problem of where to draw the line between the conflicting interests of an employee and his previous employer was considered. Marais J said: … the dividing line between the use by an employee of his own skill knowledge and experience and the use by him of his employer’s trade secrets is notoriously difficult to draw.37 Marais J accepted that computer programs should be protected as trade secrets providing that they were not commonplace. However, as regards an ex-employee, he said that the protection should be limited and should not prevent the programmer applying his mind again to writing accounting software for doctors and dentists. Furthermore, if he did write new software following termination of his employment, he would not be expected to: … wipe clean from the slate of his memory (as if that were possible) any recollection he may have of the things which it seemed to him were 34

Lancashire Fires Ltd v SA Lyons & Co Ltd [1996] FSR 629, per Lord Bingham MR at 674. [1965] RPC 239. 36 [1982] FSR 124 in the Supreme Court of South Africa. 37 Ibid at 138. 35

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Employees 10.25 appropriate for inclusion in such a suite of programmes, or of appropriate formulae, or the like. To accept the contrary view would halter respondent’s use of his own training, skill and experience to an unacceptable degree.38 10.24 This would certainly be true, in the absence of a valid term in restraint of trade, where the program performed some ordinary, mundane or unexceptional task, such as accounting software. However, where the tasks performed by computer software were themselves novel or unusual and not generally known, writing a new computer program to perform those tasks might well encroach upon the ex-employer’s rights. As Cross J said in Printers & Finishers Ltd v Holloway,39 (at 243) the type of information that would be protected is that which could be regarded as a separate part of the employee’s stock of knowledge which ‘… a man of ordinary honesty and intelligence would recognise to be the property of his old employer, and not his to do as he likes with …’. 10.25 In the Court of Appeal in Faccenda Chicken Ltd v Fowler40 Neill LJ set out the relevant principles for determining the duty of an employee and ex-employee in relation to the employer’s i nformation.41 They are as follows: 1

If there was a contract of employment the employee’s obligations were to be determined from that contract.

2

In the absence of any express terms, the employee’s obligations would be implied.

3

While still in employment, there was an implied term imposing a duty of good faith or fidelity on the employee. This duty might vary according to the nature of the contract but would be broken if the employee copied or deliberately memorised a list of customers.

4

The implied term imposing an obligation on the employee after the termination of his employment was more restricted than that imposed by the duty of fidelity. It might cover secret processes of manufacture or designs, or special methods of construction or other information of a sufficiently high degree of confidentiality so as to be classed as a trade secret.

38

Ibid at 140. [1965] RPC 239. 40 [1987] Ch 117. 41 At 135. The information concerned customers’ names and addresses, convenient delivery routes, suitable times for delivery, prices charged and details of customers’ usual orders. 39

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10.26 Confidential information, trade secrets and IT 5

Whether information fell within this implied term to prevent its use or disclosure by an ex-employee depended on the circumstances, and attention should be given to the following: (a) the nature of employment – a higher obligation might be imposed where the employee regularly handled confidential material; (b) the nature of information – it should be an authentic trade secret, or at least highly confidential; (c) whether the employer stressed the confidential nature of the material; and (d) whether the information could be easily isolated from other material the employee was free to use, this being useful evidentially rather than being a conclusive test.

10.26 The Court of Appeal subsequently applied the Faccenda Chicken principles in AT Poeton (Gloucester Plating) Ltd v Michael Ikem Horton.42 The claimant carried on a specialist electroplating business and the defendant had been employed as a sales engineer. Soon after termination of his employment the defendant started his own electroplating business. The claimant alleged misuse of confidential information concerning the electrolyte used in the process, the apparatus used by the claimant and a list of the claimant’s customers. The Court of Appeal allowed the defendant’s appeal against the finding at first instance that he was in breach of confidence. Morritt LJ considered whether certain features of the apparatus were within Goulding J’s class 3. He did so using Neill LJ’s guidelines: (a) Nature of employment. The defendant was employed as a sales engineer. Although he occasionally operated the electroplating process there was nothing in his contract of employment or the work he performed to heighten his appreciation of the alleged confidentiality of the information. (b) Nature of the information. Although it was accepted that part of the apparatus was capable of being a trade secret, it did not attain the degree of confidentiality required for class 3. The concept of the process was well known and the features of the claimant’s apparatus reproduced by the defendant were largely a consequence of using that concept.

42

[2001] FSR 14.

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Employees 10.27 (c) Whether the employer impressed on the employee the confidentiality of the information. This should be to the extent that the information can be properly regarded as a trade secret. Although this factor was present it was clear that the claim to confidentiality was much wider than justified. Although the Court of Appeal in Lancashire Fires Ltd v SA Lyons & Co Ltd43 said the employer did not have to define the ‘precise limits’ of what he sought to protect, that case was not one in which the employer had made ‘extravagant claims’. (d) Whether the information can be easily isolated from other information the employee is free to use or disclose. As the relevant features were so easily seen and assimilated by the defendant during his employment, they could not easily be isolated from information the employee was free to use and could not be protected in the absence of an appropriate covenant in restraint of trade. 10.27 In the context of computer software, it would appear that the law of confidence provides no protection against an ex-employee writing new software to perform a similar function as that performed by software written for a previous employer, providing the function is not itself a trade secret. What will be protected, however, is the source code version of any software written for a previous employer. If, following termination of employment, an employee takes away or retains a source code version of the computer program, he will prima facie be in breach of confidence. This is to the extent that the source code does not contain public domain elements or commonly used routines or other features. A further caveat is where the software was created in circumstances such that the employee is the first owner of the copyright or is entitled to any patent which may be granted for it. There may be a tension between copyright ownership and breach of confidence, for example, where the computer program was not created in the course of the employee’s employment or there is an express or implied term that the employee will retain ownership but the program performs a function which is a trade secret belonging to the employer or otherwise makes use of such a trade secret.44 Where there is any doubt as to whether the information in question falls within Goulding J’s class 2 or class 3, an employer may be able to protect himself by the use of a reasonable covenant in restraint of trade, discussed later. 43 44

[1996] FSR 629. Under section 171(1)(e) of the Copyright, Designs and Patents Act 1988, nothing in the copyright part of the Act affects the operation of any rule of equity relating to breaches of trust or confidence.

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10.28 Confidential information, trade secrets and IT 10.28 The importance of striking the right balance between the employer and the ex-employee’s ability to continue to use his skill and judgement, even in competition with the previous employer is a crucial one. Lord Neuberger made this clear in the Supreme Court in Vestergaard Frandsen A/S v Bestnet Europe Ltd,45 where he said (at para 44): Particularly in a modern economy, the law has to maintain a realistic and fair balance between (i) effectively protecting trade secrets (and other intellectual property rights) and (ii) not unreasonably inhibiting competition in the market place. The importance to the economic prosperity of the country of research and development in the commercial world is self-evident, and the protection of intellectual property, including trade secrets, is one of the vital contributions of the law to that end. On the other hand, the law should not discourage former employees from benefitting society and advancing themselves by imposing unfair potential difficulties on their honest attempts to compete with their former employer. 10.29 This is particularly apt in the information technology industry with its high staff turnover and large numbers of start-up companies, whether they be involved with computer programming, database design and development or software applications generally. The balance between protecting previous employers’ intellectual property rights including confidential information and ex-employees who may want to work for, or set up, competing organisations is a difficult one to strike. Where there is a clear conflict between an employer’s confidential information and an ex-employee’s right to exercise his skill and judgement, the courts will often favour the latter. But to some extent, it depends on the nature of the information and how far it has become part and parcel of the ex-employee’s skill and judgement. If the information is in the nature of a trade secret, rather than more mundane ‘business information’ a court is more likely to favour protecting the trade secret.

CONSULTANTS AND OTHERS 10.30 Many computer programmers and software developers work on a self-employed basis for a number of clients or do so under the auspices of a small limited company. Apart from issues as to ownership of copyright in any 45

[2013] UKSC 31, [2013] RPC 33.

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Covenants in restraint of trade 10.32 software created by such persons,46 there may also be concerns about the subsequent use of confidential information belonging to the client. Where a selfemployed consultant or a software development company is engaged it is more likely that specific provision relating to confidentiality will be included in the contract. For example, there is likely to be a term in the contract requiring that confidential information belonging to the client is not subsequently used or divulged without the client’s express permission. The opportunity ought to be taken to expressly identify what information is, or categories of information are, considered to be confidential. There may also be a duty of confidence imposed on the client in relation to the source code and other materials created by the consultant. 10.31 Where software has been developed for a client, it is common for a copy of the source code and other materials to be placed with an escrow organisation which will release the materials to the client under specified circumstances such as where the developer ceases to trade or is no longer willing or able to maintain the software. It is usual for the escrow agreement to contain a confidentiality clause requiring the escrow organisation to keep the materials confidential. The agreement is also likely to contain an obligation on the client also to keep the materials confidential in the event that they are released to the client.

COVENANTS IN RESTRAINT OF TRADE 10.32 The contract of employment may include a term restricting the employee’s use or disclosure of information concerning his employer’s business following termination of the employment.47 Such terms will be enforced by the courts only if they are reasonable and not against the public interest. In particular, an employer cannot use such terms to protect himself against legitimate competition.48 The acceptable purpose of a term in restraint of trade is to protect the employer’s business interests. It will be for the employer to

46

There should be an assignment of copyright if the client wishes to have the copyright. Alternatively, an exclusive or non-exclusive licence might be appropriate: see Chapter 2. 47 As an alternative, the obligation may be imposed later, such as by an agreement made at or towards the end of the employment. 48 Berkeley Administration Inc v McClelland [1990] FSR 505; Roberts v Northwest Fixings [1993] FSR 281. The courts will not lend their aid to a determined attempt to stop competition.

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10.33 Confidential information, trade secrets and IT show that any such term, often referred to as a covenant in restraint of trade, is reasonable and enforceable.49 Terms in restraint of trade and are frequently expressed in terms of preventing the employee working for a competitor or setting up a business in competition within a given area and for a given period of time.50 If the term is too wide in terms of either, the courts are unlikely to enforce it. It used to be the case that the two factors, time and distance, were considered together. In Fitch v Dewes,51 a solicitor’s clerk was prohibited from entering into the employment of another solicitor within a sevenmile radius of Tamworth Town Hall. The restriction was indefinite in terms of time, but nevertheless, because the geographic area was small, it was held to be valid. However, in Herbert Morris Ltd v S axelby,52 a restriction that an engineer could not work for a competitor anywhere as an engineer for seven years was held to be void. 10.33 With the coming of electronic mail and the internet, the geographical area covered by a restraint of trade covenant is less important, some might claim it to be redundant. Individuals developing and distributing software often can be based anywhere and carry out their business wherever they wish.53 10.34 If a covenant in restraint of trade is drafted too widely it will not be enforced by the courts. Nor will the courts cut it down to an acceptable level. In JA Mont (UK) Ltd v Mills,54 Simon Brown LJ said: … as a matter of policy, it seems to me similarly that the court should not too urgently strive to find within restrictive covenants ex facie too wide, implicit limitations such as alone could justify their imposition. The alternative would mean that employers would draft their covenants in restraint of trade in wide terms.55 But sometimes, a covenant can be narrowed by a process of interpretation. In L ittlewoods Organisation Ltd v Harris56 49 50 51 52 53 54 55 56

Polymasc Pharmaceuticals plc v Stephen Alexander Charles [1999] FSR 711. It should be noted that such covenants are not always concerned with confidential information. [1921] AC 158. [1916] 1 AC 688. There may be some constraints such as attending meetings and testing software on an employer’s or client’s computer hardware. [1993] FSR 577. See also Mason v Provident Clothing and Supply Company Ltd [1913] AC 724. [1978] 1 All ER 1026.

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Covenants in restraint of trade 10.35 Lord Denning MR said of a covenant that an employee ‘… shall not at any time within twelve months … enter into a contract of service or other agreement of a like nature with GUS or any subsidiary thereto’ to be limited to the mail order side of those parts of the GUS organisation which operated in the UK. Interpretation is one thing, whittling down an unacceptably wide covenant to leave an enforceable core is quite another. 10.35 In FSS Travel and Leisure Systems Ltd v Johnson57 a computer programmer was required not to engage in any business that would compete with the claimant’s business for a period of one year following termination of his employment. The claimant specialised in the development of computer programs for the travel industry. The Court of Appeal upheld the deputy judge’s decision that the covenant was unreasonable. Mummery LJ set out the following principles: 1

The court will not uphold a covenant merely to protect the employer from competition by a former employee.

2

There must be some subject matter which an employer can legitimately protect by a restrictive covenant.

3

Protection can be legitimately claimed for identifiable objective knowledge constituting an employer’s trade secrets with which the employee has become acquainted during his employment.

4

However, protection cannot legitimately be claimed in respect of the skill, experience, know-how and general knowledge acquired by an employee as part of his job, even though this may equip him as a competitor or a potential employee of a competitor.

5

The critical question is whether the employer has trade secrets which can be fairly regarded as his property, as distinct from the skill, experience, know-how and general knowledge which can fairly be regarded as the property of the employee. This requires examination of all the evidence relating to the nature of the employment, the character of the information, the restrictions placed on its dissemination, the extent of use in the public domain and the damage likely to be caused by its use and disclosure in competition to the employer.

6

The problem in making a distinction between general skill and knowledge, which every employee can take with him when he leaves, and

57

[1999] FSR 505.

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10.36 Confidential information, trade secrets and IT secret or confidential information, which he may be restrained from using, is one of definition. It must be possible to identify information used in the relevant business, the use and dissemination of which is likely to harm the employer and establish that the employer has limited dissemination and not, for example, encouraged or permitted its widespread publication. It is a matter of examining the detailed evidence relating to the employer’s claim for secrecy and deciding, as a matter of fact, on which side of the boundary line it falls. Lack of precision in pleading and absence of solid evidence in proof of trade secrets are frequently fatal to enforcement of a restrictive covenant. 10.36 In Faccenda Chicken v Fowler, Neill LJ suggested, obiter, that only trade secrets or their equivalent could be protected by a restrictive covenant and that more mundane information could not. However, this does not square with his description of the implied term imposed after termination of employment to the effect that the implied term protects trade secrets, and consequently there is no need for a restrictive covenant in respect of them. In Balston Ltd v Headline Filters Ltd,58 Scott J declined to follow that part of Neill LJ’s judgment to the effect that confidential information that could not be p rotected by an implied term ipso facto could not be protected by a suitably limited express covenant. This accords with common sense as most business organisations possess information that would harm them or benefit others if divulged, even though that information is not a trade secret or associated with one.

PUBLIC INTEREST DEFENCE 10.37 Disclosure of information for the purpose of public interest is not limited to information of a personal nature and can apply in the context of trade secrets. An example is where commercial information tends to show that a crime has been or will be committed or that a business activity is illegal in nature, such as in a case of price fixing or the activities of cartels. It could apply where software contains a virus or is seriously flawed. The case of Heythrop Zoological Gardens Ltd, discussed earlier demonstrated that a public interest defence might be relevant in the publication of photographs taken in a zoo by the Captive Animals Protection League.

58

[1987] FSR 330, an interim hearing.

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Remedies 10.40 10.38 Emails written by the claimant and emails sent to the claimant in Abbey v Gilligan and Associated Newspapers Ltd59 were obtained by the defendants and were referred to in articles published in the Evening Standard and on its website.60 The articles concerned the activities of a company, part owned by Lord Coe, providing services in respect of the London Olympics. The claimant alleged that the emails were private and the publication was in breach of confidence. The defendants ran a number of defences including public interest. Tugendhat J held that the claims were not made out but, in any event, the public interest defence succeeded on a number of grounds. These included a discussion as to whether Lord Coe had achieved the promised separation of his private business interests from his public duties at the London Organising Committee for the Olympic Games and whether his company was able to pay its debts and its unwillingness to file accounts on time. 10.39 The scope of the public interest is very wide and includes a public interest in airline pilots not being unfit to fly through drinking alcohol. In Dufour v News Group Newspapers Ltd,61 an Air Canada pilot had been breathalysed on board a flight due to depart Heathrow Airport. The test was positive and the pilot was taken to a nearby police station for blood tests which showed that the pilot was under the legal limit and he was not charged with an offence. A journalist working for the defendant wrongfully obtained information from a police officer and published a report of the incident. The pilot brought a claim for breach of confidence and his right of privacy under Article 8 of the Human Rights Convention. The defendant wished to amend its defence in the light of a pre-trial review in which the police were ordered to provide the results an analysis of the blood test and to give a forensic toxicologist report. The amendment was relevant to the defence of public interest and was allowed by the court.

REMEDIES 10.40 The remedies for breach of confidence are injunctions, damages or an account as an alternative. An order for destruction of articles made in breach of confidence or containing confidential material may also be available in appropriate circumstances. Injunctions may serve two purposes. An injunction 59

[2012] EWHC 3217 (QB), [2013] EMLR 12. The emails had been obtained by a freelance journalist working for Channel 4. 61 (Unreported) 12 June 2015, Chancery Division. 60

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10.41 Confidential information, trade secrets and IT may be granted to prevent further disclosure of the information. Where the information has already entered the public domain such that third parties are free to use the information, a ‘springboard’ injunction62 may be imposed against the person responsible for a limited period of time. Secondly, an injunction may be granted to prevent the unauthorised use of the information by the defendant. Laddie J distinguished between the two purposes of injunctions in breach of confidence actions in Ocular Sciences Ltd v Aspect Vision Care Ltd.63 The guidelines in Shelfer v City of London Electric Lighting Co64 are helpful in deciding whether to grant an injunction. Damages may be given instead of an injunction where the injury to the plaintiff’s legal rights is small, capable of being estimated in money, can be adequately compensated by a small money payment, and where the case is one in which it would be oppressive to the defendant to grant an injunction.65 10.41 An injunction may be imposed to prevent a subsequent disclosure to a third party or third parties generally, such as where the confidant is about to publish the confidential information. Another reason for imposing an injunction is where the defendant is using the information for his own purposes or it is suspected he will do so. Consequently, interim injunctions are an important first stop remedy. An application for such a remedy may follow the exercise of a search order from which evidence of use or planned use or disclosure of the information may be obtained. 10.42 In deciding whether to grant an interim injunction, the court will usually consider the balance of convenience: looking at the harm to the claimant in not granting an interim injunction and the harm to the defendant if an interim injunction is granted. In ESL Fuels Ltd v Fletcher,66 the defendants who were ex-employees of the claimant started a business supplying fuels with the same component as used by the claimant in its fuels. The claimant alleged that there was a breach of confidence in respect of its fuels and in the component. The judge refused to grant an interim injunction subject to the defendants not disclosing the confidential information and preserving their net profits pending a full trial of the issues. As the defendants had set up a 62

63 64 65 66

This is to prevent the person responsible for the breach of confidence using the information as a springboard for his own activities: Terrapin v Builders Supply Co (Hayes) Ltd [1967] RPC 375 per Roxburgh J at 392. [1997] RPC 289. [1895] 1 Ch 287. Per A L Smith LJ at 322. [2013] EWHC 3726 (Ch).

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Remedies 10.45 new fledgling business the grant of an interim injunction would be to ‘strangle their business at birth’. This approach may be very appropriate in terms of new software businesses set up by ex-employees where the previous employer claims that the new business is using its confidential information. 10.43 A springboard injunction may not be appropriate where an exemployee sets up a new business which competes with his previous employer’s business but, because of the nature of the businesses, it would not take long for the new business to get up and running without any misuse of confidential information. In Aquinas Education Ltd v Dorian Miller,67 two ex-employees of the claimant, with others set up a rival business, placing supply teachers in schools. Whilst still employed by the claimant, one of the defendants copied information belonging to the claimant onto a memory stick. An interim order for an injunction was granted68 and the case came up a few weeks later in the High Court. Nicholas Vineall QC, sitting as a deputy judge of the High Court considered that the period of approximately six weeks from the first injunction meant that the head start the defendants had obtained from the unlawful use of the claimant’s information had now gone and he refused to grant a springboard injunction. 10.44 An assessment of damages depends, at least to some extent, on the nature of the information, reflecting its value. In Seager v Copydex Ltd (No 2),69 Lord Denning MR said of the value of confidential information for the purposes of calculating damages, that if the information was not special and involved no inventive step and was the sort that could be obtained by employing a consultant, damages could be assessed at the fee a consultant might charge. On the other hand, if the information involved an inventive step or was so unusual that it could not be obtained by going to a consultant, damages might be assessed on the basis of how much a willing buyer, being desirous of obtaining the information, would pay for it.70 10.45 A claimant may elect for an account of profits as an alternative to damages. Of course, accounts are discretionary. However, there is a logic in that an account will deprive a person in breach of confidence of the benefit 67

[2018] EWHC 404 (QB). Together with orders to deliver up any information belonging to the claimant as well as restraints from approaching teachers and schools on the list of information taken from the claimant. 69 [1969] 1 WLR 809. 70 Approved recently in Walsh v Shanahan [2013] EWCA Civ 411. 68

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10.46 Confidential information, trade secrets and IT he has derived from that breach. Indeed, as the law of breach of confidence is a creature of equity, it almost goes without saying that an injunction and an account should follow automatically. As Lord Nicholls of Birkenhead put it in the House of Lords in Attorney-General v Blake (Jonathon Cape Ltd Third Party),71 (at 279): Courts of equity went further than the common law courts. In some cases equity required the wrongdoer to yield up all his gains. In respect of certain wrongs which originally or ordinarily were the subject of proceedings in the Court of Chancery, the standard remedies were injunction and, incidental thereto, an account of profits. These wrongs included passing off, infringement of trade marks, copyrights and patents, and breach of confidence. Some of these subjects are now embodied in statutory codes. An injunction restrained the continuance of the wrong, and the wrongdoer was required to account for the profits or benefits he had obtained from breaches or infringements which had already occurred. The court always had a discretion regarding the grant of the remedy of an account of profits, and this remains the position. Further, the circumstances in which an account of profits is available under the statutes vary. For instance, an account of profits may not be ordered against a defendant in a patent infringement action who proves that at the date of the infringement he was not aware, and had no reasonable grounds for supposing, that the patent existed: Patents Act 1977, section 62(1). This extract gives a useful description of the justification for the award of an account but it must be stressed, as indeed his Lordship said, that the remedy remains a discretionary remedy. It may be appropriate where the defendant has caused losses to the claimant which cannot easily be assessed or where the defendant has k nowingly set about a course of misusing the claimant’s confidential information. 10.46 An account may be the usual remedy where the defendant owes a fiduciary duty to the claimant and is in breach of that duty. However, where a fiduciary duty is not relevant or no longer relevant, the remedy for a breach of confidence remains with the discretion of the court. In Walsh v Shanahan,72 the claimant was awarded damages of £16,965 plus interest but was ordered 71

[2001] 1 AC 268. This case involved the profits made by the infamous spy George Blake from the sale of his autobiography. The House of Lords held that he should not be able to receive payment from the sale of the book. 72 [2013] EWCA Civ 411.

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Remedies 10.48 to pay most of the defendant’s costs, which were far greater than the damages award. The claimant appealed arguing that he should have been awarded an account of profits made by the defendant as a result of the breach. It was held that the trial judge had exercised his discretion appropriately. 10.47 Even though the court may award damages rather than an account of profits, in assessing damages, the court may accept that loss of profits is an important factor to consider. Proudman J took this approach in Flogas Britain Ltd v Calor Gas Ltd73 in which the defendant admitted liability for breach of confidence. Two employees of the defendant had acquired a copy of the claimant’s customer database and used the database to target the claimant’s customers. When the defendant discovered this, the employees were dismissed and the defendant tried to mitigate the losses to the claimant. In assessing damages for breach of confidence, Proudman J said it was just to also award the claimant its costs in engaging forensic computer scientists to assist in the recovery of the claimant’s information from the defendant’s computer systems.74 This head of damages came to approximately £46,000. In respect of the other heads of damage, the judge accepted some of the claimant’s figures and some of the defendant’s figures.

Enforcement Directive and confidential information75 10.48 It was not clear at first whether the enforcement Directive applied to actions for breach of confidence. Lewison LJ expressed his doubts about the application of the Directive to breach of confidence actions in Force India Formula One Team Ltd v Aerolab SRL.76 Nevertheless, he rejected the appellant’s argument that the award of damages on the basis of the fee a consultant would have been paid for the information in question failed to comply with Article of the Directive. He said (at para 108): … the argument is that the judge’s award failed to comply with article 3 which requires a remedy to be ‘effective, proportionate and dissuasive’. 73

[2013] EWHC 3060 (Ch), [2014] FSR 34. This case also involved infringement of the sui generis database right and this element of the case is discussed in Chapter 6. 74 In Goodrich Actuation Systems Ltd v Valente (unreported) Chancery Division, 23 July 2018, Arnold J ordered a forensic examination of a laptop belonging to a former employee, alleged to have downloaded confidential information onto a USB device. 75 Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 157, 30.04.2004, p 45. 76 [2013] EWCA Civ 780, [2013] RPC 36.

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10.49 Confidential information, trade secrets and IT I do not consider that the judge’s award falls foul of this principle. It is proportionate to the loss suffered by Force India and to the benefit gained by Aerolab; and it is dissuasive because it equates to almost the whole of Aerolab’s profit on this part of its contract with Team Lotus. 10.49 Jacob LJ had no doubt about the applicability of the Directive on the enforcement of intellectual property rights in Vestergaard Frandsen S/A v Bestnet Europe Ltd77 where he said (at para 56): ‘It is accepted that a claim for misuse of technical trade secrets such as the present is a claim to enforce an intellectual property right’. This is correct, certainly as far as ‘trade secrets’ are concerned. If one accepts that a trade secret is confidential information of a technical, industrial or commercial nature, it should be within Article 39 of the TRIPs Agreement, to which all Member States should adhere to. This provision requires the protection of undisclosed information, not generally known in the relevant circles normally dealing with such information, which has commercial value because it is kept secret and where the owner takes reasonable steps to maintain its secrecy. Where any doubt as to the applicability of the Directive exists, this must be in the context of other forms of confidential information which concern personal information and fall within the right to respect for private and family life under the Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms 1950 or the Charter of Fundamental Rights of the European Union.78 Where this is the case, the normal equitable remedies traditionally available under the law of confidence will apply. In any event, they are likely to be the same as would be awarded under the Directive on the enforcement of intellectual property rights. 10.50 Following the Supreme Court decision in Phillips v News Group Newspapers Ltd,79 it is now accepted that confidential information, whether of a commercial or personal nature, is within the meaning of ‘… rights pertaining to any intellectual property right …’ for the purposes of the exception to the right against self-incrimination under section 72 of the Senior Courts Act 1981. That being so, it is beyond doubt that confidential information is intellectual property within the enforcement Directive. In the Phillips80 case in the Court of Appeal, Lord Neuberger MR was of the opinion that 77

[2011] EWCA Civ 424. OJ C 83, 30.03.2010, p 389. 79 [2012] UKSC 28, [2013] FSR 12. 80 [2012] EWCA Civ 48, [2012] FSR 29. 78

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Human rights and the impact on breach of confidence 10.53 intellectual property included confidential information, whether commercial or personal, for practical purposes.81 10.51 The trade secrets Directive, discussed later in this chapter, infers that the enforcement Directive applies to that Directive as recital 69 to the trade secrets Directive states that where there is any overlap between the two Directives, the relevant provisions of the trade secrets Directive take precedence.

HUMAN RIGHTS AND THE IMPACT ON THE ACTION OF BREACH OF CONFIDENCE 10.52 There was no basic right to privacy, as such, under English law. Some areas of law might have assisted in particular circumstances such as the law of defamation,82 malicious falsehood or the law of trespass. But protection of one’s private life or reputation was very patchy.83 The UK was one of the first signatories to the Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms 1950, which came into force on the tenth ratification in 1953. It was not until 2000 that the Convention formally became part of the law of the UK following the Human Rights Act 1998. Under section 2 of that Act, the UK courts must take account, inter alia, of judgments of the European Court of Human Rights and, under section 3, must interpret UK legislation in a manner compatible with the Convention, wherever it is possible to do so. Under section 4, where the court finds that a provision under UK legislation is incompatible with a Convention right, it may make a declaration of incompatibility.84 10.53 The two key Convention rights which are so important in the context of information technology are the right to respect for private and family life 81

See paras 51 and 52. See, for example, Hulton & Co v Jones [1910] AC 20 in which a barrister called Artemus Jones brought an action in relation to a fictional story about an adulterous churchwarden from Peckham who happened also to be named Artemus Jones. Hence the disclaimer now used in relation to films. 83 See Kaye v Robertson [1991] FSR 62, in which the actor, Gordon Kaye was in hospital after being struck by a tree branch, was photographed by reporter’s when he was in no fit state to consent. 84 The intention is in such a case, that Parliament will consider modifying the incompatible legislation so that it complies with the Convention right. This is unlike the US Supreme Court and its application of the rights under the US Convention. 82

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10.54 Confidential information, trade secrets and IT and the right of freedom of expression.85 It is worth setting out these important rights in full, noting that there are derogations to each. Article 8: Right to respect for private and family life: 1

Everyone has the right to respect for his private and family life, his home and his correspondence.

2

There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.

Article 10: Freedom of expression 1

Everyone has the right to freedom of expression. This right shall include freedom to hold opinions and to receive and impart information and ideas without interference by public authority and regardless of frontiers. This article shall not prevent States from requiring the licensing of broadcasting, television or cinema enterprises.

2

The exercise of these freedoms, since it carries with it duties and responsibilities, may be subject to such formalities, conditions, restrictions or penalties as are prescribed by law and are necessary in a democratic society, in the interests of national security, territorial integrity or public safety, for the prevention of disorder or crime, for the protection of health or morals, for the protection of the reputation or rights of others, for preventing the disclosure of information received in confidence, or for maintaining the authority and impartiality of the judiciary.

10.54 There is an obvious tension between these two rights and they are particularly important in respect of the internet, whether in the context of online publishing or social media. Invasion of privacy can occur on an unprecedented scale. The activities of social media organisations and their collection and use of information about subscribers and others using their systems has 85

These rights are also enshrined in the Charter of Fundamental Rights in the European Union, OJ C 83, 30.03.2010, p 389: see especially, Articles 7 and 11, subject to the limitations in Article 52.

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Human rights and the impact on breach of confidence 10.56 caused significant concerns and breaches of privacy and data protection law. However, balanced with privacy issues are concerns about interfering with freedom of expression. Of course, in terms of the latter, no one can seriously defend unauthorised file-sharing of copyright works on peer-to-peer networks on the ground that it is covered by the right of freedom of expression.86 Article 1 of the Protocol to the Convention applies to the protection of property. See also Article 17 of the Charter of Fundamental Rights of the European Union which covers the right to property which includes intellectual property. 10.55 The rights under the Convention are not limited to protect individuals against arbitrary interference with the rights by public authorities. They also impose obligations on States to secure the rights as between individuals. In von Hannover v Germany,87 photographs were taken of Princess Caroline of Monaco in public places by press photographers. It was held by the European Court of Human Rights that her right of privacy had been breached. The photographs did not relate to her duties, obligations or suchlike as a Princess but showed her, for example, in a restaurant with a friend, on horseback, on a skiing holiday and with her children. 10.56 The right of freedom of expression is subject to derogations but there is ample opportunity for this right to conflict with the ‘right of privacy’. In some respects, it could be claimed that the law of confidence has developed to provide a balance, for example, by protecting the right of privacy subject to disclosure in the public interest. Lord Nicholls in the House of Lords in Campbell v Mirror Group Newspapers Ltd88 went so far as to say that the law of breach of confidence had developed to such a stage that it now represented the UK’s implementation of the Convention rights of privacy and freedom of expression. He said (at para 17): The time has come to recognise that the values enshrined in arts 8 and 10 are now part of the cause of action for breach of confidence. As Lord Woolf CJ has said, the courts have been able to achieve this result by absorbing the rights protected by arts 8 and 10 into this cause of action: see A v B (a company) [2002] EWCA Civ 337 at [4], [2002] 2 All ER 545 at [4], [2003] QB 195. Further, it should now be recognised that for this purpose these values are of general application. The values embodied in 86 See

Neij & Sunde Kolmisoppi v Sweden (2013) 56 EHRR SE19, discussed in Chapter 7. (2005) 40 EHRR 1. 88 [2004] UKHL 22, [2004] 2 AC 457. 87

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10.57 Confidential information, trade secrets and IT arts 8 and 10 are as much applicable in disputes between individuals or between an individual and a non-governmental body such as a newspaper as they are in disputes between individuals and a public authority. 10.57 Later, in the Court of Appeal in Douglas v Hello! Ltd (No 6),89 Lord Phillips of Worth Matravers MR said that the courts should develop, as far as they can, the action for breach of confidence so as to give effect to the Convention rights under Articles 8 and 10.90 In that case, photographs were taken surreptitiously by a photographer, at the wedding of Michael D ouglas and Catherine Zeta-Jones, who had ‘sold’ the exclusive rights to take photographs to OK! Magazine for £500,000 each. The unauthorised photographs were published in the defendant’s magazine. The Court of Appeal confirmed that there had been a breach of the Douglases right of privacy and a breach of what was described as their commercial confidence. It was accepted that persons in the public eye who seek publicity have a right in their image as a commodity which can be dealt with as with any trade secret. In the circumstances of the case, the official photographs were such a commodity that the Douglases had a right to keep them secret until the time they chose to make them public. Ordinary individuals with no ‘celebrity’ status would not necessarily have a commercial confidence though they do have a right of privacy. However, the Court of Appeal held that OK! Magazine had no right of commercial confidence it could invoke against Hello! Magazine, and that the obligation of confidence owed to OK! Magazine only covered the photographs taken on its behalf and no others. 10.58 The House of Lords, by a 3:2 majority in co-joined cases known as OBG Ltd v Allan,91 reversed the Court of Appeal decision in Douglas v Hello! to the extent that it had held that OK! Magazine had no right of commercial confidence. Photographs of the wedding were confidential in the sense that none was available publicly.92 It had been made clear to everyone attending 89

[2005] EWCA Civ 595, [2005] 3 WLR 881. See also McKennitt v Ash [2006] EWCA Civ 1714, [2007] 3 WLR 194 where Buxton LJ said (at para 11) ‘. . . in order to find the rules of the English law of breach of confidence we now have to look at the jurisprudence of Articles 8 and 10’. 91 [2007] UKHL 21, [2008] 1 AC 1. This involved appeals in three cases on the tort of inducing a breach of contract or causing loss by unlawful means and, in the appeal by OK! Magazine, also an appeal against the finding of the Court of Appeal on whether OK! Magazine had a commercial confidence which it could enforce against Hello! Ltd. 92 Of course, the confidential quality in relation to the authorised photographs was lost once they were published but this did not affect the confidential nature of any other photographs. 90

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Human rights and the impact on breach of confidence 10.60 that no one other than the authorised photographer was to take photographs of the wedding. That imposed an obligation of confidence for the benefit of OK! Magazine as well as the Douglases. Publishing the unauthorised photographs clearly caused a detriment to OK! Magazine and, consequently, all the ingredients of a breach of confidence action set out by Megarry J in Coco v Clark, supra, were present. There was no public policy reason why the law would not protect information of a particular sort only, photographic images as distinct to information about the wedding generally. Photographic images were commercially valuable and the Douglases had exercised sufficient control to impose an obligation of confidence. 10.59 The public interest defence was narrowly construed in Campbell v Mirror Group Newspapers Ltd.93 The supermodel Naomi Campbell had previously claimed that she did not have a drug addiction. The defendant newspaper published articles showing that she had been undergoing treatment at Narcotics Anonymous. The articles included details about the treatment she was undergoing and photographs showing her leaving meetings of Narcotics Anonymous with others undergoing treatment. The House of Lords, by a 3:2 majority, held that this was a breach of confidence. Whilst it was acceptable to publish a story about her having lied about taking drugs and her addiction and the fact that she was receiving therapy, publishing the additional information about the treatment with Narcotics Anonymous together with details of the treatment and the photograph went too far. Of course, publishing any of the information would have been a breach of confidence apart from the fact that Naomi Campbell was someone who sought publicity and was a role model. 10.60 The decision in von Hannover is wider than that in Campbell v Mirror Group Newspapers, discussed earlier. In the former case, it was even held to be a breach of Princess Caroline’s right to privacy to publish photographs of her in public places going about her normal business without being engaged in embarrassing, intimate or private activities. However, taking and publishing the photographs could be seen as part of a campaign of harassment conducted against her by the media. On the other hand, taking and publishing a photograph of a famous person popping out for a bottle of milk would not engage the right to privacy.94 93 94

[2004] UKHL 22, [2004] 2 AC 457. Per Baroness Hale in Campbell v Mirror Group Newspapers Ltd [2004] UKHL 22, [2004] 2 AC 457 at para 154. Of course, whilst the lower courts may have regard to decisions of the European Court of Human Rights, they are bound by previous House of Lords (now Supreme Court) decisions.

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10.61 Confidential information, trade secrets and IT 10.61 Where the individual concerned is a child, the Court of Appeal, in Murray v Express Newspapers plc,95 was of the view that the child should have a reasonable expectation of privacy, even if the parents of the child are famous. In the court below, the judge thought that routine acts such as a visit to a shop or a ride on a bus should not attract any reasonable expectation of privacy.96

Redressing the balance? 10.62 In two decisions of the Court of Human Rights, it appears that the balance between the right of freedom of expression and the right to privacy has been re-assessed in two important cases, one of which again involves Princess Caroline of Monaco. These cases, outlined below, show at least arguably, that the House of Lords failed to give adequate weight to the right of freedom of expression in the Campbell case. 10.63 In Axel Springer AG v Germany,97 the applicant published the Bild newspaper in Germany. It ran an article concerning the arrest of a well-known TV actor, who plays a police superintendant in a TV series, for possession of cocaine. He was arrested in a tent at the Munich Oktoberfest. The story was accompanied by photographs of the actor. The courts in Germany acceded to the actor’s claim for an injunction preventing further publications on the basis that his right to privacy was engaged, that the offence was not a serious one98 and that there was no particular public interest in knowing about his offence. A second article mentioned the outcome of the court hearing in public where the actor had confessed and been sentenced. No comment was made of his private life. The Court of Human Rights held, by a majority,99 that the German courts, in imposing the injunction, had acted disproportionately in relation to the legitimate aim being pursued, being the protection of the actor’s privacy.100 A small award of costs was made against the publisher 95 96 97 98 99 100

[2009] Ch 481. The child was the son of the author known as J K Rowling. Murray v Express Newspapers plc [2008] EWCA Civ 446, [2009] Ch 481. The Court of Appeal ordered a full trial of the issues. (2012) 55 EHRR 6. On the basis that he only had possession of a small quantity of the drug. Five of the 17 judges dissented. The actor had in past publicly acknowledged a previous conviction for a drug related offence and this had the effect of lowering his expectation of privacy as regards the present offence.

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Human rights and the impact on breach of confidence 10.66 which the Court of Human Rights said nevertheless could have a chilling effect on future activities. 10.64 In von Hannover v Germany (No 2),101 Princess Caroline of Monaco complained about the publication of photographs of her and her husband on a skiing holiday in St Moritz which accompanied articles about Prince Rainier of Monaco, who was seriously ill, and other events in Monaco. The European Court of Human Rights rejected the applicant’s complaints about the publication of the photographs, which had been taken in public places. It accepted that the national courts had properly taken account of case law of the Court of Human Rights and had balanced the Article 8 and Article 10 rights. The national courts had attached fundamental importance to the question whether the photos, considered in the light of the accompanying articles, had contributed to a debate of general interest. They also examined the circumstances in which the photos had been taken and, allowing a margin of appreciation in balancing those interests, the court had not failed to comply with their positive duty under Article 8. 10.65 In von Hannover (No 2), the issue of general interest was the illness of Prince Rainier. The publishers were entitled to report on how his children reconciled their family obligations with their legitimate needs of their private life including their desire to go on holiday. Princess Caroline and her husband were well-known public figures and the photographs had not been taken surreptitiously in conditions unfavourable to them. The publication of the photographs alongside the articles about the Prince’s health added, at least to some extent, to a debate of general interest. 10.66 These cases show that it is important for national courts to apply the relevant case law of the European Court of Human Rights where the convention rights are engaged, particularly in relation to the tension between the Article 8 and Article 10 rights. In doing so, there is some latitude for coming down in favour of one or the other. In the light of these cases, it is now doubtful whether the House of Lords was correct in its decision in Campbell v Mirror Group Newspapers.102 Naomi Campbell had previously gone on record as stating that she did not have an addiction problem. Coupled with

101 102

(2012) 55 EHRR 15. The decision was, however, by a 3:2 majority.

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10.67 Confidential information, trade secrets and IT her celebrity status, this made it legitimate for the press to show that this was untrue. It did not however, make lawful the publication of photographs of her leaving a clinic. It is submitted that now, with the benefit of hindsight and the subsequent decisions of the European Court of Human Rights, publication of the photographs would be allowed, to give credibility to the newspaper articles.103

TRADE SECRETS LAW 10.67 Put simply, trade secrets are a sub-class of confidential information relating to business, commerce, technology or industry. Lacking a precise formal definition, there have been numerous attempts over the years to define the meaning of trade secret. For example, in In Herbert Morris Ltd v Saxelby,104 Lord Atkinson described trade secrets in the following terms ‘… trade secrets, such as prices, &c. or any secret process or things of a nature which the man was not entitled to reveal’.105 Lord Parker thought it depended on the detailed nature of the information in question. Thus, information that was far too detailed to be carried away in the head was a trade secret, whereas a general method or scheme that could easily be remembered could not be regarded as a trade secret. 10.68 In Faccenda Chicken Ltd v Fowler,106 at first instance, Goulding J defined three classes of information, being: 1

information which, because of its trivial character or its easy accessibility from public sources, cannot be regarded as confidential;

2

information which an employee must treat as confidential, but which, once learned, reasonably remains in the employee’s head and becomes part of his skill and experience; and

3

specific trade secrets so confidential that a continuing duty of confidence applies even beyond the termination of employment or the service contract.

103

As accepted by Lord Hoffmann in his dissenting judgment in Campbell v Mirror Group Newspapers. 104 [1916] 1 AC 688. 105 At 705. 106 [1985] 1 All ER 724.

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Trade secrets law 10.71 10.69 In Lansing Linde Ltd v Kerr,107 Staughton LJ spoke in terms of information that would be liable to cause real harm if it was disclosed to a competitor, provided it was used in a trade or business and the owner had either limited the dissemination of the information, or at least not encouraged or permitted widespread publication. Butler-Sloss LJ stressed the need to take account of the changing nature of business and the need to take account of ‘… the wider context of highly confidential information of a non-technical or non-scientific nature’.108 10.70 It is reasonable, therefore, to take a trade secret as being secret information of a technical or commercial character which is not generally known to persons specialising in the relevant field and which its owner has taken steps to keep secret. Case law involving trade secrets has tended to be influenced by the facts at hand and judges in the UK have tended to define ‘trade secret’ to suit. It is clear that it extends to non-technical information which may be valuable commercially and which its owner has attempted to keep secret.109 Whether a trade secret concerns technical and inventive information or secret commercial information, it is clear that trade secrets are protected under the law of confidence.

Definition of trade secret in the TRIPS Agreement 10.71 At one time there was no universally accepted definition of ‘trade secret’ until the TRIPS Agreement. Article 39 is headed ‘Protection of Undisclosed Information’ and paragraph 2 states that: Natural and legal persons shall have the possibility of preventing information lawfully within their control from being disclosed to, acquired by, or used by others without their consent in a manner contrary to honest commercial practices so long as such information: (a) is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) has commercial value because it is secret; and 107

[1991] 1 WLR 251. A case on restraint of trade. Ibid at 270. 109 See, for example, Lansing Linde Ltd v Kerr [1991] 1 WLR 251. 108

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10.72 Confidential information, trade secrets and IT (c) has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret. ‘A manner contrary to honest commercial practices’ is defined in a footnote as meaning ‘… at least practices such as breach of contract, breach of confidence and inducement to breach, and includes the acquisition of undisclosed information by third parties who knew, or were grossly negligent in failing to know, that such practices were involved in the acquisition’ (emphasis added).

The trade secrets Directive 10.72 The Directive on the protection of undisclosed know-how and business information (trade secrets) against their u nlawful acquisition, use and disclosure (the trade secrets Directive)110 required implementation by Member States by 9 June 2018.111 Recital 2 to the Directive accepts that businesses, irrespective of their size, value trade secrets as much as patents and other forms of intellectual property. They use confidentiality as a business competitiveness and research innovation management tool in relation to a diverse range of information that extends beyond technological knowledge to commercial data such as information on customers and suppliers, business plans, and market research and strategies. Small businesses and small and mediumsized businesses (SMEs) value and rely on trade secrets even more. Recital 4 notes that innovative businesses are increasingly exposed to dishonest practices aimed at misappropriating trade secrets, such as theft, unauthorised copying, economic espionage or the breach of confidentiality requirements, whether from within or from outside of the EU. Recent developments, such as globalisation, increased outsourcing, longer supply chains, and the increased use of information and communication technology contribute to increasing the risk of those practices. Effective and comparable legal protection of trade secrets across the EU is required. 10.73 Important differences exist in Member States’ legislation for the protection of trade secrets against their unlawful acquisition, use or disclosure. 110

Directive 2016/943/EU of the European Parliament and of the Council of 8 June 2016 on the protection of undisclosed know-how and business information (trade secrets) against their unlawful acquisition, use and disclosure, OJ L 157, 15.06.2016, p 1. 111 In the UK, it was implemented by the Trade Secrets (Enforcement, etc.) Regulations 2018, SI 2018/597. The Regulations apply to England and Wales, Scotland and Northern Ireland. They came into force on 8 June 2018.

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Trade secrets law 10.74 These include the fact that not all Member States have adopted national definitions of a trade secret or the unlawful acquisition, use or disclosure of a trade secret. Therefore, the scope of protection differs between Member States. Other differences apply to civil law remedies available in the event of unlawful acquisition, use or disclosure of trade secrets. Cease and desist orders are not always available in all Member States against third parties who are not competitors of the legitimate trade secret holder. Divergences also exist in the treatment of a third party who has acquired the trade secret in good faith but subsequently learns, at the time of use, that the acquisition derived from a previous unlawful acquisition by another party.112 These and other issues explain the need to harmonise trade secret protection throughout the EU. The following description of the provisions of the Directive concentrates on the main substantive law principles together with an overview of remedies and procedural matters. 10.74 Recital 5 to the Directive refers to the TRIPS Agreement and states that the TRIPS Agreement contains, inter alia, provisions on the protection of trade secrets against their unlawful acquisition, use or disclosure by third parties, which are common international standards. All Member States, as well as the Union itself, are bound by this Agreement.113 Consequently, the definition of trade secret closely follows that in the TRIPS Agreement. Under Article 2:114 1

‘trade secret’ means information which meets all of the following requirements: (a) it is secret in the sense that it is not, as a body or in the precise configuration and assembly of its components, generally known among or readily accessible to persons within the circles that normally deal with the kind of information in question; (b) it has commercial value because it is secret;

112

Recital 6 to the Directive. Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the European Community, as regards matters within its competence, of the agreements reached in the Uruguay Round multilateral negotiations (1986–1994), OJ L 336, 23.12.1994, p 1. 114 In Pari Pharma GmbH v European Medicines Agency, Case T-235/15, EU:T:2018:65, the General Court noted that the concept of trade secret in Article 2 of the Directive was consistent with that under Article 39(2) of TRIPS. 113

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10.75 Confidential information, trade secrets and IT (c) it has been subject to reasonable steps under the circumstances, by the person lawfully in control of the information, to keep it secret; 2

‘trade secret holder’ means any natural or legal person lawfully controlling a trade secret;

3

‘infringer’ means any natural or legal person who has unlawfully acquired, used or disclosed a trade secret;

4

‘infringing goods’ means goods, the design, characteristics, functioning, production process or marketing of which significantly benefits from trade secrets unlawfully acquired, used or disclosed.

Scope of the Directive 10.75 Article 1 sets out the subject matter and scope of the Directive. Under Article 1(1) Member States may provide, in compliance with the provisions of the Treaty on the Functioning of the EU, for more far-reaching protection than provided for in the Directive but subject to a number of provisions in the Directive.115 Article 1(2) provides that the Directive does not effect: (a) the right of freedom of expression and information;116 (b) Union or national rules requiring public interest disclosures to the public or to administrative or judicial authorities; (c) Union or national rules requiring or allowing the disclosure of information submitted by businesses to and held by Union institutions and bodies or national public authorities in accordance with Union or national law; (d) the autonomy of social partners and their right to enter into collective agreements, in accordance with Union law and national laws and practices. 10.76 Of particular relevance are the provisions relating to employees in Article 1(3) which states that nothing in the Directive shall be understood to offer any ground to restrict the mobility of employees, in particular: (a) limiting employees’ use of information that does not constitute a trade secret; 115

The UK Regulations provide for wider protection under the law of confidence; see regulation 3, infra. 116 As set out in the Charter of Fundamental Rights of the European Union.

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Trade secrets law 10.77 (b) limiting employees’ use of experience and skills honestly acquired in the normal course of their employment; (c) imposing any additional restrictions on employees in their employment contracts other than restrictions imposed in accordance with Union or national law. These provisions more or less reflect current UK law on employees’ use of information and, in the last case, contractual restrictions on the use by employees during and after their employment such as by way of restrictive covenants.

Lawful acquisition, use and disclosure of trade secrets 10.77 Article 3(1) provides that the acquisition of a trade secret shall be considered lawful if obtained by any of the following means: (a) independent discovery or creation; (b) observation, study, disassembly or testing of a product or object that has been made available to the public or that is in the lawful possession of the acquirer of the information who is free from any legally valid duty to limit the acquisition of the trade secret; (c) exercise of the right of workers or workers’ representatives to information and consultation in accordance with Union law and national laws and practices; (d) any other practice which, under the circumstances, is in conformity with honest commercial practices. Point (a) above is self-evident. Point (b) reflects existing UK law, as in K S Paul (Printing Machinery) Ltd v Southern Instruments (Communications) Ltd117 and Mars (UK) Ltd v Teknowledge Ltd.118 Point (c) is self-explanatory and point (d) looks to the standard of ordinary honest business persons. Article 3(2) states that the acquisition, use or disclosure of a trade secret shall be considered lawful to the extent that it is required or allowed by Union or national law. 117

[1964] RPC 118, contractual prohibition on dismantling equipment imposed an obligation of confidence. 118 [2000] ECDR 99, no express obligation to impose an obligation of confidence, the fact of encryption was not sufficient. This case is discussed in the section on reverse engineering, supra.

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10.78 Confidential information, trade secrets and IT

Unlawful acquisition, use and disclosure of trade secrets 10.78 Article 4 of the Directive sets out what constitutes the unlawful acquisition use and disclosure of trade secrets. The acquisition of a trade secret is unlawful, when carried out without the consent of the trade secret holder, by unauthorised access to, appropriation of, or copying documents, objects, materials, substances or electronic files, lawfully under the control of the trade secret holder, containing the trade secret or from which the trade secret can be deduced. In terms of trade secrets stored on a computer or other IT device, unauthorised acquisition could result, for example, from hacking or by copying information from a computer or laptop onto a USB device or memory stick by an employee, consultant or repairer in contravention of their employment or other contract.119 Also covered is any other conduct, under the circumstances, considered to be contrary to honest commercial practices. 10.79 Article 4(3) sets out unlawful use or disclosure of a trade secret. This applies whenever carried out, without the consent of the trade secret holder, by a person who: (a) has acquired the trade secret unlawfully; (b) is in breach of a confidentiality agreement or any other duty not to disclose the trade secret; or (c) is in breach of a contractual or other duty to limit the use of the trade secret. Under Article 4(4), the acquisition, use or disclosure of a trade secret shall also be considered unlawful whenever a person, at the time of the acquisition, use or disclosure, knew or, in the circumstances, ought to have known that the trade secret had been obtained directly or indirectly from another person who was using or disclosing the trade secret unlawfully within the meaning of Article 4(3). Finally, under Article 4(5), the production, offering or placing on the market of infringing goods, or the importation, export or storage of infringing goods120 for those purposes, shall also be considered an unlawful use of a trade secret 119

Copying confidential information onto a USB device or similar is an increasingly common way to breach confidence; see Goodrich Actuation Systems Ltd v Valente (unreported) Chancery Division, 23 July 2018. 120 As defined in Article 2(4).

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Trade secrets law 10.82 where the person carrying out such activities knew, or ought, under the circumstances, to have known that the trade secret was used unlawfully within the meaning of Article 4(3).

Exceptions to unlawful acquisition, use or disclosure of trade secrets 10.80 Article 5 sets out four exceptions to the unlawful acquisition, use or disclosure of trade secrets. The first concerns the right to freedom of expression and information. The second is revealing misconduct, wrongdoing or illegal activity, provided this is done for the purpose of protecting public interests. This should be equivalent to the public interest defence under the present law of breach of confidence, subject to the limitation in this context to trade secrets. An old example under English law is Lion Laboratories Ltd v Evans121 which involved the public interest disclosure about concerns that a breathalyser device was capable of inaccurate readings. The third exception applies to disclosures by workers to their representatives for the legitimate exercise by those representatives of their functions in accordance with Union or national law, provided the disclosure was necessary for that exercise. The final exception is the purpose of protecting a legitimate interest recognised under Union or national law.

Measures, procedures and remedies 10.81 Chapter III of the Directive is divided into three sections. Section 1 covers general provisions, section 2 contains provisional and precautionary measures and section 3 comprises measures resulting from a decision on the merits of the case. The enforcement Directive applies generally but where the scope of that Directive and the present Directive overlap, the latter takes precedent as lex specialis.122

Section 1 General provisions 10.82 Article 6(1) imposes an obligation on Member States to ensure the availability of civil redress against the unlawful acquisition, use and disclosure of trade secrets. Under Article 6(2), the measures, procedures and remedies are required to be fair and equitable, not unnecessarily complicated or 121 122

[1985] QB 526. Recital 69 to the Directive.

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10.83 Confidential information, trade secrets and IT costly and not entail unreasonable time-limits or unwarranted delays and be effective and dissuasive. Article 7 requires that the measures, procedures and remedies should be applied in a manner which is proportionate, avoids the creation of barriers to legitimate trade in the internal market and provides safeguards against their abuse. Safeguards are required to deal with claimants who initiate legal proceedings abusively or in bad faith.123 10.83 Article 8 provides for a limitation period which is not to exceed six years and Article 9 requires Member States to ensure the preservation of confidentiality of trade secrets during legal proceedings. The UK already provides for this where appropriate. This is not restricted to breach of confidence actions but is fairly common in such actions. For example, part of the hearing may be held in camera with confidential details being redacted from published judgments. This already applies in the UK with part of a hearing being in camera and the details of the trade secret being redacted in the published judgment. See, for example, the judgment of Floyd LJ in MVF 3 APS ( formerly Vestergaard Frandsen A/S) v Bestnet Europe Ltd.124

Section 2 Provisional and precautionary measures 10.84 Provisional and precautionary measures are to be available at the request of the trade secret holder. These include, under Article 10, interim injunctions, prohibitions on production, marketing or importation of infringing goods. As an alternative, financial guarantees may be lodged to ensure compensation of the trade secret holder. Under Article 11, the applicant may be required to furnish evidence to permit the court to satisfy itself with a reasonable degree of certainty that a trade secret exists, that the applicant is the holder of that trade secret and that it has been acquired, used or disclosed unlawfully or these acts are imminent. 10.85 In deciding whether to grant or refuse the application, the specific circumstances are to be taken into account. Where appropriate, these may include factors such as the value of the trade secret, the measures taken to protect it, the alleged infringer’s conduct, the impact of unlawful use or disclosure, 123

Compare with the tactic of a patentee taking a patent revocation case to the line, dragging things out and putting the claimant for revocation to expense and delay only to abandon the patents towards the end of proceedings: Fujifilm Kyowa Kirin Biologics Co Ltd v Abbvie Biotechnology Ltd [2017] EWHC 395 (Pat). [2018] RPC 1. 124 [2016] EWCA Civ 541, [2017] FSR 5.

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Trade secrets law 10.88 the legitimate interests of the parties and third parties, the public interest and the safeguarding of fundamental rights. The measures may be revoked or cease to have effect, for example, if the applicant delays instituting legal proceedings for a full hearing and may require that the applicant lodges an adequate security to compensate the alleged infringer and third parties if the applicant’s case is not made out fully.

Section 3 Measures resulting from a decision on the merits of the case 10.86 Article 12 provides for injunctions and corrective measures. The latter include prohibiting producing, marketing, importing or exporting infringing goods and the destruction of documents, objects, materials, substances or electronic files containing or embodying the trade secret. These measures may include recalling goods from the market or modifying the goods depriving them of their infringing quality. Similar conditions and safeguards may apply as in the case of deciding whether to grant an application for provisional and precautionary measures under Article 13. The judicial authorities are required to consider the proportionality of the measures in the light of all the special circumstances, including the value or other specific features of the trade secret, measures taken to protect it, the infringer’s conduct in acquiring, using or disclosing the trade secret, the legitimate interests of third parties, the impact of granting or rejecting the measures on the parties, the public interest and the safeguarding of fundamental rights. 10.87 Article 14 of the Directive sets out the provisions on damages. The overlap is at its greatest in relation to damages. The basic rule is that damages must be appropriate to the actual prejudice suffered by the trade secret holder as a result of the unlawful acquisition, use or disclosure of the trade secret. This is qualified by a test of actual or constructive knowledge on the part of the infringer who must have known, or ought to have known that he was engaged in the unlawful acquisition, use or disclosure of the trade secret. Compared with the equivalent provisions in the enforcement Directive, a further qualification applies in the case of employees and their liability may be limited where they acted without intent. An example could be where an employee provides a third party with information not knowing it contains a trade secret. However, given the requirement for actual or constructive knowledge, this provision appears to be redundant. 10.88 A court, when assessing damages, must take into account all appropriate factors such as the negative economic consequences, including lost 433

10.89 Confidential information, trade secrets and IT profits suffered by the injured party, any unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the trade secret holder by the unlawful acquisition, use or disclosure of the trade secret. As an alternative, in appropriate cases, damages may be assessed as a lump sum on the basis of elements such as, at a minimum, the amount of royalties or fees that would have been due had the infringer requested authorisation to use the trade secret. This could apply where the trade secret holder licensed others to make use of the trade secret. The formula for the assessment of damages is very similar to that under the enforcement Directive. 10.89 Article 15 contains provisions for publicising judicial decisions with the proviso that any publicity shall preserve the confidentiality of trade secrets and, also, to take account of factors such as the value of the trade secret, the conduct of the infringer and the impact of the unlawful use or disclosure and the likelihood or further unlawful use or disclosure. If a natural individual will be identified as a result of a publicity order, the court must consider whether this is justified in the light of the possible harm that may be caused to the privacy and reputation of the infringer.

The UK Trade Secrets Regulations 10.90 The Trade Secrets (Enforcement, etc.) Regulations 2018125 closely follow the provisions in the trade secrets Directive, mutatis mutandis. The Regulations apply to England and Wales, Northern Ireland and Scotland. The provisions on limitation periods (or prescriptive periods in Scotland) are more detailed and taken account of the different jurisdictions of the UK. Some potentially conflicting provisions in the Limitation Act 1980 and the Prescription and Limitation (Scotland) Act 1973 are disapplied. The limitation period is six years, generally as now, in England and Wales and Northern Ireland and, in Scotland, the prescriptive period is five years. 10.91 The UK has taken advantage of Article 1(1) of the trade secrets Directive which allows Member States to provide for wider protection against the unlawful acquisition, use and disclosure of trade secrets.126 125 126

SI 2018/597. This is subject to a number of qualifications such as compliance with the Treaty on the Functioning of the European Union and certain provisions of the trade secrets Directive.

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Data protection law 10.93 Thus, regulation 3 of the Regulations provides for ‘wider protection’. It applies where the acquisition, use or disclosure of a trade secret is unlawful where that acquisition, use or disclosure constitutes a breach of confidence in confidential information and allows a trade secret holder to elect to apply for the measures, procedures and remedies available for breach of confidence where those remedies are wider than would be available under the trade secrets Directive. There is a proviso in that the remedies under such a breach of confidence action must comply with the safeguards under the trade secrets Directive. A trade secret holder will be able to apply for measures, procedures and remedies for a breach of confidence action in addition to, or as an alternative to, the measures, procedures and remedies under the provisions in the Regulations flowing from the trade secrets Directive.

DATA PROTECTION LAW 10.92 Data protection law cannot be regarded strictly as a form of intellectual property law. Nevertheless, it is so tied up with information technology and many forms of personal data are protected by the law of confidence, copyright law, rights in performance or are stored in databases protected by copyright and/or the sui generis database right that it is worth a very brief and much simplified overview of data protection law.127 This important area of law has undergone major changes recently by the introduction of the EU General Data Protection Regulation128 and the UK Data Protection Act 2018.129 10.93 The justification for an EU data protection law comes from Article 16(1) of the Treaty on the Functioning of the European Union, which states that ‘Everyone has the right to the protection of personal data relating to them’ and Article 8(1) of the Charter for the Fundamental Rights of the 127

For a fuller description of the new data protection law, see P Voigt and A von dem Bussch, The EU General Data Protection Regulation (GDPR): A Practical Guide, Springer (2017) and R Jay, Guide to the General Data Protection Regulation and the UK Data Protection Act 2018, Sweet & Maxwell (2018). 128 Regulation 2016/679/EU of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation), OJ L 119, 04.05.2016, p 1. 129 EU Regulations have direct effect but, because of Brexit, the UK has implemented equivalent legislation by an Act of Parliament. This goes further than the Regulation to some extent.

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10.94 Confidential information, trade secrets and IT European Union which is almost exactly the same.130 Article 8(2) of the Charter requires that personal data be processed fairly and on the basis of the consent of persons concerned or some other legitimate basis laid down by law and that everyone has the right of access to data which has been collected concerning him, and the right to have it rectified.131 This right of protection of personal data can be seen as a specific example of the right to respect of private and family life under Article 8 of the Council of Europe Convention on Human Rights and Fundamental Freedoms, 1950. 10.94 The Data Protection Directive of 1995132 was repealed by the EU General Data Protection Regulation (GDPR) which came into effect on 25 May 2018. The Data Protection Act 2018 implemented the GDPR but included some special provisions, for example, in relation to processing for law enforcement purposes or by the intelligence services, taking into account, inter alia, the law enforcement Directive.133 10.95 The key protection and rights are given to the ‘data subject’, a n atural person (that is, a living person) to whom personal data relate. Personal data are data from which the data subject can be identified or is identifiable, directly or indirectly by reference to an identifier.134 Particular examples are given in the GDPR and are: a name, identification number, location data, online identifier or one or factors such as one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity. Apart from the list of things cited, it is clear that the test is whether the data subject can be identified from the data in question. Some further information may be required to make the identification, for example, by referring to other data. A data controller, that is the natural or legal person, public authority, agency 130

Instead of ‘them’ Article 8(1) ends with ‘him or her’. To be pedantic, as data is the plural of datum, the word ‘has’ should be replaced with ‘have’. 132 Directive 95/46/EC of the European Parliament and of the Council of 24 October 1995 on the protection of individuals with regard to the processing of personal data and of the free movement of such data, OJ L 281, 23.11.1995, p 31. The Directive was implemented in the UK by the Data Protection Act 1998 and a host of statutory instruments. 133 Directive 2016/680/EU of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data by competent authorities for the purposes of the prevention, investigation, detection or prosecution of criminal offences or the execution of criminal penalties, and on the free movement of such data, and repealing Council Framework Decision 2008/977/JHA, OJ L 119, 04.05.2016, p 89. 134 Article 4 of the Regulation contains the main definitions. 131

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Data protection law 10.97 or body who or which decides the purposes and means of processing personal data, may have a computer database containing information about data subjects arranged by an identification number. The data subjects may not be identifiable from the data in the database but the data controller has a card index which is arranged by identification number but includes the names and addresses of the data subjects. 10.96 Personal data may include photographs, films or video clips of persons, recordings of their speech or singing, their email addresses, online social media details and domain names. Biometric data, such as facial images and fingerprints are included in personal data. Written reports concerning one or more individuals could also be included. Data protection law applies to personal data that are processed wholly or partly by automated means or, otherwise, where they form part of a filing system or are intended to form part of a filing system. Simply put, a filing system is one which is structured so that personal data relating to individuals can be quickly and easily retrieved. An example is a manual card index system where the cards contain personal data and arranged in order of individuals’ names. 10.97 Data controllers are natural or legal persons, public authorities, etc who decide the purposes and means of processing personal data and processors process personal data on behalf or controllers. Controllers may appoint data protection officers135 having professional qualities and expertise in data protection. Their responsibilities include informing and advising the controller, processor and employees; monitoring compliance with the GDPR and other data protection provisions and policies; providing advice, when requested, as regards data protection impact assessments; cooperating with the supervisory authority and acting as a point of contact for the supervisory authority. The appointment of a data protection officer is mandatory in some circumstances, for example, in the case of many public authorities or where the core activities of the controller involve large scale processing of special categories of personal data,136 but is not essential in other cases.137 A supervisory authority (the Information Commissioner in the UK) has

135

Articles 37 to 39 of the GDPR. See Article 37(1) for the cases where the appointment of a data protection officer is required. 137 Even if not mandatory, many controllers may choose to appoint a data protection officer. Parish councils are not required to appoint a data protection officer but some parish councils share the services of a professional data protection officer. 136

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10.98 Confidential information, trade secrets and IT o verall responsibility for monitoring and ensuring the application of data protection law.138

Processing and the data protection principles 10.98 ‘Processing’ is any operation or set of operations performed on personal data or sets of personal data, whether or not by automated means, such as collection, recording, organisation, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment, combination, erasure or destruction.139 This is a very wide definition and even then, is not exhaustive. The term ‘… whether or not by automated means …’ reflects the scope of data protection law which applies to personal data processed wholly or partly by automated means or where the personal data form part of a filing system or are intended to do so. 10.99 There is a set of six data protection principles set out in Article 6. The principles are set out below in abbreviated form. 1

The lawfulness, fairness and transparency of processing personal data.

2

The collection of personal data for specified, explicit and legitimate purposes and not further processed in a manner incompatible with those purposes.

3

Personal data must be adequate, relevant and limited to what is necessary for the processing purposes.

4

The accuracy of personal data and, where necessary, keeping them up to date and taking reasonable steps to ensure that inaccurate personal data are erased or rectified without delay.

5

Kept in a form which identifies the data subject for no longer than necessary for the purposes of processing.

6

Processed in a manner ensuring appropriate security of the personal data, including protection against unauthorised or unlawful processing,

138

Under the new regime, there is no requirement for controllers to notify their processing activities in relation to personal data but they are required to pay an annual fee to the Information Commissioner. 139 Article 4 containing the main definitions.

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Data protection law 10.102 accidental loss, destruction or damage, using appropriate technical or organisational measures. 10.100 Data controllers and processors must abide by the data protection principles. Moreover, data controllers are required to conform with data protection law by design and by default under Article 25. In a nutshell, data protection by design requires that the controller, at the time of determining the means of processing and at the time of the processing itself, must implement appropriate technical and organisational measures designed to implement the data protection principles whilst safeguarding the rights of data subjects. In doing so, the controller has to balance the state of the art, implementation costs, the features of the processing activity and the likelihood and severity of risks to the rights and freedoms of data subjects. 10.101 Data protection by default requires that the controller implements appropriate technical and organisational measures to ensure, by default, that only personal data necessary for each specific purpose are processed. The obligation applies to the amount of personal data collected, the extent of their processing, the period of storage and their accessibility. By default, personal data should not be made available to an indefinite number of natural persons without the individual’s consent.

Conditions for lawful processing 10.102 Processing of personal data may only take place under specific conditions. There are, in effect, two sets of conditions depending on whether the personal data is or is not a special category or data. First, for ‘normal’ personal data, processing is lawful: (a) if the data subject’s consent is obtained for the relevant purposes of processing;140 140

The consent must be informed and freely given and it must be clear to the data subject that he is giving consent, for example, where it forms part of a written declaration including other matters. The data subject may withdraw consent at any time: Article 7. It is arguable that the consent should be explicit consent as in the case of special categories of processing. In the context of a child’s consent in terms of an offer of information society services, the processing is lawful if the child is at least 16 years of age. Where the child is below 16 years of age, the consent must be that of a person having parental responsibility for the child: Article 8. The 16 years of age threshold may be reduced by Member States, providing it is not less than 13 years of age. The UK has implemented the 13 years of age limit for the child’s consent; see section 9 of the Data Protection Act 2018.

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10.103 Confidential information, trade secrets and IT (b) where the processing is necessary for entering into a contract with the data subject, at his request, or for the performance of a contract with a data subject; (c) processing necessary for compliance with a legal obligation to which the controller is subject; (d) processing is necessary to protect the vital interests of the data subject or another natural person;141 (e) processing is necessary for the performance of a task carried out in the public interest or in the exercise of official authority vested in the controller; (f) processing is necessary for the purposes of the legitimate interests pursued by the data controller or a third party except where overridden by the legitimate interests or fundamental rights and freedoms of the data subject, which require protection of personal data, in particular where the data subject is a child.

Processing special categories of personal data 10.103 Another set of conditions apply in the case of special categories of data.142 These are data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership, processing of genetic data, biometric data for the purpose of uniquely identifying a natural person, data concerning health or a natural person’s sex life or sexual orientation. The basic rule is that the processing of such data is prohibited except in certain specific cases. These are (in simplified form): (a) the data subject’s explicit consent;143 (b) processing is necessary in respect of obligations and specific rights of controllers in connection with employment, social security and social protection law as authorised by law and subject to safeguards;144 141

For example, processing location data to find a data subject lost on a mountain in bad weather. 142 Article 9. 143 Note that explicit consent is required. This must be positive and informed consent and may not override a legal prohibition to the contrary. 144 For example, where an employer submits information about employees to the tax or national insurance authorities.

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Data protection law 10.105 (c) processing is necessary to protect the vital interests of the data subject or another natural person where the data subject is physically or legally incapable of giving consent;145 (d) processing by not-for-profit organisations with a political, philosophical, religious or trade union membership aim, subject to certain conditions such as not disclosing personal data outside the organisation without the consent of data subjects; (e) the processing relates to personal data are manifestly made public by the data subject; (f) processing in relation to legal claims and whenever courts are acting in a judicial capacity; (g) on the basis of substantial public interest under EU or Member State law proportionate to the aim pursued, with due respect for data protection law and subject to appropriate safeguards for the fundamental rights and interests of the data subject;146 (h) processing is necessary in the context of preventative or occupational medicine, or in relation to public health, etc; (i) processing necessary for archiving purposes in the public interest or research, etc. 10.104 Under Article 10, where personal data relates to criminal convictions and offences or related security measures based on lawful processing for ‘normal’ personal data under Article 6(1), processing can only be carried out under the control of official authority or when such processing is authorised by EU or Member State law providing for appropriate safeguards for the rights and freedoms of data subjects. Any comprehensive register of criminal convictions may only be kept under the control of official authority.

Data subjects’ rights 10.105 The rights of data subjects have been improved under the GDPR compared with the previous data protection Directive. To some extent the 145

For example, where the data subject is unconscious and requires urgent medical treatment, the data subject’s GP may disclose information such as past medical history to the medical staff treating him. A young child is an example of a person legally incapable of giving consent. 146 An example being the disclosure of personal data tending to show the illegal conduct.

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10.106 Confidential information, trade secrets and IT rights have been enhanced to take account, in particular, of developments in information technology, online collection and processing of personal data and social media. The data subject must be provided with information when his personal data are collected by the controller and, also, where the personal data have not been collected from the data subject, for example, where the personal data originally have been collected by controller A and later transferred to controller B.147 The information to be given to the data subject is set out in Articles 13 and 14 and includes the identity and contact details of the controller; the contact details of the data protection officer, if there is one; the purposes and lawful basis for processing; recipients or categories of recipients, etc. Further information may be given to ensure fair and transparent processing, for example, the period of processing, the data subject’s rights of access, rectification, erasure148 or restriction. The scope of each of these rights is spelt out in Articles 15 to 19.149 Where possible, the controller should provide remote access to a secure system providing a data subject direct access to his or her personal data. This is particularly relevant in the context of online shopping and other services and in relation to social media.150 10.106 Where the processing involves automated decision-making, including profiling, the information provided to the data subject, including in pursuance of a data subject access request, must include the existence of the automated decision-making, meaningful information about the logic involved and, in particular in terms of profiling, the envisaged consequences of such processing for the data subject. Detailed information about the logic in an automated decision-making process may be subject to intellectual property rights, such as copyright, and trade secrets. However, that does not mean that the controller can use this fact to refuse to provide any information and the controller must provide sufficient information to enable the data subject to understand in what ways the automated decision-making affects him.

147

There is no need to provide the information to the data subject if he already has the information. 148 A right to be forgotten. This is important where the data subject as a child gave consent to processing on the internet and was not fully aware of the risks and may want to exercise the right or erasure when the data subject is older: see recital 65. 149 Under Article 19 the controller should communicate any rectification, erasure or restriction to any recipients to whom the personal data in question have been disclosed unless this proves impossible or would involve a disproportionate effort. 150 Recital 63 to the GDPR.

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Data protection law 10.109 10.107 A data subject has a right not to be subject to a decision made solely by automated processing, including profiling, which produces legal effects concerning him or similarly significantly affects him.151 However, this does not apply where necessary for entering into or performing a contract between the data controller and the data subject, where authorised by EU or Member State law, subject to suitable safeguards for the freedoms, rights and legitimate interests of data subjects or where the processing is based on data subject’s explicit consent.152 Where decisions made by automated processing in relation to contracts with the data subject or with the data subject’s explicit consent, the controller must implement suitable measures to safeguard the data subject’s rights, freedoms and legitimate interests, at least the right to obtain human intervention on the part of the controller, to express his point of view and to contest the decision. 10.108 A final right to discuss here is the data subject’s right of data portability under Article 20. A data subject has the right to receive the personal data concerning him which the data subject has provided to a controller, in a structured, commonly used and machine-readable format, together with a right to transmit those data to another controller. The data must have been provided to the first data controller with the data subject’s consent for the p urposes of processing; provided with the data subject’s explicit consent in the case of special categories of data; in relation to a contract with the first data c ontroller. Moreover, the processing must be carried out by automated means. Where technically feasible, the first data controller should transmit the personal data directly to the second data controller. The exercise of the right of portability must be without prejudice to the right of erasure except where processing is necessary for the performance of a task carried out in the public interest or on the exercise of official authority vested in the controller. Finally, the exercise of the right of portability must not adversely affect the rights and freedoms of others. The right of data portability is a very welcome right and simplifies data subjects switching banks and suppliers of goods and services, for example. Data controllers should be encouraged to work together to develop interoperable formats to enable data portability. 10.109 Figure 10.1 gives a simplified overview of data protection law under the GDPR. Note that, in basic terms, a recipient is a person or body to whom 151 152

Article 22(1). There are exceptions in the case of certain forms of processing in relation to special categories of personal data.

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10.110 Confidential information, trade secrets and IT personal data are disclosed and a third country is a country outside the EU. After BREXIT, the UK will become a third country. A third country may be classed as having adequate protection but, if not, the controller may only transfer or disclose personal data to a body in a third country subject to appropriate safeguards for the protection of the fundamental rights and freedoms of data subjects. Supervisory authority

Data subject

Rights to be informed, access, rectification, erasure, restriction, data portability, to object and in relation to automated decision-making (Arts 13-22)

Controller

Disclosures & transfers

Processor

Recipient

Third country

Data Protection Principles

Processing must be lawful under Art 6 or, where processing special categories of data, processing is permitted under Art 9; processing data relating to criminal convictions or offences processing only under control of public authority or where authorised by EU or Member State law under Art 10

Figure 10.1 Model of data protection (much simplified)

FREEDOM OF INFORMATION 10.110 A related area of law is that of freedom of information. It is provided for by the Freedom of Information Act 2000 which provides for a right of access to information held by public a uthorities.153 The Act, which is a complex piece of legislation, also contains numerous exemptions and provisions

153

In Scotland the Freedom of Information (Scotland) Act 2002 applies.

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Freedom of information 10.113 for enforcement and a system of appeals. Subject access rights under the Data Protection Act 2018 are also extended, with some modifications, to the Freedom of Information Act. 10.111 The Freedom of Information Act 2000 is retrospective and the right of access extends to information already in existence before the Act came into force. Public authorities are required to have publication schemes which indicate their commitment to make information available and give guidance as to how individuals may proceed to request information. Publication schemes must be approved by the Information Commissioner who has a number of powers and responsibilities under the Act and, of course, under the Data Protection Act 2018.154 10.112 The list of public authorities subject to the Act is enormous and includes government departments, local authorities, national health service bodies, maintained schools, universities, police authorities and a motley host of other bodies including, by way of example only, advisory committees and panels, the BBC, the British Library, the Commission for Racial Equality, the Financial Services Authority, the Health and Safety Executive, the Intellectual Property Advisory Committee, the National Museums and Galleries of Wales, the Pensions Ombudsman, the Strategic Rail Authority, the Wine Standards Board of the Vintners’ Company and the Northern Ireland Water Council. 10.113 Information is held by a public authority if it is held by the authority otherwise than on behalf of another person or if it is held by another person on behalf of the authority. This latter case would apply, for example, where the public authority uses a contractor to carry out information processing activities on its behalf such as by a facilities management company where it has outsourced its information and communications technology functions. Some public authorities are subject to the provisions of the Act only in relation to specified types of information. For example, the BBC is subject to the Act only in respect of information held otherwise than for the purposes of journalism, art and literature. The Act applies to the Competition Commission in relation to information held by it other than as a tribunal. However, such exceptions are few in number.

154

In Scotland the equivalent official is the Scottish Information Commissioner.

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10.114 Confidential information, trade secrets and IT 10.114 An exception to providing information to a person making an application under the Act applies where, and to the extent that, the information constitutes a trade secret, under section 43. The same applies where disclosure would, or would be likely to, prejudice the commercial interests of the organisation, even if it is a public authority. 10.115 The Environmental Information Regulations 2004, provide for broadly parallel rights of access to information relating to the environment. Unlike the Freedom of Information Act 2000, these Regulations implement the Directive on public access to environmental information.155

155

Directive 2003/4/EC of the European Parliament and of the Council of 28 January 2003 on public access to environmental information, OJ L 41, 14.02.2003, p 26. This Directive replaced and repealed Council Directive 90/313/EEC on the freedom of access to information on the environment, OJ L 158, 23.06.1990, p 56.

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Chapter 11

Essentials of patent law

INTRODUCTION 11.1 A patent is a very desirable form of intellectual property which is available for inventions. The grant of a patent confers a monopoly right on its owner subject only to controls over abuses of the monopoly, such as the acquisition of all the patents in a particular field of technology for the purpose of driving up prices or failing to exploit the invention coupled with the refusal to grant licences to others to do so. Patent rights were seen as so important that they survived the abolition of monopolies under the Statute of Monopolies 1623. Even then, they were to be accepted only if they were ‘… not contrary to the law nor mischievous to the state by raising prices of commodities at home, or hurt of trade, or generally inconvenient’.1 The advantage of a monopoly right for its owner, such as that under a patent or registered trade mark or registered design, is that it may be infringed by a person who does not even know of its existence. This is unlike a copyright which requires that the defendant carries out an act in relation to the copyright work, such as by making copies of it or communicating the work to the public by placing the work on a website. 11.2 A patent is granted only after a formal and rigorous process. An application has to be submitted. The invention must be clearly and adequately specified and described so that a person skilled in the relevant art can put the invention into effect. It is usual in the specification to a patent application to describe the prior art and how the invention makes new and inventive contributions to that prior art. Patent applications also include one or more claims. These set out the legal monopoly claimed by the applicant. During the application process checks are made to determine whether the invention is novel, involves an inventive step and has an industrial a pplication. Patents will not be granted to inventions that lack novelty or are obvious 1

Section 6 of the Statute of Monopolies 1623.

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11.3 Essentials of patent law v ariants or extensions of what is already known: what is already in the public domain or what has previously been patented. Patent rights can last for up to 20 years,2 subject to payment of renewal fees starting in the fifth year and then annually. The renewal fees are on a sliding scale, becoming more expensive year after year.3 11.3 The Patents Act 1977 was enacted primarily to comply with the European Patent Convention (EPC), the Patent Cooperation Treaty (PCT) and the Community Patent Convention (CPC). A number of provisions in the Act are intended to have, as nearly as practicable, the same effects in the UK as the equivalent provisions in these Conventions and Treaty.4 In particular, the important provisions on the requirements for a patent are effectively the same in the EPC as in the UK Act. That being so, reference will be made to the provisions of the EPC as is now the usual practice amongst patent judges, with cross-referencing to the Act where appropriate. Jacob LJ has frequently been critical of UK legislators who choose to rewrite rather than copy out European legislation when implementing it. He suggested when looking at those provisions in the Patents Act 1977 which are supposed to have the same effect as in the EPC, it is better instead to go straight to the text of the EPC.5 2

3

4

5

Up to 25 years in the case of medicinal products and plant protection products: Council Regulation (EEC) No 1768/92 of 18 June 1992 concerning the creation of a supplementary protection certificate for medicinal products, OJ L 182, 02.07.1992, p 1 (as amended, primarily, by Regulation 1901/2006/EC, L 378, 27.12.2006, p 1) and Regulation 610/96/EC of the European Parliament and of the Council of 23 July 1996 concerning the creation of a supplementary protection certificate for plant protection products, OJ L 198, 08.08.1996, p 30. Patent law is a complex and highly technical subject and, necessarily, this chapter only looks at patent law in overview. For more detail, see DI Bainbridge, Intellectual Property, 10th edition, Pearson Education (2018), or the Chartered Institute of Patent Attorneys, CIPA Guide to the Patents Acts, 8th edition, Sweet & Maxwell (2017). Proposals for a Community Patent Convention date back to 1976. However, now there are advanced plans for a unitary patent which may come into force, together with a Unified Patent Court, imminently. See the section on the unitary patent and Unified Patent Court later in this chapter. The unitary patent will transform patenting in a number of Member States and largely overcome the problem of parallel legal proceedings in a number of Member States in respect of multi-territorial infringement of a number of national patents derived from a single application before the European Patent Office. The Patent Cooperation Treaty 1970 makes it possible to apply for patents simultaneously in each of a large number of countries. Although the Community Patent Convention has never entered into effect, it may still be used to interpret the Patents Act 1977. Aerotel Ltd v Telco Holdings Ltd: Macrossan’s Patent Application [2006] EWCA Civ 1371, [2007] RPC 7 (at para 6).

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Layout of this chapter 11.5 11.4 A major problem for patenting in the field of information technology, including computer software and computer-implemented inventions, is that certain things, as such, are declared not to be inventions under the EPC. These include computer programs and activities that are often performed by computer programs such as methods of doing business and the presentation of information. Thus, forms of electronic commerce and website designs are not normally patentable, per se. Whilst it may not be possible to obtain a patent for a computer program as such, it may be possible to obtain a patent to protect the technical effects produced by running a computer program. The law on inventions in the field of information technology and computerimplemented inventions is the subject of the following chapter but at this point it should be noted that there have been some differences between how the courts in the UK have interpreted patent law in the context of computer programs and information technology and how it has been applied at the European Patent Office (EPO).6 Furthermore, there are significant differences between patent law in Europe and that in other countries, notably the United States.7

LAYOUT OF THIS CHAPTER 11.5 This chapter looks at the basic requirements for the grant of a patent. First and foremost, the application must fully disclose the invention so that a person who is skilled in the relevant technology (known in patent law as a person skilled in the art) can put the invention into effect once patent protection has expired. A basic principle is that a monopoly right is granted on the basis that, after expiry of the right, anyone skilled in the art should be free to work the invention.8 As patents are available for inventions which are new,

6

7

8

The EPO is responsible to handling applications for patents designating a number of countries that are members of the EPC and decides on the patentability of the invention concerned. Once it grants such a patent, it devolves into the relevant number of national patents. The EPO will be responsible for the unitary patent. Entitlement to a patent for an invention is based on the first to file the application in most countries but the United States used to base entitlement on the first to invent, this has been modified by the Leahy-Smith America Invents Act 2011 amending the US Patents Act 34 USC as from 5 January 2012. Failure to fully disclose the invention in the patent specification is a reason for rejecting the application: section 14(3) of the Patents Act 1977.

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11.6 Essentials of patent law involve an inventive step and are capable of industrial application, there follows an examination of these fundamental requirements. Neither the Patents Act nor the EPC define ‘invention’ but they contain a non-exhaustive list of things declared not to be inventions. We then turn to look at this list of things, which is of great importance in terms of information technology and ‘inventions’ implemented by means of a programmed computer. The scope of these exceptions, which has still not been resolved satisfactorily will be considered in much more detail in the following chapter. 11.6 We then examine the provisions on entitlement to a patent and dealing with patents, such as by assignments and licensing. Acts which infringe patents are considered as well as the numerous defences. Remedies are described before we look at the formalities for the grant of a patent. It can take a number of years, typically, two or three, from filing an application to the grant of a patent. It is fitting that the process involves a comprehensive examination to ensure that the requirements for the grant of a patent are satisfied, bearing in mind the fact that the proprietor of a patent has a full-blown monopoly subject only to controls over anti-competitive practices. Finally, we look at the forthcoming unitary patent and the Unified Patent Court. In some ways, the unitary patent is an unusual creature in that it will be available in most, but not all Member States of the EU. Two Member States have chosen not to participate and the status of the UK post-Brexit is not clear. It will be examined and granted by the EPO, as a conventional EPC patent, with the proprietor having one month to convert it into a unitary patent. The Unified Patent Court is an unusual creature in that its sources of law are EU law, the Unified Patent Court Agreement, the EPC, other international agreements relating to patents and binding on all the Contracting Member States and, finally, national law. The Unified Patent Court is required to apply EU law in its entirety and respect its primacy.

REQUIREMENTS FOR THE GRANT OF A PATENT 11.7 A patent will be granted if the application fully discloses the invention (if sufficiently disclosed in the specification to enable the invention to be put into effect by a person skilled in the art, usually described as sufficiency) and the subject matter is an invention, is new, involves an inventive step and is capable of industrial application, as indicated in Figure 11.1. We will look at these requirements, starting with sufficiency. The meaning of invention is left to later. 450

Requirements for the grant of a patent 11.8 Is the subject matter an invention? That is, it is not excluded under Article 52(2) and (3) EPC, eg an application for a computer program as such.

NO

YES Is the invention disclosed sufficiently so that a person skilled in the art can work the invention? YES

NO

NO

Is the invention new? YES Does the invention involve an inventive step?

NO

YES Is the invention capable of industrial application?

NO

YES The invention is potentially patentable

Not patentable

Figure 11.1 Basic requirements for patentability

Sufficiency 11.8 One way to look at a patent is to say that it is a monopoly granted by the State for a limited time for a new invention in return for the invention being available to all after the protection by the patent has expired. This requires that the application for the patent must give full disclosure of the invention so that anyone who is familiar with the field of technology in which the invention is placed may put the invention to use, whether by himself or by employing suitable skilled workers or craftsmen. If the applicant omits to disclose an important element of the invention9 so that it cannot be put into

9

Sometimes referred to by patent lawyers as an ‘essential integer’.

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11.9 Essentials of patent law effect by others, a patent will not be granted, or if it is granted,10 it may later be challenged on this basis. 11.9 Article 83 of the EPC states that an application must ‘… disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art’.11 This has been taken to mean that, first, the invention must be identified together with what it is claimed that the skilled person is enabled to do. Secondly, the specification for the invention must be examined to see whether it does enable a skilled person to carry out the invention.12 In other words, does the specification teach the skilled reader what the invention is supposed to do and how to do it? This may require some minor laboratory work or testing, which itself must be obvious to a person skilled in the art, for example, to deduce the scope of the invention.

Patentable inventions 11.10 Article 52(1) of the EPC sets out the basic requirements for the grant of a patent in the following terms: European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application.13 The words ‘in all fields of technology’ seemed to herald the greater application of the EPC to information technology and it seems that this has happened, at least at the EPO judging by their subsequent decisions, as will be seen in the following chapter. We now turn to examining the requirements of novelty, inventive step and industrial application before turning to the exceptions in Article 52(2). 10

For example, where the patent examiner has not realised that full disclosure has not been given. This is a possibility given the complexity of some inventions. 11 The equivalent provision in the Patents Act 1977 is section 14(3). Although the wording is slightly different it is clear that it has the same effect. 12 Per Lord Hoffman in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2004] UKHL 46, [2005] RPC 9. The specification is part of the application and includes a description of the invention, a claim or claims and any drawings referred to in the description. A claim defines the monopoly the applicant seeks. Most applications contain numerous claims in an attempt to broaden the monopoly so it cannot be easily overcome by making a slight variation to it, such as by using plastic rather than metal in the construction of a patented product. 13 The words emphasised were inserted into the version of the Convention which came into force on 13 December 2007.

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Requirements for the grant of a patent 11.12

Novelty 11.11 To be patentable, an invention must be new when the application was filed or at its priority date if subject to the priority of an earlier application.14 Novelty is assessed by considering whether the invention is part of the ‘state of the art’.15 The state of the art ‘… comprises everything made available to the public by means of a written or oral description, by use, or in any other way, before the date of filing …’.16 Under Article 54(3) the state of the art includes patent applications filed before the filing date of the application in question but published after that filing date.17 Inventors must be careful not to put details of their invention into the public domain before they file a patent application.18 Included in the state of the art are unpublished patent specifications which have an earlier priority date but are published after the date of filing the application in question. Subsequent new uses of known substances or compositions are not regarded as part of the state of the art notwithstanding the substance or compound itself was part of the state of the art. This allows, for example, patents to be obtained for new uses of known pharmaceutical products. 11.12 Under Article 55 of the EPC, certain disclosures are not considered to be part of the state of the art. An example is when the disclosure is a result of some abuse in relation to the applicant, an example being where it was the result of a breach of confidence. However, the application must be filed within six months for the disclosure to be ignored from the state of the art. Also, displaying the invention at a recognised international exhibition is disregarded, subject to the applicant furnishing a supporting certificate within a set time limit.

14

15 16

17 18

Where an application was first filed in country A and an application was later filed (within 12 months) in country B, the priority of that first application can be claimed meaning that novelty and inventive step for the application in country B will be considered as at the time of filing in country A so that any intervening acts will be disregarded in relation to validity. Article 54(1) of the EPC. Article 54(2) of the EPC. Where the application is based on an earlier application elsewhere, the relevant date is the date of filing the first application for a patent for that invention (unless withdrawn), that is, its priority date. This may seem a little harsh as the applicant has no way of knowing about the contents of earlier applications not yet published at the date he files his application. For example, an academic inventor might be tempted to present a paper describing his invention at a conference. The temptation must be avoided.

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11.13 Essentials of patent law 11.13 If an application for a patent lacks novelty because of the state of the art, it is said to be anticipated. However, where the anticipatory matter is a document such as a prior patent or patent application, it must contain an enabling disclosure. If the disclosure does not clearly, on its face, anticipate the invention for which a patent has been applied for, it will still anticipate if it is possible for a skilled person to recreate the claimed invention from it without undue effort.19 Some degree of experimentation might be expected in some cases. 11.14 Anticipation by use can occur even if the use is minimal and restricted to one locality. The question is whether it has been made available to the public. A patent application can be anticipated by something available to the public even though there is no evidence that anyone actually saw it or consulted it.20 The issue is whether members of the public are free in law and equity to work the invention. In Lux Traffic Controls Ltd v Pike Signals Ltd,21 independent contractors could have examined a prototype without any legal or equitable obligation. That was sufficient to anticipate the patent regardless of whether any of the contractors had actually done so.

Inventive step 11.15 Under Article 56 of the EPC, an invention involves an inventive step if, having regard to the state of the art, it was not obvious to a person skilled in the art. This notional person is not himself endowed with inventive faculties: a somewhat artificial construct. It is someone who simply has a wide knowledge of the relevant technology. He has been described as a ‘nerd’.22 In Technograph Printed Circuits Ltd v Mills & Rockley (Electronics) Ltd23 Lord Reid described the notional skilled person in the following terms (at 355): … a skilled technician who is well acquainted with workshop technique and who has carefully read the relevant literature. He is supposed to have an unlimited capacity to assimilate the contents of … scores of specifications but to be incapable of a scintilla of invention. 19

Availability to the Public, Case G01/92, [1993] EPOR 241. For example, a dusty tome lying in a little used part of a public library. 21 [1993] RPC 107. 22 Jacob LJ in Technip France SA’s Patent [2004] EWCA Civ 381, [2004] RPC 46 at para 7. 23 [1972] RPC 346. 20

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Requirements for the grant of a patent 11.17 11.16 For the purposes of determining inventive step, the state of the art does not include earlier applications that have not been published at the time of filing the invention, unlike the case with novelty: Article 56 states that matter in such earlier unpublished applications shall not be taken into account when deciding whether an invention involves an inventive step. 11.17 In deciding whether an invention involves an inventive step it is important to avoid using the benefit of hindsight. The invention must be looked at from the perspective of the date the application for the patent was first filed. A test was developed under the previous Patents Act 1949 but has been accepted as still being useful under the present Act. Indeed, it is rare for a judge not to apply the test when judging inventive step. The test, known as the Windsurfing test after the name of the case in which it was first formulated,24 has been re-stated by Jacob LJ in Pozzoli SpA v BDMO SA25 as follows. 1

(a) Identify the notional ‘person skilled in the art’. (b) Identify the relevant common general knowledge of that person.

2

Identify the inventive concept of the claim in question or, if that cannot readily be done, construe it.

3

Identify what, if any, differences exist between the matter cited as forming part of the ‘state of the art’ and the inventive concept of the claim or the claim as construed.

4

Viewed without any knowledge of the alleged invention as claimed, do those differences constitute steps which would have been obvious to the person skilled in the art or do they require a degree of invention?

Commercial success can be a pointer to whether an invention involves an inventive step, particularly if it satisfies a ‘long felt want’. Where this is so, the question is why did someone not make the invention some time ago? However, commercial success is not conclusive as it can be explained by other factors, such as marketing or technical reasons. For example, materials technology may not have been sufficiently developed to make the product subject to the invention so that it would work satisfactorily.26 24

Windsurfing International Inc v Tabur Marine (Great Britain) Ltd [1985] RPC 59; per Oliver LJ at 73. 25 [2007] EWCA Civ 588, [2007] FSR 37. 26 See, for example, Schlumberger Holdings Ltd v Electromagnetic Geoservices AS [2010] EWCA Civ 819, [2010] RPC 33. However, if all other possible explanations had been

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11.18 Essentials of patent law

Industrial application 11.18 An invention is taken as being susceptible to industrial a pplication if it is capable of being made or used in any kind of industry, including agriculture.27 In practice, this requirement is very wide and is rarely an issue. It might be relevant if it turns out that the alleged invention does not actually work or, where a range of compounds is claimed and some within the range do not do what they are claimed to do. There is no doubt that information technology falls within the meaning of industrial application. 11.19 In the boards of appeal at the EPO, in MAX-PLANCK/BDP1 Phosphatase28 it was held that the term ‘industrial application’ included all manufacturing, extracting and processing activities that are carried out continually, independently and for financial (commercial) gains. In Eli Lilly & Co v Human Genome Sciences Inc,29 Kitchen J added a proviso to this (at para 226) saying that the application need not be conducted for profit. However, he drew the line at something which is merely an interesting research result that might yield a yet to be identified industrial application. The Supreme Court disagreed and distinguished between an identified new substance which merely indicates a programme of research should be embarked upon to discover whether it has a particular effect and one which, in the light of the common general knowledge, has a plausible claimed use.30

Industrial application implicit in claims 11.20 In an earlier reference to the Court of Justice of the EU from the Patents Court, in Eli Lilly & Co v Human Genome Sciences Inc,31 the Court of Justice ruled that for an active ingredient to be protected by a basic patent in force, it is not necessary for it to be identified in the claims by a structural

27 28 29 30 31

d iscounted, secondary evidence could play an important role. If a useful development was, with the benefit of hindsight, seemingly obvious for years and the apparently straightforward technical step from the prior art simply was not taken, then there was likely to be invention: per Jacob LJ at para 77. Article 57 EPC. Case T870/04, [2006] EPOR 14. [2008] EWHC 1903 (Pat), [2008] RPC 29. Human Genome Sciences Inc v Eli Lilly & Co [2011] UKSC 51, [2012] RPC 6. Case C-493/12, EU:C:2013:835.

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Requirements for the grant of a patent 11.22 formula, provided it is possible, on the basis of the patent claims, in the light of the description of the invention,32 that the claims relate implicitly but necessarily and specifically, to the active ingredient in question.

Not an invention 11.21 Neither the EPC nor the Patents Act 1977 define what is meant by ‘invention’. All they do is list things which are not inventions. Moreover, the list is not exhaustive. Article 52(2) EPC states: The following in particular shall not be regarded as inventions within the meaning of paragraph 1: (a) discoveries, scientific theories and mathematical methods; (b) aesthetic creations; (c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers; (d) presentations of information. However, Article 52(3) then goes on to say: Paragraph 2 shall exclude the patentability of the subject-matter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such. [emphasis added.] 11.22 Three points can be made. First, the use of the phrase ‘in particular’ in Article 52(2) shows that the list is not intended to be exhaustive. Secondly, there is no common thread in the things that are excluded and they may be excluded for different purposes and reasons.33 Thirdly, and most importantly, the use of the words ‘as such’ indicate that the exclusion from the meaning of invention does not apply to the things listed absolutely. The exclusion applies so as to prevent the patenting of a discovery as such, a method of

32 33

As required by Article 69 of the EPC and the Protocol thereto. For example, some are excluded as being protected by copyright or design law (presentation of information and aesthetic creations), notwithstanding that it was not beyond doubt in 1977 that computer programs were protected by copyright law.

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11.23 Essentials of patent law doing business, as such, or a computer program, as such, etc. If the excluded thing goes beyond the ‘as such’ limitation and, for example, produces some practical effect, that effect may be an invention. We will see in the following chapter that, although a computer program as such is not an invention, the technical effect resulting from running a programmed computer may be an invention and, providing the other requirements for patentability are satisfied, will be patentable in principle. 11.23 There are some further exceptions to the grant of a European patent. Unlike Article 52(2) these are not excluded because they are not deemed to be inventions. They are simply excluded from the grant of a patent under Article 53. They are inventions the commercial exploitation of which would be contrary to the ‘ordre public’ or morality. Plant or animal varieties or essentially biological processes for the production of plants or animals are likewise excluded though this does not extend to microbiological processes or the products thereof. Methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practised on the human or animal body are also excluded. But this does not apply to products, in particular substances or compositions, for use in any of these methods. Therefore, it is possible to obtain patents for pharmaceutical products used in the treatment of the human or animal body.

ENTITLEMENT TO A PATENT 11.24 The rules on who is entitled to be the proprietor of a patent differ from the rules on who is the first owner of a copyright. First and foremost, there is a presumption that the inventor is entitled to the patent.34 Article 60 EPC states that the inventor or his successor in title is entitled to the patent. In proceedings before the EPO, the applicant is deemed to be entitled to exercise the right.35 However, where the inventor is an employee, entitlement is determined by the law of the State in which the employee is mainly employed.36

34

Section 7(2) of the Patents Act 1977. The inventor is the actual devisor of the invention: s ection 7(3). Provisions exist in relation to joint inventors. 35 A similar presumption applies with respect to an application for a UK patent. 36 If this cannot be determined, entitlement is based on the law of the State where the employer has his place of business to which the employee is attached.

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Entitlement to a patent 11.25 Therefore, in respect of employee inventors, recourse has to be had to the Patents Act 1977. It is worth setting out s ection 7(2) of the Patents Act 1977 which states: A patent for an invention may be granted — (a) primarily to the inventor or joint inventors; (b) in preference to the foregoing, to any person or persons who, by virtue of any enactment or rule of law, or any foreign law or treaty or international convention, or by virtue of an enforceable term of any agreement entered into with the inventor before the making of the invention, was or were at the time of the making of the invention entitled to the whole of the property in it (other than equitable interests) in the United Kingdom; (c) in any event, to the successor or successors in title of any person or persons mentioned in paragraph (a) or (b) above or any person so mentioned and the successor or successors in title of another person so mentioned; and to no other person. Paragraph (b) includes employers entitled under section 39, discussed below. Entitlement is by virtue of any enactment. Where a self-employed consultant is engaged to create and develop something which is potentially patentable, the contract is likely to contain a term stating that the person engaging the consultant is entitled to any patentable invention that might result. Where a person is employed who is likely to be entitled under section 39, the contract of employment may contain a term concerning entitlement. The same might apply to students carrying out research at a University. Under section 7(3), the ‘inventor’ is the actual devisor of the invention. ‘Joint inventor’ shall be construed accordingly, meaning joint inventors are those who are jointly the actual devisors of the invention. 11.25 Section 39 is a difficult provision. It is to the effect that the employer will be entitled to any patent where: (a) the invention was made in the course of the normal duties of the employee or in the course of duties falling outside his normal duties, but specifically assigned to him, and the circumstances in either case were such that an invention might reasonably be expected to result from the carrying out of his duties; or 459

11.26 Essentials of patent law (b) the invention was made in the course of the duties of the employee and, at the time of making the invention, because of the nature of his duties and the particular responsibilities arising from the nature of his duties he had a special obligation to further the interests of the employer’s undertaking. The latter case would apply where the employer was, for example, the managing director of a company. In the former case, a person employed as a storekeeper who made an invention was held to be entitled to the patent even though the invention was useful to his employer.37 In Greater Glasgow Health Board’s Application38 an employed doctor was held to be entitled to a patent even though he was encouraged to carry out research. This was not, however, an outright obligation placed on the doctor. In another case, a manager of a company, which was a subsidiary of a Swiss parent company which designed and manufactured valves, invented a new valve whilst working his notice after being made redundant. The Swiss parent company normally carried out research and development work. Needless to say, it was held that the manager was entitled to the patent.39 Any invention made by an employee not covered by the circumstances in section 39(2) is, as between the employee and employer, taken to belong to the employee. Regardless of the identity of the proprietor of a patent, the inventor has a right to be mentioned as such. 11.26 Under section 40 of the Patents Act 1977, where an invention made by an employee in circumstances such as the employer is entitled to the patent, if the patent or the invention for which the patent has been granted is of outstanding benefit to the employer, the employee may be entitled to compensation. This is also the case where the employee was originally the person entitled to the patent but he has assigned the patent or application to the employer and the employee’s benefit is inadequate. Section 40 was amended from 1 January 2005 ostensibly to make it easier for employees to be granted compensation. Before then, there was not a single case of an employee being successful in applying for compensation under section 40, and only one since. 11.27 In the first reported case in which an application for employee compensation succeeded, Kelly v GE Healthcare Ltd,40 two research scientists 37

Electrolux Ltd v Hudson [1977] FSR 312. [1996] RPC 207. 39 Harris’s Patent [1985] RPC 19. 40 [2009] EWHC 181 (Pat), [2009] RPC 12. 38

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Entitlement to a patent 11.29 were awarded £1m and £500,000 respectively for their work in the synthesis of a compound used in a patented radioactive imaging agent which proved to be extremely successful for their employer, being conservatively estimated to have produced £50m benefit for the employer. An important factor in Kelly v GE Healthcare, was that the original employer41 was in financial difficulties and the patent may have been influential in its survival. 11.28 The fact that an employer does not reap the maximum benefit does not help an employee who claims that the employer could have achieved a much higher benefit by exploiting the invention more effectively. Another problem is where the employer is a member of a group of companies and sells the patent cheaply to another company in the group for that company to exploit. In Shanks v Unilever plc,42 the patent in question was not exploited for some time. After some years, the benefit of the patent was assigned to another company in the group for a nominal sum. Eventually, the patent generated £23m although the employee claimed that it could have made £1bn had it been properly exploited. In the end the parties were left to agree what a fair share would be for the employee, based on the £23m figure. The case came again before Mr J Ebro, a hearing officer at the UK Intellectual Property Office (UK IPO), who held that the patent was not of outstanding benefit to the employer, despite being a substantial and significant benefit in money terms.43 However, Unilever made much greater profits, albeit mainly from manufacturing. The hearing officer held that the patent fell short of being an outstanding benefit to the employer, taking account of the size and nature of the employer’s business. 11.29 Professor Shanks appealed against the decision of the hearing officer. The appeal was heard by Arnold J in the Patents Court in Shanks v Unilever plc,44 in which he dismissed Professor Shanks’ appeal, although he did point out that the statutory provision did not give rise to a ‘too big to pay’ principle. Arnold J accepted that the hearing officer had not decided

41

Amersham International plc, which later had been acquired by GE Healthcare Ltd. [2010] EWCA Civ 1283, [2011] RPC 12. 43 Shanks v Unilever plc, 21 June 2013, Case No BL 0/259/13. Section 40(1) of the Patents Act 1977 was changed by the Intellectual Property Act 2004 to allow consideration of the invention or the patent or a combination of both, not just the patent, but the facts of this case preceded the change which came into effect on 1 January 2005. 44 [2014] EWHC 1647 (Pat), [2014] RPC 29. 42

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11.30 Essentials of patent law that Unilever was too big to pay but had undertaken a multi-factorial analysis as required by the statute and had not made an error of principle. This case is of considerable interest to employee inventors and the Court of Appeal granted leave to appeal to the Supreme Court.45 The appeal has yet to be heard.46

DEALING WITH PATENTS 11.30 As with other forms of intellectual property, patents (and applications for patents) can be dealt with by assignment, granting licences, mortgaging them or otherwise used as a security. As with copyright, assignments and licences may be partial and licences may be exclusive or non-exclusive. There are provisions for compulsory licences and licences of right. A compulsory licence may be granted where, for example, demand for a product is not being met on reasonable terms. This prevents abuses such as where the proprietor is limiting supply of a patented product in order to sell at inflated prices. The Competition and Markets Commission has powers to recommend, for example, that licences are available as of right. This might be the case where the proprietor refuses to grant licences and this operates against the public interest. A licence of right means that anyone may demand a licence to work the invention in question. The terms will be determined by the Comptroller47 in the absence of agreement between the parties. In practice, few compulsory licences are granted and licences or right are very rare with one exception. 11.31 Under section 46 of the Patents Act 1977, the proprietor of a patent may apply for an entry to be made on the register to the effect that licences under the patent are available as of right. This means that anyone may work the invention subject to a licence. The advantage for the proprietor is that renewal fees are reduced by half. Where the terms of the licence cannot be agreed between the proprietor and the licensee, the Comptroller of Patents shall settle the terms on the application of either party. The proprietor may cancel the entry on payment of the balance of renewal fees that would have

45

Shanks v Unilever plc [2017] EWCA Civ 2, [2017] RPC 15. The case has not yet been listed for a hearing at the time of writing. 47 The full title is the Comptroller-General of Patents, Designs and Trade Marks. The Comptroller is the Chief Executive of the UK Intellectual Property Office (‘IPO’), the trading name of the Patent Office. 46

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Dealing with patents 11.34 been paid but for the entry, provided no licence has been granted under the patent or, where it has, the licensee consents.48 11.32 As patents are formal rights subject to registration, it is important that the register of patents accurately reflects proprietorship and any rights granted in or under the patent. Included in the information contained in the register are details of transactions, instruments or events affecting rights in or under patents or patent applications. It is important to note that applications for patents can be dealt with before the patent is granted. For example, the applicant may decide to assign his or her application to a third party. 11.33 Failure to register a transaction may make it vulnerable to subsequent transactions which are registered.49 For example, if A takes an assignment of a patent which is not registered and B takes an assignment of the same patent later in time but this transaction is registered then, providing B did not know of the assignment to A, B will take free of it. Another problem with failure to register a transaction is that costs (expenses in Scotland) will not be awarded in an infringement action brought by a proprietor or exclusive licensee unless the relevant transaction was registered within six months or if not registered within six months, it was registered as soon as practicable after and the Comptroller is satisfied that it was not possible to register the transaction within the first six months.50 This can be very serious as costs in patent actions are often very high.

FRAND licences 11.34 FRAND stands for ‘fair, reasonable and non-discriminatory. It is used to described licences in the context of a technical standard technology adopted by a body such as the European Telecommunications Standards Institute (ETSI). In the case of a technical standard in force such that compliance with that standard requires the use of an intellectual property right, such as a standard-essential patent (SEP), the standards body will require that the proprietor of the right agrees to grant licences to third parties wishing to

48

Section 47. Section 33(1) of the Patents Act 1977. 50 Section 68. Previously, before the implementation of the Directive on the enforcement of intellectual property rights, the consequences were more draconian and an award of damages or an account were also at risk for a failure to register the transaction. 49

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11.35 Essentials of patent law make use of the intellectual property in order to comply with the standard. Such licences must be on ‘fair, reasonable and non-discriminatory’ terms, a FRAND licence. This allows third parties to employ the standard without refusal or being granted a licence on unfair or extortionate terms. If the owner of an intellectual property right, such as a SEP, is unwilling to grant licences on FRAND terms, the standards body will not adopt the standard using the intellectual property. 11.35 Article 102 of the Treaty on the Functioning of the EU prohibits abuses by undertakings in a dominant position in the internal market, or a s ubstantial part of it, which may affect trade between Member States. Such abuses include, inter alia, applying unfair trading practices or applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage. In many cases, undertakings which have patented technology which is part of an international standard will be in a dominant position. An abuse, without an obligation to grant licences on FRAND terms would include granting licences to related undertakings on significantly more favourable terms compared to the terms offered to unrelated undertakings. 11.36 In Huawei Technologies Co Ltd v ZTE Corpn,51 the ETSI was a body charged with creating standards meeting the objectives of the European Telecommunications sector. Where the use of an intellectual property right was essential to comply with a standard, the owner must be prepared to grant licences for the use of the technology on FRAND terms. Huawei was the proprietor of a European patent for the ‘method and apparatus of establishing a synchronisation signal in a communications system’. Huawei notified the patent to ETSI and undertook to grant licences on FRAND terms to third parties wishing to comply with the standard. Huawei entered into discussion with ZTE regarding the latter’s infringement of its patent and the possibility of concluding a licence on FRAND terms. Huawei provided an offer of such a licence to ZTE but no licence was finalised and ZTE paid no royalties in relation to the alleged past infringement of the patent. Therefore, Huawei brought proceedings for infringement of the patent, seeking an injunction and damages or an account for past infringement. It was accepted by the court that Huawei was in a dominant position, the questions for the Court of Justice of the EU concerned whether there was an abuse of

51

Case C-170/13, EU:C:2015:477.

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Dealing with patents 11.38 that dominant position under Article 102 of the Treaty on the Functioning of the EU. The Court of Justice of the EU ruled: 1

The proprietor of an SEP does not abuse its dominant position by bringing an infringement action, seeking an injunction, recall of products made using the patent, providing: (a) prior to bringing the action the proprietor has, first, alerted the alleged infringer of the infringement complained of and, secondly, the alleged infringer has expressed a willingness to conclude a licence on FRAND terms, on the basis of a specific offer in writing given to the alleged infringer specifying the terms, in particular the royalty and the way in which it is to be paid; (b) where the alleged infringer continues to use the patent, he has not diligently responded to the offer, in accordance with recognised commercial in the field and in good faith (to be established on the basis of objective factors implying, in particular, delaying tactics).

2

Article 102 does not prohibit in circumstances such as those in the main proceedings, an undertaking in a dominant position, which has given an undertaking to the standardisation body to grant licences on FRAND terms, from bringing an infringement action against an alleged infringer of its patent and seeking an account or damages in respect of past acts of infringement.

11.37 Standards organisations like ETSI do not make any assessment as to whether an intellectual property right is valid. Of course, in the absence of a FRAND licence, the proprietor of a SEP may bring an infringement action which is likely to be met by a counterclaim for invalidity.52 Alternatively, a third-party undertaking wishing to implement a SEP may bring an action for invalidity. 11.38 In a series of cases involving telecommunications standards, Unwired Planet International Ltd v Huawei Technologies Co Ltd,53 issues concerning FRAND terms were prominent.54 Essentially, offers of licences on 52

Even though a licence on FRAND terms is under negotiation, an action may be brought for past infringement. 53 [2017] EWHC 711 (Pat). This case was preceded by a number of cases on the validity and infringement of five of the claimant’s SEPs. 54 Other issues, such as competition law were also addressed by the judge.

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11.38 Essentials of patent law FRAND terms were made by the parties but there was a substantial difference in the terms offered, especially the royalty payments. In a very lengthy judgment, significant parts of which were redacted, Birss J came to some important conclusions on FRAND licences in para 806 of his judgment. These are summarised below. 1

In any given circumstances, there is only one set of licence terms which are FRAND. There cannot be two sets of licence terms which are FRAND.

2

The FRAND undertaking to ETSI is a legally enforceable obligation with an implementer (a person wishing to use the SEP under a FRAND licence).

3

A royalty rate in a licence may be above FRAND but not contrary to competition law.

4

An implementer who has taken an unqualified commitment to take a licence on FRAND terms, to be settled in an appropriate way, cannot be subject to an injunction to restrain patent infringement. However, a potential implementer who refuses to take a licence on terms found by the court to be FRAND, is taken to have decided not to have a licence and, if they have been found to infringe a valid patent, can be subject to an injunction.

5

Not only does FRAND characterise the terms of the licence but it also refers to the process by which the licence is negotiated. However, offers in negotiation which involve rates higher or lower than the FRAND rate are legitimate providing they do not disrupt or prejudice the negotiations.

6

An appropriate way to determine a FRAND royalty is to determine a benchmark rate governed by the patent proprietor’s portfolio. That will be fair, reasonable and non-discriminatory.

7

The royalty rate should not vary depending on the size of the licensee. Small new entrants should pay a royalty based on the same benchmark as established large entities.

8

The non-discrimination limb of FRAND is not a ‘hard-edged’ component justifying a licensee demanding a lower rate than the benchmark rate because the lower rate had, in fact, been given to a different but similarly situated licensee. This would distort competition between competing licensees and be contrary to Article 101 of the Treaty on 466

Dealing with patents 11.40 the Functioning of the EU (being an agreement between undertakings, having as its object or effect, the distortion of competition in the internal market. 9

A FRAND rate can be determined by using comparable licences, where these exist. Freely negotiated licences are relevant evidence of what may be FRAND. A top-down approach may be used where the rate is set by determining the patentee’s share of the relevant SEPs and applying that to the total aggregate royalty for a standard. However, this may be more useful as a cross-check.

10 In assessing a FRAND rate, counting patents is inevitable. 11 In assessing the dominant position of a SEP holder, the practical effect of the FRAND undertaking and the potential for hold out by an implementer are relevant factors and may lead to the conclusion that a SEP holder is not in a dominant position. Birss J also referred to the principles in the Court of Justice of the EU in Huawei Technologies Co Ltd v ZTE Corpn, supra. 11.39 In the follow-up case, Unwired Planet International Ltd v Huawei Technologies Co Ltd,55 Birss J decided to grant the claimant a FRAND injunction. This is an injunction which will be discharged if the defendant enters into a FRAND licence.56 A declaration was also made to the effect that the settled licence appended to the judgment was a licence on FRAND terms. 11.40 In Conservant Wireless Licensing SARL v Huawei Technologies Ltd,57 the claimant issued proceedings in the UK against the defendant Chinese companies alleging infringement of its SEPs in mobile telephony and seeking terms for FRAND licences for its global patent portfolios. The defendant group of companies challenged a claim that the patent infringement allegations were justiciable in the UK. Permission to appeal against a decision that the infringement claims were justiciable in the UK, being a natural and appropriate forum for trial of those issues was refused. The court also refused an application to stay proceedings pending a determination of the appeal.

55

[2017] EWHC 2988 (Pat), [2017] RPC 19. An appeal to the Court of Appeal is outstanding. The injunction was stayed pending an appeal. 57 [2018] EWHC 808 (Pat). 56

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11.41 Essentials of patent law

INFRINGEMENT AND REMEDIES 11.41 Under Article 64 of the EPC, patent infringement is left to national law. In the UK, section 60 of the Patents Act 1977 sets out the acts that infringe a patent. They are: ••

In the case of a product invention: making, disposing of, offering to dispose of, using or importing the product or keeping it whether for disposal or otherwise; section 60(1)(a).

••

In the case of a process invention: ––

using the process or offering it for use in the UK, knowing or where it would be obvious to a reasonable person in the circumstance that its use is without the consent of the proprietor would infringe the patent: section 60(1)(b);

––

disposing of, offering to dispose of, using or importing any product obtained directly by means of that process or keeping any such product whether for disposal or otherwise: section 60(1)(c).

Note that no knowledge on the part of the defendant is required where the invention is a product or in relation to a product obtained from a patented process. There is a further form of infringement under section 60(2) which relates to a patented process. This is where a person (other than the proprietor of the patent) supplies or offers to supply in the UK a person other than a licensee or other person entitled to work the invention with any of the means, relating to an essential element of the invention, for putting the invention into effect when he knows, or it is obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the UK. However, this does not apply in relation to the supply or offer of a staple commercial product unless it is made for the purpose of inducing the person supplied or, as the case may be, the person to whom the offer is made to do an act which infringes under s ection 60(1). 11.42 The usual remedies are available, being damages, accounts of profits, injunctions, orders for delivery up or destruction of infringing products.58 Damages and accounts are alternatives. Additionally, a declaration may be sought. This will be to the effect that the patent is valid and has been infringed.

58

Section 61.

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Defences 11.44 This may be useful in any subsequent infringement proceedings. Although no knowledge is required to prove infringement in the case of a patented product or product obtained directly from a patented process, lack of knowledge may prevent an award of damages or an account of profits under section 62. The defendant must not have been aware, and had no reasonable grounds for supposing, that the patent existed at the date of the infringement. Simply applying the word ‘patent’ or ‘patented’ to a product does not necessarily mean that the defendant has reasonable grounds for supposing that the patent existed. To be on the safe side, the proprietor should mark patented products also with the patent number. This allows a third party to find and consult the patent specification to check its scope.

DEFENCES 11.43 The defences are set out in section 60(5). They include acts done for private, non-commercial, purposes and for experimental purposes related to the subject-matter of the invention. Further defences apply in respect of ships and other vessels and aircraft temporarily in UK territory. For example, it is permissible to repair a ship temporarily at a UK port even if carrying out the repair would otherwise infringe a UK patent. This can apply even if the ship is a ferry that comes into UK territorial waters regularly. In Stena Rederi AB v Irish Ferries Ltd,59 the Court of Appeal held that the word ‘temporarily’ meant ‘transient’ or ‘for a limited time’ and frequency was not relevant. The vessel in question was a ferry, registered in the Irish Republic, which crossed between Dublin and Holyhead up to three or four times daily. 11.44 Another form of defence is the ‘Gillette’ defence.60 This is where the defendant claims that his product or process was not novel at the time the patent was first filed and, consequently, if his product or process falls within the claims of the patent, it must be invalid for lack of novelty or, alternatively, it must be outside the scope of the claims of the patent and cannot infringe it. This hints at the fact that, in many cases, a defendant will counterclaim for a declaration of invalidity, arguing that the patent ought to be revoked because

59 60

[2003] EWCA Civ 66, [2003] RPC 36. So called after the case in which it was first raised in that form: Gillette Safety Razor Co v Anglo-American Trading Co Ltd (1913) 30 RPC 465.

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11.45 Essentials of patent law it lacks novelty or inventive step, does not have an industrial application or is caught by the exclusions to the meaning of invention or other exclusions from the grant of a patent. In some cases, two or more of these attacks on the validity of the patent will be made by a defendant. A further form of attack is that the patent specification lacks sufficiency. This is where the invention is not disclosed so as to enable a person skilled in the art to work the invention without undue effort.

Right to continue prior acts, etc. 11.45 Under section 64, where a person has, in good faith, done an act that would otherwise infringe the patent or has made serious and effective preparations to do such an act before the priority date of the patent, he may continue to do the act or commence the act as the case may be. Strictly speaking this is a right and not a defence as such. This means that the right to continue the act or commence the relevant act may be assigned to a third party. Licences cannot be granted in respect of the act. Thus, where this applies only one person (or a partnership) may carry out the act or commence it where serious and effective preparations have been made to carry out the act. The upshot is that a person should not be prevented from doing something he was previously doing quite lawfully before the application for a patent was made or an earlier priority date. Of course, if such prior use made the invention available to the public, the patent would be vulnerable to revocation.

Right to repair 11.46 It is arguable that there is a right to repair a patented product. It is really a matter of whether the act of repair falls within the act of making the patented product. All products wear out in time and it may be feasible to repair them rather than buy a new replacement product. It is not permissible to make a new product ‘… under the cover of repair’.61 Compare replacing a worn-out engine in a motor car with buying a new computer but reusing the hard disk from the old one. The Supreme Court considered the concept of repair in Schutz (UK) Ltd v Werit (UK) Ltd.62 This case involved intermediate 61

Per Lord Halsbury LC in Sirdar Rubber Co Ltd v Wallington Weston & Co (1907) 24 RPC 539, approved by Lord Hoffmann in United Wire Ltd v Screen Repair Services (Scotland) Ltd [2000] UKHL 42, [2001] RPC 24. 62 [2013] UKSC 16, [2013] RPC 16.

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Defences 11.48 bulk containers (‘IBCs’), which comprised large cube-shaped plastic bottles enclosed within a cage made from hollow tubular metal bars. The life of the plastic bottles was much less than that of the cages. The first defendant made replacement bottles which were used by ‘re-conditioners’, such as the second defendant, who removed the old bottle, made necessary repairs to the cage and fitted the new replacement bottle. 11.47 Lord Neuberger63 said that it was important to decide whether in replacing the bottle the defendant had made a new product. It was relevant in making this decision to consider whether the bottle was such a subsidiary part of the product that its replacement did not constitute making a new IBC. The fact that the bottle was a necessary and integral part of the IBC favoured a view that it was more than only subsidiary. However, there were a number of factors pointing the other way. The bottle had a much lower life expectancy than the cage and would need replacing at least five or six times during the life of the cage. Although the bottle was physically large it was physically less substantial, being made of plastic whilst the cage was made of metal. In practice, a purchaser of an IBC might expect to replace the bottle several times during the life of the IBC. Where the article includes a component, which is physically easily replaceable and in practice relatively perishable, those features must constitute a factor in favour of the view that the replacement of that component does not amount to making a new IBC (of course, that view might be outweighed by other factors). A further factor was that the bottle itself did not form any part of the inventive concept of the patent, although this again is not conclusive and Lord Neuberger cautioned against using a simple ‘inventive concept’ test. After all, it is whether the defendant makes the patented product. In the present case, according to the first claim, it was a pallet container for storing and transporting liquids comprising a flat pallet, an exchangeable inner plastic container with a surrounding supporting outer sleeve made of a lattice of horizontal and vertical metal bars.

Exhaustion of rights and competition law defences 11.48 The doctrine of exhaustion of rights applies to patented products. This is not expressly mentioned in either the EPC or the Patents Act 1977 but

63

With whom the other Supreme Court judges agreed.

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11.49 Essentials of patent law is found in Articles 34 to 36 of the Treaty on the Functioning of the EU and relates to the principle of freedom of movement of goods. This allows the further commercialisation of patented products which have been placed on the market within the European Economic Area (EEA) by the proprietor of the patent or with his consent. Thus, a third party who legitimately acquires such patented products may import them and resell them. 11.49 Further defences may be raised under competition law. These apply in connection with restrictive trade practices, such as granting licences subject to onerous terms, or abuses of dominant trading positions, for example, by refusing to disclose information to competitors, such as details of software interfaces or by limiting supply of a patented product to drive prices artificially high. These competition law provisions are in the Treaty on the Functioning of the EU and apply where trade between Member States is or may be affected by anti-competitive practices.64 The relevant provisions can be used as a sword or a shield.

Unjustified threats of infringement proceedings 11.50 The remedy of unjustified threats of infringement proceedings was discussed in more detail in Chapter 8. The unjustified threats remedy replaced the former remedy of groundless threats of infringement proceedings65 which was inconsistent across the spectrum of intellectual property rights for which it was available and generally unsatisfactory. The new remedy of unjustified threats is now equivalent, mutatis mutandis, for all the intellectual property rights for which it is available. Therefore, in this chapter, we only look at the specific aspects of the remedy in the context of patents.66 Provision is made for the remedy to apply in respect of the unitary patent when the Agreement on the Unified Patent Court comes into force.

64

See Articles 101 and 102 of the Treaty. UK competition law may also be engaged where trade within the UK is affected. 65 A statutory groundless threats action in respect of patents originated in section 32 of the Patents, Designs and Trade Marks Act 1883. 66 Section 70 of the Patents Act 1977 was replaced by a new section 70 and new sections 70A to 70F with ancillary amendments to the Act by the Intellectual Property (Unjustified Threats) Act 2017 with effect from 1 October 2017.

472

Defences 11.52

The threat of proceedings 11.51 A threat of proceedings exists if a reasonable person in the position of a recipient67 would understand from the communication in question that: (a) a patent exists, and (b) a person intends to bring proceedings against another person for infringement of the patent by an act done, or if done, would be done in the UK. 11.52 The action for unjustified threats must be brought by any person aggrieved by the threats. This could be the recipient of the threats or any other person who is aggrieved by the threats. An actionable threat is one which is not one of the following: (a) if the infringement is alleged to consist of: (i) where the invention is a product, making a product for disposal or importing a product for disposal; or (ii) where the invention is a process, using a process; (b) if the infringement is alleged to consist of an act which, if done would constitute an infringement of a kind above; (c) if the threat is made to a person who has done or intends to do an act under (a) above in relation to a product or a process, and is a threat of proceedings for an infringement alleged to consist of doing anything else in relation to that product or process; (d) a threat of infringement proceedings which is not an express threat is not actionable if it is contained in a permitted communication. Looking at section 60 of the Patents Act 1977, setting out infringing acts, shows that actionable threats are those including threats relating to disposing, offering to dispose of, using or keeping a patented product or certain acts in relation to products obtained directly from a patented process. They may also include threats made in relation to acts which fell within the exceptions to infringement.

67

A recipient includes, in the case of a communication directed to the public or a section of the public, a person to whom the communication is directed.

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11.53 Essentials of patent law

Permitted communication 11.53 A permitted communication is one which, as far as it contains information relating to the threat is made for a ‘permitted purpose’ and the person making the communication reasonably believes is true. The permitted purposes are: (a) giving notice that a patent exists; (b) discovering whether or by whom a patent has been infringed by making a patented product or using a patented process; (c) giving notice that a person has a right in or under the patent, where another person’s awareness of the right is relevant to any proceedings that may be brought in respect of the patent.68 11.54 However, the following are declared not to be permitted purposes: (a) requesting a person to cease doing, for commercial purposes, anything in relation to a product or process; (b) requesting a person to deliver up or destroy a product; or (c) requesting a person to give an undertaking relating to a product or process. 11.55 The information relating to the threat must be necessary for the permitted purpose. The following information is necessary for the permitted purpose: (a) a statement that a patent exists and is in force or an application for a patent has been made; (b) details of a patent, or any right in or under it, are accurate in all material respects and are not misleading in any material respect; (c) information enabling the identification of the products or processes in respect of which it is alleged that acts infringing the patent have been carried out.

68

This list is not exhaustive as a court may, having regard to the above purposes, treat any other purpose as a permitted purpose if it considers that it is in the interests of justice to do so.

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Formalities for the grant of a patent 11.59

Remedies 11.56 The remedies available for an unjustified threat of infringement proceedings are a declaration that the threats are unjustified, an injunction against the continuation of the threats and damages for any loss sustained by the person aggrieved. These are the same remedies that previously were available under the groundless threats action.

Defences 11.57 A person against whom unjustified threats proceedings are brought has two defences. The first is to show that the act for which infringement proceedings were threatened is or would be an infringement of the patent. The second defence is to show that, despite having taken reasonable steps, the person making the threat has not identified any person who has made or imported a patented product for disposal or used a patented process and has notified the recipient before, or at the time of making the threat, of the steps taken.

Immunity for professional advisers 11.58 Equivalent provisions as with other rights subject to the unjustified threats regime apply to the immunity for professional advisers. Typically, in the case of patents these will be lawyers or patent attorneys.

FORMALITIES FOR THE GRANT OF A PATENT 11.59 There are three routes to obtaining patents. Application may be made through the UK IPO69 for a UK patent. Application may be made through the EPO for the grant of patents in one or more of the Contracting States to the EPC.70 A third possibility is application to the World Intellectual Property 69

The operating name of the UK Patent Office. For further information on patent application procedures, see the publications of the UK IPO on its website at https://www.gov.uk/topic/ intellectual-property/patents. 70 Application to the EPO may be made through the UK IPO. If the invention concerns military technology or if it could be harmful to national security or public safety, permission must be obtained from the UK IPO before application may be made abroad: section 23 of the Patents Act 1977. There are presently 38 States party to the EPC, plus two extension States and four validation States.

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11.59 Essentials of patent law Office (WIPO), applying for patents in countries belonging to the PCT.71 Normally, application through the EPC and PCT must be made via the UK IPO. The priority of the first application for a patent for an invention may be used allowing subsequent applications to be made in other countries within 12 months of the filing of the first application, with the advantage that novelty for the later applications is judged at the date of the first filing. For example, an applicant may file an application first in the UK on 1 April 2018. He can then claim the priority of that application for applications for patents for the same invention elsewhere up to midnight 31 March 2019 and they will be examined for novelty based on the state of the art as at 1 April 2018. Patent rights are territorial and a UK patent only gives rights to prevent infringing acts occurring in the UK. That is why it is usually so important to acquire p atents elsewhere. A simplified diagram for the steps in obtaining a UK patent are shown in Figure 11.2. Note that the figure assumes all forms and fees72 are submitted in a timely fashion and that any objections or requests by the patent examiner are successfully dealt with.

Typically 18 months

File application including abstract, specification, drawings and claims

Preliminary search and examination

‘A’ publication

Substantive examination

Third party observations

Grant and ‘B’ publication

Figure 11.2 Application for UK patent (simplified)

71

There are presently 152 States party to the PCT. Alternatively, application may be made through the UK IPO or the EPO. 72 Patent fees at the UK IPO were last amended on 6 April 2018.

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Formalities for the grant of a patent 11.61 11.60 The typical procedure for the grant of a UK patent is that: first the application is filed at the UK IPO including a request for a patent, the full name and address of the applicant, a description of the patent and the filing fee. Within 12 months, the claims, abstract, a form requesting preliminary examination and search together with the search fee must be filed.73 The application will then be checked by a patent examiner to ensure all the necessary documents and forms have been filed and fees paid. The examiner will make a search, typically amongst patent specifications and relevant scientific journals, to check for novelty and obviousness. A search report will then be issued.74 Normally, 18 months after the application was filed,75 the application will be published. This is known as the ‘A’ publication. The specification is no longer confidential and becomes part of the state of the art. Within six months of the date of the ‘A’ publication, yet another form and fee have to be submitted to the UK IPO. The application will lapse if the form and fee are not received within those six months. Once the patent application has been published and, before grant, any person may make written observations on the patentability of the invention. Reasons for the observations must be given and the Comptroller must consider the observations.76 The specification is examined to see whether it complies with the requirements of the Patents Act 1977, especially whether the invention claimed is new and non-obvious, whether the description is adequate so that it can be carried out by a person skilled in the art concerned and whether the claims are clear and consistent with the description. It is common for the specification or claims or both to require amendment in the light of objections raised by the examiner. Once all the examiner’s objections have been met, if they can be, the patent is granted and published as the ‘B’ publication. 11.61 The advantage of applying through the EPO is that a single application is made and processed as such.77 The application may be made in 73

Of course, these may be filed with the original application. In the light of the search report, the applicant may consider withdrawing the application, keeping his invention secret, or amending it. There are rules on the scope of amendments. For example, it is not possible to amend the claims to cover something not already disclosed in the specification as first filed. 75 Or 18 months after the priority date if the priority of an earlier application is claimed. 76 The person making the observations does not, as a result, become a party in any proceedings under the Act before the Comptroller: section 21 of the Patents Act 1977. Under this provision, a person may claim that the invention is not new because he was working the invention before the priority date. 77 Translations may be required to be filed in some Contracting States. 74

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11.62 Essentials of patent law one of the three official languages, being English, French or German. Once granted, it devolves to national patents in the States for which application was made, so we get a European patent (UK), etc. The PCT has the advantage of delaying the time before applications enter the ‘national phase’ when national fees and, where required, translations of the specification must be filed.78 Unlike the position in the UK, patents granted by the EPO may be subject to post-grant opposition, for example, by a party claiming the patent is invalid in one or more respects. In the UK, there are provisions for oppositions post-grant, for example, where an application has been made to amend the patent. The validity of a patent may be put in issue, typically as a defence in infringement proceedings.79

THE UNITARY PATENT AND UNIFIED PATENT COURT 11.62 When a European patent is granted, it devolves to each of the Contracting States for which the patent was sought. Thus, we get a European patent (UK), European patent (France), etc. Issues of renewal, infringement or validity are dealt with by the relevant Contracting State. This is unsatisfactory where two or more bundles of national patents are being infringed in each of the relevant Contracting States. As an example of the situation described as Kafkaesque by Laddie J,80 suppose that Acme plc is the proprietor of patents obtained through the EPO for the UK, France, the Netherlands and G ermany in respect of the same invention. Acme plc suspects that its patents are being infringed in each of those countries. Acme plc has no option but to bring separate legal proceedings for infringement in each of those countries if, in each case, the validity of the patents will be put in issue by each of the defendants in the relevant country. This is so even if the alleged infringers are linked by being members of the same group of companies. The Regulation on

78

For further information on the formalities, see the UKIPO website (www.ukipo.gov.uk), the EPO website (www.epo.org) and the WIPO website (www.wipo.org). 79 Section 74 of the Patents Act 1974. Also, a patent may be revoked on a number of grounds, including that the invention is not a patentable invention or where the specification does not disclose the invention clearly and completely enough so that it could be performed by a person skilled in the art. 80 Sepracor Inc v Hoechst Marrion Roussel Ltd [1999] FSR 746 at para 14 where Laddie J said: ‘a less sensible system could not have been dreamt up by Kafka’.

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The unitary patent and Unified Patent Court 11.64 jurisdiction and the recognition of and enforcement of judgments81 allows, in some cases, a single action to be brought.82 But this does not apply in the case of formal registered rights, such as patents, where the case involves the registration or validity of the right.83 Most patent infringement actions involve counterclaims for invalidity. 11.63 To improve the above situation, and to resolve problems of conflicting decisions in cases in different countries concerning essentially the same patented invention and patent specification, it is intended to provide for a unitary patent which will have effect in the participating Member States. There will be a Unified Patents Court (UPC) to hear cases on the unitary patent. There are 26 participating Member States.84 The unitary patent will come into effect when 13 Member States ratify. This must include France, Germany and the UK, the three EU States with the highest numbers of patent applications before the EPO. 11.64 At the time of writing, 16 Member States have ratified the unitary patent, including France and the UK.85 There is a legal challenge currently underway in the German Federal Constitutional Court on the basis that there will be a transfer of some of the sovereign powers to the UPC. The hearing is scheduled for later in 2018.86 This is all notwithstanding the UK’s position following Brexit. It may be that the UK will continue to participate until the end of any transition period but it does seem difficult to see how it could continue to make use of the unitary patent scheme and the UPC thereafter. 81

82

83 84

85 86

Regulation 1215/2012/EU of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), OJ L 351, 20.12.2012, p.1. A minor amendment has been made to the Regulation to take account of the Unified Patent Court (see Articles 71a to 71d). Such as in the case of an informal right, such as a copyright, and the actions are so closely connected that it is expedient to hear them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. Article 24(4) of the Regulation. Spain and Croatia have decided not to participate. Spain brought an unsuccessful action for annulment of the Regulation in Kingdom of Spain v European Parliament and the Council, Case C-146/13, EU:C:2015:298. A challenge against Regulation 1260/2012, concerning translation arrangements also was defeated in Kingdom of Spain v Council of the EU, Case C-147/13, EU:C:2015:299. The UK ratified on 26 April 2018. Hungary also had constitutional problems with a transfer of sovereign powers to the UPC but may change its constitution so as to overcome these problems.

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11.65 Essentials of patent law 11.65 The legislation behind setting up the unitary patent was Council Decision 2011/167/EU87 and Regulation 1257/2012/EU.88 The UPC was established under the Council Agreement on a Unified Patent Court.89 It will have jurisdiction to settle disputes relating to European patents and European patents with unitary effect. Thus, it will take jurisdiction from Contracting Parties to the EPC with respect to disputes over EPC patents as well as jurisdiction to hear disputes on the new unitary patent. There now follows a brief description of the unitary patent and the Unified Patent Court.

The unitary patent 11.66 The unitary patent will have uniform protection and equal effect in all the participating Member States and may only be limited, transferred or revoked, or lapse, in respect of all the participating Member States. It will, however, be possible to licence the unitary patent in the whole or part of the territories of the participating Member States. The same set of claims must apply to all the participating Member States. That is, for all the 26 Member States at present being the participating Member States. It will not be possible to obtain a European patent with unitary effect in some but not all of the participating Member States.90 11.67 The rights and limitations for the unitary patent are similar, mutatis mutandis, to those applying to national patents devolved from applications through the EPC. There are provisions for exhaustion of rights and the Unitary Patent Regulation is without prejudice to the application of competition law and the law relating to unfair competition. A unitary patent is, of course, an object of property and there are provisions to determine which national law applies, for example, in relation to assignment. The basic rule is that the national law is that of the participating Member State in which the proprietor has his or her residence or principal place of business. 87

Council Decision 2011/167/EU of 10 March 2011 authorising enhanced cooperation in the area of the creation of unitary patent protection, OJ L 76, 23.03.2011, p 53. 88 Regulation 1257/2012/EU of the European Parliament and of the Council of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection, OJ L 361, 31.12.2012, p 1 (the Unitary Patent Regulation). Unless otherwise stated, statutory references in this part of the chapter are to this Regulation. 89 Council Agreement on a Unified Patent Court, OJ C 175, 20.06.2013, p 1. 90 Until ratified by all the participating Member States, the unitary patent will apply only in those States that have ratified at the relevant time. At the time of writing, 16 Member States have ratified the Agreement on the Unified Patent Court.

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The unitary patent and Unified Patent Court 11.70

The Unified Patent Court 11.68 The Unified Patent Court will comprise a Court of First Instance and a Court of Appeal. It will also have a Registry and there will be a Patent Mediation and Arbitration Centre. Appeals from the Court of Appeal will, on points of EU law only, go to the Court of Justice of the EU. The Unified Patent Court will preside over ‘normal’ EPO patents and European patents with unitary effect. The Court’s jurisdiction will be wide-ranging and include infringement actions and defences including counterclaims, actions for declarations of non-infringement, revocation including provisional measures such as interim injunctions. Its jurisdiction will also cover supplementary protection certifications. Outside the Unified Patent Court’s exclusive competence, national courts of States that are participating Members of the EPC will handle cases on matters left to national courts such as proceedings on entitlement to patents and employee inventors.

The Court of First Instance 11.69 The Court of First Instance will have a central division, located in Paris with sections in London and Munich. The London section will hear cases on (A) Human necessities and (C) Chemistry, metallurgy. The Munich section will have responsibility for (F) Mechanical engineering, lighting, heating, weapons, blasting. The remainder will go to Paris, being (B) Performing operations, transporting; (D) Textiles, paper; (E) Fixed constructions; (G) Physics; and (H) Electricity. The Court of First Instance will also have local divisions and regional divisions. A local division will be set up on request of a Contracting Member State. Further local divisions may be set up for every 100 patent cases per calendar year in the previous three years, subject to a maximum of four local divisions. A regional division is similar to a local division but will cover two or more Contracting Member States. A regional division may hear cases in multiple locations. A regional division might be most appropriate for the Benelux countries and may also be appropriate for Contracting Member States with low patent activity. 11.70 Generally, three judges will sit in the Court of First Instance on a multi-national panel. There are further rules which apply to local and regional divisions. Any panel of a local or regional division may request the allocation of a technically qualified judge from the pool of judges. The pool of judges is established under Article 18 and will have legally qualified judges 481

11.71 Essentials of patent law and technically qualified judges. For each field of technology, there must be at least one technically qualified judge. Technically qualified judges must have a university degree and proven expertise in their field of technology. They must also have knowledge of civil law and procedure in patent litigation. The pool of judges will also be available to the Unified Patent Court’s Court of Appeal.

The Court of Appeal 11.71 The Court of Appeal will have its seat in Luxembourg and will sit in a multi-national composition with five judges, three of whom must be legally qualified and two technically qualified judges from the pool of judges. The technically qualified judges will be assigned by the President of the Court of Appeal from the pool of judges. In actions concerning decisions of the EPO in carrying out tasks referred to in Article 9 of Regulation 1257/2012/EU, being the administrative tasks of the EPO in relation to the unitary patent, the Court of Appeal will sit with three legally qualified judges.

The registry 11.72 The registry will perform functions assigned to it in accordance with the Statute of the Unified Patent Court. It will be headed by a Registrar and be responsible for keeping and maintaining the register. This will include records of all cases before the UPC and keeping lists of judges in the pool of judges, European Patent Attorneys entitled to represent parties before the UPC and lists of experts who may be called on the UPC to give expert advice. 11.73 The Registrar will also be required to keep and publicise notifications and opt-outs under the transitional provision in Article 83, including notifying the EPO, to publish decisions of the UPC, subject to protecting confidential information, and to publish annual reports and statistical data. A Deputy Registrar may be appointed and sub-registries may be set-up for all divisions of the Court of First Instance.

Patent mediation and arbitration centre 11.74 The UPC Agreement contemplates a form of alternative dispute resolution. A patent mediation and arbitration centre may be established and will have seats in Lisbon, Portugal, and Ljubljana, in Slovenia. The centre will 482

The unitary patent and Unified Patent Court 11.74 provide facilities for mediation and arbitration of patent disputes which come within the UPC Agreement. Settlements reached through the use of the c entre’s facilities will be enforceable but a patent may not be revoked or limited in mediation or arbitration proceedings. A list of mediators and arbitrators, to be established by the centre, will assist parties in the settlement of disputes.

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Chapter 12

Patents and computer-implemented inventions

INTRODUCTION 12.1 We have seen in the previous chapter that certain things are excluded from the meaning of ‘invention’ to the extent the patent or application for a patent relates to those things as such. Thus, an application to patent a computer program, as such, will be refused on the ground that it is not an invention. This is so no matter how new and inventive the computer program is.1 The law on this is clear and the courts in the UK and the Boards of Appeal at the European Patent Office (EPO) are at one in this respect. But implementing the law is a different matter and there is clear water between the Court of Appeal in England and the EPO.2 Partly this can be explained as an unfortunate consequence of the operation of the doctrine of precedent in England and Wales where early decisions of the Court of Appeal attempted to follow case law at the Technical Boards of Appeal at the EPO. However, case law at the EPO has gone through a process of evolution which could not have been predicted by the Court of Appeal in those decisions. More recently, the Court has accepted that it can depart from its previous decisions but there is one major problem. The case law at the EPO still appears to be in a state of flux and there is an absence of guidance from the Enlarged Board of Appeal which could bring some certainty. At this stage, therefore,

1

2

Neither the European Patent Convention nor the UK Patents Act 1977 define what an invention is apart from stating that certain things, as such, are not inventions. It seems illogical that a computer program which is itself new and inventive may be held not to be an invention. It would be interesting to see what a Scottish court would do if faced with such a case as it would not be bound by an English Court of Appeal decision.

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Introduction 12.3 for the Court of Appeal, and the same would apply in the Supreme Court,3 the problem is that there are no clear principles to follow. 12.2 At first sight the issue of the patentability of computer programs looks simple. An application to patent a computer program as such will be rejected because a computer program as such is not an invention for the purposes of the European Patent Convention (EPC). In spite of the deceptively plain words in the Convention and the UK Act, we have witnessed the unfortunate spectacle of eminent judges and members of the Technical Boards of Appeal grappling about what is meant by the exclusion for nearly 30 years. It is submitted that we are no nearer a complete understanding of the exclusions ‘as such’. As Lewison LJ said in HTC Europe Co Ltd v Apple Inc4 (at para 143): It is, to me at least, regrettable that because these apparently simple words [Article 52(2) and (3) of the EPC and their equivalent in section 1(2) of the UK Patents Act 1977] have no clear meaning both our courts and the Technical Boards of Appeal at the EPO have stopped even trying to understand them … instead we are now engaged on a search for a ‘technical contribution’ or a ‘technical effect’. Instead of arguing about what the legislation means, we argue about what the gloss means.5 12.3 Because of the doctrine of precedent and some early Court of Appeal decisions, heavily influenced by developments at the EPO, the courts here are stuck in a time warp, despite valiant efforts by the Court of Appeal to develop the law, as much as possible in line with the shifting sands of decisionmaking at the Technical Boards of Appeal. One consequence is that an invention involving a computer program could be granted a patent by the EPO only for the devolved UK patent to be held to be invalid if challenged. This area

3

4 5

Assuming that a case ever comes before that court. This did not happen previously in the House of Lords either. Of course, the Supreme Court has the ability to refuse to follow its previous case law under appropriate circumstances. It does so only rarely. [2013] EWCA Civ 451, [2013] RPC 30. Considering the ‘how’ of an invention is not helpful and simply add a further gloss on the wording of Article 52(2) and (3): Really Virtual Co Ltd v Comptroller of Patents [2012] EWHC 1086 (Pat), [2013] RPC 3, per J Baldwin QC sitting as a deputy judge of the Patents Court. In that case it was held that the invention was merely an algorithm expressed in computer software and/or hardware and was, consequently, unpatentable.

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12.4 Patents and computer-implemented inventions of law cries out for clarification. Unfortunately, an opportunity to do just this was rejected by the Enlarged Board of Appeal at the EPO.6 12.4 Apart from fixing the scope of the exclusion of certain things, including computer programs, from the meaning of ‘invention’ as such, there is a further level of uncertainty. That is where one of the other exclusions, such as a method of doing business, is implemented by a programmed computer. Is that an application to patent a computer program, as such, or a business method, as such? Or is it both or neither? To some extent, as we will see, it may depend on whether the invention is before the EPO or the UK courts.

LAYOUT OF THIS CHAPTER 12.5 First, we look at the meaning of ‘computer-implemented invention’, followed by consideration of the decisions of the Boards of Appeal at the EPO. Then some historical background is provided by a description of the patentability of computer programs under the Patents Act 1949. We then turn to the position in the United States, bearing in mind that the US Patents Act has some important differences compared with patent law in Europe. 12.6 We then consider the position under the EPC and look at the development of case law before the Boards of Appeal at the EPO, especially the Vicom/Computer-implemented invention case and subsequent developments at the EPO which have moved away from the Vicom position. The patentability of computer-implemented inventions in the Court of Appeal is considered next, being based primarily on Vicom and how it has been applied, particularly in relation to other excluded material such as business methods, mental acts and the presentation of information. Things then start to get interesting with the English courts recognising that the Boards of Appeal have moved on from Vicom but, because of the doctrine of precedent, the Court of Appeal is unable to respond effectively. 12.7 The Court of Appeal then embarks on refining the UK approach to computer-implemented inventions and eventually comes up with a test

6

President’s reference/Computer program exclusion, Case G3/08, [2009] EPOR 63.

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What is a computer-implemented invention? 12.9 established in Aerotel. We then look at some post-Aerotel cases and refinements, including the development of ‘signposts’ to assist in deciding whether the invention has a relevant technical character. The latest Court of Appeal case, involving multiple touch screen displays as used on hand held devices such as tablet computers is considered. Finally, there are some notes on sufficiency with respect to applications to patent software inventions.

WHAT IS A COMPUTER-IMPLEMENTED INVENTION? 12.8 A computer-implemented invention is an invention within a range of inventions which are implemented by means involving or including a programmed computer. A failed proposal for a Directive on the patentability of computer-implemented inventions,7 intended to harmonise the criteria for patentability and to make the requirements more transparent, defined such an invention as: any invention the performance of which involves the use of a computer, computer network or other programmable apparatus and having one or more prima facie novel features which are realised wholly or partly by means of a computer program or computer programs. 12.9 Computer-implemented inventions include inventions which produce effects which may or may not be themselves among the list of things declared not to be inventions under Article 52 of the EPC.8 For example, a programmed computer may control an industrial process such as a factory production line, a kiln in a pottery factory or a loom for making patterned carpets or curtains. It may control a business method such as in the case of an ATM (cash-point machine), a method of buying and selling company shares electronically or an online auction site. It may perform a mathematical method such as by making interest calculations or calculating square roots. It may perform an act previously carried out by human intellect such as recognising shapes. Where the result of running a computer program is the control of an industrial process such as a bottling plant or converting

7

8

Proposal for a Directive of the European Parliament and of the Council on the patentability of computer-implemented inventions, Brussels, 20.02.2002, COM(2002) 92 final, 2002/0047 (COD). The proposal was defeated in the European Parliament in July 2005. See also section 1(2) of the Patents Act 1977.

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12.10 Patents and computer-implemented inventions images into digital form, an application to obtain a patent is likely to succeed in the UK, at the EPO and in the US, providing the process is new and inventive. Other forms of effect, such as carrying out a method of doing business, which are themselves excluded from the meaning of invention, and which result from running a computer program, are the subject of much controversy.

STATUS OF DECISIONS OF THE BOARDS OF APPEAL AT THE EPO 12.10 Decisions of the Boards of Appeal at the EPO are of persuasive authority only. They are not binding on the courts in the Contracting States which are party to the EPC but, naturally, there is a tendency to follow them where at all possible. The decisions of the Boards of Appeal and, especially those of the Enlarged Board of Appeal, at the EPO are usually treated with the greatest respect and one would normally expect them to be followed in the domestic courts. The courts in the UK are required to take judicial notice of decisions of the Boards of Appeal at the EPO under section 91(1)(c) of the Patents Act 1977. This is not to say that the UK courts must follow those decisions. 12.11 One problem is that the doctrine of binding precedent is not necessarily given the same importance at the EPO as it is in the courts in the UK. Over the years, there has been a significant change in how the Boards of Appeal at the EPO decide applications to patent software inventions. The Boards of Appeal have distanced themselves from VICOM/Computerrelated invention,9 which was, at the time, regarded as the leading case at the EPO on software inventions. This case was considered to be correct by the Court of Appeal and followed in a number of cases. This has led to some difficulties as the Court of Appeal, except in limited and exceptional circumstances, is bound by its own previous decisions, as will be seen. What has been extraordinary from the perspective of the UK courts is that the Boards of Appeal, in the decisions which moved away from Vicom, failed to expressly mention that case and the fact that they no longer considered that it represented the correct approach to the patentability of software inventions.

9

Case T208/84, [1987] 2 EPOR 74.

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Patentability under the Patents Act 1949 12.14

PATENTABILITY UNDER THE PATENTS ACT 1949 12.12 Unlike the present Act and the EPC, the Patents Act 1949 did contain a definition of ‘invention’, being ‘any manner of new manufacture … and any new method or process of testing applicable to the improvement or control of manufacture …’.10 The phrase ‘any manner of new manufactures’ dates from the Statute of Monopolies 1623.11 Another feature of the 1949 Act which sets it apart from the current Act and the EPC is that it contained no express exclusion from the meaning of invention for computer programs and other matter excepted under Article 52 of the EPC. A number of patents were granted under the 1949 Act for inventions implemented by a programmed computer. The focus was on whether the invention was a manner of new manufacture. 12.13 In Gever’s Application,12 data processing apparatus was arranged to work in a certain way associated with punched cards inserted into it. The purpose of the apparatus was to file world trade marks so that they could be easily retrieved and checked for similarity and prior registration compared with an application to register a new trade mark. The application for a patent was described by Graham J to be an application for a ‘manner of new manufacture’ because he thought that the punched cards were analogous to a cam for controlling the cutting path of a lathe. This was distinguished from a card which merely had written or printed material on it, intended to convey information to the human eye or mind, and not meant to be ancillary to some machine by being specially shaped for that purpose. The invention was not a scheme or plan as had been held by the patent examiner but ‘… a piece of apparatus which it is admitted, as I understand it, can only function in a certain way when it has the appropriate series of cards appropriately punched and inserted into it’.13 12.14 In Burrough’s Corpn (Perkin’s) Application,14 computer programs controlled the transmission of data to terminals from a central computer (a communications system). The system, including the computer programs,

10

Section 101(1) of the Patents Act 1949. 21 Jac 1 c 3, section 6(a). 12 [1969] FSR 480. 13 Per Graham J at 484. 14 [1973] FSR 439. 11

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12.15 Patents and computer-implemented inventions was held to be patentable whether or not the programs were embodied in physical form. Although, in this case, the programs were ‘hard-wired’ – permanently embedded in the electronic circuits of the equipment. Graham J said (at 450): in our view computer programmes which have the effect of controlling computers to operate in a particular way, where such programmes are embodied in physical form, are proper subject matter for letters patent. 12.15 A distinction between different storage media was made under the 1977 Act in Gale’s Application.15 This concerned an application for a method of calculating square roots by program instructions contained in a ROM chip. The application was rejected but the applicant’s appeal to the Patents Court was allowed by Aldous J who said that the claimed invention related to a product (the ROM chip) and was, therefore, patentable. He then said that the program would not have been patentable had it been stored on a floppy disk. This decision would have had the effect of making a software designer’s choice of storage media crucial to the question of patentability. The Comptroller of Patents’ appeal to the Court of Appeal was successful. Nicholls LJ said: It would equally be nonsense, if a floppy disc containing a computer program is not patentable, that a ROM characterised only by the instructions in that program should be patentable.16

POSITION OF SOFTWARE PATENTS IN THE UNITED STATES 12.16 The US Patents Act 195217 has a wide definition of what is patentable. § 101 of that Act states: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. 12.17 The US Supreme Court has long held that § 101 contains an important implicit exception in that laws of nature, natural phenomena and abstract 15

[1991] RPC 305. Ibid at 325. 17 35 USC. 16

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Position of software patents in the United States 12.19 ideas are not patentable.18 However, this requires something of a balancing act. Nature, natural phenomena and abstract ideas underpin most forms of scientific and technological work. The notion of pre-empting from patenting inventions based on nature, natural phenomena and abstract ideas could seriously harm innovation. Moreover, this would appear to be contrary to the US Constitution, Article I, § 8, cl 8 which endows upon Congress the power ‘to promote the P rogress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries’. The difficulty in most jurisdictions, including the US, the UK and Europe is how to distinguish between abstract ideas, laws of nature and so on (unpatentable) and new and inventive technological means implementing them (in principle, patentable). 12.18 At one time it was thought in the US that computer programs were mathematical algorithms and unpatentable as such. The reason being that mathematical algorithms were not considered to fall within the meaning of patentable inventions. In cases such as Gottschalk v Benson19 and Parker v Flook,20 the US Supreme Court held that an algorithm or mathematical formula is like a law of nature and cannot be patented as such. Both of those cases concerned computer related inventions. The former was for claims to an algorithm to convert decimal numbers into binary code. The latter was for a method of calculating a number for setting off an alarm limit in relation to a chemical process, such process itself not being claimed. However, in Diamond v Diehr,21 the US Supreme Court confirmed that a computercontrolled process used in rubber curing was patentable. The applicants sought to patent a process for curing synthetic rubber. They did not seek a patent for a mathematical formula as such. 12.19 Since Diamond v Diehr, the US had become much more liberal in granting patents for software inventions generally and the courts accepted that computer programs and business methods are patentable in principle. Unlike the EPC, there is no express exemption although early case law in the US accepted that certain things are not patentable such as laws of nature, newly

18

Association for Molecular Pathology v Myriad Genetics Inc, 569 US 576 (2013) and other cases going back to Le Roy v Tatham, 55 US 156 (1852). 19 409 US 63 (1972). 20 437 US 584 (1978). 21 450 US 175 (1981).

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12.20 Patents and computer-implemented inventions discovered minerals or wild plants, scientific theories, abstract ideas, physical phenomena and suchlike.22 12.20 In State Street Bank & Trust Co v Signature Financial Group,23 the Federal Court adopted a ‘useful, concrete and tangible result’ test for business method inventions. Once the invention is reduced to some form of practical application, it becomes patentable, provided the other requirements are satisfied, such as novelty, non-obviousness and adequacy of disclosure. The invention in question involved the transformation of data, representing discrete dollar amounts, through a series of mathematical calculations, by a machine, into a final share price. This was held to be patentable as it was implemented by data processing apparatus and not merely a mathematical method or an abstract idea. 12.21 The US Supreme Court overturned this ‘useful, concrete and tangible result’ approach in Bilski v Kappos.24 The Supreme Court held that the US Patents Act did not exclude business methods from patentability. The court cited §273(b)(1) of the US Patents Act which states that in the case of an action for infringement based on ‘a method in [a] patent’, there is a defence of prior use. That shows that the legislators clearly intended that business methods be patentable. However, that does not suggest a broad patentability of such inventions. The Supreme Court declined to adopt a ‘machine or transformation’ test as the exclusive test for business method patents but left it open to courts to develop other limiting criteria to further the Patents Act’s purposes which are not inconsistent with its text. 12.22 Although the US previously adopted a generous approach to business method software inventions, it has not been without some criticism. The State Street case paved the way for a flood on applications to patent business methods. The Supreme Court in Bilski has stemmed that flood. It may be much harder to obtain patents for business methods unless they are put into effect by a programmed computer.

22

For example, Einstein would not have been allowed to patent E=mc2, nor would Newton get a patent for his theory of gravity. Archimedes’ screw pump for lifting water uphill makes use of the laws of hydraulics. Those laws are not patentable as such but the screw pump would be, had it been new. 23 149 F 3d 1368 (Fed Cir, 1998). 24 561 US 593 (2010).

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Position of software patents in the United States 12.24 12.23 Subsequent case law before the Federal Circuit gives a clue as to how the courts will develop other limiting criteria. For example, in Research Corpn Techs v Microsoft Corpn,25 an image transformation process was held to be eligible for a patent as it could not, as a practical matter, be performed by the human mind. This should be contrasted with Cybersource Corpn v Retail Decisions Inc26 which involved a fraud detection method using computer technology. However, it was deemed unpatentable because it was essentially a mental process. In other words, an abstract idea.27

The ‘Alice’ two-step test 12.24 The US Supreme Court refined a two-stage test for the patentability of computer-implemented inventions in Alice Corpn Pty Ltd v CLS Bank International28 in the context of a claim for a computer method of minimising settlement risks in financial transactions using a third-party intermediary,29 together with associated system and media claims. The first step is to identify the abstract idea represented by the claim. The second step is to determine whether the balance of the claim adds significantly more. Rehearsing previous case law, the Supreme Court noted that the inclusion of ‘… a generic computer in a claim cannot transform a patent-ineligible abstract idea into a patent-eligible invention’.30 This is in accordance with the pre-emption concern underlying the § 101 jurisprudence in that patenting abstract ideas prevents others patenting inventions comprising new technical applications of abstract ideas. The Supreme Court continued by stating that (at 2358, 2359): The fact that a computer ‘necessarily exist[s] in the physical, rather than purely conceptual, realm’ [as argued by the petitioner] is beside the point. There is no dispute that a computer is a tangible system (in § 101 terms, a ‘machine’) or that many computer-implemented claims are formally addressed to patent-eligible subject matter. But if that were the end of the

25 26 27 28 29 30

627 F 3d 859 (Fed Cir 2010). 645 F 3d 1366 (Fed Cir, 2011). Compare with Raytheon Co’s Application [1993] RPC 427, infra. 134 S.Ct. 2347 (2014), 573 US ___ (2014). Following the Supreme Court decision in Mayo Collaborative Services v Prometheus Laboratories Inc, 556 US 66 (2012). A form of financial escrow arrangement. At p 2358.

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12.25 Patents and computer-implemented inventions § 101 inquiry, an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept. Such a result would make the determination of patent eligibility ‘depend simply on the draftsman’s art’ [per Parker v Flook]31 thereby eviscerating the rule that ‘laws of nature, natural phenomena, and abstract ideas are not patentable’. 12.25 The Court of Appeals for the Federal Circuit has applied the Alice test subsequently. In Enfish LLC v Microsoft Corpn,32 the Court said that it did not read Alice as meaning that all improvements in computerrelated technology are inherently abstract and must, therefore, be considered at step 2. Some improvements in computer-related technology when appropriately claimed are not abstract, such as chip architecture, an LED display and so on. Nor did the Court accept that software claims are inherently abstract and must, therefore, be considered at the second step of the Alice test. The claim in the present case was for a self-referential database. The Court of Appeals held that the claims were not directed to an abstract idea but to a specific improvement in the way computers operate in the form of a self-referential table. Consequently, the patent was valid. The Court also noted that many of the cases on computer-implemented patent claims centred on an abstract idea implemented by conventional computer technology. 12.26 Patent claims were directed to crowdfunding in Gust Inc v AlphaCap Ventures LLC.33 The District Court held that this was a fundamental economic concept and way of organising human activity and, as such, was an abstract idea. The first step in Alice was, therefore, not satisfied. An argument that the claims were directed to improvements in computer functionality was rejected because the claimed computer components were routine and conventional in the industry. The claims did not include an inventive concept sufficient to render the abstract ideas patent eligible under the second step of Alice.34 31

Parker v Flook, 437 US 584 (1973) at 593. A method of updating alarm limits in catalytic conversion process was held unpatentable, the only novel concept was the use of a mathematical method operated by a computer. 32 822 F 3d 1327 (Fed Cir 2016). 33 226 F Supp 3d 232 (SD NY, 8 December 2016). 34 An appeal to the Court of Appeals for the Federal Circuit concerning attorney fees was successful by a majority verdict: Gust Inc v AlphaCap Ventures LLC, 28 September 2018.

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Position of software patents in the United States 12.30 12.27 In Visual Memory LLC v Nvidia Corpn,35 the patent in suit claimed to overcome deficiencies in computer memory systems by creating a memory system with programmable operational characteristics that could be used with multiple different processors without the accompanying reduction in performance. The Court of Appeals for the Federal Circuit held that the patent claimed an improvement to computer memory systems and was not directed to an abstract idea. The decision of the District Court was reversed and the case remanded for further proceedings.36 The Court of Appeals, by finding that the claims were not directed to an abstract idea, passed the first step of the Alice test and there was no need to go on to consider the second step. 12.28 Apart from one claim, the US Court of Appeals for the Federal Circuit held, in Data Engine Technologies LLC v Google LLC,37 that the claims were not abstract but were directed to a specific improved method for navigating through complex three-dimensional electronic spreadsheets and, as such, were outside Alice step 1. 12.29 The situation in the US as to the patentability is whether what is claimed is within the implicit exceptions in 35 USC § 101, being nature, natural phenomena or abstract ideas. If it is, then the question becomes whether there is something else in the claim that is outside those exceptions and is itself new and inventive. For example, the application of an algorithm to design a new method of data analysis. If the ‘something else’ is simply using the excepted thing in generic computer technology, the second step in Alice is not satisfied. On the other hand, if what is claimed is not within the exceptions the issue is simply whether the alleged invention falls within the meaning of § 101. 12.30 Readers should contemplate the implicit exceptions to 35 USC § 101 and the non-exhaustive but explicit list of things regarded as noninventions under Article 52(2) of the EPC, bearing in mind the proviso in Article 52(3). In terms of computer-implemented inventions, is the end result the same in the US as in the case of the Boards of Appeal at the EPO or the UK courts or both?

35

867 F 3d 1253 (2017). There could be further issues not considered at first instance, such as whether the invention was new and inventive. 37 9 October 2018. 36

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12.31 Patents and computer-implemented inventions

DEVELOPMENT OF CASE LAW ON COMPUTERIMPLEMENTED INVENTIONS AT THE EPO 12.31 VICOM/Computer-related invention38 was a watershed decision which heavily influenced case law in Contracting States which were members of the EPC. It was also cited as authority in numerous cases before the Boards of Appeal at the EPO. Quietly and almost unnoticed, the Boards of Appeal moved away from Vicom in a series of decisions in which Vicom was not even mentioned. Before looking at the decision in Vicom and subsequent developments, it is worthwhile setting out Article 52 of the EPC once more.39 Article 52 Patentable inventions (1) European patents shall be granted for any inventions, in all fields of technology, provided that they are new, involve an inventive step and are susceptible of industrial application. [emphasis added.] (2) The following in particular shall not be regarded as inventions within the meaning of paragraph 1: (a) discoveries, scientific theories and mathematical methods; (b) aesthetic creations; (c) schemes, rules and methods for performing mental acts, playing games or doing business, and programs for computers; (d) presentations of information. (3) Paragraph 2 shall exclude the patentability of the subjectmatter or activities referred to therein only to the extent to which a European patent application or European patent relates to such subject-matter or activities as such. 12.32 The current version of the EPC includes the words ‘in all fields of technology’.40 Arguably, this shows a leaning towards patenting software 38

Case T208/84, [1987] 2 EPOR 74. Readers should note that the equivalent provisions in the Patents Act 1977 are intended to have the same effect. 40 This appeared in the 2000 version of the EPC and was implemented in the 13th edition of the EPC, which came into effect on 13 December 2007. The 16th edition was published in 2016 but retains this wording. 39

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Development of case law 12.34 inventions and biotechnology patents. However, even though the EPO has become more liberal in granting patents for software inventions (or computer-implemented inventions as they are often referred to at the EPO), it is likely that the examination process will remain rigorous and will avoid the criticisms often levelled at the past practice at the US Patent and Trademark Office which is often accused of granting too many patents that are of too low quality and often quite trivial.

Vicom/Computer-related invention 12.33 The main claim in VICOM/Computer-related invention41 was for ‘a method of digitally processing images in the form of a two-dimensional array’ by an operator matrix, ‘characterised in that the method includes repeated cycles of sequentially scanning the entire data array with a small generating kernel operator matrix … according to conventional error minimisation techniques’. Another claim was to an apparatus for carrying out the method described in the main claim. It was possible to implement the method and apparatus using a suitably programmed conventional computer. The examination division of the EPO rejected the application on the basis that it was a claim to a mathematical method and/or computer program as such. 12.34 As regards the objection based on mathematical method, the Board of Appeal held that a mathematical method as such is an abstract concept prescribing operations on numbers, without producing any direct technical result. On the other hand, if a mathematical method is used in a technical process which is carried out on a physical entity by technical means, it cannot be regarded as a mathematical method as such. It is a technical method. A claim directed to that technical process cannot be regarded as a claim to a mathematical method as such. Similarly, if a claim is directed to a technical process which is carried out under the control of a computer program (whether implemented in the hardware or the software), then the claim cannot be regarded as related to a computer program as such. It is an application of the program for determining the sequence of steps in the process and it is the process for which protection is sought. In the present case, the subject matter of the invention was the practical application of a computer program,

41

Case T208/84, [1987] 2 EPOR 74.

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12.35 Patents and computer-implemented inventions the technical effect resulting from the operation of the programmed computer and not the computer program itself. 12.35 The Board of Appeal in Vicom made a number of other important points. First, a computer of a known type which is set up to operate according to a new program cannot be considered to be part of the state of the art. Secondly, it would be illogical to grant protection for a technical process controlled by a suitably programmed computer but not to protect the computer itself when set up to execute the control. Finally, the Board of Appeal said that an invention which is patentable under conventional criteria should not be deprived of its patentability merely because it is implemented by modern technical means comprising a programmed computer. The Board of Appeal also said that a process carried out under the control of new hardware and/or software is not necessarily capable of industrial application, an example being in the case of a game.42 12.36 In the years following Vicom, the Boards of Appeal often referred to Vicom in their decisions. At this stage, it could be said that the Boards of Appeal at the EPO were developing the jurisprudence in a way which built upon and did not conflict with Vicom.43 In IBM/Document abstracting and retrieving,44 an application to patent a system for automatically abstracting and retrieving a document was rejected. The Board of Appeal explained that the change in a physical entity in Vicom referred to a change in a real thing even if represented as an electric signal. In the present case, the electric signals represented information stored in a document, which could be of any nature. The activity did not bring about a change in the document but merely derived new information from it. Importantly, the Board of Appeal also noted Article 52(2)(c) covered activities excluded which did not aim at any direct technical result. Rather they were of an abstract and intellectual character. 12.37 In IBM/Card Reader45 the Board of Appeal at the EPO built on the requirement for a technical method. This would exclude a method such as

42

Note that the Board did not conclude that such a process was not an invention. Rather it considered whether it was capable of industrial application. 43 Indeed, Vicom was usually treated as authority for the requirement of a technical process. 44 Case T22/85, [1990] EPOR 98. 45 Case T854/90, [1994] EPOR 89.

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Development of case law 12.39 a business method even if it involved a technical component. In IBM/Card reader, the Board of Appeal dismissed an appeal against a refusal to grant a patent in relation to an invention whereby an automatic card-reading machine could read any card. This would allow the use of any bank card with a machine such as an automated teller machine (ATM or cash-point machine) to carry out a transaction. The Board confirmed that the subject matter of a patent must have a technical character and be industrially applicable. It also went on to say that applying technical means to perform a business activity does not mean that the business activity has a technical character and is thus an invention. 12.38 Vicom was also treated with great respect in IBM/Computer programs.46 In that case, IBM had applied to patent a data processing system used to display information in windows such that any information displayed in one window and obscured by a second window is moved automatically to a new position so that it was no longer obscured. The first few claims concerned the process and had been accepted by the EPO as having a technical effect but some of the subsequent claims were rejected. These claims focused on a computer program product, being a storage device containing the program, and which, when run, caused the computer to execute the process. 12.39 The Board of Appeal held that a computer program product was not excluded, per se. It confirmed that computer programs must have a technical character, for example, in the effects resulting from the running of the program, to be patentable. Furthermore, a claim for a computer program product may have a technical character resulting from the potential technical effect which will be revealed when the program is run on a computer. The same applies to the apparatus adapted for carrying out the technical effects. Therefore, in principle, a patent may be available for: (a) a computer program which has a technical character because, when run, it causes technical effects; (b) a computer when so programmed to create those technical effects, and (c) a computer program product containing the program which, when run in a computer, creates the technical effects.

46

Case T935/97, [1999] RPC 861.

499

12.40 Patents and computer-implemented inventions It was not long, however, until the Boards of Appeal stopped referring to Vicom and moved away from that case and the line of authorities flowing from it. It can be said that the current practice at the EPO is significantly different.

The move away from Vicom at the EPO 12.40 The change in the application of Article 52(2) and (3) in relation to software inventions by the Boards of Appeal was not a sudden change. It was more of a series of incremental changes without express disapproval of Vicom by the Boards of Appeal at the EPO. The cases described below trace the changes. 12.41 The first major step was taken in PBS Partnership/Controlling pensions benefits system.47 The Board of Appeal at the EPO confirmed that it was implicit that an invention had to have a technical character to be patentable. It further stated that methods only involving economic concepts and practices of doing business are not inventions for the purposes of the EPC and a feature of a method which concerned the use of technical means for a purely non-technical purpose and/or for processing purely non-technical information does not necessarily confer a technical character to such a method. However, the Board went on to say that an apparatus constituting a physical entity or concrete product, suitable for performing or supporting a business or economic activity, is an invention within the meaning of the EPC. The Board then rejected the notion that the question of whether the invention made a technical contribution to the art was relevant to whether it was an invention for the purposes of the EPC. It would, however, be relevant to ask whether the alleged invention was new and involved an inventive step. The Board of Appeal held that the invention in question did not involve an inventive step. Nevertheless, the practical effect of the decision was to undermine the exclusion of computer programs ‘as such’. Although a programmed computer could be an invention, the state of the art included the idea of using computer technology in the economic sector. The notional skilled computer programmer would think the invention obvious. 12.42 It could be argued that the previous allegiance to the need to look for a technical contribution, an almost inevitable result of Article 52(2) and (3), 47

Case T931/95, [2002] EPOR 522.

500

Development of case law 12.44 obscured the basic nature of what should constitute a patentable invention, namely, novelty, inventive step and industrial applicability. Surely, there is no further need for the exclusions in Article 52(2). Most new software applications and computer programs will fail the test for inventive step. Automating an existing process will not usually involve an inventive step.48 Many new methods of doing business are likely to lack industrial applicability. If a new and inventive computer program has an industrial application then it surely should, in principle, be patentable. The following cases show how close the Boards of Appeal at the EPO have moved towards this sentiment. 12.43 In HITACHI/Auction method,49 the alleged invention was a method of conducting online auctions. One problem was that of delays in computer networks when persons placed bids. The problem was solved by the use of a Dutch auction system. A person bidding at the auction would place two bids, one being his desired bid price, the other being his maximum bid price. This method would overcome problems caused by delays in transmitting bids. The application for a patent was refused. It did not involve an inventive step and the problem could just as easily be overcome by the use of postal bids. Although the Board of Appeal confirmed that a method using technical means, as well as the apparatus itself was an invention, the subject-matter of the application was the circumvention of a technical problem rather than a solution of the problem by technical means. The Board went on to say that the question of whether an invention has a technical character can be implied from the physical features of an entity; the nature of an activity; or conferred on a non-technical activity by use of technical means.50 [emphasis added.] 12.44 The Board of Appeal also said that if a method was designed to be particularly suitable for being performed on a computer then, arguably, it had a technical character. In Hitachi, the Board said that a purely abstract concept devoid of technical implications could not be an invention, being within the exclusion in Article 52(2). However, anything carried out by a programmed computer, whether claimed in that way, as a concrete entity, or as the activity performed by the programmed computer, has a technical

48

Unless, for example, it was considered impossible in the past or if it brought about some hitherto unexpected benefit. 49 Case T258/03, [2004] EPOR 548. 50 This is in contrast to the decision of the Board of Appeal in IBM/Card reader, Case T845/90, [1994] EPOR 89. This case was not mentioned in Hitachi, nor was Vicom.

501

12.45 Patents and computer-implemented inventions character and is an invention. In this respect the Board of Appeal differed from the decision in PBS Partnership which focused on claims to a concrete entity rather than the method itself. 12.45 The Board of Appeal in Hitachi realised that its interpretation of ‘invention’ was very broad and would include ‘… activities which are so familiar that their technical character tends to be overlooked, such as the act of writing, using pen and paper’. The Board also noted that it had long been accepted that the exclusion of things as such, meant that a mix of technical and non-technical features may be patentable.51 Of course, Hitachi does not mean that all methods using technical means are patentable. They still have to satisfy the other requirements, in particular, novelty and inventive step. 12.46 In MICROSOFT/Clipboard format I52 and MICROSOFT/Clipboard format II,53 the Microsoft Corporation applied to patent inventions concerning the use of clipboard formats to transfer non-file data between software applications. In both cases, the Board of Appeal, following Hitachi, confirmed that a method using technical means was an invention and a computer system including a memory (a ‘clipboard’ in the present case) was a technical means. A method implemented in a computer system represents a sequence of steps actually performed and achieving an effect, and not a sequence of computer-executable instructions (that is, a computer program) which only have the potential of achieving such an effect when loaded into, and run on, a computer. The claims in the application were not, therefore, claims to a computer program as such. Even though a method of operating a computer may be put into effect by means of a computer program, a claim to such a method does not claim the computer program as such. 12.47 The Board of Appeal confirmed that the steps in the claimed method solved a technical problem by technical means. Functional data structures (clipboard formats) were used independently of any cognitive content in order to enhance the internal operation of a computer system with a view to facilitating the exchange of data among various application programs. The claimed steps thus provided a general-purpose computer with further functionality.

51 Following

Koch & Sterzel/X-ray apparatus, Case T26/86, [1988] EPOR 7. Case T424/03, [2006] EPOR 39. 53 Case T411/03, [2006] EPOR 40. 52

502

Development of case law 12.49 The programmed computer assists the user in transferring non-file data into files. Finally, a computer program on a technical carrier is not a computer program as such and may contribute to the technical character of the subject-matter of what is claimed to be a patentable invention. The Board of Appeal confirmed that the Microsoft inventions were new and inventive over the prior art.54 12.48 By accepting that a method using technical means was an invention and a computer system including a memory was a technical means, the Board of Appeal adopted a very wide meaning of invention. The focus now seems to be more on whether the alleged invention is new and involves an inventive step. However, there is an important distinction between the Microsoft, PBS and Hitachi cases. In Microsoft, the technical character was not directed to other material declared to be non-inventions as such, for example, business methods and the presentation of information. 12.49 Subsequent cases at the EPO took an approach as set out in HITACHI/ Auction method, where appropriate. For example, in IGT/Computer implemented game process,55 in respect of an application in relation to a method of operating an electronic video poker machine, the Board of Appeal held: 1.

The implementation of a card game in an electronic video poker machine involved steps implying the use of an appropriate display and control means. This bestowed a technical character on the claimed method as a whole.56

2.

Where an invention consists of a mixture of technical and non-technical features, consideration must be directed to the actual contribution of each feature to the technical character by: (a) determining the difference between the claimed subject-matter and the prior art, so as to allow: (b) the effect of each difference in relation to the prior art to be established, from which: (c) the extent to which the respective differences contributed to the technical nature (that is, its technical ‘residue’) could be inferred.

54

The closest prior art was Microsoft’s own Windows 3.1 software. Case T1023/06, [2007] EPOR 36. 56 HITACHI/Auction method was expressly referred to by the Board of Appeal. 55

503

12.50 Patents and computer-implemented inventions 12.50 In the present case, the differences addressed the technical problem of enabling a machine to play more than one game with improved readability. However, the implementation of the differences was straightforward and obvious. They were a non-technical modification of game rules which did not contribute to inventive step. The implementation of the changed rules within a machine in an obvious manner did not require any inventive step. 12.51 In Walker/Text processing,57 the application was for a method for enhancing text presentation from a machine-readable natural language text based on reader specific parameters including at least the viewing field of dimensions including parsing and folding rules. The Board of Appeal held that the mere fact that mental activities were involved did not necessarily render the subject-matter non-technical as the technical solution was in providing a tool serving to assist or replace human activities, including mental ones. Technical aspects could be present in the design and use of a graphic interface. Therefore, means for analysing text, dividing it into segments related to the physical arrangement of the overall image structure of the displayed text with a view to solving the technical problem of improving text presentation, specifically readability on a display, was not excluded by Article 52(2) of the EPC as such. 12.52 Probably the most important aspect of the above line of authorities is that the fact that the technical contribution lies within one of the other things excluded from the meaning of invention as such is not fatal to the application. This is in direct conflict with the present case law at the English Court of Appeal and High Court, as will be seen later.58 That is not to say that a business method, for example, performed by a programmed computer is patentable. There is a still a requirement for a technical problem to be solved by a technical means.59

57

Case T49/04, [2007] EPOR 34. Its approach also is in conflict with the US approach which denies patent protection to inventions consisting of an abstract idea performed by a generic computer, as in Alice Corpn Pty Ltd v CLS Bank International, 573 US __ (2014), 134 S Ct 2347 (2014), discussed supra. 59 Duns Licensing Associates/Estimating sales activity, Case T154/04, [2007] EPOR 38. The use of mathematical and statistical methods to evaluate data about sales activity was a method of business research as such. 58

504

Development of case law 12.54 12.53 One thing that the Technical Boards of Appeal at the EPO have singularly failed to do is to develop, other than in a piecemeal and haphazard fashion, the scope of the exclusion of computer programs as such and computer-implementations of other exclusions, for example, business methods as such. Largely, this is a result of the nature of the cases before the Boards and their failure to develop the law in this area in a principled manner with scant regard to the underlying purposes of the exceptions in Article 52(2) and (3). This has been compounded by the lack of any significant, or indeed, any, guidance from the Enlarged Board of Appeal. This is a great shame, especially as the then President of the EPO made a reference to the enlarged Board for resolution of the scope of Articles 52(2) and (3) in relation to computer programs.60 12.54 The questions referred by the President were: 1

Can a computer program only be excluded as a computer program as such if it is explicitly claimed as a computer program?

2

(a) Can a claim in the area of computer programs avoid exclusion under Article 52(2)(c) and (3) merely by explicitly mentioning the use of a computer or a computer readable storage medium? (b) If question 2(a) is answered in the negative, is a further technical effect necessary to avoid exclusion, said effect going beyond those effects inherent in the use of a computer or data storage medium to respectively execute or store a computer program?

3

(a) Must a claimed feature cause a technical effect on a physical entity in the real world in order to contribute to the technical character of the claim? (b) If question 3(a) is answered in the positive, is it sufficient that the physical entity be an unspecified computer? (c) If question 3(a) is answered in the negative, can features contribute to the technical character of the claim if the only effects to which they contribute are independent of any particular hardware that may be used?

4

60

(a) Does the activity of programming a computer necessarily involve technical considerations? President’s reference/Computer program exclusion Case G3/08, [2009] EPOR 63.

505

12.55 Patents and computer-implemented inventions (b) If question 4(a) is answered in the positive, do all features resulting from programming thus contribute to the technical character of a claim? (c) If question 4(a) is answered in the negative, can features resulting from programming contribute to the technical character of a claim only when they contribute to a further technical effect when the program is executed? 12.55 The Enlarged Board of Appeal declared that the reference was inadmissible in Programs for computers.61 Under Article 112(1)(b), the President may refer questions to the Enlarged Board of Appeal in order to ensure uniform application of the law or if a point of law of fundamental importance arises or where two Boards of Appeal have given different decisions on the question referred. As to question 1, the Enlarged Board of Appeal stated that Duns Licensing Associates/estimating sales activity62 had created a practical system for delimiting innovations for which a patent could be granted. As to question 2, there was no divergence identified by the referral and the question was, therefore, inadmissible. As to questions 3 and 4, there was no divergence sufficient to support the referral and, consequently, these questions were inadmissible. However, the Enlarged Board of Appeal made some important points, including: ••

the word ‘different’ in Article 112(1)(b), based on the French and German versions of the EPC, was better interpreted as meaning ‘divergent’;63

••

the development of jurisprudence over time might mean that the decisions in some cases are different to decisions in others but that alone cannot justify referral to the Enlarged Board;

••

changes in direction in legal development are a normal part of judicial activity and it is wrong to speak of divergent decisions simply because departures from earlier practice are deemed necessary when homing in on the right solution to a specific case;

••

even a radical drift in jurisprudence need not fall within Article 112(1)(b) provided the Board of Appeal corrects itself, preferably in an explicit fashion, declaring the earlier practice to be no longer relevant;

61

Case G3/08, [2010] EPOR 36. Case T154/04, [2007] EPOR 38. 63 The official languages of the EPC are English, French and German. All have the same status. 62

506

Development of case law 12.57 ••

there was a clear difference between the decisions in IBM/computer programs64 and MICROSOFT/clipboard format I65 and, although the seven years between the cases was not long in legal terms, the cases were, nonetheless, compatible with the notion of the development of case law.

12.56 As for greater harmonisation across Europe, the Enlarged Board of Appeal said (at para 29): Even the essentially commendable desire for harmonisation expressed by Jacob L.J. in the Aerotel Ltd v Telco Holdings Ltd judgment can be taken up by the Enlarged Board only to the extent possible under the EPC, even if his suggestion might significantly advance the cause of legal uniformity in Europe. When judiciary-driven legal development meets its limits, it is time for the legislator to take over. 12.57 It is difficult to know how a legislator could restate the exceptions in a more meaningful way that judges and Boards of Appeal could apply in a consistent manner. Surely the words are straightforward enough. A computer program is not an invention if the application relates to the computer program as such. What could be simpler? If the application is for a patent solely for a computer program, it is excluded. Otherwise, the application can proceed to examination to ensure it meets the other requirements, being novelty, inventive step, industrial application and sufficiency. The only fly in the ointment is if the application involves the implementation by programmed computer of one of the other exclusions, such as a method of doing business. However, Article 52(2) and (3) says that the list of non-inventions is excluded only to the extent that the patent or application for a patent relates to that thing as such (emphasis added).66 An application for a method of doing business implemented by a programmed computer is not an application for a business method as such nor is it an application for a computer program as such. This approach would not open the floodgates to applications to patent business methods and computer programs because they would still have

64

Case T1173/97, [2000] EPOR 219. Case T424/03, [2006] EPOR 39. 66 The reference to a patent as well as an application for a patent is needed if there is a challenge to the validity of a granted patent on the basis of Article 52(2) and (3). 65

507

12.58 Patents and computer-implemented inventions to be, inter alia, novel and inventive. Implementing a business method by programmed computer would be unlikely to meet the basic requirements in the vast majority of cases. 12.58 Further support for the view that implementing business methods by technical means is not a claim to a business method as such, as in HITACHI/ Auction method67 was given in MEI/Currency validator.68 The patent examiner objected to a claim to a method of programming a currency tester comprising storing data for executing a method as described in the preceding claims. However, the Technical Board of Appeal, citing HITACHI/ Auction method, held that it involved technical means, being the currency tests. It therefore had a technical character. In particular, the claim involved the storage of data, with the effect that data are in fact stored in the currency tester after the step is executed. This must be contrasted with a sequence of computer-executable instructions (a computer program) which merely has the potential of achieving an effect when loaded in and executed by the computer. For that reason, the claim was distinguishable from a computer program. There was no discussion as to whether the method of testing currency was itself excluded as being a business method. 12.59 A mathematical algorithm for classifying data which was implemented by computer was held to be not patentable by the Board of Appeal in COMPTEL/Classification method.69 The Board of Appeal confirmed that patents can only be granted for technical subject matter and, consequently, a non-obvious contribution had to have a technical character. Implementing a non-technical innovation on a general-purpose computer, with no other technical implication, would lack inventive step. A mathematical algorithm would only have a technical character if the problem to be solved, itself, had a technical character. Enhanced speed of operation of an algorithm was not, per se, sufficient to establish a technical character. 12.60 The applicant in COMPTEL argued that a previous case, COMVIK/ Two identities,70 was wrongly decided on the basis that it rejected

67

Case T258/03, [2004] EPOR 55. Case T494/07, [2011] EPOR 36. 69 Case T1784/06, [2013] EPOR 9. 70 Case T641/00, [2004] EPOR 10. 68

508

Development of case law 12.62 c onsideration of non-technical problems. The invention in COMVIK was the use of two identities in a telephone SIM which the user could switch between, for example, work calls and private calls.71 A patent had been granted for the invention but was subject to opposition proceedings and the Board of Appeal confirmed it to be invalid. The Board of Appeal held that a patent claim could be a mix of technical and non-technical features (being features relating to non-inventions under Article 52(2)) even if the non-technical features comprised a dominant part of the claim. But, when looking for inventive step under Article 56, using a problem/solution approach, the problem had to be a technical one. In COMPTEL, the problem was not technical. 12.61 There is a danger of conflating the determination of whether what is claimed is an invention with the issue of inventive step. Where there is a possibility of the alleged invention comprising subject matter excluded under Article 52(2) and (3), that must be considered first. If the alleged invention is held to be wholly excluded as a non-invention, that is an end to the matter. If it not so excluded, either completely or partly, it is then a question whether the whole or remaining part is novel and involves an inventive step. The applicant in UNILOC/Two identities,72 argued that the examining division at the EPO had elided the requirements under Article 52(2) with those of Article 56; that is, failing to deal separately with the exclusions from the meaning of invention and the requirement of inventive step. Further criticisms were made including an argument that the case law on computer-related inventions was confusing, there was a lack of clear guidance, and there was no definition of what ‘technical’ meant, resulting in subjective assessments of the term. These criticisms were not accepted by the Board of Appeal which refused to submit the case to the Enlarged Board of Appeal. Of the differences between the alleged invention and the prior art, the Board of Appeal held that those differences related to legal, economic and administrative considerations, rather than technical ones, which could not contribute to inventive step, in accordance with COMVIK. 12.62 Despite concerns raised about COMVIK, it continues to be treated with respect by the Boards of Appeal and frequently cited as authority

71 72

This could be useful, for example, in terms of billing for usage. Case T1461/12, [2016] EPOR 5.

509

12.63 Patents and computer-implemented inventions for deciding computer-implemented invention cases. In MICROSOFT/ On-demand property system,73 the invention was for a computer-implemented method for c alculating and managing properties more quickly than in the prior art. This was a method of updating the properties of objects which were dependent upon the properties of other objects. The Board of Appeal confirmed that a computer-implemented method must have a ‘further’ technical effect to be patentable. It must also solve a technical problem independently of its absolute and relative computing time. Only then, and only if the speeding up affects the established technical effect, can it be argued that the speeding-up contributes to a technical effect and so, to an inventive step. Simply speeding up an established computer process, per se, is not enough. 12.63 The proper approach to considering the patentability of computerimplemented inventions is as follows: 1

Construe the claim(s) to identify the technical effect, if there is one. The presence of some non-technical elements does not matter and may help understand or contribute to the claim or give some context to it.

2

Consider that technical effect in the context of prior art. This may reduce the scope or width of the technical effect on the basis of lack of novelty (or may even determine that the technical effect lacks novelty).

3

Test the technical effect (or what remains of it) for inventive step.

Unfortunately, some decisions of the Boards of Appeal do not fully separate out these various stages. Moreover, some decisions are somewhat opaque and rely on previous decisions without full or convincing explanation. This can be excused to some extent because of the complexity, scope and fastmoving nature of computer technology. However, the Guidelines for Examination in the European Patent Office74 do follow the logical approach set out in the EPC. One is sometimes left to wonder whether the exclusions in the EPC would be better restated as excluding ‘nature, natural phenomena and abstract ideas’ as implicit in the US Patents Act rather than the exclusion, in particular, of a list of things, lacking a common theme, stated to be non-inventions, as such.

73 74

Case T1370/11, [2016] EPOR 28. Latest edition November 2017.

510

The position in the UK 12.66

THE POSITION IN THE UK 12.64 Two English cases straddled the EPO’s decision in Vicom. They are Merrill Lynch and Gale’s Application. In both, the Court of Appeal, with the benefit of Vicom, followed the EPO Board of Appeal in that case. At first instance, in Re Merrill Lynch, Pierce Fenner & Smith Incorporated’s Application,75 the alleged invention related to an improved data processing system for implementing an automatic trading market for securities. The system received and stored the best current bids, qualified customer buy and sell orders, executed orders as well as monitoring stock inventory and profit. In the Patents Court it was held that, where an invention involves any of the materials excluded from the meaning of ‘invention’ in section 1(2) of the Patents Act 1977,76 the proper construction of the exclusion requires an enquiry into whether the inventive step resides in the contribution of the excluded matter alone. If the inventive step resides only in the excluded matter the invention is not patentable. Falconer J, said that the novel and inventive effect must lie outside the computer program even though it may be defined by the program. In other words, in determining patentability, the computer program must be ignored so that if the inventive step resides in the program alone, that is not taken into account. 12.65 On appeal, the Court of Appeal in Merrill Lynch’s Patent Application,77 had the benefit of Vicom and the approach taken by the EPO in that case was approved. However, the Court of Appeal still confirmed that the invention in Merrill Lynch was not patentable but on other grounds. The ‘invention’ made no technical contribution to the art as it was entirely software based. 12.66 In Gale’s Patent Application,78 in the Patents Court, Aldous J made a distinction between a ROM chip and a floppy disk, saying that installing a computer program on the former was potentially patentable as a chip was a product. Again, the Court of Appeal79 followed Vicom and disapproved

75

[1988] RPC 1. Equivalent to Article 52(2) and (3) of the EPC. 77 [1989] RPC 561. 78 [1991] RPC 305; supra. 79 [1991] RPC 305. 76

511

12.67 Patents and computer-implemented inventions making such a distinction. In Vicom it was held, inter alia, that distinctions between different embodiments of the same invention, whether carried out in hardware or software, would be inappropriate. 12.67 In a case concerning another exclusion from the meaning of invention, Genentech Inc’s Patent,80 involved an application for a patent for the application of discovery concerning recombinant DNA technology. It was narrowly held by the Court of Appeal, following Vicom, that a patent which claimed the practical application of a discovery81 did not relate to the discovery as such, therefore, was not excluded by section 1(2) of the Patents Act 1977. This was so even if the practical application might be obvious once the discovery had been made. 12.68 In Fujitsu Ltd’s Application,82 discussed later, Aldous LJ said (at 614): It would therefore seem that as a matter of words, if for instance the patent was not confined to a computer program, then it could not be excluded under subsection (2), as to an extent the patent would not relate to the computer program as such. However it is and always has been a principle of patent law that mere discoveries or ideas are not patentable, but those discoveries and ideas which have a technical aspect or make a technical contribution are. Thus the concept that what is needed to make an excluded thing patentable is a technical contribution is not surprising. That was the basis for the decision of the Board in Vicom. It has been accepted by this court and by the EPO and has been applied since 1987. It is a concept at the heart of patent law. 12.69 It is more difficult to achieve a technical advance where the whole process is software based. In Wang Laboratories Inc’s Application,83 an application for a patent for an expert system shell was rejected because there was no new technical effect. Aldous J (as he then was) said that the computer (being a conventional machine) and the program combined did not produce a new computer. In Hitachi Ltd’s Application,84 an application in

80

[1989] RPC 147. A discovery is, as such, another thing excluded from the meaning of invention. 82 [1997] RPC 608. 83 [1991] RPC 463. 84 [1991] RPC 415. 81

512

The position in the UK 12.72 respect of a compiler program was rejected by the principal examiner acting for the Comptroller at the Patent Office as being no more than an application for a computer program as such. 12.70 A further difficulty faced applicants hoping to obtain a patent for software inventions. If the ‘technical effect’ produced by running the software was no more than other matter excluded from the meaning of invention, such as a business method or method for performing a mental act, then the application was doomed to failure. This followed the approach at the EPO under Vicom and the cases following it until the sea change at the EPO. A number of cases in the UK demonstrated the ‘excluded effect’ approach which could be described as a double-exclusion principle.

Double-exclusion principle 12.71 Some computer programs perform activities which also fall exclusively within one or more of the things which are, as such, excluded from the meaning of invention. An example being a computer program running in a conventional computer which performs a business method and nothing else. One could argue that the presence of more than one of the excluded things or activities must logically mean that the application is not for any single one of those things as such. For example, an application for a computer program that performs a business method is neither an application for a computer program as such nor an application for a business method as such. Nevertheless, case law in the UK has taken the approach that it matters not whether the application is for one or more of the things or activities falling outside the meaning of invention as such. Schemes, rules or methods for performing mental acts, playing games or doing business as such are excluded under Article 52(2) and (3) (see also section 1(2)(c) of the Patents Act 1977). Business methods are considered first.

Business methods 12.72 We have seen that, under the Vicom line of cases, if the technical effect was no more than a business method, it would be unpatentable.85 In CFPH LLC’s Application,86 a claim to a method of online wagering was 85 86

IBM/Card Reader Case T854/90, [1994] EPOR 89. [2005] EWHC 1589 (Pat), [2006] RPC 5.

513

12.73 Patents and computer-implemented inventions rejected on the basis that it was a claim to a method of doing business. Peter Prescott QC, sitting as a Deputy Judge of the High Court, spoke of the difficulty in deciding whether a claim was to subject matter or activities excluded from the meaning of an invention. He noted that many things are now controlled by a programmed computer, for example, the automatic pilot of an aircraft or a process for making canned soup and, in principle, a better way of doing those things ought to be patentable. He said (at para 104): The question to ask should be: is it (the artefact or process) new and nonobvious merely because there is a computer program? Or would it still be new and non-obvious in principle even if the same decisions and commands could somehow be taken and issued by a little man at a control panel, operating under the same rules? For if the answer to the latter question is ‘Yes’ it becomes apparent that the computer program is merely a tool, and the invention is not about computer programming at all. It is about better rules for governing an automatic pilot or better rules for conducting the manufacture of canned soup. 12.73 A claim to a lottery game played through the internet was rejected in Shoppalotto.com Ltd’s Patent Application.87 At the UK Intellectual Property Office (UK IPO) the hearing officer held that the application was for a scheme, rule or method of performing a mental act, playing a game or doing business, or a program for a computer or the presentation of information. The appeal was dismissed. Pumfrey J said that the correct approach was to ask whether there was a relevant technical effect, being one over and above ‘that to be expected from the mere loading of a program into a computer’. What did the claimed programmed computer invention contribute over and above the fact that it involved a computer program? It would be patentable if there was a contribution not within the subject matter and activities declared to be ‘non-inventions’ as then it would not be an application for the excluded matter as such. He also noted that the list of things or activities excluded from the meaning of invention formed a heterogeneous collection and it was difficult to discern any underlying policy for their inclusion in the list.88

87

[2005] EWHC 2416 (Pat), [2006] RPC 7. CFPH LLC’s Application [2005] EWHC 1589 (Pat), [2006] RPC 5 (at para 21), Peter Prescott QC described the list of excepted matter as a ‘miscellaneous rag-bag’. Although excluded for policy reasons, they were not all excluded for the same reasons.

88 In

514

The position in the UK 12.76 12.74 In Crawford’s Patent Application,89 a display system designed to prevent bus grouping was also held to be not an invention as it was, inter alia, a method of doing business. Kitchen J said that there was a consistent principle that an inventor had to make a contribution to the art and that contribution had to have a technical nature, being susceptible to industrial application and not within one of the areas excluded by Article 52(2) of the EPC. But this ignores the fact that most of the exclusions are there because they are, by their very nature, abstract and lacking industrial application in their pure form. It is the technical application of the excluded matter that overcomes the effect of Article 52(2). It is arguable that the invention in question did overcome a technical problem by technical means and would, in principle, be patentable at the EPO.

Mental acts 12.75 The exclusion of mental acts applies even if implemented by a computer program such that the program performs the act in a completely different way to the act performed by a human being. In Raytheon Co’s Application,90 an application was made for a patent for a means of identifying ships by software means. The software worked by comparing the silhouette of an unknown ship with a database of ships’ silhouettes stored in the computer. The application was refused as a method of performing a mental act, even though it was almost certain that the algorithms built into the software owed nothing to the way in which a human being would recognise an object. The fact that it could be done by a human being was enough. This was so even though the task might prove impossible if attempted by a human being or if it would take an immense amount of time – so much time that the object of the exercise had disappeared over the horizon some time before it was recognised. 12.76 Often an application for a patent in the UK is based on the priority of patents granted elsewhere. It seems strange that some countries will accept an application and the UK rejects an application for the same invention. This happened in Fujitsu Ltd’s Application.91 The application was for

89

[2005] EWHC 2417 (Pat), [2006] RPC 11. [1993] RPC 427. 91 [1997] RPC 608. 90

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12.77 Patents and computer-implemented inventions software developed to help chemists design new chemical compounds. A computer screen displayed the crystalline structure of two known chemicals and these images could be rotated and manipulated so as to align one face of one crystal with the complementary face of the other crystal. It was held that the application was for a method of performing a mental act as such. In the Court of Appeal, Aldous LJ rejected the submission that, as it was not p ossible to perform a mental act using a computer, a claim for a method of using a computer could not be a claim to a method of performing a mental act. He stressed that it was important to look at the substance of an application. Thus, a claim for a computer program operating in a particular way is no more than a claim to a computer program. Furthermore, a claim to a method of carrying out a calculation, which is a method of performing a mental act, can never become more patentable simply because the calculation is being performed by a computer rather than being done manually on a piece of paper. The Court of Appeal also held that the application was for a computer program as such. 12.77 According to HH Judge Birss QC in Halliburton Energy Services Inc’s Patent Application,92 the scope of the mental act exclusion is a narrow one. Its purpose is to ensure that patent claims could not be performed by purely mental means and that was all. The exclusion would not apply if there were appropriate non-mental limitations in the claim. The invention concerned a computer simulation for designing drill bits for oil drilling so that field tests would not be needed. The objection that this was a method of performing a mental act could be overcome by an amendment to the relevant claim to include a step of manufacturing a drill bit.

Presentation of information 12.78 In Townsend’s Patent Application,93 an application was made to patent an advent calendar having additional information printed on the doors on the calendars which when opened revealed a treat such as a small toy or small chocolate. The particular problem for which solution was proposed was where an advent calendar was shared by two children. The claimed invention was to include information so each child would know when it was his turn to open the door and retrieve the treat. The application was rejected as 92 93

[2011] EWHC 2508 (Pat), [2012] RPC 12. [2004] EWHC 482 (Pat).

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The position in the UK 12.80 being simply the presentation of information. Other applications rejected, inter alia, as being the presentation of information included Shoppalotto and Crawford, supra.

Recognition of disparity with EPO 12.79 Mr Peter Prescott QC, sitting as a deputy judge of the High Court, was the first to note that decisions at the Boards of Appeal at the EPO had departed from the Vicom approach. In CFPH LLC’s Application,94 he noted that the technical contribution approach favoured previously in Vicom had been replaced in PBS Partnership/Controlling pensions benefits system and HITACHI/Auction method by a new approach. According to Peter Prescott QC, this consisted of first looking at whether the invention was excluded by Article 52(2) without any knowledge of the prior art.95 If there are any technical means, even including a pen and paper, the first stage is passed. The next stage is to consider whether the invention was new and, if so, obvious by taking account only of those features which contributed to the technical character. 12.80 Mr Peter Prescott QC considered that the current practice at the EPO was not entirely satisfactory. He said that for the subject-matter of an application to be patentable, there must be unity of four conditions. These conditions were that it was an invention (in the sense it was not excluded matter), it was new, not obvious and capable of industrial application.96 He gave an example of tomorrow’s newspaper. That would be a new manufactured item containing at least some non-obvious information. But it would not be an invention as it was a presentation of information. Only three of the conditions applied. Nor would it be patentable if it was printed using a new though obvious ink.97 The applications in CFPH LLC’s Application concerned methods of interactive networked betting. It was held that they

94

[2005] EWHC 1589 (Pat), [2006] RPC 5. Original emphasis (see para 87 of Peter Prescott QC’s judgment in CFPH LLC’s Application). 96 He could be accused of stating the obvious. 97 Peter Prescott QC at para 93 said that, in that case, the newspaper would satisfy three out the four conditions, implying that the presentation of information exclusion no longer applied. This must be because of the use of the new ink, following HITACHI/Auction method. 95

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12.81 Patents and computer-implemented inventions were no more than a new concept in the world of gambling. The novelty and non-obviousness only lie within a method of doing business. Although Mr Peter Prescott QC identified differences in the approach before the UK Patent Office and the EPO, he considered the result would be the same whichever approach was used. Indeed, he thought it would be hard to think of examples when the approaches would result in different outcomes.

Court of Appeal rejects EPO approach 12.81 In Aerotel Ltd v Telco Holdings Ltd and Macrossan’s Patent Application,98 the Court of Appeal reviewed the case law in the UK and at the EPO, taking due note of the recent decisions of the Boards of Appeal at the EPO. Note was also taken of the law in the US. The case involved two separate inventions each applied for by different applicants. The cases were decided together because the central point in both was whether the ‘inventions’ were excluded matter. One invention (Aerotel) was a telephone system which allowed pre-payment from any available telephone. The other (Macrossan) was a method of automatically acquiring the documents required for the formation of a company. 12.82 Jacob LJ identified three possible approaches to deciding whether the subject-matter of a patent application was excluded under Article 52(2) and (3). They were (the last approach itself had three variants): 1

The contribution approach

Does the inventive step reside only in the contribution of excluded matter? If YES, the subject matter is not an invention under Article 52(2). This was the approach adopted by Falconer J at first instance in Merrill Lynch but expressly rejected by the Court of Appeal.

2

The technical effect approach

Does the invention as defined in the claim make a technical contribution to the known art? If NO, Article 52(2) applies. A possible clarification (at least by way of exclusion) of this approach is to add the qualification that novel or inventive purely excluded matter does not count as

98

[2006] EWCA Civ 1371, [2007] RPC 7.

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The position in the UK 12.83 a ‘technical contribution’. This is the approach (with the q ualification) adopted by the Court of Appeal in Merrill Lynch and subsequently followed by the Court of Appeal in Gale and Fujitsu. The approach (without the rider as an express caution) was that first adopted by the EPO Boards of Appeal in Vicom and other cases in the following few years). 3

The ‘any hardware’ approach

Does the claim involve the use of, or is to, a piece of physical hardware, however mundane (whether a computer or a pencil and paper)? If YES, Article 52(2) does not apply. This was the approach in PBS Partnership/Pension, HITACHI/Auction method and the Microsoft/ Clipboard formats cases. It was specifically rejected by the Court of Appeal in Gale. However, Jacob LJ noted that there were three variants of this approach: (i) Where a claim is to a method which consists of an excluded category, it is excluded by Article 52(2) even if hardware is used to carry out the method. But a claim to the apparatus itself, being ‘concrete’ is not so excluded. The apparatus claim is nonetheless bad for obviousness because the notional skilled man must be taken to know about the improved, excluded, method. This was the specific approach taken in PBS Partnership/Pension. (ii) A claim to hardware necessarily is not caught by Article 52(2). A claim to a method of using that hardware is likewise not excluded even if that method as such is excluded matter. Either type of claim is nonetheless bad for obviousness for the same reason as above. This is the approach in HITACHI/Auction method, disagreeing with PBS Partnership/Pension about method claims. (iii) Simply ask whether there is a claim to something ‘concrete’ e.g. an apparatus. If YES, Article 52(2) does not apply. Then examine for patentability on conventional grounds – do not treat the notional skilled man as knowing about any improved excluded method. This is the Microsoft/Clipboard formats approach.

12.83 Rather than applying the thinking in HITACHI/Auction method and the Microsoft/Clipboard formats cases, Jacob LJ said that he had no choice but to follow the previous Court of Appeal decisions because of the

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12.84 Patents and computer-implemented inventions doctrine of stare decisis.99 On the basis of those decisions, there must be a technical contribution which is not itself within the matter excluded from the meaning of ‘invention’. This is the second approach with the ‘rider’, consistent with the Court of Appeal decisions adopting the Vicom approach.100 12.84 Mr Birss, for the Comptroller, suggested a four-step structured approach, being: 1

Construe the claims to determine what the monopoly is.

2

Identify the contribution.

3

Ask whether the contribution is solely of excluded matter.

4

Check whether the contribution is technical.101

Jacob LJ considered this a useful test to apply his second approach with the rider and he applied it to both the Aerotel patent and the Macrossan application. In doing so, he held that the Aerotel patent was valid, being a new combination of existing apparatus and not a business method as such. In Macrossan, the alleged invention was essentially an interactive system to do the work normally done by a solicitor or company formation agent. This was a claim for a business method as such and also a claim for a computer program as such. The result would probably be the same at the EPO, although there Macrossan would be more likely to be rejected on the basis that it was not new or did not involve an inventive step, being no more than the automation of an existing mental process. 12.85 Jacob LJ noted that there was some conflict between the Court of Appeal decisions and the Technical Boards of Appeal at the EPO. He drew 99

That is, the doctrine of binding precedent. None of the exceptions in Young v Bristol eroplane Co Ltd [1944] KB 718 applied. The House of Lords (now Supreme Court) A has consistently said that the Court of Appeal cannot add to the exceptions in Young v Bristol Aeroplane, see, for example, Davis v J ohnson [1979] AC 264. However, since then, Baroness Hale of Richmond did not rule out the possibility of a very limited extension of the exceptions in relation to conflicting Privy Council decisions in In re Spectrum Plus Ltd (in liquidation) [2005] UKHL 41, [2005] 2 AC 680. 100 Genentech Inc’s Patent [1989] RPC 147; Merrill Lynch’s Patent Application [1989] RPC 561; Gale’s Patent Application [1991] RPC 305; Fujitsu Ltd’s Patent Application [1997] RPC 608. 101 In Halliburton Energy Services Inc’s Patent Application [2011] EWHC 2508 (Pat), [2012] RPC 12, HH Judge Birss QC (as he now was) explained that his own test in Aerotel was consistent with previous Court of Appeal decisions and just restated the test in Merrill Lynch’s Patent Application [1989] RPC 561.

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The position in the UK 12.87 some comfort from the fact that the German Bundesgerichsthof had declined to follow the HITACHI/Auction method on at least one occasion.102 Jacob LJ went so far to suggest that some decisions of the Technical Boards of Appeal were mutually contradictory. The Technical Board of Appeal in Duns Licensing Associates/Estimating sales activity103 reciprocated by describing the ‘technical effect approach’ adopted by Jacob LJ in Aerotel as not being: … consistent with a good-faith interpretation of the European Patent Convention in accordance with Article 31 of the Vienna Convention on the Law of Treaties of 1969.104

Post-Aerotel cases in the UK 12.86 After Aerotel, there have been a number of cases where the exclusions in Article 52 of the EPC have been at issue. In Oneida Indian Nation’s Application,105 the applicant was an Indian nation based in New York. The subject matter of the application was a ‘system, method and article of manufacture for gaming from an off-site location’. The judge, Mr Christopher Floyd QC, sitting as deputy judge of the Patents Court in the High Court, f ollowed Aerotel and applied the four-step test. 12.87 In Oneida, the contribution was a computerised two-stage gaming apparatus providing advantages such as a reduction in the number of processing steps and the data transmission steps; dispensing with the need to make an account check for every bet placed and, as a result, making the system more secure and robust. As regards the fourth step in Aerotel, Mr Christopher Floyd QC said (at para 10): … if the invention fails to overcome that test [the third step], any technical contribution must have been one of purely excluded matter … The 4th step is intended merely to make sure that inventions that have passed at step 3 are technical in nature. [original emphasis.]

102

Jesco Schwarzer, 28 September 2004, 17 W (pat) 31/03. Case T154/04, [2007] EPOR 349. 104 At para 12. Article 31(1) of the Treaty states: 1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose. 105 [2007] EWHC 954 (Pat). 103

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12.88 Patents and computer-implemented inventions 12.88 The claimed advantages were to a new method of doing business and fell completely within the exclusion. Although they could be described as ‘technical’ they did not count as such because they were not a relevant technical effect. They were merely the consequence of putting the new business method into effect. Furthermore, the hardware involved was standard and formed no part of the contribution. 12.89 Cappellini’s Application and Bloomberg LLP’s Application106 involved two separate ‘inventions’. In Bloomberg, the invention was for a method of distributing data in which the data transmitted to a user was mapped to a form suitable for the application to be used by the user. The method was to be performed in software only. The Cappellini invention was a new algorithm for planning a delivery route for a package using a network of carriers. Pumfrey J made a number of general points. First, the question of patentable subject matter was essentially a question of the scope of the claim. If the claim covered a method of arriving at a particular result by the exercise of rational processes alone, then it was a claim to a ‘scheme, rule or method of performing a mental act’. Secondly, if a physical article resulting from the performance of a mental act, such as mathematical c alculations, became a feature of the claim, the claim would not be objectionable. But it was objectionable unless ‘tethered’ to the claim. Pumfrey J said (at para 8) ‘I do not, of course, say that every result must be a physical article before the claim is allowable’. Finally, a claim to a programmed computer as a matter of substance was just a claim to the program on a kind of carrier. If the result of running the program was no more than the performance of a business method, this added nothing to the art that did not lie in the excluded matter. 12.90 With respect to Bloomberg, Pumfrey J held that the application was for a computer program as such. There was no question of matching the form of the data to any deficiency or advantageous feature of hardware. It was purely formatted to render it suitable to cooperate with particular software. As regards Cappellini, Pumfrey J said that this was both the presentation of information and a mathematical method. Although there was a physical effect, being the movement of known items (vehicles) over known and existing routes, this was a method of doing business (moving vehicles according to a routing algorithm). Pumfrey J criticised PBS Partnership/Pensions, saying 106

[2007] EWHC 476 (Pat), [2007] FSR 26.

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The position in the UK 12.92 that it reached the correct result by incorrect reasoning. He said he preferred Aerotel, an important question being what the claimed invention was as a matter of substance.107 12.91 A new method of inventory management, implemented by software, involving two databases, one defining the layout of a facility, the other the items in it was the subject of the application in Raytheon Co v C omptroller 108 General of Patents, Trade Marks and Designs. The claimed contributions to the art were the use of visual representation, the synthesis of individual images and the navigability of the system. Kitchen J said that ‘… it is p ossible that the technical contribution does not fall wholly within any one of the exclusions but does fall wholly within two or more … the invention would nonetheless be excluded’.109 The second and third aspects of the contribution were simply matters of program design and related to a computer program as such. The first aspect was a method of doing business and also no more than a method of presenting information.

Further developments 12.92 The next major case before the Court of Appeal was Symbian Ltd v Comptroller General of Patents.110 The invention was for a method of accessing data in a dynamic link library in a computing device.111 This had the advantage of making such devices faster and more reliable in operation. The application was refused by the hearing officer as being an application to patent a computer program as such. On appeal, Patten J held the invention to be patentable. The Comptroller General appealed to the Court of Appeal. Lord Neuberger of Abbotsbury gave the judgment of the court.112 107

Of course, Pumfrey J had no option but to follow Aerotel. [2007] EWHC 1230 (Pat), [2008] RPC 3. 109 At first reading the logic of this sentence seems faulty. However, it may mean that the technical contribution is, for example, a computer program as such and a method of doing business as such. 110 [2008] EWCA Civ 1066, [2009] RPC 1. After this case, the Patent Office issued a new notice: Practice Notice (Patents Act 1977: patentability of computer programs), 8 December 2008. 111 A dynamic link library is one containing functions common to a number of different applications. 112 By sitting in the Court of Appeal, Lord Neuberger may have wished to give some gravitas to the decision. This may be a reflection of how unsatisfactory the law on the patentability of computer-implemented inventions had become. 108

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12.93 Patents and computer-implemented inventions 12.93 In relation to stare decisis, the Court of Appeal recognised that there was a new exception to the rule in Young v Bristol Aeroplane.113 The Court could depart (but was not bound to do so) from previous Court of Appeal decisions where they were inconsistent with clear guidance from the EPO Boards of Appeal unless satisfied that it was wrong.114 Nevertheless, the Court of Appeal in the present case decided to follow Aerotel, the reason being that there have been some conflicting decisions of the Boards of Appeal after A erotel which show that the law before the Boards of Appeal is not yet settled and there has not yet been a decision at the Enlarged Board of Appeal.115 12.94 In Symbian on the issue of whether it would be right for the Court of Appeal to depart from its previous decisions in the light of developments at the EPO, Lord Neuberger said (at para 46): The fact that there are now three such decisions of the Board subsequent to Aerotel which appear to support the approach disapproved in Aerotel might suggest that this court should now adopt that approach. We do not agree. First, there is no decision of the Enlarged Board. Not only does that mean that the view of the Board is not as authoritative as it could be; it also suggests that the Board does not consider that the time has arrived for the point to be conclusively determined. Secondly, the approaches in the four decisions since Aerotel are not identical: in particular, one of them appears more consistent with the view preferred in Aerotel. Thirdly, we are concerned that, particularly if the passage quoted from FUJITSU LTD/ File search method represents the Board’s view, the computer program exclusion may have lost all meaning. Fourthly, it is not as if the English courts are alone in their concern about the approach of the Board, as the observations from the German judiciary quoted in para.30, and referred to in [129] to [131] of Aerotel, demonstrate. Fifthly, if this court is seen

113

Encouraged by Lord Hoffmann in Merrell Dow Pharmaceuticals Inc v H N Norton & Co Ltd [1996] RPC 76 and Conor Medsystems Inc v Angiotech Pharmaceuticals Inc [2008] UKHL 49, [2008] RPC 28 where he emphasised that it was desirable for English courts to adopt the same principles as the Boards of Appeal when assessing obviousness. 114 See also Jacob LJ in Actavis UK Ltd v Merck & Co Inc [2008] EWCA Civ 444, [2008] RPC 26. 115 Despite a reference to the Enlarged Board of Appeal by the President of the EPO in President’s reference/Computer program exclusion, Case G3/08, [2009] EPOR 63. The Enlarged Board refused to offer guidance on the basis that the EPC did not allow it.

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The position in the UK 12.97 to depart too readily from its previous, carefully considered, approach, it would risk throwing the law into disarray. 12.95 The reference to FUJITSU/File search method,116 reinforces the difficulty in trying to follow some of the decisions of the Technical Boards of Appeal. In that case (at para 4), the Board held that ‘[t]he claimed method requires the use of a computer. It has therefore technical character and constitutes an invention within the meaning of Article 52(1) EPC … ’. The claim in question related to a file search method and apparatus and index file creation method and device. This case, which followed HITACHI/Auction method, arguably demonstrates the widest divergence between the UK and the EPO.117 12.96 Although following Aerotel and the previous Court of Appeal decisions, Lord Neuberger cast some doubt on the approach in the decision in that court in Fujitsu Limited’s Application.118 Although ostensibly consistent with Vicom and Gale, it was hard to reconcile with those two cases as to what constitutes a technical contribution, the alternative ground for refusal (that the alleged invention was a method of performing a mental act) could not be faulted. 12.97 Lord Neuberger noted a major difficulty in the past was the dividing line between what was and was not ‘technical’.119 Nonetheless, he accepted that there was a need for a technical effect but it was not limited to an effect outside the computer. In the present case, the invention made a better computer in that it increased speed and reliability. The invention could also be applied to other devices such as cameras and mobile phones so any distinction between whether the technical effect lies within or outside the computer is an artificial one. In applying the law as expressed in Aerotel and explained in Symbian, it was held that the invention was not caught by the exclusion. He applied Aerotel thus: Stage 1 of the Aerotel guidance was not in issue.

116

Case T1351/04, 18 April 2007. This may be one reason why the case has not been formally reported in the European Patent Office Reports. 118 [1997] RPC 608. 119 The word does not appear in either section 1(2) of the Patents Act 1977 or Article 52 of the EPC. 117

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12.98 Patents and computer-implemented inventions Stage 2 – the contribution was a program which makes a computer operate on other programs faster than prior art operating programs enabled it to do by virtue of the claimed features. Stage 3 – the contribution was not solely excluded matter as it had the knock-on effect of the computer working better as a matter of practical reality. Stage 4 – the contribution was technical on any view as to the meaning of ‘technical’. 12.98 A computer program invention is caught by the exception if it does not produce a technical effect at all, or if it does, that effect itself lies within the other exclusions from the meaning of invention. This accords with some, but by no means all, decisions of the Boards of Appeal. Following Symbian, the UK Intellectual Property Office issued a Practice Notice.120 Extracts from paras 6 to 8 of the Notice state: 6. … whilst an invention involving a computer is undoubtedly ‘technical’, in law the mere presence of conventional computing hardware does not of itself mean an invention makes a technical contribution and so avoids the computer program exclusion. This is in contrast to the practice of the European Patent Office, which the Court of Appeal rejected in the Symbian case.

120

7.

… one effect of the computer program exclusion is to prevent other excluded material becoming patentable merely by use of a computer in its implementation. Thus, a business method, mental act, mathematical method or presentation of information implemented on a conventional computer system or network would still be excluded.

8.

… examiners will object to the computerisation of what would be a pure mental act if done without the aid of a computer as both a mental act and a computer program as such. A similar logic applies to the other exclusions.

Practice Notice (Patents Act 1977: Patentability of computer programs), 8 December 2008. See also, generally, the Manual of Patent Practice, Section 1, October 2017, available at https://www.gov.uk/government/publications/patents-manual-of-patent-practice.

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The position in the UK 12.100

Signposts 12.99 In AT & T Knowledge Ventures LP v Comptroller General of Patents,121 Lewison J explained that Aerotel and Symbian, taken together, meant that the four-stage test in Aerotel was still good law but should not be followed blindly and that the question of whether the contribution is technical must be asked and answered in the course of the inquiry but it does not matter whether it is asked at stage 3 or 4. Although it is impossible to define ‘technical effect’ in the context of the excluded matter, Lewison J thought the following were useful ‘signposts’ (at paras 40 and 41): (i) whether the claimed technical effect has a technical effect on a process which is carried on outside the computer; (ii) whether the claimed technical effect operates at the level of the architecture of the computer; that is to say whether the effect is produced irrespective of the data being processed or the applications being run; (iii) whether the claimed technical effect results in the computer being made to operate in a new way; (iv) whether there is an increase in the speed or reliability of the computer; (v) whether the perceived problem is overcome by the claimed invention as opposed to merely being circumvented. If there is a technical effect in this sense, it is still necessary to consider whether the claimed technical effect lies solely in excluded matter. This test is useful for distinguishing between a relevant and an irrelevant technical effect. Clearly, if none of the signposts apply, it seems highly unlikely that the technical effect is a relevant one.122 12.100 In Cranway Ltd v Playtech Ltd,123 Lewison J applied the Aerotel test and his own ‘signposts’ in AT & T and concluded that the application to patent a method of online gambling fell wholly within the exclusion. The whole process was carried out on a computer and/or server, the computer

121

[2009] EWHC 343 (Pat), [2009] FSR 19. Per Floyd J in Protecting Kids the World Over Ltd’s Patent Application [2011] EWHC 2720 (Pat), [2012] RPC 13. 123 [2009] EWHC 1588 (Pat), [2010] FSR 3. 122

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12.101 Patents and computer-implemented inventions architecture was standard, the computer did not operate in a new way, there was no increase in speed or reliability of the computer and the perceived problem was a business problem not a computer problem. To the extent that the alleged invention solved a problem, it was a method of doing business. 12.101 The Boards of Appeal of the EPO have distinguished between excluded matter and non-excluded matter where an alleged invention comprises both. In Konami/Video game device,124 the claims were directed at a computer game device. The alleged invention was directed at the technical implementation of rules for playing a game.125 It was held that only those features which contributed to technical character were to be taken into account when testing for inventive step.126 This seems to contradict the decision in VICOM/Computer-related invention,127 where the Board of Appeal held, inter alia, that (at 79): … even if the idea underlying an invention may be considered to reside in a mathematical method a claim directed to a technical process in which the method is used does not seek protection for the mathematical method as such. [original emphasis.]

Recent Court of Appeal cases 12.102 In HTC Europe Co Ltd v Apple Inc,128 the relevant claim for our purposes was to a method of responding to more than one touch on a touch screen display, for example, of the sort used to ‘pinch’ and ‘de-pinch’ (that is, to expand and contract a screen display on a device such as a tablet computer or phone). The benefit of the invention was that it made the development of application programs much easier as they could make use of this technology instead of having to include relevant processing facilities within the program.

124

Case T1793/07, [2009] EPOR 103. The close-marking of an opponent’s player in a video football game. 126 See also, to similar effect, IGT/Electronic multi-play poker Case T336/07, [2008] EPOR 227. 127 Case T208/84, [1987] EPOR 74. 128 [2013] EWCA Civ 415, [2013] RPC 30. The parties had previously settled but the Comptroller stepped in on the basis of the public interest which is served in such a case as ensuring that invalid patents are not restored to the register. See Halliburton Energy Services Inc v Smith International (North Sea) Ltd [2006] EWCA Civ 185, [2006] RPC 26 and Apimed Medical Honey Ltd v Brightwake Ltd [2012] EWCA Civ 5, [2012] RPC 17. 125

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The position in the UK 12.104 It was accepted by counsel that, given the present state of play in the jurisprudence, it would be appropriate to apply the Aerotel approach, a central issue being whether the invention made a technical contribution to the known art with the rider that novel or inventive purely excluded subject matter does not count as a technical contribution. It was also appropriate, though not strictly necessary, to follow the four-stage structured approach in Aerotel.129 12.103 Kitchen LJ though the signposts in AT & T were also useful. However, he noted that, in the light of Mann J’s judgment in Gemstar-TV Guide International Inc v Virgin Media Ltd,130 he would adopt as his fourth signpost the less restrictive question whether a program makes a computer a better computer in the sense of running more efficiently and effectively as a computer. Kitchen LJ thought that this was ‘… another illustration of the still broader question whether the invention solves a technical problem within the computer’.131 12.104 In finding the relevant claim valid, Kitchen LJ thought the judge at first instance who held it invalid as a claim to a computer program as such had taken his ‘eye off the ball in focussing on the fact that the invention was implemented in software and in doing so failed to look at the issue before him as a matter of substance not form’.132 Kitchen LJ thought the invention patentable because: 1

The problem addressed by the patent, how to deal with multiple touches on new multi-touch devices, is essentially technical in nature.

2

The solution to this problem is a method of dividing up the screen of such a device into views and configuring each view as a multi-touch view or a single-touch view using flags with a specific functionality. This method concerns the basic internal operation of the device and applies irrespective of the particular application for which the device is being used and the application software which it is running for that purpose.

129

Per Kitchen LJ at paras 44 to 46. [2009] EWHC 3068 (Ch), [2010] RPC 10; appeal dismissed [2011] EWCA Civ 302, [2011] RPC 25. 131 At para 51. 132 At para 57. 130

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12.105 Patents and computer-implemented inventions 3

The invention presents a new and improved interface to application programmers, including third party programmers, and makes it easier for them to write application software for a multi-touch device. The device is, in a real practical sense, an improved device.

12.105 Richards LJ agreed with Kitchen LJ. Lewison LJ also came up with the same conclusion finding only one of his signposts not satisfied, being the third signpost in that he thought it doubtful whether the device was made to work in a new way. Importantly, the fourth signpost was satisfied as the device became a more efficient and effective device because of the invention which made it easier to write application programs for the device. 12.106 An application for a patent for a method, system or computer program product for retrieving a file or machine-readable data from a remote computer using email was the subject matter in Lantana Ltd v Comptroller General of Patents, Designs and Trade Marks.133 It was described as consisting of a local c omputer containing a list of documents stored on a remote computer. Selecting an item on the list on the local computer automatically generated an email which was sent to the remote computer containing machine readable instructions causing the remote computer to find the relevant document and send it back to the local computer. The document could then be worked on without maintaining a continuous connection to the remote c omputer.134 The hearing officer for the Comptroller of Patents turned down the application as being for a computer program as such. On appeal, to the Patents Court, Birss J upheld that decision. The applicant for the patent’s appeal to the Court of Appeal was unsuccessful. 12.107 By using the signposts, there is a danger of breaking down a patent claim into its constituent parts and considering each in turn. However, the issue of matter excluded from the meaning of invention must be resolved when looking at the claim as a whole. It may be acceptable to look at the constituent parts of a claim provided consideration is also given to the claim as a whole. In the Court of Appeal, Kitchin LJ accepted that: … it is the claim as a whole that must be considered when assessing the contribution which the invention has made, and that it is not permissible 133 134

[2014] EWCA Civ 1463, [2015] RPC 16. Broadly the description put forward by Mr Beresford of Beresford & Co for the appellant in the Court of Appeal.

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The position in the UK 12.109 simply to cut the claim into pieces and then consider those pieces separately and without regard to the way they interact with each other. 12.108 The difficulty for the applicant was that the invention used known technology in a known manner and simply solved the problems associated with maintaining a continuous connection between a local and a remoted computer by choosing to use a well-known non-continuous technology, being email.135 Rather than resolve the problems the invention merely circumvented it.136 There was no new and non-obvious technical contribution to bring the invention outside the computer technology as such exclusion. One could argue that the use of a known method to overcome a known problem is similar to the issue of patentability of collocations. In British Celanese Ltd v Courtaulds Ltd137 Lord Tomlin said (at 193): … a mere placing side by side of old integers so that each performs its own proper function independently of any of the others is not a patentable combination, but that where the old integers when placed together have some working interrelation producing a new or improved result then there is patentable subject-matter in the idea of a working interrelation brought about by the collocation of those integers.138 There may be invention in putting two known things together. A further feature of the present case is that the technology involved is not just a computer program as such. The invention also involved the use of a computer139 and wired and wireless telecommunications technology 12.109 Lantana also confirms that what might have been considered as a technical contribution in the past is not necessarily a technical contribution thereafter. As Arden LJ said (at para 43): ‘… simply because at one point in history a process constitutes a technical contribution that the same or similar process, even if novel, will constitute a technical contribution for all time’. The temptation of looking at novelty and obviousness alongside the question of the exclusions can only obfuscate matters. The correct procedure 135 136 137 138 139

Problems of continuous connections included vulnerability to hackers or loss of connection, described by Arden LJ as ‘the problem of vulnerable connectivity’. As in HITACHI/Auction method, Case T258/03, [2004] EPOR 548. (1935) 52 RPC 171. This case was decided under the Patents and Designs Act 1907. Although simply running a computer program in a computer is a computer program as such, unless the program makes the computer a better computer.

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12.110 Patents and computer-implemented inventions is first to determine whether the alleged invention is caught by the exclusions entirely. Only when this has been resolved are the questions of novelty and obviousness relevant, assuming there is anything left of the alleged invention.140

SUFFICIENCY AND COMPUTER-IMPLEMENTED INVENTIONS 12.110 Apart from the above discussion of the scope of exclusions to the meaning of invention, patent law as it applies generally also applies to computer-implemented inventions. The nature of some such inventions may make it difficult to describe them with sufficient precision. Under Article 83 of the EPC, a patent application must disclose the invention in a manner sufficiently clear and complete for it to be carried out by a person skilled in the art. Article 84 states that the claims in a patent application must define the matter for which protection is sought and also be clear, concise and supported by the description. The equivalent provisions under the UK Patents Act 1977 are contained in section 14(3) and (5). 12.111 Careful drafting is essential for all forms of invention. A patent application includes, inter alia, a specification describing the invention, one or more claims and any drawing referred to in the description or any claim. Claims are interpreted by reference to the description and drawings and define the legal monopoly sought by the applicant. It is essential that a person skilled in the relevant art can, by studying a patent specification, and without undue effort, make the invention if a product or perform the invention if it is a process. The rationale is that after the patent has expired, anyone should be free to work the invention. If the invention is not sufficiently described to allow this, others will be deprived of their right to the invention after the patent expires.141

140

Of course, many inventions will clearly fall outside the exclusions and other exceptions to patentability, such as being contrary to public policy or morality or exceptions relating to the treatment or diagnosis of the human or animal body or in relation to certain biological inventions. 141 The grant of a patent has been likened to a bargain between an inventor and the State. In return for a monopoly of limited duration, the inventor publishes his invention so that others may see what it is and how it works and, after the expiry of the patent, work it for themselves.

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Patents and artificial intelligence 12.113 12.112 Particular care is needed when drafting the description and claims for computer-implemented inventions.142 For example, algorithms must be precisely defined and stated. Flowcharts must be accurate and easily understood by a skilled person. It is common for the specification to contain one or more preferred embodiments of the invention. Overall there must be what is called an enabling disclosure. If there is not, the application may be rejected or, if granted, the patent could be vulnerable to a challenge on its validity. In Halliburton Energy Systems Inc v Smith International (North Sea) Ltd,143 a patent for computer modelling for persons wishing to design and use simulation systems for drill bit design was held to be invalid on the ground of insufficiency. A person skilled in the art would start with a specific and preferred embodiment, but there was not enough information in the specification for such a person to construct a kinetic model of the bit. The amount of work involved to reproduce the invention was not irrelevant to the question of sufficiency. If what was taught involved too much further work or experimentation over what was reasonable, the patent specification could not be regarded to contain an enabling disclosure. Furthermore, the basic equation underlying the proposed computer model had been shown to be wrong about the relationship between depth of penetration and force.

PATENTS AND ARTIFICIAL INTELLIGENCE 12.113 Artificial intelligence (AI) is an emerging area for patenting. Typically, at the heart of most AI systems is an algorithm which, being a mathematical method, is excluded from the meaning of invention, as such. The same principles should apply as for the other exclusions, thus, a nonobvious technical contribution to the art resulting from the use of the algorithm should be patentable. AI is also involved in machine-learning and neural network systems where, for example, a machine interacts with an environment and modifies, updates and enhances algorithms controlling its reactions to and/or control of that environment. Given the growing importance of AI and its extension to all field of technology, there is an argument for the grant of patents for algorithms, applied to technology in all forms, subject to the availability of FRAND type licences for third parties.144 142

It is not usual to include listings of computer program code in patent applications. [2006] EWCA Civ 185, [2006] RPC 26. 144 This would overcome the objection of pre-emption, locking away algorithms and mathematical methods from third parties, a danger of much concern in the US courts. 143

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12.114 Patents and computer-implemented inventions 12.114 The EPO held a conference on 30 May 2018 on Patenting Artificial Intelligence.145 The conference saw the main concern for patent offices being the rapid growth of AI in many technical fields, but noted that the EPO was well prepared as a result of its case law, guidelines and three-member Boards of Appeal and its programme of training for examiners in AI and computer-implemented inventions. Highlights of the conference included the following points: 1

Innovators should be encouraged to disclose their innovations through patenting rather than rely on trade secrets. In this way, society would benefit from the publication of patent specifications and the fact that, once the patent has expired, the invention will be available to all.146

2

There was a two-track system of protection for AI inventions. Source code would be protected by copyright and the technical effect of algorithms by patents.

3

The statistics showed that applications for AI inventions tended to claim the technical effect which was in line with the jurisprudence of the EPO.

4

Some adjustment of the practicalities of patenting might be required. The 20-year maximum term of protection could be seen as excessive in the content of AI inventions and the time before a patent specification was published (18 months) should be shorter to prevent wasted parallel research and development.

5

Three possible areas of AI were put forward. The first, ‘core AI’, for which the challenge was that it often related to algorithms as such and, as patent law now stood, would be unlikely to be patentable. The second was trained models/machine learning, where claiming variations and ranges might be an issue. The third was AI as a tool in an applied field, defined by technical effects.

6

One possible approach, particularly in the US, was to make AI algorithms as such patentable.

145

European Patent Office, Patenting Artificial Intelligence, Munich, 30 May 2018. The conference programme, presentations and summary are available at: https://www.epo.org/ learning-events/events/conferences/2018/ai2018.html. 146 Bearing in mind many patents are not renewed for the full term of the patents.

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Patents and artificial intelligence 12.116

Example AI patent application 12.115 An example of a patent application involving AI is Training Action Selection Neural Networks. The applicant is Deepmind Technologies Limited and there are a number of co-inventors. The PCT application number is WO 2018/083532 A1 and the publication date is 11 May 2018. The abstract is: Methods, systems, and apparatus, including computer programs encoded on a computer storage medium, for training an action selection neural network. One of the methods includes maintaining a replay memory that stores trajectories generated as a result of interaction of an agent with an environment; and training an action selection neural network having policy parameters on the trajectories in the replay memory, wherein training the action selection neural network comprises: sampling a trajectory from the replay memory; and adjusting current values of the policy parameters by training the action selection neural network on the trajectory using an offpolicy actor critic reinforcement learning technique. 12.116 The patent specification can be found on the PCT website using the PATENTSCOPE database.147 It is instructive to read the summary of the specification and the claims, particularly Claim 1. Readers should contemplate whether the alleged invention is patentable in the US, before the EPO and in the UK as the law presently stands in those jurisdictions.

147

Available at: http://www.wipo.int/patentscope/en/.

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Chapter 13

Essentials of trade mark law and the law of passing off

INTRODUCTION 13.1 Trade marks are used to distinguish the goods or services of an undertaking making, selling or hiring goods or providing services from those of other undertakings.1 Individuals or companies engaged in those sorts of commercial activities used to be referred to in UK law as traders but the EU, and now UK law, refers to undertakings. These could rank from massive international business, commercial and industrial organisations to shopkeepers, start-up and medium-sized undertakings, sole traders and eBay sellers. Activities covered include an enormously wide spectrum of business activities delivered including business-to-business, business-topublic authority, public authority or business-to-consumer by online tendering, contracting, auction sites or via physical outlets such as in shopping malls, high street shops, market stalls, eBay and social media. Virtually all undertakings, from large to small, use distinctive marks, names, logos or other distinctive insignia to distinguish their business activities from their competitors. They have registered them as trade marks. These marks, and such like, became ‘badges of origin’ so that end consumers associated the marks or signs applied to goods or services as coming from a particular identifiable source. Eventually, these signs took on a secondary meaning as indicating the quality of a product or service. It is not surprising that these signs, names, logos and such like became valuable as a property right, to be fiercely protected.

1

Trade marks applications must set out the description of goods or services for which protection is sought, from within 34 classes of goods and 11 classes of services. There is a classification system under the Nice Agreement. An example is the registration of MARMITE for meat; meat products; sausages; meat extracts in Class 29, the proprietor being Unilever plc.

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Introduction 13.3 13.2 The owners of these signs, names and logos, etc began to take precautions to ensure that they were fully protected and would take legal action to prevent others using similar signs. This was to stop others ‘riding on the coat tails’ of the goodwill and reputation associated with the signs, names and logos and to prevent others using similar signs and names to dilute their value as indications of origin and quality. Originally, the law developed to recognise a property right in business names, logos and ‘get-up’ which could be enforced by an action under the tort of passing off.2 Eventually, it became possible to register a trading name, logo or other sign as a trade mark. This was a more effective form of protection and it was generally much easier to bring a successful action for trade mark infringement than an action for p assing off.3 13.3 Previous UK trade mark legislation was notorious for its opacity. The Trade Marks Act 1938 was arguably the worst drafted piece of legislation on the statute book. One Court of Appeal judge even admitted that he did not have the faintest idea of what the section defining infringement was supposed to mean, describing it as being of ‘fuliginous obscurity’.4 Amazingly, the 1938 Act stayed in force, with a clumsy amendment made in 1984 extending protection to service marks, until a new Trade Marks Act 1994 replaced it on 31 October 1994.5 The Trade Marks Act 1994 was enacted to comply with an EU Directive to approximate trade mark laws across EU Member States rather than attempt full harmonisation of trade mark law across the EU.6 The 1994 Act also took account of the Community Trade Mark Regulation 1994;7 2

Originally, an action under the tort of deceit was possible. In some cases, both forms of action would be brought by a trade mark proprietor. 4 Section 4(1) of the 1938 Act contained a sentence of over 250 words. 5 The House of Lords considered the 1938 Act to be ill-suited to modern trading practices in Hollie Hobby Trade Mark [1984] FSR 199. 6 The original Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trade marks, OJ L 40, 11.02.1989, p 1 was replaced by a codified version, Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks, OJ L 299, 08.11.2008, p 25 (‘the Directive on trade marks’). There is now a new Directive, Directive 2015/2436/EU of the European Parliament and of the Council of 16 December 2015 to approximate the laws of Member States relating to trade marks (recast), OJ L 336, 23.12.2015, p 1. Most of this Directive requires compliance by Member States by 14 January 2019. H owever, the procedure for revocation and declarations of invalidity under Article 45 is to be implemented by 14 January 2023. 7 Council Regulation 40/94/EC of 20 December 1993 on the Community trade mark, OJ L 11, 14.01.1994, p 1, replaced by the codified version Council Regulation 207/2009/EC of 26 February 2009 on the Community trade mark, OJ L 78, 24.03.2009, p 1 (‘CTMR’). 3

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13.4 Essentials of trade mark law and the law of passing off now replaced by the EU Trade Mark Regulation 2017.8 The EU trade mark is administered by the EU Intellectual Property Office (EUIPO).9 Thus, we now have two trade mark systems in the EU. First, there are the national trade mark systems under the Trade Marks Directive 2015 and, secondly, there is the EU trade mark. 13.4 The basic characteristics for registrability of a sign as a national trade mark in the EU Member States and the EU trade mark are broadly the same. The same can be said for the rights and infringement although, of course, the EU trade mark takes effect throughout the EU.10 But, apart from territorial c onsiderations, the registrability, rights and infringement of national trade marks and EU trade marks are very similar almost to the point of being identical.11 Moreover, signs may not be registered if they conflict with existing registered trade marks and other rights and these provisions are mirrored in the scope of rights and infringement. Trade mark law in Europe has a large measure of symmetry and economy. 13.5 The laws of trade marks and passing off are relevant to information technology because many trade marks are used (and abused) on the internet and internet-related applications, including online auctions, sales and marketing and, of course, social media.12 Some of the impact of the legal provisions on trade marks may differ in relation to online trading compared with commerce and business carried on in bricks and mortar stores and offices. Territorial issues also arise, for example, is a trade mark placed on a webpage hosted in one country in use in other countries from which the website can be, or has been, accessed? What about the use by a third party of a competitor’s trade mark as an AdWord used in a search engine to retrieve the third party’s advertisement and weblink? What if I register someone else’s name as my domain name? All these issues and more will

8

Regulation 2017/1001/EU of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark, OJ L 154, 16.06.2017, p 1 which came into effect on 1 October 2017. 9 Formerly the Office for the Harmonisation for the Internal Market (Trade Marks and Designs) (‘OHIM’). 10 The approximation of trade marks laws applies also to the European Economic Area. 11 But, there are some differences, apart from territorial aspects. Furthermore, the EU trade mark has provisions on procedural issues and jurisdiction. 12 Social media systems, such as Facebook, and internet service providers, such as Google, rely on advertising to generate income.

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Layout of this chapter 13.7 be discussed in the following chapter. First, in this chapter we explore the nature of registered trade marks and the law of passing off, with brief mention of a further action known as malicious falsehood, an example being where X maliciously puts a statement on social media which falsely suggests that Y’s goods are counterfeit.

LAYOUT OF THIS CHAPTER 13.6 We start by looking at the basic requirements for registration of a trade mark including the grounds for refusal of registration.13 The rights of the proprietor are then described together with what constitutes infringement. There are a number of limitations to the effects of a trade mark, such as use of one’s own name, and the doctrine of exhaustion of rights applies so as to allow further commercialisation of goods placed on the market in the EU by the proprietor. We then look at licensing and dealing with trade marks. Registered trade marks are vulnerable to revocation, for example, if they are not used for five or more years. There are other forms of revocation and these are considered as well as reasons for invalidity. Remedies are discussed followed by a brief look at the main criminal offences that apply to trade marks. The registration process in the UK is described before moving on to the EU trade mark. Although the national trade mark system under the Directive and the EU trade mark are completely separate, many of the provisions in the Trade Marks Directive and the EU Trade Mark Regulation are, mutatis mutandis, very similar or equivalent. That being so, the Court of Justice of the EU has consistently referred to case law from one system in relation to the other, especially in connection with the absolute and relative grounds of refusal of registration or invalidity. 13.7 In this chapter, we look at UK trade mark law with focus on the provisions in the new Trade Marks Directive,14 with references to the UK Trade Marks Act 1994 for matters left to Member States and optional implementation permitted by the Directive. There is a short description of the EU trade

13

These grounds are relevant for the Directive and, mutatis mutandis, the EU Trade Mark Regulation. 14 At the time of writing the new Directive is due to be implemented by 14 January 2019. In the UK, the necessary secondary legislation has been made, being the Trade Marks Regulations 2018, SI 2018/825 which will come into effect on 14 January 2019 and modify the Trade Marks Act 1994.

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13.8 Essentials of trade mark law and the law of passing off mark before the section on passing off and malicious falsehood.15 Again, for a fuller description, please refer to a standard text on trade mark law.16

REGISTERED TRADE MARKS17 13.8 The key essential function of a registered trade mark is that it distinguishes the goods or services of one undertaking18 from those of other undertakings.19 In other words, registered trade marks serve as badges of origin. Consumers buying goods or services are able to identify where those goods or services come from by reference to the trade mark under which the goods are sold or the services provided.20 Reflecting on this essential function gives us the basic requirement for registration of a sign as a registered trade mark.21 That is, that the sign is capable of distinguishing the goods or services of one undertaking from those of other undertakings. The use of the word ‘capable’ is used to denote that a new sign will become so capable after use by the undertaking. 15 16 17

18

19

20

21

I have attempted to limit references to the UK Act, where the provisions are equivalent to those in the Directive, so as to simplify the explanation in this chapter. For example, A Firth, G Lea and P Cornforth, Trade Marks: Law and Practice, 4th edition, Jordan Publishing, 2016. As mentioned previously, the focus in this section is on the new Trade Marks Directive 2015/2436/EU, the majority of provisions of which are due to be implemented by Member States by 14 January 2019. Unless otherwise stated, references hereinafter to ‘the Directive’ are to Directive 2015/2436/EU. Both the Directive on trade marks and the EU Trade Mark Regulation refer to undertakings, whereas previously the term ‘trader’ tended to be used in the UK. The term undertaking is not defined in the UK Act though ‘business’ is defined as ‘including any trade or profession’ and ‘trade’ ‘includes any business or profession’: section 103(1) of the Trade Marks Act 1994. Recital 3 to the EU Trade Mark Regulation uses the term ‘undertaking’ in the context of manufacturing and distributing goods or providing services. Trade marks may also serve other ‘secondary’ functions, such as communication, advertising and investment: see L’Oréal SA v Bellure NV, Case C-487/07, EU:C:2009:387 at para 58. This remains the case where, for example, the business and trade marks of the original undertaking has been acquired by another organisation. For example, the trade mark ‘Kit-Kat’ remains a badge of origin even though the original company, Rowntrees of York, was acquired by Nestlé. It would still be a badge of origin even of the new owners eventually transferred the chocolate biscuit factory to a different location. The term ‘sign’ is used generically for any name, logo or other identifier used in business. It is usual in the legislation to refer to a sign that possesses the features required for registration as a trade mark, whether or not it is registered as such.

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Registered trade marks 13.11 13.9 Article 2 of the Directive on trade marks states that a trade mark may consist of any signs, in particular words, including personal names, or designs, letters, numerals, colours, the shape of goods or of the packaging of goods, or sounds, provided that such signs are capable of: (a) distinguishing the goods or services of one undertaking from those of other undertakings; and (b) being represented on the register in a manner which enables the competent authorities and the public to determine the clear and precise subject matter of the protection afforded to its proprietor. This is a big change from the previous Directives which, instead of (b) above, required that the sign must be capable of graphical representation. The change reflects case law involving applications to register sound, colour and olfactory trade marks. See, for example, Ralf Sieckmann v Deutsches Patent- und Markenamt,22 in which the Court of Justice of the EU confirmed that a trade mark representation must be clear, precise, self-contained, easily accessible, intelligible, durable and objective. In that case, the use of a chemical formula to represent a smell failed to satisfy most of those criteria. Hence the change in the requirement for representation as in (b) above. 13.10 Note that the list of signs which may be trade marks is not exhaustive and that even the shape of goods and packaging may be registered as trade marks. There have been numerous registrations for colours and sounds as trade marks. Shape marks have proved troublesome, one reason is that consumers have tended not to associate the shape of goods as functioning as trade marks. Signs intended to be used on webpages, on other online media or used in relation to software or computer games generally pose no special problems. They will generally satisfy the requirement of fulfilling the representation requirement, for example, by submitting on durable media a drawing of the sign or a photograph of a screen shot or series of images depicting a moving sign. In principle, there is no prohibition against the registration of moving images provided they conform to the requirements of Article 2, above. All this is subject to the absolute and relative grounds for refusal of registration not being applicable. 13.11 The fact that a sign complies with the basic twin requirements of capability of graphical representation and capable of distinguishing under 22

Case C-273/00, EU:C:2002:748.

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13.12 Essentials of trade mark law and the law of passing off Article 2 does not mean that the trade mark is registrable. There are two sets of grounds for refusal. The first are the ‘absolute grounds’ and the second set are the ‘relative grounds’.23 They are described as such in the Trade Marks Act 1994, the EU Trade Mark Regulation and the Trade Marks Directive (‘the Directive’). First, we look at the absolute grounds for refusal.

Absolute grounds for refusal of registration24 13.12 Before looking at the absolute grounds in more detail, it is worth noting that the grounds under (b), (c) and (d) below can be overcome if the sign or trade mark in question has become distinctive through use.25 This does not apply to the other grounds, for example, in relation to shape marks caught under (e). Under Article 4(1) of the Directive, a sign or trade mark26 shall not be registered or, if registered, is liable to be declared invalid of the basis of the following absolute grounds: (a) It is not a trade mark: that is, it does not meet the requirements for a trade mark under Article 3, because it is not capable of distinguishing goods or services of one undertaking from those of other undertakings and/or fails to comply with the requirement for representation. (b) The trade mark is devoid of distinctive character: this overlaps with (a) above for if it has no distinctive character it cannot distinguish goods or services of one undertaking from those of another. (c) What used to be known as laudatory or descriptive marks, such as ‘super’, ‘first-rate’, ‘the best’, etc: but this is a wider ground of refusal 23

The Directive refers to ‘Absolute grounds for refusal or invalidity’ and ‘Relative grounds for refusal or invalidity. The EU Trade Mark Regulation has separate absolute and relative grounds for invalidity under Articles 59 and 60 of the Regulation. The UK Trade Marks Act 1994 separates the grounds for invalidity in section 47. There is no significant consequence of this change in structure. 24 Statutory references here are to Directive 2015/2436/EU. The grounds are described as the absolute grounds for refusal or invalidity in Article 4. This is because the same grounds apply to actions for invalidity of registered trade marks. 25 In the term ‘sign or trade mark’, ‘sign’ is relevant to an application to register a sign as a trade mark whereas ‘trade mark’ is relevant to an application for invalidity of a registered trade mark. 26 The use of ‘sign’ here reflects whether the application relates to something which does not comply with the meaning of a trade mark under Article 4(1)(a). Where it does, it is then a question of whether it is caught by the other absolute grounds for refusal or invalidity.

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Registered trade marks 13.12 as it covers trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the kind, quality, quantity, intended purpose, value, geographical origin, or the time of production of the goods or of rendering of the service, or other characteristics of the goods or services. Note that the list is not exhaustive and the ground applies only if the trade mark consists exclusively of such signs or indications. These exceptions can be justified in that, generally, consumers do not appreciate such signs as functioning as trade marks. (d) Trade marks which consist exclusively of signs or indications that have become customary in the current language or in the bona fide and established practices of trade: to allow registration of such signs or indications would monopolise words and descriptions that other traders have used legitimately to describe their own goods or services. (e) Certain types of signs that consist exclusively of the shape (or another characteristic)27 of goods: this ground applies where the shape results from the nature of the goods, is necessary to obtain a technical result, or which adds substantial value to the goods.28 This is a difficult ground and has been applied in a weak sense, for example, the technical result exception might apply even if there are other shapes that can achieve the same result.29 (f) Trade marks which are contrary to public policy or to accepted principles of morality; (g) Trade marks which because of their nature are likely to deceive the public, for instance as to their nature, quality or geographical origin of the goods or services.

27

As from 14 January 2019, to the word ‘shape’ is added ‘or another characteristic’. For example, in Christian Louboutin v Van Haren Schoenen BV, Case C-163/16, EU:C:2018:423, the sign in question was the colour red applied to the sole of a high heeled shoe. The Court of Justice of the EU confirmed that this was not a shape mark. However, the facts of that case pre-dated the current Directive when the ground for refusal applied only to shape marks and not shape or another characteristic of goods. It is arguable that the ground for refusal now would apply to such a mark. 29 See Koninklijke Philips Electronics NV v Remington Consumer Products Ltd, Case C-299/99, EU:C:2002:377. In terms of information technology, this ground is of little importance except in relation to applications to register the shape of hardware such as a computer mouse or the shape of a laptop computer although design law is more relevant to such shapes. 28

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13.13 Essentials of trade mark law and the law of passing off Further grounds for refusal exist, such as designations of origin and geographical indications,30 traditional terms for wine, traditional specialities, registered plant denominations, state emblems, hallmarks, etc31 and emblems and symbols protected under the laws of Member States. 13.13 Where grounds of refusal (or invalidity) apply only in respect of some goods or services for which that trade mark has been applied or registered, refusal of registration or invalidity will apply to those goods or services only. This applies to both the absolute grounds and the relative grounds, under Article 7 of the Directive.

Bad faith 13.14 Article 4(2) of the Directive provides that a trade mark may be invalidated if it was applied for in bad faith.32 Under the UK Act an application to register a trade mark must carry a statement that the trade mark is being used by the applicant or with his consent or he has a bona fide intention that it will be so used.33 The meaning of bad faith has generated considerable case law. In the UK in Gromax Plasticulture Ltd v Dun & Low Nonwovens Ltd,34 Lindsay J said that bad faith clearly included dishonesty but could also include some dealings which fell short of the standards of acceptable commercial behaviour. This is not dissimilar to a finding in the EUIPO in a case on bad faith in terms of an EU trade mark where bad faith was described as the opposite of good faith, equated to a dishonest intention, generally implying, though not limited to, actual or constructive fraud, or are designed to mislead or deceive another or any other sinister motive.35 30

31 32

33 34 35

For example, Parma Ham, Cornish Pasties, Scotch Whisky. In Scotch Whisky Association v Michael Klotz, Case C-44/17, EU:C:2018:415, the Association brought an action against a German Whisky made in the Buchenbach Valley in Germany and sold under the name ‘Glen Buchenbach’. Although the names of many Scotch Whiskies start with the word ‘Glen’ this alone is not sufficient to find infringement. Merely invoking among the relevant public an association is not enough. Registration of such marks is prohibited under Article 6ter of the Paris Convention for the Protection of Industrial Property 1883. Bad faith is recognised as a ground for cancellation or prohibition of marks registered or used in bad faith, with no time limit for cancellation or prohibition: Article 6bis(3) of the Paris Convention. Section 32(3) of the Trade Marks Act 1994. Article 4(2) of the Directive allows Member States to provide for this. [1999] RPC 367. Case C000053447/1 TRILLIUM Trade Mark, 28 March 2000.

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Registered trade marks 13.16 13.15 The Court of Justice of the EU, in Malaysia Dairy Industries Pte Ltd v Ankenaevnet For Patenter Og Varaemerker,36 ruled that it was important to have a consistent approach to bad faith in relation to the EU Trade Mark Regulation where it applies also. It was necessary to have regards to all the relevant factors at the time of application. The fact that the applicant knows or should know that a third party is using the mark abroad at the time of the application to register and which may cause confusion is not, per se, sufficient for a finding of bad faith. In other words, something else is needed, for example, an intention to deceive or take advantage of another undertaking’s mark.37 An intention to register a trade mark identical or similar to a trade mark belonging to a third party registered elsewhere so as to prevent the third party using the trade mark in the applicant’s country is another example of what counts as bad faith.38 13.16 There is tension between the operation of bad faith between the UK Act, on the one hand, and the Directive and the EU Trade Mark Regulation, on the other. Section 32(3) of the UK Act requires the applicant for registration to make a statement to the effect that the mark is being used or there is a bona fide intention that it will be used. Lack of this bona fide intention may be alleged in opposition proceedings or the registrar himself may apply to the court for a declaration for invalidity of the registration. Under the Directive and the EU Trade Mark Regulation, bad faith is simply an absolute ground for invalidity. This tension made Arnold J question whether section 32(3) was fully compatible with the Directive in Sky plc v Skykick UK Ltd,39 in which he submitted a number of questions to the Court of Justice of the EU for a preliminary ruling. The questions submitted included: (i) whether it is bad faith simply to apply to register a trade mark without any intention of using it; (ii) whether it is possible to conclude that an application is made partly in bad faith if and to the extent that the applicant had no intention to

36

Case C-320/12, EU:C:2013:435. For example, in Baywatch Trade Mark Application, 12 November 1999, Trade Mark Registry, the application wished to register ‘Baywatch’ for restaurant services. The makers of the famous TV series by that name objected successfully. Prior to the hearing the applicant offered to sell the trade mark to the claimants for £15m plus royalties. It was held that the application was made in bad faith. There was no evidence that the applicant had developed any concrete plans to launch a restaurant business. 38 Chocoladefabriken Lindt & Sprungli AG v Franz Hauswirth GmbH, Case C-529/07, EU:C:2009:361. 39 [2018] EWHC 943 (Ch). 37

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13.17 Essentials of trade mark law and the law of passing off use the trade mark in relation to some though not all the specified goods or services; and (iii) whether a lack of sufficient clarity or precision in specifying the goods or services for which the trade mark will be used is a reason to declare the registration wholly or partially invalid.40

Relative grounds for refusal of registration 13.17 Article 5 of the Directive sets out a number of other grounds for refusal, known as the relative grounds for refusal because they look to the relationship of the trade mark for which registration is sought with earlier registered trade marks or other signs or trade marks protected in other ways such as by copyright, design rights or, as unregistered trade marks protected by the law of passing off, infra. For example, is the trade mark subject to the application the same or confusingly similar to an existing registered trade mark. The relative grounds applicable to earlier registered trade marks are particularly important as they form the basis for infringement. So, for example, using a sign which is identical to a registered trade mark in respect of identical goods or services will infringe the registered trade mark.41 13.18 There are three main grounds for refusal, the first two relating to the existence of an earlier trade mark,42 being: ••

where the trade mark is identical to an earlier trade mark and the goods or services applied for are identical to the goods or services of that earlier trade mark. If this is the case the trade mark simply is not registrable;

••

where the trade mark applied for is identical or similar to the earlier trade mark and the goods or services applied for are identical or similar to goods or services of that earlier registered trade mark, providing there is a likelihood of confusion on the part of the public which includes a likelihood of association with the earlier trade mark. Of course, where the both the marks and the goods or services are identical, the ground for refusal above applies and there is no need to show a

40

For example, use of terms such as ‘computer software’ or ‘electronic mail system’. The requirement for the description of the goods or services for which the trade mark is to be used to be clear and precise comes from The Chartered Institute of Patent Attorneys v Registrar of Trade Marks, Case C-307/10, EU:C:2012:361. 41 Subject to limitations to the rights of the trade mark proprietor. 42 The third ground of refusal, below, is based on an earlier trade mark with a reputation.

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Registered trade marks 13.19 likelihood of confusion. This is probably the most common ground for refusal (and the most common form of infringement). The relationship between the earlier trade mark and the sign applied for must be assessed globally, taking into account all the factors relevant to the case, including in particular, the degree of distinctiveness of the earlier mark and the degree of similarity between the marks at issue and the existence of visual, aural or conceptual similarity.43 Moreover, the average consumer perceives a trade mark as a whole and does not proceed to analyse its various details.44 Where the sign for which registration is sought and the earlier trade mark are a mixture of a word mark with figurative elements, even though the visual similarity is low, registration of the sign might be refused nonetheless if, phonetically, the sign and the earlier mark are almost identical. In France.com Inc v EUIPO,45 both signs included the word France46 with a representation of the Eiffel Tower and the colours of the French flag. The General Court of the EU ruled that, because of the phonetic and conceptual similarity between the signs, there was a likelihood of confusion and, therefore, the French Republic was entitled to oppose registration of the applicant’s sign. Where an earlier trade mark had a three-letter sequence, BGW, as a dominant part of the mark, the use of the same threeletter sequence followed by a description of those letters used for identical or similar goods produced a likelihood of confusion.47 13.19 For the purposes of the above, an earlier trade mark means: (a) a trade mark with an earlier date of application, taking account of any priorities, being, (i) an EU trade mark; (ii) a trade mark registered in the Member State concerned;48 (iii) trade marks registered under international arrangements which have effect in the Member State concerned;49

43 44 45 46 47 48 49

Kenzo Tsujimoto v EUIPO, Joined Cases C-85/16 P and C-86/16 P, EU:C: 2018:349. Sabel BV v Puma AG, Rudolf Dassler Sport, Case C-251/95, EU:C:1997:528. Case T-71/17, EU:T:2018:381. The wording of the sign applied for was France.com but the addition of ‘.com’ was seen simply as a reference to a website. BGW Beratungs-Gessellschaft Wirtschaft mbH v Bodo Scholz, Case C-20/14, EU:C:2015:714. In the case of Belgium, The Netherlands, or Luxembourg, a trade mark registered at the Benelux Officer for Intellectual Property. Such as trade marks registered under the Madrid System.

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13.20 Essentials of trade mark law and the law of passing off (b) EU trade marks claiming seniority under the EU Trade Mark Regulation under (a)(ii) and (iii) even when the latter has been surrendered or allowed to lapse;50 (c) applications for trade marks under (a) and (b), above, subject to their registration; (d) trade marks which, on the date of application for registration, taking account of any priority claimed, are well known in the Member State concerned, being well known in accordance with Article 6bis of the Paris Convention.51 13.20 The third ground applies where there exists an earlier trade mark with a reputation. Thus, a trade mark shall not be registered where it is identical or similar to an earlier trade mark which has a reputation in the Member State (or an earlier EU trade mark with a reputation in the EU) and where the use of the trade mark for which registration is sought would, without due cause, take unfair advantage of, or would be detrimental to, the distinctive character or repute of that earlier trade mark. The Directive states that the use of the trade mark applied for must be in relation to identical, similar or nonsimilar goods or services. The previous Directive was stated to apply only in respect of non-similar goods or services, but the Court of Justice of the EU ruled that the equivalent provision also applied to identical and similar.52 The UK Act was modified accordingly soon after the Court of Justice ruling. 13.21 Further grounds for refusal apply. First, in a case where an agent or representative of the proprietor of the trade mark applies for registration thereof in his own name without the proprietor’s authorisation, unless the agent or representative justifies his action. Secondly, to the extent that, under

50

For example, if the proprietor of a trade mark registered in, say, Germany, he may claim the seniority of that trade mark in a subsequent application for an EU trade mark. 51 Where the competent authority in a Convention country considers a trade mark as wellknown in that country as being already the mark of a person entitled to the benefits of the Convention, it will refuse an application to register a trade mark, or cancel the registration of and prohibit the use of a trade mark which is liable to cause confusion. For example, if a US trade mark is well known in the UK, an application by the third party to register a confusingly similar trade mark in the UK will be refused, even if the US trade mark has not been registered in the UK. 52 See Davidoff & Cie SA v Gofkid Ltd, Case C-292/00, EU:C:2003:9 and Adidas-Salomon AG v Fitnessworld Trading Ltd, Case C-408/01, EU:C:2003:582.

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Registered trade marks 13.23 EU legislation or the law of the relevant Member State providing for protection of designations of origin and geographical indications: (i) an application for a designation of origin or a geographical indication had already been submitted in accordance with EU legislation or the law of the relevant Member State prior to the date of application for registration of the trade mark or the date of the priority claimed for the application, subject to its subsequent registration; (ii) that designation of origin or geographical indication confers on the person authorised under the relevant law to exercise the right to prohibit the use of a subsequent trade mark. 13.22 There then follows a number of optional relative grounds for refusal. These apply to earlier non-registered trade marks or other signs used in the course of trade, where the use of the trade mark may be prohibited by virtue of an earlier right, in particular: a right to a name; a right of personal portrayal; a copyright; or an industrial property right; and, where the trade mark is liable to be confused with an earlier trade mark protected abroad, if at the date of the application, the applicant was acting in bad faith.53 Finally, Member States have, in appropriate circumstances, no obligation to refuse registration or to declare a trade mark invalid where the proprietor of the earlier trade mark or other earlier right consents to the registration of the later trade mark.54 13.23 By way of derogation from the relative grounds for refusal, Member States may provide that the grounds for refusal of registration or invalidity in force in that Member State prior to the date of the entry into force of the provisions necessary to comply with Directive 89/104/EEC are to apply to trade marks for which an application has been made prior to that date. In other words, where an application to register a trade mark was made prior to 28 December 1991,55 the then subsisting relative grounds of refusal may be applied. This optional derogation does not and will not apply in the UK as Schedule 3, para 2(1) of the Trade Marks Act 1994 already states that marks registered under the 1938 Act have effect as if registered under the 1994 Act. 53

This would include unregistered marks and signs protected by the law of passing off. The UK will provide for these optional grounds for refusal of registration. The 1994 Act will be amended accordingly on 14 January 2019 by regulation 5 of the Trade Marks Regulations 2018. 55 This was the date for compliance with Directive 89/104/EEC, the first trade marks Directive. The UK failed to make this date. 54

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13.24 Essentials of trade mark law and the law of passing off

Rights of the proprietor and infringement 13.24 The rights of the proprietor of a registered trade mark are set out in Article 10 of the Directive. The right is a right to prevent others without the proprietor’s consent using in the course of trade, in relation to goods or services, any sign where: (a) the sign is identical with the trade mark and is used in relation to goods or services which are identical with those for which the trade mark is registered. Complete identity is not required providing the differences between the sign and the trade mark are insignificant and are such as to go unnoticed by the average consumer or where all the elements of the trade mark are reproduced without modification or addition;56 (b) the sign is identical with, or similar to, the trade mark and used in relation to identical goods or services with, or similar to, the goods or services for which the trade mark is registered, if there exists a likelihood of confusion on the part of the public; the likelihood of confusion includes a likelihood of association between the sign and the trade mark. A likelihood of association, might occur where the use in question makes people think of the trade mark proprietor without confusion as to the origin of the goods or services in question. Such non-origin association, on its own, is not enough to show infringement, and there must be some confusion as to the origin of the goods or services;57 (c) the sign is identical with, or similar to, the trade mark irrespective of whether it is used in relation to goods or services which are identical with, or similar to, those for which the trade mark is registered, where the latter has a reputation in the Member State and where use of that sign without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute of that trade mark; this is no longer a form of infringement that is an option for Member States.58

56 See

Lloyd Shuhfabrik Meyer & Co GmbH v Klisjen Handel BV, Case C-342/97, EU:C:1999:323. 57 First accepted in the UK in Wagamama Ltd v City Centre Restaurants plc [1995] FSR 713 (‘Wagamama’ and ‘Raja Mama’s’) and later confirmed in the Court of Justice of the EU in Sabel BV v Puma AG, Rudolf Dassler Sport, Case C-251/95, EU:C:1997:528 (signs consisting of or including a running large cat). 58 This form of infringement is now compulsory in all Member States. Previously, the UK and most other Member States opted to provide for this form of infringement.

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Registered trade marks 13.26 The prohibited forms of use included affixing the sign to goods or their packaging; offering the goods or putting them on the market or stocking them for these purposes under the sign, or offering or supplying services thereunder; importing or exporting goods under the sign; using the sign as a trade or company name or part of a trade or company name; using the sign in business papers or in advertising; or using the sign in comparative advertising in a manner that is contrary to Directive 2006/114/EC.59 Note that the Directive introduces these uses as ‘the following, in particular, may be prohibited …’ which suggests that the list is not exhaustive and that some, if not all, the uses are optional. Most Member States, including the UK, will simply apply the prohibited uses in the Directive. 13.25 There is provision for dealing with the issue of goods in a Member State in transit from outside the EU bound for another country. The proprietor of a registered trade mark may also prevent third parties bringing goods into a Member State without being released for free circulation where those goods come from outside the customs territory of the EU and the goods (or their packaging) carry a sign identical to, or indistinguishable in its essential aspects from the trade mark. The proprietor’s entitlement will lapse if proceedings are initiated under the European Customs Enforcement Regulation 201360 to determine infringement and evidence is adduced to show that the proprietor is not entitled to prevent the placing of the goods on the market in the country of final destination. 13.26 In terms of infringement, the concept of the average consumer is used. He is reasonably well informed and reasonably observant and circumspect. The average consumer makes a global assessment of the identity of sign and the trade mark but rarely compares them side by side and may have an

59

Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 concerning misleading and comparative advertising (codified version), OJ L 376, 27.12.2006, p 21. The Trade Marks Act 1994, as amended with effect from 14 January 2019, refers instead to the Business Protection from Misleading Marketing Regulations 2008, SI 2008/1276, as amended by amending Regulations, SI 2013/2701. Note that although Article 10(3) makes these forms of use optional by the use of the phrase ‘may be prohibited’, the UK Act adopts these formulae for use: see section 10(4) of the Trade Marks Act 1994. 60 Regulation 608/2013/EU of the European Parliament and of the Council of 12 June 2013 concerning customs enforcement of intellectual property rights and repealing Council Regulation 1383/2003/EC, OJ L 181, 29.06.2003, p 15.

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13.27 Essentials of trade mark law and the law of passing off imperfect recollection of the one or the other. Furthermore, his level of attention may vary according to the nature of the goods or services concerned.61 This may be highly relevant in connection with signs and trade marks which are generated by software and appear on screens of computers, televisions, tablet computers and mobile phones. 13.27 Under Article 12 of the Directive,62 where a reproduction of a trade mark in a dictionary, encyclopaedia or similar reference work, in print or electronic form, gives the impression that it is a generic name of the goods or services for which the trade mark is registered, the proprietor may request that the publisher ensures that the reproduction of the trade mark is, without delay or, in the case of works in printed form, no later than the next edition, accompanied by an indication that it is a registered trade mark. This is important bearing in mind that a trade mark, if it becomes a generic name as a result of the acts or inactivity of the proprietor, is vulnerable to revocation.63

Comparative advertising 13.28 Section 10(6) of the Trade Marks Act 1994 permitted the use of a trade mark for the purpose of identifying the goods or services as those of the proprietor providing such use was in accordance with honest practices in industrial or commercial matters and did not, without due cause, take unfair advantage of or be detrimental to the distinctive character or repute of the trade mark. This was a curious home-grown provision with no direct equivalent in the previous Directive. It was seen as a way of allowing ‘fair’ comparative advertising. There have been calls for section 10(6) itself to be repealed as it adds nothing but obfuscation.64 It will be repealed imminently by the Trade Marks Regulations 2018, with effect from 14 January 2019.

61

As the Court of Justice of the EU ruled in Lloyd Schuhfabrik Meyer & Co GmbH v Klisjen Handel BVI, Case C-342/97, EU:C:1999:323. 62 And, indeed, under Article 12 of the EU Trade Mark Regulation. 63 Under Article 20 of the Directive, Article 58(1)(b) of the EU Trade Mark Regulation (Article 58 contains grounds for revocation) and section 46(1)(c) of the Trade Marks Act 1994 (section 46 covers revocation of registration). 64 In O2 Holdings Ltd v Hutchinson 3G Ltd [2006] EWCA Civ 1656, [2007] RPC 16, Jacob LJ said section 10(6) was pointless and was an unnecessary distraction in an already complicated branch of law.

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Limitations on the effects of a trade mark 13.31 13.29 Under EU law, comparative advertising is permitted under the Comparative Advertising Directive 2006.65 Under Article 4 comparative advertising is permitted only if a number of conditions are satisfied. These include where there is no confusion between the advertiser and competitor or their respective trade marks and where the competitor’s trade marks are not discredited or denigrated. The Court of Justice of the EU confirmed that all the conditions under Article 4 must be satisfied for comparative advertising to be permitted in O2 Holdings Ltd v Hutchinson 3G UK Ltd.66 13.30 Comparison websites usually make use of registered trade marks. In most cases, the proprietors will have consented to this use of their trade marks. But this might not always be the case. Another use might be where one business advertises its goods and compares their features and prices with those of their competitors. Usually, this use will not be with the consent of the competitor. It will be allowed where the identity of the advertiser is clear and it is also clear that the other trade marks belong to competitors and that the features and prices indicated are used fairly and objectively.67

LIMITATIONS ON THE EFFECTS OF A TRADE MARK 13.31 There are a number of limitations to the rights of the proprietor under Article 14 of the Directive. The proprietor may not prohibit a third party from using, in the course of trade: ••

the name or address of the third party, where that third party is a natural person;

••

signs or indication which are not distinctive or which concern the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service, or other characteristics of goods or services;

65

Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 concerning misleading and comparative advertising (codified version) OJ L 376, 27.12.2006, p 21, implemented in the UK by means of the Business Protection from Misleading Advertising Regulations 2008, SI 2008/1276, as amended. 66 Case C-533/06, EU:C:2008:339. 67 Some amount of selectivity in the choice of features may be expected: see Barclays Bank plc v RBS Advanta [1996] RPC 307. However, this case pre-dates the Directive on misleading and comparative advertising.

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13.32 Essentials of trade mark law and the law of passing off ••

the trade mark for the purpose of identifying or referring to goods or services as those of the proprietor of that trade mark, in particular, where the use of that trade mark is necessary to indicate the intended purpose of a product or service, in particular as accessories and spare parts.

The new proviso that the own name or address is limited to natural persons contradicts the finding of the Court of Justice in Anheuser-Busch Inc v Budějovický Budvar, národní podnik,68 in which the Court accepted that the name in question could be the name of a company as the wording of the Directive did not limit this to natural persons. Restricting the limitation to natural persons is a significant reduction in the potential scope of this limitation. All the above apply only where the use made by the third party is in accordance with honest practices in industrial or commercial matters.69 As far as honest practices are concerned, changing one’s name to that of a major manufacturer or retailer would not be in accordance with honest practices in industrial or commercial matters. Using the name of another undertaking, for example, by stating that you supply that other undertaking’s goods as accessories would be acceptable. Whether it is acceptable in an online context is a different matter as will be seen in the following chapter. 13.32 There is also a limitation that applies in relation to an earlier right which only applies in a particular locality if such a right is recognised in the relevant Member State within the limits of the territory in which it is recognised.70 This might apply, for example, where an undertaking had, prior to the registration of the trade mark, built up a goodwill in a name where

68

Case C-245/02, EU:C:2004:717. See paras 77 to 80. See also, Scandecor Developments AB v Scandecor Marketing AV [2001] UKHL 21, [2002] FSR 7 where the House of Lords considered the point not acte claire. 69 In Frank Industries Pty Ltd v Nike Retail BV [2018] EWHC 1893 (Ch), the claimant registered ‘LNDR’ as a trade mark for clothing and brought an infringement action against Nike for trade mark infringement and passing off in respect of the latter’s use of its ‘swoosh’ mark together with the initials ‘LDNR’. The action was successful and Nike’s defence under Article 14 was not made out as it had not acted fairly in accordance with honest practices in the light of what it now knew about the likelihood of confusion by its use of ‘LDNR’ which has no usage as an abbreviation for Londoner although ‘LDN’ was an accepted abbreviation for London. Account was taken of the growing use of abbreviations used online and in social media. 70 Article 14(3).

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Limitations on the effects of a trade mark 13.34 that goodwill extends only to a small geographical area. This limitation is designed to protect small undertakings operating in one locality only.71 13.33 There is a further limitation in the form of acquiescence under Article 9 of the Directive. This applies where the proprietor of an earlier trade mark, being aware of a later registered trade mark, acquiesces in its use for a period of five or more years. The proprietor cannot apply for a declaration of invalidity of that later trade mark nor may he oppose the use of it in respect of the goods or services for which it is used. The only proviso to this is where the application to register the later trade mark was made in bad faith. Member States may also apply acquiescence in relation to other earlier rights, such as a copyright or right to a name protected by the law of passing off. The UK chose to implement this further form of acquiescence.72 A proviso to the above is that the proprietor of the later registered trade mark is not entitled to oppose the use of the earlier right, even though that right may no longer be invoked against the later mark.

Exhaustion of rights 13.34 The concept of exhaustion of rights applies to registered trade marks. Under Article 15(1) of the Directive, the proprietor cannot prevent the use of the trade mark in relation to goods which have been put on the market in the EU under that trade mark by the proprietor or with the proprietor’s consent. However, this does not apply if there are legitimate reasons for the proprietor to oppose further commercialisation of the goods, especially where the condition of the goods is changed or impaired after they have been put on the market (Article 15(2)). This might apply, for example, where the goods have been repackaged using inferior outer packing bearing a sub-standard copy of the trade mark. The proprietor may oppose the resale of luxury goods, such as well-known perfumes, in budget discount stores.73

71

The pre-existence of the goodwill could have been a relative ground for refusal of registration but small traders operating in a small local area may either have not known about the application for registration or, if they did, would not be willing to challenge a large corporation in opposition or invalidity proceedings. 72 Section 48 of the Trade Marks Act 1994. 73 Copad SA v Christian Dior couture SA, Case C-59/08, EU:C:2009:260.

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13.35 Essentials of trade mark law and the law of passing off

LICENSING AND DEALING IN TRADE MARKS 13.35 Trade marks may be licensed, exclusively or non-exclusively.74 The licence may be partial, for example, being limited to only some of the goods or services for which it is registered or being limited in duration or territorially. The proprietor may invoke his trade marks rights against a licensee who contravenes the terms of the licence in a number of ways, for example, by using it outside the licensed territory, after the licence expired, in a different form or in relation to goods and services outside the scope of the licence. A further form of contravention is in relation to the quality of goods manufactured, or services rendered, by the licensee for which the trade mark is used. 13.36 Under Article 25(3) of the Directive, exclusive licensees may bring proceedings for infringement if the proprietor, after formal notice, does not himself bring infringement proceedings within an appropriate period. Nonexclusive licensees may bring proceedings for infringement if the proprietor consents, bearing in mind the terms of the licence agreement. A licensee may, for the purpose of obtaining compensation for the damage suffered by him, be entitled to be joined in proceedings brought by the proprietor of the trade mark, under Article 25(4). Under the UK Act, sub-licences may be granted if the licence so permits.75 There is a danger in proliferating licences under a trade mark as it may lose its distinctive character and be vulnerable to an application for invalidity.76 13.37 National trade marks may be assigned as with any other form of intellectual property and assignments may be partial in terms of duration, the scope of goods or services covered or territorially.77 Under Article 25(5) of the Directive, procedures must be provided to record licences in 74

Article 25. Section 28(4) of the Trade Marks Act 1994. References to a licence or licensee include a sub-licence or sub-licensee. 76 Under the absolute ground of being devoid of distinctive character in Article 4(1)(b) of the Directive. Note, however, that a trade mark will not be invalidated under Article 4(1)(b), (c) or (d) if before the date of application for invalidity, following the use made of it, it has acquired a distinctive character. 77 This is unlike the EU trade mark which, having a unitary character cannot be assigned except in relation to the entire EU: Article 1(2) of the EU Trade Mark Regulation. However, licences under the EU trade mark can be granted for some or all of the goods or services for which it is registered and for the whole or part of the EU: Article 25(1) of the 75

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Requirement that trade mark must be used 13.39 their registers. In the UK, assignments and licences are some of the transactions which must be registered.78 Failure to register will leave assignees and licensees vulnerable to any person acquiring a conflicting interest in ignorance of the earlier transaction. Other difficulties apply in the case of infringing acts and, in actions for infringement, the assignee or licensee may not be awarded costs.

REQUIREMENT THAT TRADE MARK MUST BE USED 13.38 A business might register a trade mark but not use it for some time. There may be good reasons for this, such as the time taken to launch a new product. For example, a business may decide to establish a new online trading activity and register a trade mark to be used for its online business but there may be a delay of some years during which technical issues must be resolved, website designs created, legal advice taken as to the e-commerce implications of online trading, establishing a marketing campaign and so on. Such delays are expected in terms of genuine business activities. However, there is a danger that trade marks might be registered by persons with no intention of using them.79 This might interfere with trade and be used as tools of extortion and deception. So, a basic rule of trade marks is that you must use them or lose them. 13.39 If a trade mark has not been put to genuine use within five years of its registration or if use has been suspended for an uninterrupted period of five or more years, it is liable to revocation unless there are proper reasons for nonuse. Furthermore, where opposition to registration is raised or an application for invalidity is made on the basis of an earlier trade mark, the earlier trade mark must have been put to genuine use within the preceding five years or there must be proper reasons for non-use. Use includes use in a form differing in elements which do not affect the distinctive character of the trade mark as registered.80 EU Trade Mark Regulation. Equivalent provisions apply in respect of licensees as under the Directive. 78 Section 25 of the Trade Marks Act 1994. 79 This would usually amount to bad faith and leave the trade mark vulnerable to invalidity proceedings. 80 For the provisions on non-use in the Directive, see Articles 16 and 19. See also Article 17 where an allegation of non-use may be used as a defence in infringement proceedings. Non-use under the Trade Marks Act 1994 is provided for under sections 6A and 47.

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13.40 Essentials of trade mark law and the law of passing off

REVOCATION AND INVALIDITY 13.40 A registered trade mark may be revoked for non-use for five or more years in the absence of proper reasons for non-use, as above. Revocation is also possible if, because of the acts or inactivity of the proprietor, it has become a common name in the trade for the goods or services for which it is registered.81 A further ground for revocation is where, because of the use of it by the proprietor or with his consent, it has become misleading to the public, particularly as to the nature, quality or geographical origin of goods or services.82 13.41 A registered trade mark may be declared invalid if any of the absolute grounds or relative grounds apply. However, in the case of the absolute grounds under Article 3(1)(b), (c) or (d), a trade mark registration will not be invalidated if the trade mark has become distinctive because of the use made of it by the proprietor or with his consent.83 Both revocation and invalidity may apply only to some of the goods or services for which the trade mark was registered. 13.42 The practical difference between revocation and invalidity is that a trade mark is valid until it is revoked but, if it is declared invalid, it is as if the trade mark had never been registered. This does not affect transactions past and closed, for example, where the trade mark has been subject to an assignment. This is one reason why it is important to carry out a due diligence exercise when considering acquiring rights under a trade mark.84

REMEDIES 13.43 The Directive is silent on remedies for infringement of registered trade marks. Reference should be made to the enforcement Directive.85 The 81 82 83

84 85

This is why vigilant trade mark owners will notify anyone using the trade mark generically in a publication, for example, by calling a vacuum cleaner a ‘hoover’. Article 20 of the Directive. These grounds are where the trade mark lacks distinctive character, is descriptive (indicating kind, quality, quantity, purpose, geographical origin, etc) or is in customary usage in the trade. Rather than the elegant way in which the absolute and relative grounds are set out in the Directive (serving to apply to registration and invalidity) the UK Act takes a more ham-fisted approach and has separate provision for invalidity under section 47. The same applies, of course, to other forms of intellectual property transactions. Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 157, 30.04.2004, p 45.

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Remedies 13.44 remedies under section 14(2) of the Trade Marks Act 1994 are not inconsistent with the Directive, and are damages, injunctions, accounts or otherwise as are available for infringement of any other property right. An injunction preventing future use and damages in respect of past use are the usual remedies sought in trade mark infringement actions. The proportion of profits resulting from the unauthorised use of the trade mark is difficult to assess and many other factors will play an important role such as the quality and price of the goods or services to which the offending mark has been applied. Consideration must also be given to the formula for assessing damages set out in the enforcement Directive.86 Forms of interim measures such as interim injunctions and search orders are also available, if appropriate. In some cases, a successful claimant may ask for a publicity order at the expense of the defendant.87 The judgment and its findings to be publicised. The Act also contains provisions for orders for erasure of offending signs and for delivery up of offending goods, materials or articles.88 13.44 A particular method of obtaining evidence, which has no legislative provision, is the use of a trap order. This is used to obtain evidence of confusion, for example, where the goods of a competitor are supplied in response to a request for the trade marked goods made by reference to the trade mark. Another ploy often used though seldom effective, is to use surveys to elicit evidence of confusion. There is a danger of a lack of objectivity in carrying out a survey and a full survey likely to be admissible as evidence of confusion is often prohibitively expensive. The Court of Appeal overturned the trial judge’s decision to admit survey evidence in Interflora Inc v Marks & Spencer plc (No 2).89 Sir Robin Jacob said (at para 33): … It is possible to conduct fair surveys and they may indeed lead to witnesses of value. And that may turn a case – some of the Jif lemon

86

Article 13 of the enforcement Directive. Article 13 was implemented in the UK by the Intellectual Property (Enforcement, etc) Regulations 2006, SI 2006/1028 which also provided for orders for disclosure of information in Scotland, which did not previously have the equivalent of Norwich Pharmacal Orders. 87 Article 15 of the enforcement Directive. For examples of publicity orders in trade marks cases, see Enterprise Holdings Inc v Europcar Group UK Ltd [2015] EWHC 300 (Ch) and Lifestyle Equities CV v Santa Monica Polo Club Ltd [2017] EWHC 3578 (Ch). 88 Sections 15 and 16 of the Trade Marks Act 1994. 89 [2013] EWCA Civ 510, [2013] FSR 26. The Interflora v Marks & Spencer cases are discussed in the following chapter. They relate to the use of a competitor’s trade mark in an AdWord used in the context of search engines.

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13.45 Essentials of trade mark law and the law of passing off witnesses were of that character. But if the survey amounts to no more than scratching around for something and produces so little as this one has, then there is every good reason in common sense and procedural economy for excluding it along with any resultant witnesses.90

Unjustified threats 13.45 As with patents and registered designs (UK and Community) and the UK unregistered design right, there is a remedy of unjustified threats of infringement proceedings for registered trade marks (both UK and EU trade marks).91 For a fuller description in the context of designs, see Chapter 8. The following explanation focuses on the provisions in the Trade Marks Act 1994 under new sections 21 to 21F. In general, references to a registered trade mark include references to an application to register a trade mark where the application has been published.

The threat of proceedings and actionable threats 13.46 A threat of proceedings exists if a reasonable person in the position of a recipient92 would understand from the communication in question that: (a) a registered trade mark exists; and (b) a person intends to bring proceedings (whether in a court in the UK or elsewhere) against another person for infringement of the registered trade mark by an act done, or if done, would be done in the UK.93 The action for unjustified threats must be brought by any person aggrieved by the threats. This could be the recipient of the threats or any other person who is aggrieved by the threats.

90

The reference to the Jif Lemon case is to one of the leading cases in passing off. See infra. Unjustified threats actions were introduced by the Intellectual Property (Unjustified Threats) Act 2017, replacing the previous groundless threats actions with effect from 1 October 2017. Groundless threats actions remain available in respect of threats made before that date. The new action improves upon the groundless threats regime and is more harmonious across the rights to which it applies. 92 A recipient includes, in the case of a communication directed to the public or a section of the public, a person to whom the communication is directed. 93 This includes proceedings for delivery up and disposal of infringing goods, material or articles, see section 21F. 91

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Remedies 13.47 Under section 21A, a threat of infringement proceedings is not actionable if the infringement is alleged to consist of: (a) applying, or causing another person to apply, a sign to goods or their packaging; (b) importing, for disposal, goods or packaging to which a sign has been applied; or (c) supplying services under a sign.94

Other forms of non-actionable threats are threats:

(d) made to a person who has done, or intends to do, an act under (a) or (b) above in relation to goods or their packaging and is a threat of proceedings alleged to consist of doing anything else in relation to those goods or packaging; or (e) made to a person who has done, or intends to do, an act under (c) above in relation to services and is a threat of proceedings alleged to consist of doing anything else in relation to those services. Thus, a threat made to a person in respect of an act under (a), (b), or (c) above is not actionable nor is a threat made to that person in respect of doing anything else in relation to the goods, packaging or services in question. For example, if a threat is made to a person who has applied a sign to goods, in respect of distributing those goods, that is not an actionable threat. It makes such threats not actionable by that person or any other person aggrieved by the threats. A threat of infringement proceedings which is not an express threat is not actionable if it is contained in a permitted communication, below.

Permitted communication 13.47 A permitted communication is one which, under section 21B, as far as it contains information relating to the threat is made for a ‘permitted p urpose’ and the person making the communication reasonably believes is true. The permitted purposes are: (a) giving notice that a registered trade mark exists; 94

This also applies to allegations relating to these acts which, if done, would constitute such an infringement. For example, where it appears that the act in question will be done.

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13.48 Essentials of trade mark law and the law of passing off (b) discovering whether, or by whom, a registered trade mark has been infringed by an act mentioned in (a), (b) or (c) above; (c) giving notice that a person has a right in or under a registered trade mark, where another person’s awareness of the right is relevant to any proceedings that may be brought in respect of the registered trade mark.95 However, the following are declared not to be permitted purposes: (a) requesting a person to cease using, in the course of trade, a sign in relation to goods or services; (b) requesting a person to deliver up or destroy goods; or (c) requesting a person to give an undertaking relating to the use of a sign in relation to goods or services. The information relating to the threat must be necessary for the permitted purpose. The following information is necessary for the permitted purpose: (a) a statement that a registered trade mark exists and is in force or that an application for the registration of a trade mark has been made; (b) details of the registered trade mark, or of a right in or under the registered trade mark which are accurate in all material respects and are not misleading in any material respect; (c) information enabling the identification of the goods or their packaging, or the services, in relation to which it is alleged that the use of the sign constitutes an infringement of the registered trade mark.

Remedies and defences 13.48 The remedies available for an unjustified threat of infringement proceedings are a declaration that the threats are unjustified, an injunction against the continuation of the threats and damages for any loss sustained by the person aggrieved.96 These are the same remedies that previously were available under the groundless threats action. A person against whom unjustified threats proceedings are brought has two defences. 95

This list is not exhaustive as a court may, having regard to the above purposes, treat any other purpose as a permitted purpose if it considers that it is in the interests of justice to do so. 96 Remedies and defences are set out under section 21C.

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Remedies 13.52 13.49 The first is to show that the act for which infringement proceedings were threatened is or would be an infringement of the registered trade mark. There is a danger here where an application to register a trade mark has been made but it has not yet been registered. The defendant may have difficulty in showing infringement. The application may be refused in the form it was applied for, the range of goods or services applied for may be cut down or a disclaimer may be required. Making threats before registration too soon after publication of the application may trigger an application for opposition by a person aggrieved by the threats. 13.50 The second defence is to show that, despite having taken reasonable steps, the person making the threat has not identified anyone who: (a) applied, or caused another to apply, the sign to goods or their packaging, (b) imported, for disposal, goods or their packaging to which the sign has been applied, or (c) supplied services under the sign and notified the recipient before, or at the time of making the threat, of the steps taken. This defence is particularly relevant where a threat is made against a secondary infringer, such as a distributor or retailer.

Immunity for professional advisers 13.51 Equivalent provisions apply, as with other rights subject to the unjustified threats regime, to the immunity for professional advisers.97 Typically, in the case of registered trade marks, these will be persons acting in a professional capacity in providing legal services, or the services of a trade mark attorney or a patent attorney, who is regulated by one or more regulatory bodies. It is required that in making the communication, the professional advisor was acting on the instructions of another person and, when the communication was made, the professional a dvisor identified the person on whose instructions he or she was acting.

Criminal offences 13.52 Counterfeiting is a major problem and UK law has developed some serious criminal penalties to address the problem. S ection 92 of the Trade Marks Act 1994 provides for a wide range of offences in relation to

97

Section 21D.

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13.53 Essentials of trade mark law and the law of passing off signs identical to or likely to be mistaken for a registered trade mark.98 The offences are of some complexity and almost appear of strict liability, subject to a defence of belief on reasonable grounds that the use in question did not or would not have infringed the registered trade mark. The maximum penalty on conviction in the Crown Court is imprisonment for a term not exceeding 10 years and/or a fine. There have been numerous convictions under section 92, mainly of market traders and those involved in bootlegging activities. There was even a challenge to the offences where it was argued that they were contrary to the right to a fair trial under Article 6(2) of the Council of Europe Convention for the Protection of Human Rights and Fundamental Freedoms, 1950. However, the House of Lords rejected this challenge in R v Johnstone.99 13.53 In R v M,100 the Supreme Court held that the offence of unauthorised use of a trade mark under section 92(1) applied where the use made of the trade mark in question was without the consent of its proprietor. The defendants had, inter alia, been selling and disposing of ‘grey imports’ being goods to which the proprietor had authorised the application of the trade mark to goods but not their subsequent sale.101 The defendants had argued that the offences only applied to ‘true counterfeits’.102

REGISTRATION OF A NATIONAL TRADE MARK 13.54 Applications to register a UK trade mark are made to the UK Intellectual Property Office. The main steps are as follows: ••

before applying to register a trade mark it is worthwhile ensuring it is acceptable (that is, that the absolute grounds for refusal do not apply)

98

The application or use of the sign or article designed or adapted to make copies of the sign must be done with a view to gain. [2003] UKHL 28, [2003] FSR 42. [2017] UKSC 58, [2017] Cr App R 30. The goods included clothes and shoes bearing trade marks such as Ralph Lauren and Adidas, with the consent of the proprietors of those marks. They were made in countries outside the EU, hence there was no issue of exhaustion of rights. However, some of the goods in possession of the defendants were made by persons who were neither the trade mark proprietors nor authorised by the proprietors to make the goods bearing the trade marks. There were described as ‘true counterfeits’. They reasoned that the prosecution would be bad for duplicity as the offences only applied to ‘true counterfeits’ not ‘grey goods’. This was rejected by the Supreme Court.

99 100 101

102

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Registration of a national trade mark 13.56 and carrying out a search for possible conflicting earlier trade marks or other earlier rights (which could be used to challenge the application on the basis of the relative grounds for refusal); ••

apply by submitting a completed form which includes a representation of the trade mark and a description of the goods and/or services for which registration is sought (refer to the classification system of 45 classes, comprising 34 classes of goods and 11 classes for services) and the fee. Application may be made online for £170 plus £50 for each additional class of goods and/or services;103

••

an examination report will be sent in around 20 working days. Only the absolute grounds are examined;

••

the trade mark will be advertised in the Trade Marks Journal which gives third parties the opportunity to oppose the registration (such opposition must be brought within two months of publication);

••

if there is no opposition (or any opposition is successfully resolved in favour of the applicant) and none of the absolute grounds apply, the trade mark will be registered (if all goes well, the total time scale will be around three months from application).

13.55 The initial registration lasts for 10 years. Thereafter, the registration may be renewed for further periods of 10 years. There is no upper time limit and some of the UK’s oldest trade marks are still on the register including the very first trade mark, the Bass Red Triangle trade mark.104 The only issue that would prevent continued renewals would be if the trade mark was revoked on the grounds of non-use for an uninterrupted period of five or more years. 13.56 The Directive, the EU Trade Mark Regulation and the UK Act all now provide for certification marks and collective marks.105 The former indicate 103

There is also an ‘up-front’ online procedure which is £100 plus a further £100 if the application is continued after a check on whether the application meets the rules for registration. Conventional applications on paper may also be made (fee is £200 plus £50 for each additional class). 104 UK’s trade mark No 1, registered 1 January 1876. The trade mark is an oval label bearing the triangle and, inter alia, the words ‘Bass & Co’s Trade Mark’ and a stylised signature ‘Bass & Co’. The mark is in black and white although the mark is usually used in colour. It is registered in Class 32 for Pale Ale. The present proprietor is Pioneer Brewing Co Ltd, based in Bedfordshire, resulting from an assignment with effect from 1 January 2016. 105 In the Directive, a certification mark is described as a ‘guarantee or certification mark’.

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13.57 Essentials of trade mark law and the law of passing off that goods or services conform with certain objective standards. Examples in the UK is the British Standard Institute’s Kite mark and the Stilton certification mark. A collective mark is one used by members of an association which is the proprietor of the trade mark. UK examples are the Publishers’ Association and Conference Centres of Excellence.106

THE EU TRADE MARK 13.57 To all intents and purposes, the EU trade mark is very much like that in the Directive.107 Of course, there are some differences. For example, the EU trade mark is effective throughout the EU and has a unitary nature in that it cannot be registered, assigned, revoked or invalidated except in relation to the entire EU. However, where there is a likelihood of confusion in some parts of the EU but not in other parts of the EU, the court must conclude that there is an infringement of the trade mark in all the EU except those parts of the EU where no such likelihood of confusion exists. In combit Software GmbH v Commit Business Solutions Ltd,108 the Landgericht Düsseldorf (a German EU trade mark court) held that the there was a likelihood of confusion between ‘combit’ and ‘Commit’ in German-speaking Member States but not in English-speaking Member States. Thus, in terms of infringement, it appears that the unitary nature of an EU trade mark can be compromised in proceedings before an EU trade mark court. 13.58 The absolute grounds for refusal are virtually identical to those in the Directive.109 Where, in proceedings for invalidity, it is claimed that a mark 106 In

The Tea Board v EUIPO, Joined Cases C-673/15 P to C-676/15 P, EU:C:2017:702, the Tea Board, based in India, was the proprietor of EU collective marks for ‘Darjeeling’ registered to ‘Tea’ and opposed an application to register trade marks for lingerie which included that word. The Court of Justice of the EU confirmed that the essential function of a collective trade mark was to distinguish goods and services of members of the association from those of other undertaking and not to distinguish goods by geographical origin. There was no likelihood of confusion as the goods were very different (tea and lingerie) and no evidence of detriment to distinctive character, damage to repute or unfair advantage. 107 The EU trade mark is governed by the Trade Mark Regulation and Commission Delega ted Regulation 2018/625/EU of 5 March 2018 supplementing Regulation 2017/1001/EU of the European Parliament and of the Council on the European Union trade mark, and repealing Delegated Regulation 2017/1430/EU, OJ L 104, 24.04.2018, p 1. 108 Case C-223/15, EU:C:2016:719. 109 An additional absolute ground in the Regulation concerns badges, emblems or escutcheons other than those covered by Article 6ter of the Paris Convention, which are of particular

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The EU trade mark 13.61 is devoid of distinctive character and the proprietor claims that the mark has acquired a distinctive character through the use made of it, that acquired distinctive character must be shown to exist in the whole of the EU, not just some Member States.110 This means that it will be much more difficult to show acquired distinctive character under the EU Trade Mark Regulation than under domestic trade mark law. 13.59 For the relative grounds of refusal under the Regulation, earlier trade marks also include trade marks registered under international arrangements which have effect in the Union and applications for earlier trade marks are included in the meaning of earlier trade marks subject to their registration. Where the earlier right is to a non-registered trade mark or other right, it is required to be of more than local significance. 13.60 The registration process for an EU trade mark is similar to that in the UK except that applications go to the EUIPO.111 Fees are greater of course but given the much wider geographical protection, represent very good value. The EUIPO has its own Boards of Appeal and appeals from there go to the General Court of the EU and then to the Court of Justice of the EU. Certain national courts are designated at EU trade marks courts. These include the Patents County Court, the High Court and the Court of Appeal in England and the Court of Session in Scotland and the High Court of Northern Ireland. It is common for proceedings in the UK to involve both the UK trade mark and the equivalent EU trade mark. Many large organisations maintain both national trade marks and EU trade marks. Of course, after Brexit it is unlike that UK courts will be able to hear cases on the EU trade mark. 13.61 The EU Trade Mark Regulation contains procedures for application and registration of the EU trade mark and, opposition and cancellation divisions as well as the appeal system. There are also complex provisions for jurisdiction. There are necessarily some provisions which have no equivalent under the Directive. At present, in the UK, there are provisions for unjustified threats of infringement proceedings equivalent to those for the UK trade mark, along with criminal offences as those for the UK trade mark. public interest, unless the consent of the competent authority to their registration has been given: see Article 7(1)(i) of the EU Trade Mark Regulation. 110 Société des Produits Nestlé SA v Mondelez UK Holdings & Services Ltd, Joined Cases C-84/17 P, C-87/17 P and C-95/17 P, EU:C:2018:596. 111 Previously known as the Office for Harmonisation in the Internal Market (Trade Marks and Designs).

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13.62 Essentials of trade mark law and the law of passing off 13.62 There is no need to look at the EU trade mark in more detail for our purposes as the relevant substantive legislation is very similar to that under the Directive, allowing for the differences in scale. Although the two systems are distinct and autonomous, the Court of Justice frequently refers to cases from the other system as persuasive authority.112 Any relevant differences will be picked up in the subsequent chapter.

PASSING OFF 13.63 The law of passing off developed in the nineteenth century. It originated from the tort of deceit and became useful for protecting the goodwill associated with commercial activity. Goodwill was described by Lord Macnaghten, in Commissioners of Inland Revenue v Muller & Co’s Margarine Ltd,113 as: … the benefit of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. Goodwill typically may exist in a business name but is not limited to business names nor is it limited to commercial enterprises.114 It may exist in the name of a product or service or a method of carrying on business or packaging.115 It is sometimes referred to as business ‘get-up’. It may even relate to the shape of a vehicle, such as a taxi.116 Consumers may choose to buy from a particular business because it has earned a reputation for quality, value for money or good service. They may choose to go to a particular 112 See, 113 114

115 116

for example, P – SAT.1 SatellitenFernsehen GmbH v OHIM, Case C-322/02, EU:C:2004:532. [1901] AC 217. For example, it was held that there was goodwill in the operating name of the UK Intellectual Property Office, UKIPO, which is an executive agency of the Department for Business, Innovation and Skills: see Comptroller-General of Patents, Designs and Trade Marks v Intellectual Property Agency Ltd [2015] EWHC 3256 (IPEC), [2016] FSR 22. Gama Healthcare Ltd v PAL International Ltd [2016] EWHC 75 (IPEC). London Taxi Corpn Ltd v Frazer Nash Research Ltd [2016] EWHC 52 (Ch), [2016] ETMR 18. However, the court held that the claimant’s argument that there was goodwill in the shape of its taxis failed as the shapes relied on were mere abstractions based on four models of taxis and, even then, the claimant would have had difficulty in showing that such features denoted the shape of their taxis.

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Passing off 13.65 dentist because he has become known as being very proficient. Goodwill must exist within jurisdiction. A claimant must show goodwill in the sense of a customer base in jurisdiction. Showing a mere reputation only is not enough.117 13.64 The law of passing off often overlaps with trade mark law. Goodwill may exist in a trade mark. If that trade mark is registered, the owner may bring an action for trade mark infringement and for passing off against someone using the trade mark without permission. There may be an advantage in doing so as the scope of protection afforded by the law of passing off and trade mark law differ. What might amount to passing off might not infringe the trade mark. However, registering a trade mark gives protection from the date of registration whereas goodwill may take some time to acquire. It might take a new start-up business some months or even years to build up an actionable goodwill.

Basic requirements for a passing off action 13.65 Essentially, three things are needed for a successful action in passing off. These were set out in Reckitt & Colman Products Ltd v Borden Inc118 by Lord Oliver as being: ••

the existence of goodwill;

••

a misrepresentation made by the defendant as to his goods or services;

••

consequential damage (or likely damage) to that goodwill.119

This seems much simpler than trade mark law, yet the claimant must prove all three elements, unless admitted. It may be difficult to prove the existence 117

Starbucks (HK) Ltd v British Sky Broadcasting Group plc [2015] UKSC 31, [2015] FSR 29, discussed in more detail in the following chapter. However, a trade mark with a reputation in a Member State, even without trade in that Member State, is a relative ground for refusal of registration under Article 5(2)(d) of the Directive, Article 8(2)(c) of the EU Trade Mark Regulation and section 56 of the UK Trade Marks Act 1994. This a result of Article 6bis of the Paris Convention. 118 [1990] 1 All ER 873: the ‘Jif Lemon’ case. The defendant marketed a different shape of yellow coloured lemon and was held to be liable for passing off its lemons as those of the claimant. 119 Lord Oliver restated in simpler terms the test for passing off set out in Erven Warnink BV v J Townend & Sons (Hull) Ltd [1979] AC 731, still regarded by some as the leading authority on passing off.

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13.66 Essentials of trade mark law and the law of passing off of goodwill, especially where the claimant has not been in business for a long time. Goodwill requires a customer base within the jurisdiction of the UK or the relevant part of it. Reputation alone does not give rise to goodwill. The misrepresentation need not be deliberate and is not limited to a business name. It is also important to appreciate that damage is not limited to actual damage in the sense of lost sales. It is damage to goodwill which is important and one form of damage is the erosion of goodwill. This may occur where others use the name of the claimant’s product but not in a manner to deceive as to the origin of the product. This is often referred to as extended passing off. For example, almost everyone would know that ‘Elderflower Champagne’ is not real Champagne but the continued use of the name could erode the distinctiveness of the name Champagne.120 13.66 A further example of extended passing off in respect of ‘Greek Yoghurt’ was Fage UK Ltd v Chobani UK Ltd121 in which it was accepted that a substantial number of consumers recognised the name as denoting yoghurt made in Greece using traditional processed whereby thickening was performed by straining the yoghurt. The defendant imported yoghurt made in the USA, which was thickened using thickening agents and sold under the name ‘Greek Yoghurt’ although also marked with a sign saying made in the USA. The Court of Appeal held that there was no difference in principle between extended passing off and conventional passing off. The defendant had misrepresented its goods as those of a class of traders of whom the claimant was one. The goodwill invaded by the defendant was not of one trade alone but was shared with other traders the name of whose goods is distinctive. The class of traders need not be fixed, for example, some may leave the class and other traders may join the class. A claimant still must show that the name has acquired a goodwill, that the use of the same name by another trader amounted to a misrepresentation, calculated to cause deception and, as a result, cause damage to the claimant’s business. Where the name in which goodwill was claimed was a geographical name, the claimant had to show that it had acquired a secondary meaning so as to be distinctive of the goods of one or more traders. Moreover, the claimant would have to show that the defendant’s use of the same or similar name applied to different goods would be a misrepresentation calculated to cause the claimant 120

Taittinger SA v Allbev Ltd [1993] FSR 641. Elderflower Champagne was labelled as nonalcoholic and sold for less than £3 a bottle. Another issue in the case was that the word ‘Champagne’ was and still is a protected geographical indication. 121 [2014] EWCA Civ 5, [2014] FSR 29.

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Passing off 13.68 damage by causing a likelihood of confusion amongst a substantial number of consumers.

Character merchandising and endorsement 13.67 Names or images of popular characters from television, film, music and sport are often licensed to traders to make memorabilia and goods to which those names or images have been applied. The characters may be fictious or cartoon characters like Mickey Mouse, Popeye or Betty Boop; real persons such as Rihanna, Katy Perry, Angelina Jolie or characters from films and television series such as Star Wars, Dr Who and the Daleks. In the past, there have been a number of cases where the courts have not been prepared to contemplate character merchandising to enter into the realms of passing off.122 Of course, if an image used without a licence is protected by copyright it is a different matter, for example, if a copyright image is used without authorisation, such as in the ‘Popeye’ case, King Features Syndicate Inc v O and M Kleeman Ltd.123 However, there is no property right in a name or image, per se, known to English law124 and a celebrity cannot complain if a third party uses their name on a garment or uses their image on a T-shirt, unless the celebrity has a copyright or right under copyright in respect of the image. There must be something special in the facts for an actionable misrepresentation to be made out, such as an accompanying statement to the effect that the name or image has been exclusively licensed by the celebrity.125 13.68 Whilst there is no ‘image right’ in English law, passing off may be relevant where the defendant’s goods, advertising or marketing suggest that a celebrity endorses those goods.126 An example might be where a celebrity’s 122

For example, Tavener Rutledge Ltd v Trexapalm Ltd [1977] RPC 275 (‘Kojak’ lollipops), Wombles Ltd v Wombles Skips Ltd [1977] RPC 99 (in both cases an allegation of passing off failed): cf Mirage Studios v Counter-Feat Clothing Co Ltd [1991] FSR 145 (Ninja Turtles case, in which an allegation of passing off was successful). 123 [1941] AC 417. 124 Per Kitchen LJ in Fenty v Arcadia Group Brands Ltd (No. 2) [2015] EWCA Civ 3, [2015] FSR 14 at para 29; infra. 125 See, for example, Hearst Holdings Inc v AVELA Inc [2014] EWHC 439 (Ch), [2014] ETMR 34, involving images of the famous ‘Betty Boop’ cartoon character. 126 In Irvine v Talksport Ltd [2003] EWCA Civ 423, [2003] FSR 35, the defendant ‘doctored’ a photograph of the F1 racing driver, Eddie Irvine, to show him holding one of the defendant’s radios.

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13.69 Essentials of trade mark law and the law of passing off photograph is printed onto T-shirts and the circumstances are such as to give the impression that the celebrity has endorsed the sale of those T-shirts as in Fenty v Arcadia Group Brands Ltd (No 2).127 In that case, an independent photographer attended a video shoot of the performance of a single by the singer from her ‘Talk That Talk’ album. He had taken a still from the video and licensed it to the defendant who sold T-shirts bearing her image through its Topshop outlets and online.128 The Court of Appeal held that, in an endorsement case, the claimant had to show that he had goodwill, that the defendant’s activities amounted to a misrepresentation that the celebrity had endorsed or approved the goods or services concerned and these activities caused or were likely to cause damage to that goodwill.129 Without this finding of endorsement there could be no passing off.

Remedies 13.69 Remedies for passing off are injunctions, especially interim injunctions and quia timet injunctions, damages or, as an alternative, an account of profits. The latter is unusual in a passing off action and would be difficult to assess in most cases. An account, being an equitable remedy is discretionary and might be appropriate where the passing off has been unintentional, whereas exemplary damages might be appropriate in deliberate and malicious passing off cases. In an Irish case, McCambridge Ltd v Joseph Brennan Bakeries,130 the passing off was unintentional and involved a wrapper for bread. The defendant had sold the bread previously with a different wrapper. The claimant asked for an account of profits and the court assessed the profits at one-third the profits made on the bread with the offending wrappers. The bread itself, of course, was not relevant to the passing off action. 13.70 A quia timet injunction is one granted to prevent the defendant carrying out a planned activity which would amount to passing off but which has not yet commenced. Although there is no express statutory provision for an action for unjustified threats of infringement proceedings in relation to

127

[2015] EWCA Civ 3, [2015] FSR 14. The claimant was the famous pop-star ‘Rihanna’. The claimant had no copyright in the image. 129 At first instance the judge accepted that the T-shirt bearing the image amounted to a representation that Rihanna had endorsed it. The Court of Appeal found no error in the trial judge’s reasoning. 130 [2014] IEHC 269, [2014] ETMR 44, High Court of Ireland. 128

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Malicious falsehood 13.73 passing off, it appears that the courts may have an inherent jurisdiction to entertain such proceedings.131

Implications 13.71 Being based in common law,132 passing off has the advantage of being flexible and adaptable to new business methods and procedures. For example, passing off developed to address the problem of third persons registering famous names and trade marks as part of their internet domain names. Marketing using the internet, either through social media or a website can result in claims of passing off that would not have been an issue when traditional media was used such as in printed local newspapers. Two traders or companies with similar business names and activities operating in different parts of the country may have co-existed quite happily, even in ignorance of each other until one of them starts using the internet for advertising its business. We will look at these sort of issues in the following chapter.

MALICIOUS FALSEHOOD 13.72 One trader might make a statement denigrating another trader’s goods, business or services. For example, trader A might falsely state that trader B’s goods are unsafe or are counterfeit, that trader C is practising as an electrician but is not qualified to do so or that trader D is in financial difficulties. Where such statements are false and are made with malice, the other traders may bring an action for malicious falsehood. It is a difficult action as it will not usually be easy to prove malice. The basis of the action is a false statement made maliciously, without just cause or excuse. It goes beyond mere advertising ‘puff’ or exaggeration. 13.73 Malicious falsehood is a form of defamation set in a business context. It is sometimes referred to as trade libel.133 One of the rules that apply 131 See

W3 Ltd v easyGroup Ltd [2018] EWHC 7 (Ch), [2018] FSR 16. There is no statute for passing off but it is recognised under section 2(2) of the Trade Marks Act 1994 which states that nothing in that Act affects the law relating to passing off. Furthermore, section 4(4) of the Trade Marks Act 1994 recognises that unregistered marks and signs protected by the law of passing off is one of the relative grounds for refusal of registration. 133 Unlike normal defamation cases, malicious falsehood actions are heard by a judge without a jury. 132

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13.74 Essentials of trade mark law and the law of passing off to defamation is the single meaning rule. Where a statement can bear two meanings, the judge would choose which one to apply. However, the Court of Appeal rejected the single meaning rule in Ajinomoto Sweeteners Europe SAS v Asda Stores Ltd.134 The defendant sold health foods using phrases such as ‘No hidden nasties’ and ‘No artificial flavours and no aspartame’. At first instance, the judge thought two meanings were possible being that there is a risk that aspartame is harmful or unhealthy or that the foods in question were for persons who found aspartame objectionable. He took the latter meaning and held that the case on malicious falsehood had not been made out. The Court of Appeal reversed that finding. 13.74 There is ample scope for committing malicious falsehood online, on a website or, particularly, using social media such as Facebook or Twitter. In Pirtek (UK) Ltd v Jackson,135 the claimant operated a hydraulic hose replacement business through franchisees. The defendant was a franchisee through his own company. Following difficulties between them, the defendant was made bankrupt and lost his home. He then engaged on a campaign of disparaging the claimant’s products, services and business activities on a website and on Facebook and Twitter. The Court granted an injunction against the defendant prohibiting him from continuing to make malicious statements about the claimant and its business. However, it was alleged that the defendant continued to do so and the claimant applied to have the defendant committed to prison for contempt of court. Of course, it is all too easy to submit online comments carelessly made but again, it will be hard to prove malice on the part of the sender.136 It may be easier where the sender is a rival trader with a history of disparaging statements about the other trader.

134

[2010] EWCA Civ 609, [2010] FSR 30. [2018] EWHC 1004 (QB). 136 Although a false statement made by a person who is reckless as whether the statement is true or false, might be sufficient for a finding of malice. 135

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Chapter 14

Trade marks, goodwill and the internet

INTRODUCTION 14.1 Trade marks can be used and infringed on the internet in a conventional sense. There are some differences in that the potential reach is often greater than is the case with paper publications and tangible goods or services to which the trade marks have been applied or used. Furthermore, it is at least arguable that the consumer perceptions of trade marks and their context differ when they are used online. There is, inevitably, a distinction between online trading and sales made person to person in a traditional bricks and mortar store or outlet. Issues of confusion may not be quite the same. Furthermore, it appears that the Court of Justice of the EU has added some new subsidiary functions for trade marks used online. The essential function of a trade mark, some would say its only function needing protection at law, is its function as denoting the origin of the relevant goods or services.1 Now, however, we have other functions, such as an investment function and a marketing function which might be engaged and result in actionable damage by online use of a trade mark by a third party. The scope of trade mark litigation has been broadened by the use of the internet. 14.2 There are plenty of other issues to examine such as use in keywords or AdWords, which may not be transparent to a website user. Other problems are caused by the lack of territorial boundaries constraining the reach of websites. This could compromise the EU doctrine of exhaustion of rights. Even simply advertising goods or services online by the trade mark owner can have unexpected consequences. Furthermore, providers of online services such as auction sites, social media or blog sites may be in trouble where others place material on their sites which infringes trade marks, damages goodwill or constitutes a malicious falsehood. The purpose of this chapter 1

This function is not limited merely to incidents of confusion as it can be harmed by blurring, dilution or tarnishing by unauthorised third party use.

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14.3 Trade marks, goodwill and the internet is to examine the potential uses and liabilities relating to trade marks, passing off and statements made maliciously in the context of the internet and online use.

LAYOUT OF THIS CHAPTER 14.3 The first part of this chapter concentrates on trade marks and their numerous online uses, such as use by the proprietor and uses by others, for example, in comparative advertising, or by taking advantage of the operation of search engines by third parties by means of keywords and AdWords. Other issues relate to third parties using a trade mark to advertise goods put on the market or otherwise distributed by the trade mark proprietor. Next, we look at passing off. The law of passing off protects a trader’s goodwill. It has proved to be a very important tool in the battle against cybersquatting, where third parties register names of important companies and of celebrities as domain names and then offer to transfer them to the relevant companies or celebrities at extortionate prices far outweighing the costs of registering the domain names. The law of passing off may also apply where one trader copies the look and feel of another trader or uses a similar domain name, causing confusion amongst visitors.2 The intention may be to divert business from the other trader or the similarity may be purely coincidental. 14.4 A trader operating in a limited geographical area may, nonetheless, have generated goodwill in that area. There may be issues where other traders use similar names or logos in adjacent or contiguous geographical areas. Prior to the internet, this may not have caused any difficulties provided their areas of operation did not overlap or did so only peripherally. Any confusion would be nil or trivial. However, as soon as one acquires a website, the possibility of confusion increases and the courts may be tasked with ordering changes to the website to minimise or prevent such confusion. Finally in this chapter, there is some material on the law of malicious falsehood. This is an interesting tort, not unlike libel3 but with some differences. Care must be taken not to 2 3

For example, ‘argos.com’ and ‘argos.co.uk’ are owned by completely different undertakings: see infra. Libel is a form of defamation, as is slander. As a general rule libel is written and slander is spoken. It is clear that defamatory information placed online falls within libel. The distinction may be important as regards proof of damage and the ‘publisher’s defence’ under section 1 of the Defamation Act 1996 and the website operators’ defence under section 5 of the Defamation Act 2013, which came into force on 1 January 2014.

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Trade marks, websites and the internet 14.6 denigrate or harm another trader’s business or reputation without justification. The same applies, a fortiori, to social media and blogs, as the action can be brought against the individual or the service provider if he becomes aware of the statement and does not act quickly to remove it. Website use has a number of jurisdictional issues but these are covered more specifically in Chapter 16 as problems of jurisdiction have implications for all forms of intellectual property rights.

TRADE MARKS, WEBSITES AND THE INTERNET 14.5 Trade marks are used in a number of ways on the internet. They are used in a conventional sense on websites by their proprietors or licensees to advertise their goods or services. They fulfil their basic function in this way as acting as an indication of the origin of the goods or services. But even here, the impact and perception of a trade mark may not be quite the same as in respect to use in a ‘bricks and mortar’ establishment such as a shop, store or supermarket or used in traditional newspapers and magazines. Advertising on a webpage is also different to advertising in commercial breaks on television as the internet is an interactive tool permitting the user to carry out a search, to decide which sites to visit, how long to visit a website and whether to look at other webpages on a website or move on to other websites whether by following links or otherwise. 14.6 Third party traders may buy goods from sources outside the EU or the EEA4 and advertise them online using the trade mark. They may advertise them on their own website or through an online marketplace such as eBay. Where the goods in question were placed on the market outside the EU or the EEA as relevant, the proprietor may still use his trade mark rights to prevent their further commercialisation in the EU or the EEA, as the case may be. This right also may impact on online sales and online auction sites where

4

For the trade marks Directive, it is the EU which applies to exhaustion of rights but for the EU Trade Mark Regulation, it is the EEA which is important for the doctrine of exhaustion of rights. See Article 15 of Directive 2015/2436/EU of the European Parliament and of the Council of 16 December 2015 to approximate the laws of the Member States relating to trade marks (recast) OJ L 336, 23.12.2015, p 1 (‘trade marks Directive’) and Article 15 of Regulation 2017/1001/EU of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark (codification) OJ L 154, 16.06.2017, p 1 (‘EU Trade Mark Regulation’).

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14.7 Trade marks, goodwill and the internet the goods in question have been first acquired in the EU or the EEA or even where the goods have been or will be imported from outside and are ‘grey imports’.5 14.7 Other less conventional uses of trade marks include the use of trade mark names, belonging to another, as keyword meta tags. In that way a search for a particular business may result in a list of hits which include rival businesses. Although keyword meta-tags are not normally seen, it is arguable that such uses of trade marks by competitors infringe the trade marks. A more controversial use of trade marks belonging to others is in AdWords.6 These are words which are paid for by advertisers to facilitate the retrieval of a link to the advertiser’s own website in a list of sponsored links. They usually appear above or alongside the sites retrieved by use of a search engine. Following a ruling of the Court of Justice of the EU and its application in the High Court, there have been some changes to what AdWords may or may not include.7 14.8 Trade marks are commonly used on comparison websites and in comparative advertising. In relation to the former, there is not normally a problem as the trade mark owners will have consented to the use of their trade marks. However, comparative advertising is a different matter. This is where an advertiser compares his goods or services with those of a competitor. The competitor’s trade mark is usually shown (indeed the name of the competitor itself will usually be a registered trade mark) together with a list of features of the goods or services on offer. It is natural that the advertiser will want to make his goods or services appear better and cheaper. The question is how far this can go without infringing the competitor’s trade mark or damaging its repute. 14.9 A collective body representing trade mark proprietors may bring proceedings in its own name against an alleged infringer of the rights of those 5

6

7

A grey import applies to goods to which the proprietor has, or has consented to, the goods bearing his or her trade mark for sale outside the EU or EEA but has not consented to their importation to the EU or EEA. Google AdWords is a system whereby businesses pay to use words and phrases which are used for retrieving brief advertisements and links to websites in response to a query entered in Google’s search engine. The more that is paid, the higher up the list the advertisers entry will appear. The AdWords themselves are not displayed in the list of sponsored links. See the Interflora v Marks & Spencer cases discussed infra.

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Trade marks, websites and the internet 14.11 trade mark proprietors, in accordance with Article 4(c) of the enforcement Directive8 providing that body is recognised by national law as having a direct interest in the defence of those rights and national law allows it to bring legal proceedings for the purpose of enforcing the trade mark rights of its members. The Court of Justice so ruled in Cooperateive Vereniging SNB-REACT UA v Deepak Mehta.9 It was alleged that the defendant had registered domain names identical to the trade marks of 10 trade mark proprietors who were members of the collective body and was selling goods online which bore those trade marks. There was also an issue of whether the defendant’s internet service provider was liable but this was a question of whether the defences for information society service providers in respect of being a mere conduit, caching or hosting applied, this being a matter for the national court to determine.10 14.10 A final issue, which is fully explored in Chapter 16, is that of jurisdiction, given the potential of websites being available on a worldwide basis. If a sign is displayed on a website located in country A, can that infringe a trade mark registered in country B? For example, a business (Business X) established in France, with business activity in France and some other parts of the EU, has a website and uses his unregistered trade name. An unconnected business (Business Y) established in and operating in the United States has a trade mark registered in the US that is confusingly similar. Can Business Y successfully bring trade mark infringement proceedings in a relevant State in the United States?11

Loss of control and parasitic advertising 14.11 An advertisement of a business online can attract multiple links or mentions on other websites that specialise in providing information and 8

Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights, OJ L 195, 02.06.2004, p 16 (‘enforcement Directive’). 9 Case C-521/17, EU:C:2018:639. 10 Articles 12 to 14 of Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, OJ L 178, 17.07.2000, p 1 (‘e-commerce Directive’). 11 The trade mark proprietor would choose a State where there was or might be some evidence of trade carried on by Business X in that State.

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14.12 Trade marks, goodwill and the internet c ontact details concerning the business, without any request from the business owner. These sites operate independently and may take details from the official website. They may generate income from advertising or by taking a fee from any transaction concluded. In many cases, the business owner has no control over these sites and, in practice, may be unable to remove any reference to the business. This may cause difficulties for a business authorised to use a trade mark by its proprietor after that authorisation expires or is withdrawn. 14.12 In Daimler AG v Egyud Garage,12 the defendant (Egyud) made a contract with the Daimler Company under which Egyud became authorised to provide services in relation to Mercedes Benz motor vehicles and to describe itself as an ‘authorised Mercedes-Benz dealer’ in its advertisements. Egyud asked an online advertising service to place an advertisement for its company including a statement that it was an authorised Mercedes-Benz dealer. When the contract with the Daimler expired, Egyud took steps to bring to an end the reference to the Mercedes-Benz trade mark on its online advertisement as this could make the public think there was still a contractual link between it and Daimler. However, in the meantime, a number of websites published advertisements, without Egyud’s consent, indicating that it was a Mercedes-Benz dealer. Despite Egyud writing to these other websites asking for the advertisements to be taken down, they continued to proliferate. Entering ‘egyud’ and ‘garage’ into the Google search engine brought up a list of results which linked to these websites.13 14.13 Technically, it appeared that Egyud infringed the Daimler trade mark for Mercedes-Benz by the continued use of advertising the dealership without any right or power to bring it to an end, without necessarily falling within the limitations on trade mark rights or under the doctrine of exhaustion of rights. The Court of Justice of the EU pointed out that an advertiser cannot be liable for the independent actions of other economic operators, such as other advertising website operators, who act on their own initiative and in their own name, where the advertiser has no direct or indirect dealings with those operators who do not act under the instructions of, or on behalf of, that advertiser.14 The Court noted that no one can be legally obliged to do the impossible!

12

Case C-179/15, EU:C:2016:134. As there was no contractual or other relationship between Egyud and these other websites, Egyud had no power to order that the advertisements be taken down or modified. 14 At para 36. 13

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Trade marks, websites and the internet 14.16 14.14 The Court of Justice ruled, therefore, that a third party, named in an advertisement on a website, containing a sign identical or similar to a trade mark which gives the impression that there is a commercial relationship between the third party and the trade mark proprietor, does not make use of the sign for the purposes of the Directive,15 where the advertisement has not been placed by that third party or on his behalf. This is a pragmatic solution but does it depend on the efforts made by the advertiser to have all references to the trade mark removed, such as by notifying the websites of the end of the authorisation to use the trade mark?

Impact of online use on the functions of origin, advertising and investment 14.15 The Court of Justice of the EU accepts that, in addition to the function of indicating the origin of goods or services, trade marks have other functions, being the functions of communication, advertising and investment.16 In Cosmetic Warriors v Amazon.co.uk Ltd,17 the claimant was the proprietor of a Community trade mark for LUSH registered for cosmetics and toiletries including soap. The claimant was particularly well known for its LUSH Bath Bombs. The defendant had Google AdWords for lush which linked through to the Amazon.co.uk site, but no products of the claimant were available on that site. The claimant alleged that (i) by participating in the AdWords scheme, the defendant had effectively arranged that anyone entering ‘lush bath products’ into the Google search engine would be directed to the Amazon site even though the claimant’s products could not be bought there; and (ii) a person by searching on the Amazon site using the word ‘lush’ would be offered goods, which were not those of the claimant, on pages on the Amazon site which displayed ‘LUSH’ in a number of contexts. 14.16 John Baldwin QC, sitting as a deputy judge of the High Court, accepted that Amazon had used the trade mark in the course of trade.18 He then 15

Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks, OJ L 299, 08.11.2008, p 25 (now replaced by the trade marks Directive 2015/2436). 16 See, inter alia, L’Oréal SA v Bellure NV, Case C-487/07, EU:C:2009:387 at para 58, and Interflora Inc v Marks and Spencer Plc, Case C-323/09, EU:C:2011:604 at para 38. 17 [2014] EWHC 181 (Ch), [2014] FSR 31. 18 See Google France SARL v Louis Vuitton Malletier SA, Joined Cases C-236/08 to C-238/08, EU:C:2010:159 at paras 50–59 and L’Oreal SA v eBay International AG, Case C-324/09, EU:C:2011:474 at para 87.

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14.17 Trade marks, goodwill and the internet held that the origin function was infringed as persons going to the Amazon site, after clicking on the Google AdWords, looking for the claimant’s goods would not, without difficulty, be able to tell whether the goods offered were not those of the claimant. As to the advertising function, the use of the trade mark indicates that goods bearing that marks are those of the claimant which depends on the reputation of the mark to attract consumers. The judge considered that that function was bound to be damaged by the defendant using the LUSH trade mark to attract the attention of consumers and attempt to sell them third party goods whilst making no effort to inform them that the goods on offer were not the claimant’s goods.19 It seems that it is almost inevitable that the advertising function will be adversely affected where there is confusion as to the origin of goods or services and, arguably, also with other forms of infringement. 14.17 As to the investment function of the LUSH trade mark, the judge held that this also was damaged. The claimant’s business had been successfully built on an image of ethical trading. Some members of the public may have found the defendant’s business model unattractive, particularly in respect of payment of UK corporation tax. Whilst the decision by the claimant not to sell through Amazon.co.uk could be thought to be questionable,20 the judge accepted that the investment function of the LUSH trade mark was damaged by the activities of the defendant.

Confusion and online use of trade marks 14.18 Where a sign is used by one trader which is similar to a registered trade mark belonging to another trader and is used for similar or identical goods, a finding of infringement requires that there is a likelihood of confusion on the part of the public. Is the test of a likelihood of confusion modified where the sign is used on a website? Is the basic function of a trade mark, being to act as a badge of origin, affected by its use on a website? The online purchasing experience is not the same as going into a shop or store where there are other clues as to the identity of the trade mark proprietor.

19

Now, entering LUSH in the search box in Amazon triggers a message to the effect that LUSH goods are not on sale at Amazon, followed by a list of third party goods for bath bombs and the like. 20 For example, the claimant did sell through the US Amazon site, Amazon.com.

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Trade marks, websites and the internet 14.20 14.19 In the UK, the trial is held before a single judge. Whether a likelihood of confusion exists is a question of fact for the judge, after hearing all the evidence which may include admissible survey evidence. The judge will apply the test derived from a number of Court of Justice of the EU cases. This is based on the average consumer who is reasonably observant and reasonably circumspect but uses a global assessment of the marks without analysing their various details and who rarely gets the opportunity to make a direct comparison of the marks and carries an imperfect recollection of them in his mind.21 A further factor is the level of similarity between the marks and the goods or services in question. 14.20 In the United States, many intellectual property cases are heard before a jury. Under §32(1) of the US Trademark Act 1946,22 infringing use must be ‘likely to cause confusion, or to cause mistake, or to deceive’. US judges direct juries as to the meaning of confusion for trade mark purposes using a number of factors, known as the ‘Sleekcraft factors’.23 Those factors are: 1.

the strength of the mark;

2.

the proximity of the goods;

3.

the similarity of the marks;

4.

evidence of actual confusion;

5.

the marketing channels used;

6.

the type of goods and the degree of care likely to be exercised by the purchaser;

7.

the defendant’s intent in selecting the mark; and

8.

the likelihood of expansion of the product lines.

21

See, for example, Lloyd Schuhfabrik Meyer & Co GmbH v Klisjen Handel BV, Case C-342/97, EU:C:1999:323; Canon Kabushiki Kaisha v Metro Goldwyn Mayer Inc, Case C-39/97, EU:C:1998:442; Sabel BV v Puma AG, Rudolf Dassler Sport, Case C-251/95, EU:C:1997:528 and Gut Springenheide and Tusky, Case C-210/96, EU:C:1998:369. 22 15 USC, the Lanham Act. 23 After the case AMF Inc v Sleekcraft Boats, 599 F 2d 341 (9th Cir, 1979) in which the factors were first set out. AMF used the name ‘Slickcraft Boats’. At first instance, this case was not heard before a jury.

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14.21 Trade marks, goodwill and the internet 14.21 In Brookfield Communications Inc v West Coast Entertainment Corp,24 the court held that not all the Sleekcraft factors are relevant in all cases. A sub-set may be sufficient to determine whether there is a likelihood of confusion. O’Scannlain J said: We must be acutely aware of excessive rigidity when applying the law in an internet context: emerging technologies require a flexible approach. 14.22 The parties were close competitors and the fact that both used the internet for advertising and supplied internet-based products increased the likelihood of confusion. O’Scannlain J said: Web surfers are more likely to be confused as to the ownership of a website than traditional patrons of a brick-and-mortar store would be of a store’s ownership. 14.23 In another internet case, Internet Specialities West v MilonDiGiorgio Enterprises Inc,25 it was said that, of the Sleekcraft factors, three were of greatest importance in relation to internet use, being the similarity of the marks, the relatedness of the services and the simultaneous use of the internet as a marketing channel. Because of differences between US trade mark law and trade mark law in the EU, these cases are of limited use in the UK. However, they serve to remind lawyers that the threshold of confusion may differ from established norms when considering trade mark use on the internet: a fortiori when considering domain names which include a trade mark name belonging to a competitor.26 14.24 There has been no trade mark case in the UK where the Sleekcraft factors have been considered. In one case involving the use of trade marks on the internet, Reed Executive plc v Reed Business Information Ltd,27 Jacob LJ implicitly accepted that it was important to look at a website as a whole. Other images and text could impact on the overall assessment of the marks and a good proportion of visitors, who might be initially confused, might scroll

24

174 F 3d 1036 (9th Cir, 1999); involved the use of ‘MovieBuff’ on a website and as domain names. 25 559 F 3d 985 (9th Cir, 2009). 26 The law of passing off has proved effective in resolving domain name disputes though this has now been mainly but not completely overtaken by dispute resolution systems employed by domain name registries, such as Nominet. 27 [2004] EWCA Civ 159, [2004] RPC 40.

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Trade marks, websites and the internet 14.27 down to the bottom of a webpage where it was usual to see a statement as to the identity of the owner of the site.28

Third parties advertising online using registered trade marks 14.25 Here, we are looking at where usually there is no issue of deception by advertising goods which are not those of the trade mark proprietor. Where the goods are counterfeit, there is a clear infringement of the trade mark and this may attract criminal penalties also. But what is the situation where a trader offers genuine goods? This is not normally a problem as the trader will be operating as an online retailer having possession of the goods for the purposes of selling them with the permission of the trade mark proprietor. 14.26 The doctrine of exhaustion of rights applies to prevent the trade mark proprietor using his trade mark to prevent the further commercialisation of his goods which have been placed on the market in the EEA or, in the case of the EU trade mark, the EU, by him or with his consent. But, where the goods have been placed on the market outside the EEA or EU, where appropriate, the trade mark proprietor may use his right to prevent their further commercialisation within the EEA or EU. This only applies to using the trade mark in the course of trade so sales by private individuals are unaffected.29 14.27 Various cosmetics and perfumes were being sold on eBay via its auction sales and ‘Buy It Now’ sales. L’Oréal and other companies brought proceedings against eBay and the individual sellers for various infringements of its national and EU trade marks in L’Oréal SA v eBay International AG.30 The Court of Justice of the EU ruled that this infringed the national and EU trade marks where the goods were sold in the EEA or EU or where the goods were offered for sale in the EEA or EU. It was for the national court to determine whether the goods on offer online were targeted at consumers in the relevant Member State.

28

See paras 100 to 106 of the judgment of Jacob LJ. It may not be an easy matter to distinguish between a private seller and a business seller if the latter purports to be the former and is not registered as a business seller. 30 Case C-324/09, EU:C:2011:474. Of course, at the time the trade marks were known as Community trade marks. Some of the goods were counterfeit, some were samples for use by retailers and some had been put on the market outside the EEA. See later on the AdWords issue in this case. 29

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14.28 Trade marks, goodwill and the internet 14.28 Under Article 14(1) of the e-commerce Directive, an information society service provider has a defence in respect of hosting illegal information or an illegal activity unless it has actual knowledge of that illegal information or activity. On becoming aware of the illegal nature of the i nformation or activity, to escape liability the service provider must act expeditiously to remove or disable access to it. The Court of Justice of the EU ruled that the service provider will have an active role and cannot rely on the defence, if he provides assistance to the advertiser, such as by optimising the presentation of the advertisements or by promoting them. Furthermore, even if the service provider has not played such an active role, he may still attract liability if aware of facts or circumstances such that a diligent economic operator should have realised the offers were unlawful and had not acted expeditiously to remove or disable access to them. In other words, by providing assistance to some advertisers by setting up online shops for them to promote their goods and to help increase sales, eBay took an active role in the unlawful activity and could not rely on the Article 14(1) defence. In any case, once it had knowledge of the unlawful nature of the offers, eBay was outside the defence by failing to remove or disable access to them expeditiously. 14.29 Finally, under Article 11 of the enforcement Directive,31 Member States could order a service provider such as eBay to take measures to contribute to the ending of the infringements and to prevent future infringements. An example of appropriate action to be taken could include filters to detect keywords used in offers to discover infringing offers for sale. In Coty Germany GmbH v eBay International AG,32 Coty made perfumes and made one for sale exclusively in the United States under the JOOP! mark which was a registered Community trade mark.33 Various persons advertised these perfumes without restricting their sale to countries outside the EU. eBay refused to stop these advertisements but the German court imposed a cease and desist order on eBay in respect of commercial offers on its EU sites on pain of a fine not exceeding €250,000 or administrative detention of its director for a term not exceeding six months. The German court thought it was perfectly feasible for eBay to filter advertisements by keywords to pick up infringing offers by business advertisers and also supply information about other

31

Article 11 deals with injunctions. [2012] ETMR 19, before the Landgericht, Berlin. 33 Now EU trade mark. 32

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Trade marks, websites and the internet 14.32 advertisers to the trade mark owners so they could determine whether they were business or private users.34

Free-riding on the coat tails and damage to repute or distinctiveness 14.30 It is possible to use a trade mark in such a way that the essential function of indicating origin is not compromised, for example, because consumers realise that the goods or services on offer are not those of the trade mark proprietor. The trade mark is not used deceptively but is used to take advantage of the reputation of the trade mark. This is often referred to as freeriding or riding on the coat tails of the trade mark owner. For example, I might place an advertisement on a website stating that my goods are imitations of goods manufactured by X, where the names of X’s goods are registered trade marks. Although the essential function of the trade mark is not affected as no-one would be likely to think that X is selling imitations of its own goods, such advertising could be taking unfair advantage of the repute of the X trade mark. 14.31 Another form of abuse is where the defendant’s use of the trade mark or a similar sign to the trade mark tarnishes the reputation of the trade mark. For example, the defendant might use a sign similar to a trade mark used for high quality goods to advertise his business of selling cheap second-hand alternative goods. This is often described as ‘tarnishing’. First, we look at free-riding on the coat-tails of a well-known trade mark which might cause damage to the distinctive character of the mark by diluting that distinctive character or by blurring the distinctiveness, such as where a trader sells ‘RollsRoyce’ stationery products.

Free-riding causing blurring or dilution 14.32 In L’Oréal SA v Bellure NV,35 the defendant dealt in ‘smell-alikes’ of the claimant’s famous perfumes and also distributed comparison sheets containing the claimant’s trade marks. In terms of Article 5(2) of the trade marks Directive (infringement by, without due cause, taking unfair advantage of or 34

Business users are usually identified as such but this does not prevent a business user operating as if it was a private individual. 35 Case C-487/07, EU:C:2009:378.

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14.33 Trade marks, goodwill and the internet damaging the reputation of a trade mark of repute), the Court of Justice of the EU held infringement did not require that the essential function is prejudiced. However, the Court went on to say: The advantage arising from the use by a third party of a sign similar to a mark with a reputation is an advantage taken unfairly … where that party seeks by that use to ride on the coat-tails of the mark with a reputation in order to benefit from the power of attraction, the reputation and the prestige of that mark and to exploit, without paying any financial compensation, the marketing effort expended by the proprietor of the mark in order to create and maintain the mark’s image. 14.33 Applying the Court of Justice ruling, Jacob LJ was fairly critical of the ruling.36 First, he noted that there was no legislative justification for protecting functions of communication, investment or advertising.37 In essence, the ruling made it unlawful for a trader honestly to describe his goods as having the same feature (in this case, smell) as those of the trade mark owner. The Court of Justice ruling also suggested that the comparative advertising was unlawful under the Article 4(1)(h) of the comparative advertising Directive38 which states that comparative advertising shall not be permitted where goods or services are presented as being imitations or replicas of goods or services bearing the trade mark. 14.34 The above ruling prevents third parties selling imitation products by reference to a registered trade mark, whether by online or any other form of advertising. It is not possible to sell goods on the basis that they have the same attributes as other goods. Nor will it be possible to use slogans such as ‘Genuine Fake Rolex Watches’.39 In terms of the latter form of advertising, even though the immediate buyer realises that the watches are not put on the market by the trade mark proprietor, others who come across them might be deceived.40 36

L’Oréal SA v Bellure NV [2010] EWCA Civ 535, [2010] RPC 23. We will meet these functions again in the section on AdWords. 38 Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 concerning misleading and comparative advertising (codified version) OJ L 376, 27.12.2006, p 21. 39 This would infringe in any case under Article 5(1)(a) of the Directive – being the use of an identical sign in relation to identical goods. 40 Compare with Arsenal Football Club plc v Reed, Case C-206/01, EU:C:2002:651, involving scarves and other football memorabilia bearing the claimant’s trade marks without 37

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Trade marks, websites and the internet 14.37 14.35 Another form of infringement under Article 5(2) is where the repute of the trade mark is damaged. This could be where there is ‘blurring’ or ‘tarnishing’ of the trade mark’s reputation. In terms of blurring, there is an analogy with passing off and the Elderflower Champagne case.41 The form of damage to reputation occurs where, even in the absence of confusion as to the origin of goods, the use of the trade mark or similar sign insidiously comprises the distinctiveness of the trade mark. In Intel Corpn Inc v CPM United Kingdom Ltd,42 the defendant applied to register ‘INTELMARK’ as a trade mark for marketing and telemarketing services. This was opposed by the famous computer chip manufacturer, INTEL. 14.36 The Court of Justice of the EU ruled, inter alia, that, even though the earlier trade mark is unique and has a huge reputation, it is still a question of fact for the trial court to decide as to whether there exists a link within the meaning of Adidas-Salomon.43 Furthermore, even if such a link is established this alone does not establish unfair advantage or detriment to the repute or distinctive character of the earlier trade mark with a reputation. On the other hand, uniqueness is not a precursor to a finding of unfair advantage or detriment and even a first use of the later mark may suffice to establish detriment to distinctive character. The court also ruled that there must be evidence of a change, or serious likelihood of a change, in economic behaviour of the average consumer of the goods or services for which the earlier mark was registered for a finding of detriment to the distinctive character of the earlier mark.44 14.37 The Court of Justice of the EU also set out a test for determining whether the necessary link existed.45 The following factors should be taken into account: ••

41 42 43

44 45

the degree of similarity of the marks; authorisation. It is conceivable that the repute of the Rolex trade mark would be damaged by dilution of the mark’s standing amongst consumers or if the replicas are poorly made. Taittinger SA v Allbev Ltd [1993] FSR 641. Case C-252/07, EU:C:2008:655. The case was based on the equivalent relative ground for refusal under Article 4(4)(a), now Article 5(4)(a) of the new D irective 2015/2436. Adidas-Salomon AG v Fitnessworld Trading Ltd, Case C-408/01, EU:C:2003:582. The question of whether a link is established in the minds of the public, in the absence of confusion, requires a global assessment taking account of all the circumstances of the case. The INTELMARK trade mark was registered but eventually surrendered in full, perhaps as a result of a settlement. At para 42.

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14.38 Trade marks, goodwill and the internet ••

the nature of the goods or services for which the conflicting marks were registered, including the degree of closeness or dissimilarity between those goods or services, and the relevant sections of the public;

••

the strength of the earlier mark’s reputation;

••

the degree of the earlier mark’s distinctive character, whether inherent or acquired through use;

••

the existence of the likelihood of confusion on the part of the public.46

14.38 It is also important to understand that the use by the defendant must be without due cause and it is the defendant who bears to burden of proof. It is not an easy burden to discharge. The circumstances must be such as the defendant has no real option to use the claimant’s trade mark as, in doing so, there is a likelihood of damage to the reputation or distinctive character of the claimant’s trade mark.47 14.39 The case of British Sky Broadcasting Group plc v Microsoft Corpn48 involved a number of trade mark issues and passing off. The claimant had numerous operations in broadcasting (including over the internet) and broadband services (including as an internet service provider) and provided a set-top box which could record, store and replay programmes and the like. It had numerous UK and EU trade marks including Sky, Sky Broadband, Sky Movies, Sky Sports, etc. Microsoft’s SkyDrive allowed online storage of documents and photos with remote access and sharing facilities.49 The claimant alleged that SkyDrive infringed its trade marks and was also passing off. It succeeded on all grounds. 14.40 On the question of infringement by taking, without due cause, an unfair advantage of the repute of the claimant’s trade marks, Asplin J accepted that the claimant had an established reputation in the UK in respect of its trade marks. As far as the existence of a link was concerned, she said that it was

46

This last factor was not essential but would be sufficient to prove ‘calling to mind’. Lucas Bols v Colgate-Palmolive (1976) 7 IIC 420. ‘CLARYN’ was a trade mark used for gin and was infringed by the use of ‘KLAREIN’ for a detergent. A case on ‘tarnishing’ a Benelux trade mark which pre-dated the trade marks Directive but has been approved under the Directive. 48 [2013] EWHC 1826 (Ch). 49 This form of storage is often referred to as ‘The Cloud’. 47 See

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Trade marks, websites and the internet 14.42 not necessary to show confusion. But she accepted that a link did exist on the basis of survey evidence,50 coupled with the similarity of the marks and the way the SkyDrive mark would be appreciated conceptually, aurally and contextually. The average consumer would call Sky to mind when seeing the SkyDrive mark. Having come to that conclusion, Asplin J said that dilution of the claimant’s marks was an obvious inference and there was nothing to suggest that the defendant’s use was without due cause. 14.41 Unfortunately, there was no consideration of the fact that the SkyDrive mark was used predominantly in software, on Microsoft’s Outlook or Hotmail email systems or in apps used for computers, tablets and mobile phones.51 In terms of Microsoft’s email systems, the user would be quite clear that the SkyDrive mark was used by Microsoft and the same applies to Microsoft’s apps which generally carried the Microsoft name under the sign. The survey was carried out using flashcards, printed on cards, which is not the same as use of the sign in an online context.52 It might have been better to carry out a survey showing screenshots of Microsoft’s use of SkyDrive.53

Tarnishing 14.42 Tarnishing may occur where a third party uses a trade mark to describe goods or services which may be legal but which may denigrate the status of the trade mark. For example, the use ‘VISA’ for condoms54 or ‘BABEWATCH’ for soft porn films.55

50

51

52

53 54 55

However, little weight was given to the survey evidence although it did tend to show some confusion. There were a number of defects with the survey and the prior approval of the court to carrying out the survey had not been sought. An ‘app’ is a software application designed to perform one or more distinct operations, such as an app for reading ebooks, playing music, transferring files, giving weather forecasts and so on. There are hundreds of thousands of apps, if not millions. After criticising the survey and saying that she gave little weight to it, Asplin J gave the impression that she was influenced by it. However, she did say that she considered the use of SkyDrive contextually. Unfortunately, for us, Microsoft appear to have decided not to appeal and have agreed a limited period of time to change its name for its SkyDrive operation. CA Sheimer (M) Sdn Bhd’s Trade Mark Application [2000] RPC 484. The opponent’s appeal succeeded on the grounds of bad faith rather than ‘tarnishing’. Baywatch Production Co Inc v Home Video Channel [1997] FSR 22. The claimant’s application for an interim injunction was refused.

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14.43 Trade marks, goodwill and the internet 14.43 The use of trade marks by third parties on websites, even in the absence of confusion as to origin, has the potential to do greater harm to the reputation or distinctive character of a registered trade mark. Far more persons may be exposed to what can only be described as a misrepresentation. That being so, the threshold of damage might be reached at a lower level of m isrepresentation than would be the case in relation to traditional forms of advertising. This is especially the case where the trade mark has an international presence and status. However, this would require a quantitative element in finding Article 5(2) infringement whereas it is arguable that it is a qualitative test.

Keyword meta-tags 14.44 The source code of a webpage usually contains meta-tags. A particular type of meta-tag is the keyword meta-tag. These are picked up by search engines but not normally seen by persons retrieving webpages. An example of keyword metatags is as follows:

14.45 The designer of a website will choose the keyword meta-tags carefully to maximise the possibility of hits by search engines so it will appear, preferably, on the first page of hits retrieved by entry of an appropriate search enquiry. For example, Giacomo has a cafe in Luton where he sells his own cakes and ice cream. He might choose keyword meta-tags such as ‘Giacomo, Giacomo’s cafe, cakes, cafe, ice-cream, dairy, Luton, carrot cake, gateau, chocolate cake, etc’. None of these should cause any legal issues. The difficulties begin when it is decided to include other persons’ trade marks in the keyword meta-tags. For example, Giacomo might be tempted to include the name of his local rival, Gioachino, in his list of keywords. 14.46 In the United States, there have been a number of cases on the use of trade marks belonging to others as keywords. In Playboy Enterprises Inc v Calvin Designer Labels,56 the defendant used the claimant’s trade marks, 56

985 F Supp 1220 (ND Cal, 1997).

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Trade marks, websites and the internet 14.48 ‘Playboy’ and ‘Playmate’, in his website meta-tags and this was held to infringe the trade marks. However, in Playboy Enterprises Inc v Welles,57 infringement was not made out in relation to Terri Welles’s website which used the same keywords. She was a former Playmate of the Year and the use of the Playboy trade marks was minimal. Furthermore, her website included a number of disclaimers. It was held that she was not using ‘Playboy’ and ‘Playmate’ as trade marks, but as descriptive terms fairly and accurately describing her website. Her use of the trade marks in meta-tags was permissible and was an attempt, in good faith, to index the content of her website. 14.47 There have been relatively very few cases involving keyword metatags in the UK. In Roadtech Computer Systems Ltd v Mandata Ltd,58 it was confirmed that using the trade mark as a meta-tag was an infringement.59 The defendant in Pfizer Ltd v Eurofood Link (UK) Ltd60 used the claimant’s registered trade mark, ‘Viagra’ and its company, in its meta-tags. The defendant advertised a drink called ‘Viagrene’, with alleged aphrodisiac properties, on its website. However, after finding infringement under Article 5(1)(b) or, alternatively, under Article 5(2), of the trade marks Directive,61 the judge did not need to consider infringement in the use of the trade mark in the meta-tag. Simply by using Viagrene on its website and other promotional material the defendant infringed the trade mark. A claim in passing off also succeeded. 14.48 The use of trade marks in meta-tags may escape if the word used in the meta-tag is not identical to the trade mark. For example, in Brookfield, the court said that it was acceptable for the defendant to use ‘Movie Buff’ in a meta-tag. The space between the words was pivotal and persons trying to find the claimant’s website by typing in its trade mark would be less likely to retrieve the defendant’s website instead. However, in this case, the term ‘Movie Buff’ has an ordinary meaning and the situation might be different if both the trade mark and the word used in the meta-tag had no ordinary meaning. To some extent, use of trade marks in meta tags has been overtaken by developments in the use of trade marks in Google AdWords and AdSense programmes. 57

7 F Supp 2d 1098 (SD Cal, 1998). [2000] ETMR 970. 59 Before the hearing, the defendant removed the offending meta-tags. 60 [2001] FSR 3. 61 Sections 10(2) or 10(3) of the Trade Marks Act 1994. 58

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14.49 Trade marks, goodwill and the internet

Google AdWords 14.49 Google allows advertisers to ‘buy’ words and phrases, known as AdWords, used to retrieve their advertisements and links to their own w ebsites in sponsored links in response to enquiries entered into the Google search engine. It is one of Google’s main revenue streams. The same AdWord can be chosen by a number of advertisers. Sponsored links often appear alongside the normal search results. For example, our cafe proprietor Giacomo might be prepared to pay for phrases such as ‘cream cakes’, ‘ice-cream’, ‘Luton’, etc. To be used as Adwords. The more Giacomo is p repared to pay, the higher up the list of sponsored links his advertisement and link to his website might appear. 14.50 Other search engines provide similar systems. The model generally used is based on a payment per click. The advertiser pays the agreed price each time a user clicks on his advertisement and accesses his website. The maximum cost per click determines the position of the advertisement in the list of sponsored links. The more that is paid, the higher up the list the advertisers link appears. Normally, the advertiser submits a few lines of text describing his business operations and the address of his website. This is all well and good but what if an advertiser chooses someone else’s trade marks as his AdWords? 14.51 In Google France SARL v Louis Vuitton Malletier SA,62 Vuitton became aware that other companies were using the Vuitton national and Community trade marks as AdWords. Entering Vuitton into the Google search engine would retrieve, in the sponsored links, a number of companies offering imitation products for sale. At first instance, it was held that Google was liable for trade mark infringement. On appeal to the French Cour de cassation, a reference was made for a ruling to the Court of Justice of the EU on questions relating to the trade marks Directive, the Community Trade Mark Regulation63 and the e-commerce Directive. The Court of Justice of the EU ruled that: 1. 62 63

A trade mark proprietor may prohibit advertising using a keyword identical with the trade mark, without his consent, on an internet referencing Joined Cases C-236/08, C-237/08 and C-238/08, EU:C:2010:159. Council Regulation 40/94/EC of 20 December 1993 on the Community trade mark, OJ L 11, 14.01.1994, p 1, replaced by the codified version Council Regulation 207/2009/EC of 26 February 2009 on the Community trade mark, OJ L 78, 24.03.2009, p 1.

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Trade marks, websites and the internet 14.52 service for identical goods or services in a case where the advertisement does not enable an average internet user, or enables such a user only with difficulty, to ascertain whether the goods or services referred to originate from the trade mark proprietor or an economically connected undertaking or whether they originate from a third party. 2.

An internet referencing service provider which stores, as a keyword, a sign identical with a trade mark and organises the display of a dvertisements on the basis of that keyword does not use that sign within the meaning of Article 5(1) and (2) of the trade marks Directive or Article 9(1) of the Community Trade Mark Regulation.

3. Article 14 of the e-commerce Directive, which provides a hosting defence, applies to an internet referencing service provider where that service provider has not played an active role such as to give it knowledge of, or control over, the data stored. If it has not played such a role, that service provider cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of those data or of that advertiser’s activities, it failed to act expeditiously to remove or to disable access to the data concerned. 14.52 Thus, the Court of Justice of the EU ruled that an advertiser using another’s trade mark as an AdWord would only infringe that trade mark if average internet users cannot distinguish (or can do so only with difficulty) whether the goods or services come from the trade mark proprietor (or a linked undertaking)64 or from some other undertaking. Furthermore, the service provider is not liable for storing the AdWord because he does not himself use the trade mark for the purposes of the Directive and Regulation and can rely on the hosting defence if he has not played an active role such as to give him knowledge or control over the unlawful information or activity. This is, however, subject to a duty to remove or disable access to the information or activity should he subsequently become aware of its unlawful nature.65

64 65

For example, a licensee. This accords with the principle under Article 15 of the Directive on electronic commerce, that service providers have no general obligation to monitor the information they store or transmit or to seek facts or circumstances indicating illegal activity.

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14.53 Trade marks, goodwill and the internet 14.53 The use of AdWords was also an issue in L’Oréal SA v eBay International AG.66 Entering L’Oréal’s trade marks into the Google search engine would retrieve sponsored links including links to infringing and noninfringing products available for sale or auction on the eBay site. The Court of Justice of the EU, on the AdWord issue, inter alia, ruled that as the links directly gave access to the relevant entry in eBay’s marketplace, this meant that eBay was an advertiser. However, eBay was using the trade marks, not for identical or similar goods, but to promote its own service of making available an online marketplace. Nevertheless, such use could be subject to consideration as to whether it infringed under Article 5(2) of the trade marks Directive by taking an unfair advantage of or being detrimental to the distinctive character or repute of the trade marks. In relation to the use of the trade marks as keywords to promote its customer-sellers offers, that use was use of an identical sign in relation to identical goods and would infringe unless the advertising enabled reasonably well-informed and reasonably observant internet users to ascertain whether the goods referred to in the advertisement originated from the proprietor of the trade mark (or economically linked undertaking) or from a third party.67 14.54 Accordingly, an online marketplace operator would not be liable for trade mark infringement apart from potential liability under Article 5(2) by taking unfair advantage of or being detrimental to the reputation or distinctive character of a trade mark of repute. On the other hand, an advertiser selling or offering goods for sale in the course of trade using identical trade marks for identical goods could be liable unless it is clear to average internet users that the goods are not those of the trade mark proprietor or an economically linked undertaking. The same principles apply as in Google v Vuitton as far as the service providers’ hosting defence under Article 14 of the e-commerce Directive. The Court of Justice also addressed the impact of the enforcement Directive. The Court ruled that Member States must take measures to ensure that national courts can order online marketplace operators to take measures which contribute to bringing an end to the infringement of rights and to

66 67

Case C-324/09, EU:C:2011:474. See also Die BergSpechte Outdoor Reisen und Alpinschule Edi Koblmüller GmbH v Günter Guni, Case C-278/08, EU:C:2010:163 and Portakabin Ltd v Primakabin BV, Case C-558/08, EU:C:2010:416.

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Trade marks, websites and the internet 14.55 prevent future infringements by users of online marketplaces. The measures adopted must be effective, proportionate and dissuasive. 14.55 The use of trade marks belonging to competitors as AdWords could be seen as consistent with fair competition by providing alternative sources of goods or services. As Advocate General Poiares Maduro said in his opinion in Google France SARL v Louis Vuitton Malletier SA68 (at para 154): … it is important not to allow the legitimate purpose of preventing certain trade mark infringements to lead all trade mark uses to be prohibited in the context of cyberspace. That is, as long as internet users recognise and understand what is going on, the fact that careless or stupid internet users might think that a sponsored link gives access to the trade mark proprietor’s website or websites associated with or recommended by the trade mark proprietor matters not, providing the average internet user is able to make the necessary distinction without undue burden.69 As internet users understand more about how trade marks are used online and the nature of sponsored links and AdWords, the less likely they will be deceived and the more likely they will see sponsored links for what they are. Where a trade mark which belongs to a competing business is used as an AdWord, it is at least arguable that most reasonably well informed and reasonably observant internet users will not be deceived as to the origin of goods or services. The Court of Justice of the EU did not go this far and ruled that a trade mark proprietor can prevent the use, for identical goods or services, of a keyword identical to the trade mark in an internet referencing service where the advertisement does not enable the average internet user, or enables that user only with difficulty, to ascertain whether the goods or services in question originate from the trade mark proprietor or an economically linked undertaking or, on the contrary, originate from a third party.70 Things might be different where the trade mark is one used by a network of dealers or where it is a collective mark used by members

68

Joined Cases C-236/08 to 238/08, EU:C:2009:569. The law tends to disregard the fact that a ‘moron in a hurry’ might be deceived: per Foster J in Morning Star Cooperative Society Ltd v Express Newspapers Ltd [1979] FSR 113. 70 Google France SARL v Louis Vuitton Malletier SA, Joined Cases C-236/08 to C-238/08, EU:C:2010:159. 69

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14.56 Trade marks, goodwill and the internet of an association. That brings us to the litigation between Interflora and Marks & Spencer.

Interflora v Marks & Spencer 14.56 In Interflora Inc v Marks and Spencer plc,71 the claimant had registered ‘INTERFLORA’ as a UK and a Community trade mark, inter alia, for flower delivery services. These services were operated via a network of independent florists and orders could be placed through Interflora’s own website. Marks & Spencer also operated a flower sale and delivery service amongst the many other goods and services it provided. It was not, however, part of the Interflora network of florists. Marks & Spencer selected as AdWords, ‘Interflora’, ‘Interflora Flowers’, ‘Interflora D elivery’, ‘Interflora.com’, ‘Interflora. co.uk’ as soon as a change in policy at Google allowed advertisers to select trade marks belonging to others. When internet users entered ‘interflora’ or any of the above variants in a Google search, an advertisement for Marks and Spencer came up in the sponsored links list. A typical example of the advertisement was as follows: M & S Flowers Online www.marksandspencer.com/flowers Gorgeous fresh flowers & plants Order by 5 pm for next day delivery 14.57 The Court of Justice of the EU summarised its previous rulings on Article 5 of the previous trade marks Directive and Article 9 of the then Community Trade Mark Regulation72 as follows: 1.

Where a commercial advertiser uses a sign to trigger the display of an advertisement, that use is in the course of trade even if the sign is not itself displayed in the advertisement – nevertheless the conditions in Article 5 of the trade marks Directive (or Article 9 of the Community Trade Mark Regulation) and relevant case law must still be satisfied.

2.

Where an identical sign is used for identical goods or services is involved, as in the present case, the trade mark proprietor is entitled to prevent the use of the sign only if it is liable to have an adverse effect on one of the functions of the trade mark.

71 72

Case C-323/09, EU:C:2011:604. Now Article 10 of Directive 2015/2436 and Article 9 of the EU Trade Marks Regulation.

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Trade marks, websites and the internet 14.59 3

These essential functions are– (a) the essential function of guaranteeing the origin of the goods or services, (b) the function of guaranteeing the quality of the product or service, and (c) the functions of communication, investment and advertising.73

The Court of Justice then considered, in the context of AdWords, the functions of guaranteeing origin, investment and advertising which it considered relevant to the present case.

Essential function of guaranteeing origin 14.58 Whether this function is adversely affected when internet users are shown, on the basis of a keyword identical with the trade mark, a third party’s advertisement, such as that of a competitor of the trade mark proprietor, depends in particular on the manner in which that advertisement is presented. It is adversely affected if the advertisement does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark (or an economically linked undertaking) or, on the contrary, originate from a third party.74 In other words, can ‘normal’ internet users readily distinguish whether the advertisement comes from a trader who is, or is connected to, the proprietor or from a competitor.75 14.59 The fact that Google did not allow trade mark proprietors to prevent the selection by others of signs identical with their trade marks is irrelevant to that question. However, if an internet referencing service like Google did give 73

This was contrary to the view of the European Commission that only the essential function of indicating origin should be relevant to infringement under Article 5(1)(a). Although earlier cases used the plural, it was only in L’Oréal SA v Bellure NV, Case C-487/07, EU:C:2009:378, that the Court of Justice of the EU expressed the other functions as being those of guaranteeing the quality of goods or services in question and those of communication, investment or advertising. 74 See the Google France and Portakabin cases. 75 A normal internet user is one who is reasonably well-informed and reasonably observant. This is a different to the meaning of the average consumer.

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14.60 Trade marks, goodwill and the internet trade mark proprietors this option, a proprietor that failed to take it up could be said to have given tacit consent to the use by others of its trade mark as an AdWord keyword. However, the fact that trade mark proprietors have never been asked for consent, let alone given it, merely confirms that the use of a sign identical to their trade mark is without their consent.76

Advertising function 14.60 Although it may have repercussions on the advertising use of a word mark by the proprietor, it has been held that the use of a sign identical with another person’s trade mark as a keyword in a referencing service such as AdWords does not have an adverse effect on that function of the trade mark.77 Where a trade mark proprietor selects its own word trade mark as an AdWord keyword and a competitor has also registered the same word as an AdWord keyword, the proprietor may have to pay a higher price to ensure its advertisement comes higher up the list of sponsored links than that of the competitor. The fact that the proprietor may have to intensify its advertising is not, on its own, a sufficient reason for finding that the advertising function is adversely affected. After all, although trade marks are an essential element in the system of undistorted competition under EU law, their purpose is not to protect proprietors against competition. 14.61 Internet advertising using trade marks belonging to others as keywords is aimed at offering consumers alternatives to the goods or services of the trade mark proprietors. Moreover, this does not deprive the proprietor from using its trade mark effectively to win over consumers.

Investment function 14.62 The investment function relates to the acquisition or preservation of a reputation capable of attracting consumers and retaining their loyalty. Although it may overlap with the advertising function it is distinct from it. In terms of acquiring or preserving a reputation, although advertising is 76

As at the time of writing, Google will not investigate complaints that a trade mark has been used in a keyword AdWord but will investigate claims where a trade mark has been used without consent in the text of the advertisement, ‘as a courtesy’. See Google Advertising Policies, 2018. 77 Where the keyword is not displayed in the advertisement itself: see Google France and Die BergSpechte, supra.

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Trade marks, websites and the internet 14.64 involved, various commercial techniques are also employed.78 A third party’s use of a trade mark adversely affects the investment function of a trade mark if it substantially interferes with the proprietor’s use of the trade mark to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty. Where a trade mark already enjoys a reputation, the investment function is adversely affected if a third party uses an identical mark for identical goods or services in such a way as to affect that reputation and jeopardise its maintenance. 14.63 However, in the interests of fair competition, a trade mark proprietor cannot prevent a competitor from using a sign identical with that trade mark in relation to identical goods or services, if the only consequence of that use is to oblige the proprietor of that trade mark to adapt its efforts to acquire or preserve a reputation capable of attracting consumers and retaining their loyalty. Furthermore, the fact the use complained of may result in some consumers switching from goods or services bearing that trade mark to those of another undertaking cannot be successfully relied on by the proprietor of the mark.

Unfair advantage or detriment to trade mark of repute 14.64 The Court of Justice in Interflora v Marks and Spencer also considered infringement under Article 5(2) of the trade marks Directive (unfair advantage or damage to repute).79 Where the trade mark has a reputation, the proprietor is entitled to prevent a competitor advertising using a keyword identical to the trade mark selected in an internet referencing service where, by doing so, the competitor: ••

takes unfair advantage of the distinctive character or repute of the trade mark (free-riding);

••

causes detriment to the distinctive character of the trade mark (by a process of dilution, for example, by contributing to turning the trade mark into a generic term); or

••

causes detriment to the repute of the trade mark (tarnishment).

78 79

However, the court did not explain what these ‘commercial techniques’ were. Now Article 5(3)(a) of Directive 2015/2436. The equivalent provision is in Article 9(2)(c) of the EU Trade Mark Regulation.

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14.65 Trade marks, goodwill and the internet However, the proprietor of a trade mark with a reputation cannot prevent the use of his trade mark as a keyword by a competitor if it puts forward alternatives to the proprietor’s goods or services, not being mere imitations,80 without causing dilution or tarnishment and without adversely affecting the functions of the trade mark. Such use falls within the meaning of fair competition and is, therefore, not without due cause. Although the competitor obtains an advantage from the distinctive character and repute of the trade mark, such advantage is not without due cause. 14.65 One issue is that third parties may use a trade mark legitimately in comparative advertising and in certain descriptive uses.81 As to invisible use as AdWord keywords, it would seem that most internet users, certainly those with some experience of online shopping, will realise what is going on with systems such as AdWords keyword service, even if they are not aware of the precise mechanics of it. If we endow the reasonably well-informed and reasonably observant internet user with some of the qualities of the average consumer, particularly the attribute of being reasonably circumspect, it seems even more likely that the retrieval of advertisements through the AdWord system will not affect the basic functions of trade marks. However, as we will see below, the Interflora v Marks & Spencer case is somewhat different as the Interflora mark is used by a network of literally thousands of independent flower retailers. Many internet users might think that Marks & Spencer operated under that same network. 14.66 Arnold J in the Chancery Division of the High Court applied the Court of Justice of the EU ruling to find that Marks & Spencer infringed the Interflora trade mark.82 Applying the test of whether the reasonably wellinformed and reasonably observant internet user could not, or could only with difficulty, make the necessary distinction, Arnold J held that, even by the time of the trial, a significant proportion of them could not. There was no evidence to the contrary and the evidential burden lay with the defendant to show that there was no such confusion among a significant proportion of internet users. Of course, in determining whether such confusion

80

As was the case in relation to some of the goods offered online in Google France. Providing such advertising complies with Article 4 of the misleading and comparative advertising Directive. 82 Interflora Inc v Marks & Spencer plc [2013] EWHC 1291 (Ch), [2013] FSR 33. 81

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Trade marks, websites and the internet 14.69 existed, consideration of confusion amongst ill-informed and unobservant internet users could not be taken into account. However, even after discounting these users, it was not a question of comparing the proportions of internet users who were not confused with those who were. It was not a simple matter of saying that at least 51 per cent were or were not confused. The question was whether a significant proportion could not make the relevant distinction.83 14.67 Arnold J recognised that, over time, the experience and increased knowledge of advertising online would mean that fewer users would not be able to distinguish between a list of natural search results and paid for advertising appearing under sponsored links. However, that was not the case at the time of the trial though more may have been able to make that distinction now than at the time of the infringement, being some five years ago. 14.68 One way to avoid liability is to make it quite clear in the brief text accompanying the retrieved link that there is no connection with the owner of the trade mark used as an AdWord. For example ‘We have no relationship with [the trade mark owner] but have equivalent goods or services we think might be of interest to you’. 14.69 Marks and Spencer appealed against Arnold J’s decision above. The Court of Appeal allowed the appeal on the basis that the judge had fallen into error in accepting that the evidential burden lay with the defendant to show that its advertisements were sufficiently clear so as not to cause confusion as to the origin of the goods on the part of the average consumer.84 The case was remitted back to the High Court85 where an injunction was refused on the balance of convenience under American Cyanamid principles and also, as the defendant’s freedom of expression was engaged, under Cream Holdings Ltd v Banerjee.86

83

Presumably, this could be a significant minority. Thus, there is no single meaning rule in trade marks to the effect that the question is determined on the basis of the higher proportion of users. 84 Interflora Inc v Marks and Spencer plc [2014] EWCA Civ 1403, [2015] FSR 10. 85 Interflora Inc v Marks and Spencer plc [2014] EWHC 4168 (Ch), [2015] FSR 13. 86 [2004] UKHL 44, [2005] 1 AC 253. The freedom of expression was, however, a commercial one rather than an artistic or political freedom of expression.

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14.70 Trade marks, goodwill and the internet

Google AdSense 14.70 Google Adsense is a way of advertising by allowing Google to place advertisements alongside webpages, Facebook pages, YouTube pages, and the like. Typically, they might appear at the beginning, alongside and at the end of a webpage When clicked the advertisements take you to the ‘landing page’ of the advertiser.87 Google generates income from the AdSense system, some of which goes to the operator of the website or other pages on which the advertisements are displayed. 14.71 In Argos Ltd v Argos Systems Inc,88 Argos Ltd (‘AL’) was well known in the UK and Ireland for its chain of retail outlets and strong internet presence from which its goods could be ordered for delivery or collection. It owned the domain name ‘argos.co.uk’. It had been unable to register ‘argos.com’ as this had previously been registered as a domain name by Argos Systems (‘AS’), a US company specialising in software for the construction industry in the United States. It had no business in the UK or Ireland and no intention of entering the market there. AS participated in the Google AdSense programme and generated income from adverts, including some for AL. AL objected claiming that AS was taking, without due cause, unfair advantage of its Community trade mark ‘ARGOS’.89 14.72 The first issue was to decide whether the advertisement through AdSense was targeted at consumers in the UK. The fact that advertisements on the internet could be accessed from a jurisdiction is not enough. A trader must intend to establish commercial relations with consumers in a jurisdiction with a clear expression of an intention to engage in custom in that jurisdiction.90 Factors that are relevant to this question include the language and currency used, using telephone numbers with an international code and using a top level domain name for a jurisdiction which is not that of the State in which the undertaking is established or domiciled.91 Whether an advertisement was targeted at c onsumers in the UK was an objective question 87

That is, the page of the advertiser to which the click launches. [2018] EWCA Civ 2211. 89 On the basis of Article 9(1)(c) of the Community Trade Mark Regulation; see now Article 9(2)(c) of the EU Trade Mark Regulation. 90 Merck KGaA v Merck Sharp & Dohme Corpn [2017] EWCA Civ 1834, [2018] ETMR 10. 91 Pammer v Reederei Karl Schluter GmbH & Co KG and Hotel Alpenhof GesmbH v Heller, Joined Cases C-585/08 and C-144/09, EU:C:2010:740. 88

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Trade marks, websites and the internet 14.74 seen from the perception of the average consumer in the UK and the reaction of them to the advertising. AS was operating a website which included billboard advertisements directed to consumers in the UK, even though most would immediately realise the AS site was not for them. However, the AS billboard contained advertisements that would be of interest to UK consumers and, as such, there was targeting of consumers in the UK. The Court of Appeal also held that there was a link between the sign on the AS site and the trade mark as the use of the sign would call into the mind of the average consumer the AL trade mark. Most of the traffic arriving from the UK to the AS website and billboard did so because of the reputation of the ARGOS trade mark. 14.73 Finally, it had to be shown that AS was, without due cause, taking unfair advantage of the distinctive character or repute of the trade mark. It had been accepted that the use of a trade mark as a keyword to promote alternative goods (though not imitation goods) in a way which did not dilute or tarnish the trade mark and which did not affect any of the functions of the trade mark could be seen as fair competition.92 AS’s use of AL’s trade mark did not divert any business away from AL nor did it cause consumers to click on advertisements of competitors.

Injunctions against service providers for trade mark infringement 14.74 Under section 97A of the Copyright, Designs and Patents Act 1988, injunctions are available against service providers who have actual knowledge that another person is using their service to infringe copyright.93 Article 11 of the enforcement Directive provides for, inter alia, injunctions to be available against intermediaries whose services are being used by a third party to infringe an intellectual property right.94 This latter provision was not expressly implemented in the UK and there was some doubt as to whether an equivalent remedy to that available against service providers for copyright 92

Specsavers International Healthcare Ltd v Asda Stores Ltd [2012] EWCA Civ 24, [2012] ETMR 17. 93 This implements Article 8(3) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10. 94 The same principles apply to traditional forms of business involving intermediaries, such as a person letting out pitches to traders in a market hall: Tommy Hilfiger LLC v Delta Center a.s., Case C-494/15, EU:C:2016:528.

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14.75 Trade marks, goodwill and the internet infringement applied in relation to trade mark infringement. In a reference to the Court of Justice of the EU from the English High Court (Chancery Division), the Court of Justice confirmed that Article 11 of the enforcement Directive provides for the grant of injunctions against intermediaries whose services are being used by third parties to infringe intellectual property rights. Those injunctions must be effective, proportionate, and dissuasive and must not create barriers to legitimate trade.95 14.75 A number of persons were selling counterfeit products bearing infringing trade marks, such as Cartier and Montblanc, via websites which could be accessed through UK internet service providers in Cartier International AG v British Sky Broadcasting Ltd.96 Although the grant of injunctions against service providers was well established under section 97A of the Copyright, Designs and Patents Act 1988,97 there was no express UK legislation providing for an equivalent remedy for trade mark infringement. The Court of Appeal dismissed the appeal from the decision of Arnold J, at first instance, where he granted the injunctions sought by the trade mark proprietors. He also ordered that the internet service providers bear the costs of implementing the blocking of the target websites. 14.76 The Court of Appeal noted that the equitable jurisdiction to grant injunctions was not limited to particular historical situations as set out by Lord Diplock in The Siskina v Distol Compania Naviera SA98 or by Lord Brandon in South Carolina Insurance Co v Assurantie Maatschappij ‘De Zeven Provincien’ NV.99 Moreover, the power to grant injunctions was not limited to injunctions against infringers of the rights in question and could be granted by analogy with the equitable protective duty as in Norwich Pharmacal.100 Further factors included the High Court’s wide jurisdiction to grant injunctions under section 37(1) of the Senior Courts Act 1981 which states: ‘The High Court may by order (whether interlocutory or final) grant an injunction … in all cases in which it appears to the court to be just and convenient to do so’. Additionally, Article 11 of the enforcement Directive 95 96 97 98 99 100

L’Oréal SA v eBay International AG, Case C-324/09, EU:C:2011:474. [2016] EWCA Civ 658, [2017] RPC 3. Implementing Article 8(3) of Directive 2001/29/EC on the harmonisation of certain aspects of copyright and relation rights in the information society. [1979] AC 210. [1987] AC 24. Norwich Pharmacal Co v Customs & Excise Commissioners [1974] AC 133.

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Trade marks, websites and the internet 14.78 added further weight and was an important consideration. As Kitchen LJ said (at para 65): It seems to me to be clear from this guidance that art.11 does indeed provide a principled basis for extending the practice of the court in relation to the grant of injunctions to encompass, where appropriate, the services of an intermediary, such as one of the ISPs, which have been used by a third party to infringe a registered trade mark. There is no dispute that the ISPs are intermediaries within the meaning of art.11 and accordingly, subject to the threshold conditions to which I shall shortly come, I believe that this court must now recognise pursuant to general equitable principles that this is one of those new categories of case in which the court may grant an injunction when it is satisfied that it is just and convenient to do so. 14.77 The threshold conditions referred to by Kitchen LJ were adopted by Arnold J at first instance, being: (i) the internet service providers (ISPs) had to be intermediaries within the meaning of Article 11 of the enforcement Directive; (ii) either the users or operators of the website in question had to be infringing the claimant’s trade marks; (iii) the users or operators of the website had to use the services of the ISPs; and (iv) the ISPs had to have actual knowledge of this.101 The Court of Appeal agreed that the threshold conditions had been satisfied in this case.

Costs of compliance with injunctions against service providers 14.78 In Cartier v British Sky Broadcasting, the majority of the Court of Appeal, Briggs LJ dissenting, agreed with Arnold J that the ISPs should bear

101

In such cases, having actual knowledge, is likely to mean that the ISPs have knowledge by virtue of notice from the trade mark proprietors or their lawyers or, at least, no later than the commencement of proceedings for the grant of an injunction. Otherwise, an obligation to monitor users or operators of websites would be imposed on the ISPs which would contradict the immunity granted to service providers under the e-commerce Directive.

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14.79 Trade marks, goodwill and the internet the costs of implementing the blocking injunctions. The Court of Appeal acknowledged that the question of proportionality may, in some cases, result in a different decision as to who should be liable to bear the costs of implementing the blocking injunctions, for example, if the costs became more onerous. Briggs LJ, dissenting, thought that the applicant for a blocking injunction ought to pay the implementation costs but not the costs of designing and installing blocking software. On the evidences, the implementation costs were modest but the applicant for the injunction benefited from valuable injunctive relief and ought to pay for it as it enabled the applicant to better exploit its intellectual property rights.102 14.79 The ISPs challenged the order allocating the costs of implementing the blocking orders by a subsequent appeal to the Supreme Court in Cartier International AG v British Telecommunications plc.103 Lord Sumption, with whom their other Lordships agreed, thought that the incidence of compliance costs was a matter of English law within the broad limits of EU principles of effectiveness and equivalence, and the requirement that any remedy should be fair, proportionate and not unduly costly.104 Lord Sumption went on to say that a principle of English law is that, absent good reasons for imposing a different order, an innocent intermediary is entitled to be indemnified by the rightholder for the costs of complying with a website blocking order. An intermediary is legally innocent and would not under English law be liable for trade mark infringement even without relying on the safe harbours provisions in the e-commerce Directive. An ISP acting as a mere conduit has no means of knowing that its network is being used to infringe trade marks. Even when an ISP is informed of this, it does not have even a limited duty to prevent access to the illegal material. The ISPs legal duty is simply to comply with a court order to block access to the website in question. 14.80 It has been suggested that, as ISPs benefit financially from the use of their networks, they have a moral or commercial responsibility. But this is not a legal responsibility. Owners of intellectual property rights seek

102

Even then, Briggs LJ accepted that there may be exceptional circumstances justifying a different award. 103 [2018] UKSC 28. 104 Recital 23 to the enforcement Directive states that: ‘[t]he conditions and procedures relating to such injunctions [i.e. injunctions against intermediaries] should be left to the national law of the Member States’.

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Trade marks, websites and the internet 14.81 website blocking injunctions in their own commercial interests. The protection of intellectual property rights is an ordinary and natural cost of the business which owns the rights and which has an interest in asserting them. This is not the same for the ISPs. As Lord Sumption said of the protection of those rights (at para 35): ‘It is not ordinarily and naturally a cost of the business of an ISP which has nothing to do with the rights in question but is merely providing a network which has been abused by others. There is therefore no reason why the rights-holder should be entitled to look for contribution to the cost of defending his rights to any one other than the infringers.’ 14.81 Lord Sumption summed up by saying that, in principle, rights-holders should indemnify the ISPs against their compliance costs, subject to EU law limitations on the power to grant relief. Though he said he had no reason to question whether such limitations would be exceeded by such an indemnity which must be limited to reasonable compliance costs, which are generally fairly modest. There was no reason to suggest that the costs would be excessive, disproportionate or would prejudice the right-holders ability to enforce their trade marks. The Supreme Court decision is sensible and reflects the reality of offering information society services. The ‘mere conduit’ defence under Article 12 of the e-commerce Directive is an important factor in the light of website blocking orders. It provides a defence to information society service providers where they have not initiated the transmission, have not selected the recipient of the transmission and have not selected or modified the information contained in the transmission. There is no duty to monitor the content of transmissions but a court may require the service provider to terminate or prevent an infringement. As the conditions and procedures for granting website blocking injunctions is a matter for national law, it is not surprising that there is some divergence as to the costs of compliance with website blocking orders. For example, in Société Française du Radiotéléphone v Union des Producteurs de Cinema,105 the French Supreme Court held that it was justifiable at law to require blocking measures to be borne by service providers unless it proved disproportionate, complex, costly and for such a time as to compromise the service provider’s business model in the long term. In such a case, it may be appropriate to require the right-holders to bear some of all the costs of compliance.

105

Supreme Court, 1st Civil Chamber (Cour de cassation), 6 July 2017.

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14.82 Trade marks, goodwill and the internet

PASSING OFF AND THE INTERNET 14.82 The law of passing off pre-dates trade mark registration in the UK and developed from the tort of deceit as a way of controlling deceptive business practices where consumers would or might be deceived as to the origin of goods or services or as to their quality and other attributes.106 The law of passing off can be considered to be a common law version of registered trade mark law but there are some differences. For example, generally, passing off is more difficult to prove than trade mark infringement. However, it can apply in wider circumstances and protect general business ‘get-up’ which might be too vague for trade mark protection. Because there is some overlap between the two forms of right, it is not unusual for a claim be brought for both trade mark infringement and passing off. 14.83 Essentially, the law of passing off protects a trader’s goodwill. This can exist in relation to a trading name, logo, unregistered trade mark or a general business ‘get-up’ which is distinctively associated with a particular trader.107 The presence of goodwill, which can be described as the attractive force that brings in custom,108 must be proved by the claimant.109 He or she also must prove that the defendant has made a misrepresentation which has or will cause confusion or deception amongst customers. Finally, there must be evidence that the misrepresentation has done or will cause damage to the claimant’s goodwill. Consequently, the test for passing off requires: ••

the existence of the claimant’s goodwill;

••

a misrepresentation as to the defendant’s goods or services; and

••

damage (or likely damage if the misrepresentation is continued or about to commence).110

106

For example, in Perry v Truefitt (1842) 49 ER 749 (one of the early cases in which the tort was recognised) the defendant sold a hair-treatment product with a similar name in similar bottles which bore similar labels to those of the claimant. In Spalding & Bros v A W Gamage Ltd (1915) 84 LJ Ch 449, the defendant sold the claimant’s reject footballs which had been sold to a third party by the claimant as scrap. 107 It can also apply to a franchising operation where the name or logo is used by the franchisees. 108 See Lord Macnaghten in Commissioners of Inland Revenue v Muller & Co’s Margarine Ltd [1901] AC 217 at 223. 109 Unless, of course, the defendant accepts that the claimant has the relevant goodwill. 110 Often described as the classic trinity of passing off, first set out in this way by Lord Oliver in Reckitt & Colman Products Ltd v Borden Inc [1990] 1 All ER 873 (this is the ‘Jif Lemon’

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Passing off and the internet 14.85

Goodwill 14.84 The law of passing off protects goodwill but goodwill must be distinguished from reputation. The presence of goodwill requires that the trader has a customer base in jurisdiction who buy the goods or services of the trader within that jurisdiction. Simply having a reputation in jurisdiction when the trader only supplies goods or services outside the jurisdiction will not do. In Starbucks (HK) Ltd v British Sky Broadcasting Group Plc,111 the claimant operated a Chinese language subscription internet television service, called NOW TV, in Hong Kong. A good number of Chinese speaking residents in the UK and Chinese visitors to the UK knew of the service and some had subscribed to it whilst staying in Hong Kong. NOW TV was available on some airlines operating between Hong Kong and the UK and there was some evidence of the availability of some YouTube videos in the UK. Lord Neuberger confirmed that under the law of passing off, a claimant must show actual goodwill in England and this required the presence of clients or customers in England for the products or services in question. Where a claimant’s business is outside the jurisdiction, persons who are in the jurisdiction, but are not customers of the claimant in the jurisdiction, is not sufficient to prove the presence of goodwill, even if they are customers of the claimant when they go abroad.112 14.85 On the other hand, where a claimant can show that there are people within, say England, who book a service in England where the service in question is to be provided abroad, that may be sufficient to show goodwill, provided the numbers booking the service in England are more than minimal.113 Similarly, if customers in England place an order in England for goods located outside England where the goods are imported into England for delivery to those customers, that too is sufficient to show goodwill.114 The order may be placed with a subsidiary or agent located in England, and the goods in question may simply be imported in England without the presence of an agent or subsidiary in England. Alternatively, orders may be placed online.

111 112 113 114

case in which the defendant sold lemon juice in a similar though differently shaped plastic lemon coloured container). [2015] UKSC 15, [2015] FSR 29. The availability of the service on airlines or via YouTube was irrelevant as these were not provided for payment. Sheraton Corpn of America v Sheraton Motels Ltd [1964] RPC 202. La SA des Ancienes Etablissements Panhard et Levassor v Panhard Levassor Motor Co Ltd [1901] 2 Ch 513.

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14.86 Trade marks, goodwill and the internet In the latter case, the issue is whether the website is targeted at customers in the jurisdiction. See L’Oréal SA v eBay International AG115 in which the Court of Justice of the EU noted (at para 64): It must, however, be made clear that the mere fact that a website is accessible from the territory covered by the trade mark is not a sufficient basis for concluding that the offers for sale displayed there are targeted at consumers in that territory.

Misrepresentation and damage 14.86 It is clear that an actionable misrepresentation need not be deliberate, though it often is.116 As for damage to goodwill, passing off has similarities to trade mark law in that quantifiable damage, such as lost sales, may be relevant but damage may also be found in erosion of goodwill. For example, the use of the name ‘Elderflower Champagne’ for a non-alcoholic drink was found to cause damage to the Champagne producers through a process of eroding the association of the name Champagne with a high quality expensive sparkling wine coming from the Champagne region in France.117 14.87 Carrying out an internet search for ‘Victorian Plumbing’ would be likely to bring up the claimant’s website advertisements for ‘Victoria Plum’.118 There was nothing on the claimant’s website to indicate there was no connection between the claimant and defendant. Although many persons would realise they had reached the wrong site, a substantial proportion of the relevant public might think the parties were connected and this was a misrepresentation by the claimant. The defendant succeeded on it’s counterclaim for passing off.119 115

Case C-324/09, EU:C:2011:474. Erven Warninck BV v J Townend & Sons (Hull) Ltd [1979] AC 731, one of the leading cases on passing off along with Reckitt & Colman v Borden, it was said by Lord Diplock that the misrepresentation must be ‘calculated to injure the business or goodwill of another trader’. However, subsequent case law shows that it need not be deliberate. The word ‘calculated’ must mean calculated in the sense of effect rather than intention. 117 Taittinger SA v Allbev Ltd [1993] FSR 641. 118 Victoria Plum Ltd (t/a Victoria Plum) v Victorian Plumbing Ltd [2016] EWHC 2911 (Ch), [2017] FSR 17. 119 The claimant won on the claims of trade mark infringement and the defence of honest concurrent use was not made out. The defendant had bid on a number of keywords s imilar to the claimant’s trade marks. These included ‘victoria plum’, ‘victorian plumb’ and ‘victorian plum’. 116 In

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Passing off and the internet 14.90 14.88 In a case reminiscent of the trade mark case of Daimler AG v Egyud Garage,120 a removal company Bee Moved, was for a time a member of the National Guild of Removers and Storers (NGRS), a trade association. Bee Moved advertised on the Really Moving website which mentioned Bee Moved being a member of the NGRS. After expiry of its membership a director of Bee Moved accessed the Really Moving website and removed the reference to being a member of NGRS. Unfortunately, it appeared that the Really Moving website crashed soon after but the software was reinstated later from an older version which still contained the reference to Bee Moved as a member of NGRS. The Court of Appeal confirmed that the misrepresentation was made by a third party and Bee Moved was not liable for passing off. The court noted that where an advertiser requests removal of a misrepresentation from a website and the website operator refuses to comply, the advertiser potentially could be liable forever and that could not be right.121 14.89 In many cases, where the activity in question has not yet started, the court must decide whether damage to goodwill is likely to occur.122 But, where the activity has commenced, the claimant will adduce evidence of damage, for example, by calling witnesses who can give evidence of confusion or by adducing survey evidence. Erosion of goodwill may be presumed where the defendant is ‘free-riding on the coat tails of the claimant’s goodwill’ or is engaged in an activity which might tarnish the attractive force generated by the goodwill. Other evidence might take the form of carrying out internet searches. 14.90 The first judgment handed down in the newly named Intellectual Property Enterprise Court,123 was Bocacina Ltd v Boca Cafes Ltd.124 In that case, the claimant used ‘Bocabar’ for its bar and restaurant in Bristol and had a website at ‘bocabar.co.uk’. The defendant had a cafe also in Bristol operating under the name ‘Boca Bistro Cafe.125 The judge accepted that the 120 121 122 123

124 125

Case C-179/15, EU:C:2016:134. National Guild of Removers and Storers Ltd v Bee Moved Ltd [2018] EWCA Civ 1302. In the Victoria Plum case, the judge accepted that there was a likelihood of damage to the defendant’s goodwill. The new name was adopted on 1 October 2013.Previously, the court was known as the Patents Court. The change of name reflects the fact that the court, being part of the Chancery Division of the High Court hears cases on forms of intellectual property such as copyright, trade marks and designs and is not limited to patent cases. [2013] EWHC 3090 (IPEC). It also had registered ‘BOCA BISTRO CAFE’ as a trade mark.

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14.91 Trade marks, goodwill and the internet claimant had a local goodwill extending to Bristol and surrounding areas. There was some evidence of confusion, for example, a number of persons had visited the defendant’s cafe thinking it to be that of the claimant. The judge also noted that internet searches for ‘Boca Bristol’ or ‘Boca Restaurant Bristol’ brought up both parties in close proximity. Although the evidence of confusion was not extensive it was sufficient not to disturb the court’s prima facie view that there was confusion. An injunction was granted to prevent the defendant using ‘Boca’, etc; an order cancelling the domain name ‘bocacafes.co.uk’;126 removal or references to ‘Boca’ or ‘Boca Bistro Bar’ on Facebook pages controlled by the defendant if not substantially removed or altered within three months. The defendant’s trade mark was declared invalid. 14.91 A publicity order was granted but in a subsequent hearing, primarily about costs and offers of settlement, it was held by Daniel Alexander QC, sitting as an Enterprise Judge, that the publicity order should not refer to the defendants being guilty of passing off as this suggested to the lay reader that the defendants had been convicted of a criminal offence.127 14.92 Being common law, passing off has shown itself quite flexible to adapt to meet new problems caused by the use of information technology, especially in the realm of cybersquatting. A number of other countries apply the law of passing off, most notably, some of the commonwealth countries such as Australia, New Zealand, Malaysia and India. Other countries have unfair trading laws and there are numerous legislative initiatives aimed at controlling unfair practices and protecting consumers.128

Domain names 14.93 Registering a domain name is usually a simple and relatively inexpensive operation. Most businesses now have a number of domain names, some of which they actively use and other similar domain names that they have

126

It seems that the domain was due to lapse shortly for non-payment of renewal fees. Bocacina Ltd v Boca Cafes Ltd [2014] EWHC 26 (IPEC), [2014] FSR 33. 128 See, for example, the Unfair Commercial Practices Directive, OJ L 149, 11.06.2005, p 22, implemented in the UK by the Consumer Protection from Unfair Trading Regulations 2008, SI 2008/1277. There are also criminal offences available in some cases such as under the Trade Descriptions Act 1968. 127

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Passing off and the internet 14.95 registered but do not use to prevent others registering them. In some cases, a number of domain names may link to one site. Marks & Spencer plc is a good example.129 In the past, a number of persons have registered company names and celebrity names as domain names and then offered to transfer the registrations to the appropriate company or celebrity for substantial sums.130 Sometimes this might be accompanied by veiled threats to use the websites associated with the domain names so as to cause confusion or to include offensive or derogatory content. Now, domain name registries, responsible for registering domain names, operate dispute resolution systems. However, the courts in the UK first tackled this problem using the law of passing off. 14.94 In Harrods Ltd v UK Network Services Ltd,131 a person with no association with the famous Knightsbridge Store registered ‘harrods.com’ as a domain name. Summary judgment was granted to the owner of the store on the basis of trade mark infringement and passing off. However, this case was not fully argued as the defendant failed to put in an appearance. As the domain name had not been put to use, it was questionable how this could amount to trade mark infringement or passing off. However, quia timet injunctions can be granted to prevent some potential future course of conduct. There was a risk that the domain name could have been used to launch a website confusingly similar to the claimant’s. 14.95 In a further development, the Chancery Division of the High Court picked up on an old case, Singer Manufacturing Ltd v Loog,132 where it was held to be sufficient for passing off for a person to have possession of an instrument which may be used to deceive customers. The claimant, established in the United States, manufactured and sold the famous ‘Singer’ sewing machines and had factories and outlets in the UK. The defendant was the UK distributor of sewing machines manufactured in Berlin to the ‘Singer system’ bearing a label containing the word ‘Singer’. He distributed advertising and

129

‘marksandspencer.co.uk’ and ‘marksandspencer.org’ and ‘marksandspencer.net’ all link back to the main site at ‘marksandspencer.com’. 130 Initially, registrations were granted on a ‘first-come-first-served’ rule without any consideration as to entitlement at law (under trade mark law, company names, or otherwise. The first example of the difficulties this causes was in Pitman Training Ltd v Nominet UK [1997] FSR 797. 131 The Times, 9 December 1996. 132 (1880–1881) LR 18 Ch D 396, affirmed in the House of Lords in (1882) 8 App Cas 15.

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14.96 Trade marks, goodwill and the internet other printed material133 to wholesalers in the UK. Even though the wholesalers would be unlikely to be deceived,134 the material could be seen by ultimate purchasers who could be deceived. In that way the material was an instrument of deception and its further use or distribution could be restrained under the law of passing off. 14.96 Time moves on and with the advent of the internet and the registration of domain names, Singer v Loog was applied in Marks & Spencer plc v One in a Million Ltd135 in which the defendant registered a number of domain names such as ‘marksandspencer.co.uk’, ‘bt.org’ and ‘sainsbury.com’. Actions were brought for summary judgment against the defendant dealer of domain names. At the time of the trial, the domain names had not been used. Nevertheless, the judge granted quia timet injunctions against the defendant. These injunctions went further than usual and required that the defendant transferred the domain names to the relevant businesses. The defendant’s appeal to the Court of Appeal was unsuccessful. In British Telecom plc v One in a Million Ltd,136 it was noted, for example, that if someone looked up ‘marksandspencer’ in an internet register to find the identity of the owner would see that it was owned by One in a Million Ltd. Many persons would assume that it was connected with or associated with Marks & Spencer plc. Apart from that deception, there was also a danger of erosion of goodwill. Aldous LJ held that domain names which comprised distinctive names were instruments of fraud or deceit. The motive of the defendants was important and made it easy to find passing off. They had offered to sell the domain names to the relevant organisations for large sums of money coupled with an express or implied threat to sell to third parties if the claimant’s refused to pay. Aldous LJ said (at 18): … there can be discerned from the cases a jurisdiction to grant injunctive relief where a defendant is equipped with or is intending to equip another with an instrument of fraud. Whether any name is an instrument of fraud will depend upon all the circumstances. A name which will, by reason of its similarity to the name of another, inherently lead to passing off is such an instrument. If it would not inherently lead to passing off, it does not follow that it is not an instrument of fraud. The court should consider the similarity of the names, the intention of the defendant, the type of trade and all the surrounding circumstances. 133

Such as price lists and invoices. As they generally knew genuine Singer sewing machines were not made in Berlin. 135 [1998] FSR 265. 136 [1999] FSR 1. Marks & Spencer plc was also a co-respondent, along with others. 134

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Passing off and the internet 14.98 14.97 Both Directline Group Ltd v Directline Estate Agency137 and Glaxo plc v Glaxowellcome Ltd138 were cited with approval in the One in a M illion case. In both of those cases, injunctions were granted to restrain threatened rather than actual passing off and trade mark infringement. The defendant’s companies had been set up with names similar to well-known company names and the threat of passing off was very real. In Directline, Laddie J accepted that the companies, which included ‘Directline Estate Agency Ltd’, ‘Manchester U Ltd’, ‘Virgin Jeans Ltd’ had been set up with the intention of trading off the claimants’ reputations and there was a strong case that passing off would occur. Laddie J described the defendants’ activities as a ‘scam’. In Glaxowellcome, the defendant showed some initiative in realising that a new company name would be Glaxo-Wellcome plc after a forthcoming merger between two pharmaceutical companies, Glaxo plc and Wellcome plc. The defendant offered to sell the new company name for £100,000. A later case, Smithkline Beecham Ltd v GSKline Ltd,139 the defendant registered numerous trade marks, company names and domain names such as ‘gskline.com’. On the domain names issue, Arnold J followed BT v One in a Million and granted summary judgment to the claimant. 14.98 Registering a domain name very similar140 to that used by an established trader will almost inevitably lead to a conclusion that passing off is or will occur, especially where the fields of activity are the same or similar. In Phones 4u Ltd v Phone4u.co.uk Internet Ltd,141 the claimant already had goodwill in the name ‘Phones 4u’ used for its mobile phone business. The defendant registered ‘phone4u.co.uk’ for its business. In the Court of Appeal, Jacob LJ said that there was no realistic use of the latter without causing deception and there was some evidence that potential customers of the claimant had visited the defendant’s website and that the defendant had then sought to take advantage of the misunderstanding by trying to deal with them. At one stage, the defendant offered to sell the domain name to the claimant. The defendant said, untruthfully, that he had already been offered £100,000 for the domain name by a third party. The Court of Appeal, reversing the judge at first instance, confirmed that the domain name was an instrument of deceit.142 137 138 139 140 141 142

[1997] FSR 374. [1996] FSR 388. [2011] EWHC 169 (Ch). Of course, no two domain names can be identical. [2006] EWCA Civ 244, [2007] RPC 5. At first instance, the judge failed to find that the claimant had goodwill at the relevant date and also found that there was evidence only of ‘mere confusion’: [2005] EWHC 334 (Ch).

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14.99 Trade marks, goodwill and the internet 14.99 Where a claimant chooses a descriptive or generic name for his business, it may be difficult to show damage or a likelihood of damage. In Radio Taxicabs (London) Ltd v Owner Drivers Radio Taxi Services Ltd,143 the claimant operated under ‘Radio Taxicabs’. The defendant registered ‘www. radiotaxis.com’ as a domain name, with a link to its previously registered domain name ‘www.dialacab.co.uk’ which was its main website presence. The defendant’s trading name was ‘Dial-A-Cab’. There was no real evidence to show that the defendant had registered the ‘www.radiotaxis.com’ domain name with the intention of either taking advantage of the claimant’s goodwill or diverting business from the claimant. In the absence of an intention to deceive, the claim for an order to assign the domain name to the claimant on the basis that it was an instrument of deceit could not succeed. The claimant had taken the risk of choosing a descriptive or generic name for its business and any representation made by the defendant was simply that it operated a radio taxi service. 14.100 In many cases involving domain names and passing off, the damage to the claimant is often in the future or even speculative as the domain name in question may not have been put to use at the time legal proceedings commence. Of course, one possible form of damage is that, without an order to transfer the domain name to the claimant, he will not be able to register the domain name for himself. This form of damage was envisaged in the context of the registration of a company name. In Compagnie Générale des Eaux v Compagnie Générale des Eaux Sdn Bhd,144 the claimant was a large company based in France which had existed for over 130 years and which operated internationally. It had interests in Malaysia providing training and technical services to a group of Malaysian companies and paid taxes in Malaysia. The defendant registered an identical name as the company name in Malaysia and offered to negotiate favourable terms as to the future use of the company name by the claimant. In finding that the claimant had goodwill in Malaysia and the existence of a likelihood of confusion, the High Court of Malaysia found that there was a probability of damage of one of two types. Either the claimant would suffer damage as a result of confusion, or the claimant would suffer damage by virtue of being unable to register its own name as its company name in Malaysia because of the defendant’s prior registration. This latter form of damage is very real, otherwise third parties would not engage in the

143 144

[2004] RPC 19. [1997] FSR 610.

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Passing off and the internet 14.103 a ctivity of registering names of well-known companies coupled with demands to sell for exorbitant sums and/or often veiled threats to use them personally or to sell them to others unconnected with the company or even to rival companies. 14.101 Nowadays, more disputes involving domain names are resolved by the Uniform Domain-name Dispute-Resolution Policy operated by the International Corporation for Assigned Names and Numbers which is followed by all domain name registries.145 Nominet operates the .uk domain registry which has a dispute resolution service146 and the World Intellectual Property Organization (WIPO) operates a Uniform Domain Name Dispute Policy which received 3,074 new cases in 2017, an all-time high.147 The cases are handled by the WIPO Arbitration and Mediation Centre which is based in Geneva with a branch in Singapore.

Domain names, trade marks and passing off 14.102 Registering a domain name which is similar to a registered trade mark may amount to passing off with a high degree of success. In Yoyo.Email Ltd (‘Yoyo’) v Royal Bank of Scotland Group plc (‘RBS Group’),148 Yoyo registered domain names similar to the trade marks owned by the RBS Group, using the ‘.email’ top level generic domain, such as ‘rbs.email’, ‘natwest.email’ and ‘coutts.email’. RBS Group applied under the WIPO Uniform Domain Names Resolution Service where the Panel concluded that (i) the domain names were identical or confusingly similar to the RBS Group registered trade marks; (ii) that Yoyo’s proposed use of the domain names could not be regarded as bona fide, nor was it legitimate or fair; and (iii) Yoyo had registered the domain names and intended to use them in bad faith. 14.103 Yoyo sought a declaration that it had committed no wrong. It argued, inter alia, that it intended to make the domain names available to users of its intended email services for addressing emails to the RBS Group, whether provided free of charge or for a payment and intended to make it clear that it was not authorised or licensed by or connected or associated with the RBS Group 145

The website address is: http://www.icann.org/en/help/dndr/udrp. http://www.nominet.org.uk/. 147 WIPO domain name disputes report, 14 March 2018, available at http://www.wipo.int/ pressroom/en/articles/2018/article_0001.html. 148 [2015] EWHC 3509 (Ch), [2016] FSR 18. 146

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14.104 Trade marks, goodwill and the internet of companies. The RBS Group counterclaimed for passing off in accordance with the decision in the One in a Million case and also applied to strike out Yoyo’s claim. The judge struck out Yoyo’s claim and entered judgment for the RBS Group on its counterclaim for passing off. The judge accepted RBS Group’s submission that actionable passing off occurred at the time of registration of the domain names. Thus, it was unnecessary to consider Yoyo’s business model and suggested means of preventing confusion. In any case, Yoyo would be registered as the owner of the domain names and anyone consulting the register would see this. 14.104 Where there is a question of an abusive registration, once the parties have agreed to submit to a dispute resolution service, the losing party should not be able to apply to the court for a declaration that he was not guilty of abusive registration. In Toth v Emirates,149 the claimant had registered ‘Emirates.co.uk’ as a domain name with Nominet the UK domain name registry. Emirates brought a case before Nominet’s dispute resolution service. It was unsuccessful but following an appeal it was successful and the domain name was reassigned to Emirates. The claimant brought an action before the court for a declaration that its registration was not abusive.150 However, the court held that the Nominet dispute resolution procedure was a self-contained procedure which was closely regulated and was quick, cheap and efficient. To allow a losing party to attempt to apply to the court for a declaration that he was not guilty of abusive registration would undermine the dispute resolution procedure. Once a registrant discovered that a claim of abusive registration was to be made against him, he could apply to the court for a declaration which would cause the dispute resolution procedure to be suspended even if the preliminaries of which might have already started.

Passing off and website design 14.105 Passing off need not be limited to the choice of domain name but the overall appearance and design of a website, whether or not the domain name is deceptively similar, can amount to passing off. In easyJet Airline Co Ltd v Dainty,151 the defendant used the domain name ‘www.easyRealestate.co.uk’ 149

[2012] EWHC 517 (Ch), [2012] FSR 26. Other allegations, such as groundless threats of trade mark infringement, were not continued before the court. 151 [2002] FSR 6. 150

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Passing off and the internet 14.107 but, because of the similar look and feel of his website compared to the claimant’s airline website, he was found to be guilty of passing off. The defendant’s case was not helped by the fact that he informed the claimant that the domain name was to be sold by auction and that a number of persons were interested. 14.106 The possibility of passing off by similarities in website design might be increased by linking to a third party’s website, especially where deep linking is concerned, by-passing the front page. This may give the impression that the websites are owned by the same or associated companies. The basic test for passing off still applies, being: ••

Does the claimant have goodwill in his name, logo or even website appearance?

••

Has the defendant made a misrepresentation, for example, by virtue of similarities in website design and/or domain name?

••

Has there been or is there likely to be damage to the claimant’s goodwill, for example, by diverting customers or by erosion or denigration of goodwill?

14.107 Links from the defendant’s to the claimant’s website may increase the likelihood of confusion and disclaimers are less likely to be effective than in other forms of advertising as they are more likely to be missed in this c ontext. For example, in Yahoo! Inc v Akash Arora,152 the defendant registered his domain name as ‘Yahooindia.com’. The claimant was the well-known registered proprietor of the trade mark YAHOO! in 69 countries and the owner of the domain name ‘yahoo.com’. The High Court of Delhi held that the defendant was guilty of passing off. The court also held that the defendant’s disclaimer on its website was ineffective as the nature of the internet meant that the use of a very similar domain name could not be rectified by the use of a disclaimer. However, the use of a prominent disclaimer might be acceptable in some cases.153 It is a question of fact as to whether it is likely to be seen by the ordinary website user. It is submitted that the disclaimer would have to be very prominent to be effective as it is much easier to miss something when looking at a website compared with looking at the printed page. 152 153

[1999] FSR 931. As in India TV Independent News Service Pvt Ltd v India Broadcast Live LLC [2008] FSR 2 (High Court of Delhi).

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14.108 Trade marks, goodwill and the internet

Website advertising and localised goodwill 14.108 Prior to the internet and the use of websites as an advertising medium, small local traders could carry on their businesses in their own local area without fear of passing off actions being brought by traders who happened to use similar trading names in other small localised areas. Now, however, many small traders have their own websites on which they describe and advertise their business activities. Some also engage in e-commerce, taking orders online. Two small businesses with similar names and in the same field of activity may have co-existed peacefully for some time. In Redwood Tree Services Ltd v Apsey (t/a Redwood Tree Surgeons),154 the parties were based only 10 miles apart. Their areas of activity barely overlapped, nonetheless. Once the defendant started operating a website, things came to a head. The evidence of damage was fairly insignificant and the judge ordered that the defendant’s website carried an appropriate disclaimer so as to prevent confusion. The disclaimer also stated that the defendant did not operate in the postcode areas in which the claimant operated.155

MALICIOUS FALSEHOOD AND ONLINE STATEMENTS 14.109 Malicious falsehood is a tort that developed from slander of title and slander of goods. It may apply, for example, where one trader falsely says that a rival trader has filed for bankruptcy or is selling counterfeit or defective goods. Apart from showing that the statement made was false to a material degree,156 it must be shown to have been made maliciously or with reckless indifference as to whether it was true or not. Malicious falsehood claims are not common as they can be difficult to substantiate and, often a claim will be rejected at a preliminary stage.157

154

[2011] EWPCC 14. The defendant’s website was also ordered to carry a reference to the judgment in accordance with the Directive on the enforcement of intellectual property rights. The duration was set at six months. 156 Simple claims that one trader’s goods are inferior to another’s are not sufficient, being mere advertising puff: White v Mellin [1895] AC 154. 157 See Wright v Caan [2011] EWHC 1978 (QB), involving a competitor and dragon from the TV series Dragons’ Den. 155

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Malicious falsehood and online statements 14.112 14.110 The law of defamation is similar though not identical to malicious falsehood.158 Where a libellous statement has been placed on a website, for defamation, each and every time it is accessed gives rise to a fresh cause of action. This ‘multiple-publication’ rule is particularly important in terms of limitation of actions. Normally, proceedings for defamation, including malicious falsehood, must be brought within one year of publication otherwise the cause of action is statute-barred.159 But each time the statement is accessed online, the operation of the rule means the one-year period starts again. However, the Defamation Act 2013 replaced that rule with a single publication rule so that only the first publication will count and the one-year period during which proceedings may be commenced starts from then.160

Malicious falsehood, websites and intermediaries 14.111 In Thornton v Telegraph Media Group Ltd,161 the claimant wrote a book ‘Seven Days in the Art World’. She had interviewed a third-party member of the Turner prize jury who subsequently denied that she had been interviewed. She wrote a review of the book and added further comments about the claimant. The defendant published the review in the Daily Telegraph on 1 November 2008 and placed it on its website that same day. Eventually, the review was removed from the website in March 2009. The claimant was awarded £65,000 in damages for libel and malicious falsehood, apportioned equally for the paper publication and the website publication. Although the website publication was more limited in terms of persons reading it, it lasted longer and would have been seen by persons using search engines to find out about the claimant. 14.112 The danger with statements which may be subject to claims in malicious falsehood (the same applies to libel) is that a considerable number of persons may access and read the statement and this danger is exacerbated if the website operator does not act expediently to remove the statement. Once the person about whom the statement commences legal proceedings, it is important to bear in mind that the numbers accessing the website may 158

For example, the single meaning rule applies to defamation though it has been confirmed that it has no place in malicious falsehood. 159 Section 4A of the Limitation Act 1980. 160 Section 8 of the Defamation Act 2013 which came into force on 1 January 2014. 161 [2011] EWHC 1884 (QB), [2012] EMLR 8.

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14.113 Trade marks, goodwill and the internet increase substantially, especially if the target is well known. This can cause all sorts of problems for the news media which often keep long term archives which are available online. 14.113 There are dangers for intermediaries operating online services and internet service providers in respect of statements placed on their websites. The dangers were highlighted recently in Tamiz v Google Inc.162 In that case, the claimant complained of blogs placed on the defendant’s blog site which he alleged were defamatory of him. He complained to the defendant who contacted the blogger who took down the blogs soon after. The Court of Appeal held that it was at least arguable that the defendant had become a publisher once it knew of the existence of the material163 but as the period between that time and the removal of the material was just a few days, not many persons would have seen it and the damage to the claimant’s reputation would have been trivial only.164 Again the Defamation Act 2013 contains a specific defence for website operators in relation to material posted on their website by others.165 Regulation 19 of the Electronic Commerce (EC Directive) Regulations 2002166 provides a defence in respect of hosting unlawful or illegal information where the service provider is unaware that the information is unlawful or illegal providing he acts expeditiously to remove or disable access to it on becoming aware of its nature. However, the Court of Appeal in Tamiz v Google, in view of its findings on the law of defamation, felt it was unnecessary to consider the hosting defence. 14.114 A case was brought by Tamiz at the European Court of Human Rights in Tamiz v United Kingdom167 on the basis that the national courts had denied him a remedy for the breach of the Article 8 right to respect for private and family life under the Council of Europe Convention for the Protection of

162

[2013] EWCA Civ 68, [2013] 1 WLR 2151. Byrne v Dean [1937] 1 KB 818 in which it was held that a golf club was a publisher of a statement placed by an unknown person on its notice board. The Court of Appeal upheld the trial judge’s decision to decline jurisdiction and his refusal to allow service of proceedings outside the jurisdiction of England (the defendant being established in the United States). Section 5 of the Defamation Act 2013, not yet in force. SI 2002/2013. The Regulations implemented Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, L 178, 17.07.2000, p 1. (3877/14), [2018] EMLR 6.

163 See 164

165 166

167

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Malicious falsehood and online statements 14.117 Human Rights and Fundamental Freedoms. The European Court of Human Rights held that the applicant’s case was manifestly unfounded and, hence, inadmissible. The balancing exercise between the right to privacy under Article 8 and the right of freedom of expression under Article 10 had been undertaken in accordance with criteria laid down by the European Court of Human Rights and the court would need strong reasons to substitute its own views over that of the national court. 14.115 Although malicious falsehood is a separate, though similar, tort to defamation, it seems sensible that the same principles apply in as much as the single publication rule168 also ought to apply to malicious falsehood as should the website operator defence under section 5 of the Defamation Act 2013. As a fallback, intermediary service providers can still rely on the mere conduit, caching and hosting defences under the Electronic Commerce (EC Directive) Regulations 2002, implementing the equivalent defences in the e-commerce Directive.

Comparative advertising and online statements 14.116 It is not uncommon for malicious falsehood claims to be brought in relation to comparative advertising. For example, in British Airways plc v Ryanair Ltd,169 the defendant was involved in comparative advertising and placed advertisements comparing its prices with those of the claimant under the headings ‘EXPENSIVE BA … DS!’ and ‘Expensive BA’. Jacob J said that the malicious falsehood claim ‘does not get off the ground’. However, in O2 Holdings Ltd v Hutchinson 3G Ltd,170 Jacob LJ (as he became) accepted that he had been wrong and the issue was whether the advertising complied with the comparative advertising D irective.171 The Court of Justice of the EU confirmed this in O2 Holdings Ltd v Hutchinson 3G Ltd.172 14.117 The use of websites has become ubiquitous in the fields of commerce and industry. Whilst simply referring to a competitor is not malicious 168

169 170 171 172

This will protect publishers who maintain archives of their publications which are available online in respect of any defamatory statement or malicious falsehood contained within them. [2001] FSR 32. [2006] EWCA Civ 1656, [2007] RPC 16. Which it probably did not. Case C-533/06, EU:C:2008:339.

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14.117 Trade marks, goodwill and the internet falsehood, placing material on a trader’s website which denigrates a competitor’s product or business can bring an action in malicious falsehood. For example, in Niche Products Ltd v MacDermid Offshore Solutions LLC (No 2)173 a letter was posted online disputing the veracity of the claimant’s report showing deficiencies in the defendant’s new lubricant formulation. In Boehringer Ingleheim Ltd v VetPlus Ltd,174 Jacob LJ said that the general threshold which had to be crossed in comparative advertising cases was that the claimant would have to show that he would probably succeed at trial.

173 174

[2013] EWHC 3540 (IPEC), [2014] FSR 24. [2007] EWCA Civ 583, [2007] ETMR 67.

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Chapter 15

Competition law

INTRODUCTION 15.1 Competition law is a very specialised area of law, known in the United States as anti-trust law.1 The purposes of competition law are, inter alia, to prevent holders of intellectual property rights imposing unfair terms on licensees, cooperating to fix prices and abusing their dominant positions, for example, by limiting supply to drive up prices of their goods. In the European Union (EU), Articles 101 and 102 of the Treaty on the Functioning of the EU (TFEU)2 control restrictive trade practices and abuses of dominant trading positions respectively, where these may affect trade between Member States.3 In the UK, there are also homegrown provisions, equivalent to the those in the TFEU, but based on adverse effects on trade within the UK.4 15.2 Although the TFEU recognises the importance of protecting industrial and commercial property5 a key aim is to encourage fair competition and the abolition of obstacles to the freedom of movement within the internal market of goods, persons, services and capital.6 As many goods are subject to intellectual property rights, there is a danger that owners of these rights

1 2 3

4 5

6

For a comprehensive guide to competition law generally, see R Whish and D Bailey (2018), Competition Law, 9th edition, OUP. Formerly Articles 81 and 82 of the EC Treaty. Unless otherwise stated, references are to the TFEU. The Agreement on the European Economic Area (‘EEA Agreement’) has equivalent provisions in Articles 53 and 54. The EEA comprises the Member States of the EU, the EU itself and Iceland, Liechtenstein and Norway. Sections 2 and 18 of the Competition Act 1998. See, for example, Articles 36 and 345 of the TFEU. The term ‘industrial property’ includes, inter alia, patents, trade marks and designs: see Article 1 of the Paris Convention for the Protection of Industrial Property 1883. Articles 3(1) and 26(2) of the TFEU.

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15.3 Competition law may exercise them in such a way to prejudice the freedom of movement of goods. Articles 34 and 35 of the TFEU contain prohibitions on quantitative restrictions on import and export of goods and measures having equivalent effect.7 This has resulted in the doctrine of exhaustion of rights.8 Once goods have been placed on the market within the European Economic Area (EEA)9 by or with the consent of the rightholder, he can no longer exercise his rights to prevent the subsequent commercialisation of those particular goods. There are also provisions on the freedom to provide services under Article 56 of the TFEU.

LAYOUT OF THIS CHAPTER 15.3 Restrictive trade agreements are examined first, followed by examination of the controls over abuses of dominant trading positions, including the ‘as efficient competitor test’. Restrictions in agreements with retailers may be acceptable if they are designed solely to protect the exclusivity and image of luxury goods. Examples of the abuses of dominant trading positions are the protracted litigation between Microsoft and the European Commission in relation to bundling in of software along with the Windows operating system and a failure to supply competitors with interface information and the recent fines imposed on Google for abusing its dominant position in connection with its shopping service and its search engine. The EU Antitrust Damages Directive is described briefly. This has been implemented under UK law and provides for awards of damages for persons adversely affected by infringements of EU and national competition laws. 15.4 The doctrine of exhaustion of rights is next looked at, followed by a particular form in relation to parallel importers. This doctrine is intended to prevent the segregation of the internal market by the application of price

7

8

9

Articles 34 and 35. Article 36 allows restrictions, inter alia, for the protection of industrial and commercial property provided it is not a means of arbitrary discrimination or a disguised restriction on trade between Member States. Described in context in previous chapters in relation to copyright works (especially where the works have been made available on tangible media and in the case of broadcasts), designs, patents and trade marks. These provisions also have their equivalent in the EEA Agreement (Articles 11 to 13 of that Agreement). For the European trade mark, the doctrine of exhaustion of rights applies in relation to the EEA, but for the Community Design it applies only to the EU.

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Restrictive trade agreements 15.7 differentials between Member States. Finally, the freedom to provide services is examined in the light of licences to broadcast football matches in encrypted form.

RESTRICTIVE TRADE AGREEMENTS 15.5 Article 101(1) of the TFEU prohibits agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts. 15.6 Article 101(2) makes such agreements or decisions void.10 The list of agreements and the like is, as usual, non-exhaustive. In terms of intellectual property rights, Article 101 is particularly concerned with terms in licence agreements (vertical agreements), for example, software licences, or agreements between undertakings, for example, to pool or share rights or provide for joint research and development with the intention of creating new rights (horizontal agreements). An example being where undertaking A and undertaking B cooperate to develop new mobile telephony devices. 15.7 The basic prohibition in Article 101(1) may be declared inapplicable in the case of any agreement or category of agreements between 10

An entire agreement will not necessarily be void if the restrictive terms can be severed leaving the agreement intact in a meaningful way.

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15.8 Competition law undertakings, any decision or categories of decisions by associations of undertakings or any concerted practice11 or category of concerted practices, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: ••

impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

••

afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.12

15.8 In Football Association Premier League v QC Leisure13 the Court of Justice of the EU held that territorial exclusive licence agreements permitted the licensee to broadcast within a given territory were caught by Article 101. The agreements in question contained terms obliging the licensee not to supply decoding devices enabling access to the broadcasts of English Premier League football matches by viewers outside the licensed territory. This was a restriction on competition prohibited under Article 101. 15.9 The teeth of the Commission are sharp when it comes to dealing with breaches of Article 101(1). An early example is a Commission Decision of 2002,14 when a number of organisations were fined for participating in a number of agreements and concerted practices in relation to Nintendo games and games consoles with the object of preventing parallel exports in the games and consoles. Distributors of the games and consoles had exclusivity within their own territory and were not allowed to sell outside their territory nor to sell to third parties who would sell them elsewhere. Nintendo itself was fined over €149m.15

11

12 13 14

15

Arrangements between companies within the same group of companies cannot be a concerted practice as it has been accepted that they form a single economic entity: Micro Leader Business v Commission of the European Communities, Case T-198/98, EU:T:1999:341. Article 101(3). Joined Cases C-403/08 and C-429/08, EU:C:2011:631. Commission Decision 203/675/EC of 30 October 2002 relating to a proceeding pursuant to Article 81of the EC Treaty and Article 53 of the EEA Agreement, OJ L 255, 08.10.2003, p 33. The reference to the EC Treaty should now be read as Article 101 of the TFEU. This fine pales into insignificance compared to some recent fines under Article 102 for abuses of dominant positions; infra.

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Restrictive trade agreements 15.12

Luxury goods and selective distribution systems 15.10 A selective distribution system for luxury goods designed, p rimarily, to preserve the luxury image of those goods complies with Article 101(1) of the TFEU in circumstances such that resellers are chosen on the basis of objective criteria of a qualitative nature, laid down uniformly for all potential authorised retailers and applied in a non-discriminatory fashion providing the criteria do not go beyond what is necessary. The Court of Justice of the EU ruled accordingly in Coty Germany GmbH v Parfumerie Akzente GmbH16 in which Coty applied rules to ensure that their perfumes were sold in appropriate luxury store surroundings. By amendment to the authorised retailer contracts, retailers could also sell the perfumes online but were required to conduct internet sales through an ‘electronic shop window’ of the authorised retailer and that the luxury character of the goods were preserved. Furthermore, the services of an internet store which is not an authorised retailer of Coty was not permitted. 15.11 The defendant challenged these amendments and started selling the products through ‘amazon.de’. In relation to the selling on the internet, the Court of Justice of the EU ruled that the amendment to the contracts could be justified on the basis of preserving the luxury images of the goods, laid down uniformly and in a non-discriminatory fashion, if proportionate in the light of the objective pursued. However, this was a matter for the referring court to determine on the facts. 15.12 Article 4 of Commission Regulation 330/201017 removes the benefit of block exemption in relation to certain vertical agreements and concerted practices.18 In Coty v Parfumerie, The Court of Justice of the EU ruled that, in the circumstances such as those in issue in the case, the prohibition on members of a selective distribution system operating as retail distributors, of making use in a discernible manner, of third parties for internet sales does not constitute a restriction of customers under Article 4(b) of the Regulation or a restriction of passive sales to end users within the meaning under Article 4(c). 16

Case C-230/16, EU:C:2017:941. Commission Regulation 330/2010/EU of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJ L 102, 23.04.2010, p 1. 18 Article 2 of the Regulation provides for exemption from Article 101(1) of the TFEU. 17

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15.13 Competition law

Exemptions 15.13 The European Commission published a number of ‘block exemption’ Regulations setting out the types of terms which may be acceptable and those which are not to take advantage of the exception to the working of Article 101(1). Where not covered by a block exemption, the parties to a particular agreement could request an individual exemption from the Commission. The most relevant agreement in relation to information technology and computer software is the technology transfer Regulation.19 A ‘technology transfer agreement’ means: (i) a technology rights licensing agreement entered into between two undertakings for the purpose of the production of contract products by the licensee and/or its sub-contractors; (ii) an assignment of technology rights between two undertakings for the purpose of the production of contract products where part of the risk associated with the exploitation of the technology remains with the assignor.20 15.14 Products include goods or services, including both intermediary goods and services and final goods and services, and ‘contract product’ means a product produced, directly or indirectly, on the basis of the licensed technology rights. Examples of goods within the technology transfer Regulation could include smartphones, computers, tablet computers, fitness trackers, wi-fi devices, etc. Services will include various ‘apps’ and internet services, such as online booking services, online dating, email systems, etc. Exemption is from Article 101(1) but there is a market share threshold under Article 2. For example, where the agreement is between two under takings their combined market share must not exceed 20 per cent in the case of competing undertakings or, in the case of non-competing undertakings, 30 per cent.21 The technology transfer Regulation contains ‘hardcore

19

Commission Regulation 316/2014/EU on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of technology transfer agreements, OJ L 93, 28.03.2014, p 17 (‘technology transfer Regulation’). This also has relevance to the EEA. 20 Article 1 of the Regulation contains the definitions. 21 Where the market share threshold is exceeded, application should be made for an individual exemption.

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Abuses of a dominant position 15.16 restrictions’ in Article 4, such as restrictions on fixing prices, limiting output or, in some cases, allocating markets or customers. Further restrictions are in Article 5 and are described as excluded restrictions. For these, the benefit of the exemption under Article 2 does not apply. These restrictions include, for example, an obligation on the licensee to grant back improvements to, or its own new applications of, the licensed technology. Another restriction is in relation to an obligation imposed on one party by the other not to challenge the validity of the latter’s intellectual property rights.22 The Commission may withdraw the benefit of the Regulation in a specific case, for example, where the effect of the exemption has effects incompatible with Article 101(3).

ABUSES OF A DOMINANT POSITION 15.15 Article 102 of the TFEU states that: any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States. In United Brands Continental BV v Commission of the European Communities,23 the Court of Justice of the EU described a dominant position as: … a position of market strength enjoyed by an undertaking enabling it to prevent effective competition being maintained in the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers.24 15.16 Owning an intellectual property right or being an exclusive licensee in respect of an intellectual property may put the owner in a dominant position. This is particularly so with respect to monopoly rights such as patents,

22

Although this is acceptable if there is provision for termination of the agreement on this event. 23 Case C-27/76, EU:C:1978:32. 24 At para 65. Cited with approval in the Court of Appeal in Unwired Planet International Ltd v Huawei Technologies Co Ltd [2018] EWCA Civ 2344.

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15.17 Competition law trade marks and registered design rights.25 Even owning copyright and related rights may put a person in a dominant position, for example, where no other person has access to the subject-matter or material from which the work is created or is contained within the work.26 However, simply being in a dominant position does not fall foul of Article 102. There must be some abuse of that dominant position which results or may result in effects on trade between Member States. 15.17 Four examples of abuse are given in Article 102. They are not exhaustive and are: ••

the imposition of unfair trading conditions or prices;

••

the limitation of production, markets or technical developments to the prejudice of consumers;

••

discrimination against some trading parties by applying dissimilar conditions to equivalent transactions;

••

the imposition of unconnected supplementary obligations in contracts.

15.18 The main purpose of Article 102 is to prevent the distortion of compe tition, in particular, to protect the interests of consumers rather than protecting the interests of competitors. Freedom of contract is an essential element of free trade. Furthermore, the ability to choose one’s own trading partners and dispose of one’s own property are central principles of the laws of Member States and incursion into those rights requires careful consideration. Thus, the refusal to grant a licence does not, on its own, require intervention.27 However, if a refusal to grant licences is coupled with other factors, there may well be a need for intervention on the basis of Article 102. 15.19 Failing to give notice of an application for the grant of injunction whilst in negotiations for a fair, reasonable, and non-discriminatory (FRAND)

25

Either the UK registered design of the registered Community design. This can be the case where the work comprises material created by the owner and not available from any other source, such as in the case of forthcoming programme schedules for television programs: see RTE and ITP v Commission of the European Communities, Joined Cases C-241/91P and C-242/91P, EU:C:1995:98, discussed later. 27 These and similar sentiments were expressed by Advocate General Jacobs in his opinion in Oscar Bronner GmbH & Co KG v Mediaprint Zeitungs- und Zeitschriftenverlag GmbH & Co KG, Case C-7/97, EU:C:1998:264. 26

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Abuses of a dominant position 15.21 licence may be an abuse of a dominant position. The Court of Justice of the EU laid down guidelines in such a case in Huawei Technologies Co Ltd v ZTE Corpn.28 However, in Unwired Planet International Ltd v Huawei Technologies Co Ltd,29 the Court of Appeal concluded that the Court of Justice was not laying down mandatory conditions and held that, in determining whether a course of conduct was abusive, account had to be taken of the actual circumstances in the case, including precisely what notice had been given and the nature and extent of consultations.30 15.20 In RTE and ITP v Commission of the European Communities,31 the Court of Justice dismissed an appeal from a Commission Decision and subsequent finding at the Court of First Instance that television companies, which refused to make available in advance copies of listings of their forthcoming television programmes, had committed an abuse under Article 102. Although mere ownership of copyright does not confer a dominant position on its owner, as the television companies had a de facto monopoly in relation to the information, they were in a dominant position. By refusing to make the listings available, the companies were preventing competition from independent television magazines publishing weekly listings of forthcoming programmes, for which there was a public demand. The Court of Justice confirmed that the requirement that trade between Member States be affected was satisfied by showing that the conduct concerned was capable of affecting such trade, and it was not necessary to show that trade had in fact been affected.32 15.21 In IMS Health GmbH & Co OHG v NDC Health GmbH & Co KG,33 both parties provided services in relation to data on regional pharmaceutical sales. IMS Health was the owner of copyright in a ‘brick structure’ used to represent regions and their attributes and had distributed the structure to pharmacies and doctors’ surgeries free of charge, thereby building up a

28 29 30 31 32

33

Case C-170/13, EU:C:2015:477. See the discussion of this case in Chapter 9. [2018] EWCA Civ 2344. At para 269. Of course, this was in connection with a FRAND licence. Joined Cases C-241/91P and C-242/91P, EU:C:1995:98. The General Court of the EU (then known as the Court of First Instance) had correctly found that the exclusion of all potential competitors had affected the market comprising Ireland and Northern Ireland. Case C-418/01, EU:C:2004:257.

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15.22 Competition law market prominence such that clients were reluctant to accept other structures. The defendant was the successor to a company set up by a former manager of IMS Health and tried to use structures similar to those of the claimant. IMS Health refused to grant a licence in respect of its brick structure to the defendant as it was a competitor. IMS Health sued for infringement of its copyright in the brick structures. The defendant put in a counterclaim, alleging that the claimant’s refusal to grant it a licence was an abuse of a dominant position under Article 102. The Court of Justice confirmed, on the basis of RTE and ITP v Commission, that a refusal to grant a licence, per se, did not amount to an abuse under Article 102. However, it could amount to an abuse in the p resence of other factors, being: ••

where the undertaking requesting the licence intended to offer new products or services not offered by the copyright owner and in respect of which there was a potential consumer demand;

••

where the refusal to grant the licence cannot be justified on objective considerations; and

••

where the refusal is such as to reserve to the copyright owner the market for the supply of the data in question in the Member State concerned by eliminating competition in that market.

15.22 Where the owner of copyright is the only person able to create the work in question, that alone cannot amount to an abuse of a dominant position. However, if it is coupled to other behaviour as identified in RTE and ITP v Commission, it can amount to an abuse. In particular, using copyright to exploit a monopoly situation by denying access to the work to others, where there is a clear public demand for access to the work, may amount to an abuse. In the majority of cases, copyright does not create monopoly rights in as much as others are free to create similar works providing they do not perform or authorise the performance of the acts restricted by copyright. For example, where a person creates a database of information collected from the public domain or other widely available sources, there can be no question of an abuse of a dominant position.34 Others are free to create their own databases by collecting together the same or similar information. Where the only realistic and practical source of the information is the 34

Assuming, of course, that the database is protected by copyright by virtue of being the author’s own intellectual creation and/or by the sui generis database right by virtue of being the result of a substantial investment.

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Abuses of a dominant position 15.24 owner of the work in which it is comprised, as in the case of the database controlled by the British Horseracing Board, the potential for abuse is great. However, there must be something in the way the work is controlled which brings it within Article 102. Simply refusing to licence the work or making a large profit are not, in themselves, sufficient. 15.23 It may be difficult to evaluate at what level the price charged for a product becomes abusive. In Attheraces Ltd v British Horseracing Board Ltd,35 the defendant, ‘BHB’, maintained a computer database of information relating to horseracing in the UK. It included ‘pre-race data’ such as details of meetings, names of races, distances, entries, owners, jockeys and trainers. It licensed this data to bookmakers, television companies and internet sites wishing to cover horseracing. The claimant ran websites, television channels and other audio-visual transmissions on horseracing and provided customers and viewers with information which ultimately came from the BHB database. BHB had a monopoly in the pre-race data and the claimant alleged excessive, unfair and discriminatory pricing for the data by BHB. At first instance,36 the judge held that BHB was in breach of Article 102 and also in breach of section 18 of the Competition Act 1998.37 On appeal, the Court of Appeal held that the trial judge had erred by calculating the economic value of the pre-race data as the cost of producing it plus a reasonable margin – a cost plus approach.38 That did not take account of the value of the pre-race data to the claimant and resulted in a value too near to the cost of production. BHB’s prices were neither excessive nor unfair and there was no discriminatory pricing.39 15.24 An undertaking in a dominant position which charges an unfair price will fall within Article 102. However, this must be distinguished from an undertaking charging a high price. In BHB Enterprises plc v Victor Chandler (International) Ltd,40 yet another case involving the BHB database,

35 36 37 38 39

40

[2005] EWHC 3015 (Ch), [2006] FSR 20. [2005] EWHC 3015 (Ch), [2006] FSR 20. The equivalent UK provision. [2007] EWCA Civ 38, [2007] ECC 7. BHB had also threatened to refuse to grant a licence to the claimant which eventually started taking the data from a third party for no payment which had been appointed by BHB to collect and distribute the data. It has held by the Court of Appeal that this refusal did not constitute an abuse under Article 102. [2005] EWHC 1074 (Ch), [2005] ECC 40.

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15.25 Competition law f ollowing the ruling by the Court of Justice of the EU in British Horseracing Board Ltd v William Hill Organisation Ltd,41 the defendant stopped paying a licence fee to the claimant in respect of pre-race data. The reason was that the defendant considered that the rights of the BHB in respect of the database were severely limited by the ruling. The claimant threatened to cut off the supply of the data to the defendant which alleged, inter alia, that the claimant was in breach of Article 102 of the TFEU and section 18 of the Competition Act 1998. The BHB database cost some £4m per annum to maintain but it was alleged that the income from exploiting it was around £600m over five years. The defendant had been paying £60,000 per month for the pre-race data.42 It was alleged that the price charged for the pre-race data was unfair. Laddie J rejected the allegation because the defendant failed to show how it was unfair. The defendant’s approach failed to consider the value of the database as an asset and concentrated on the cost of acquisition or creation instead. 15.25 Where a copyright collecting society is the only collecting society authorised for certain types of works in a Member State, the society may be in breach of Article 102 if it charges fees substantially more than equivalent collecting societies in other Member States or charges a price for its services which is significantly higher than the economic value of those services. The Court of Justice of the EU ruled accordingly, inter alia, in OSA – Ochranný svaz autorský pro práva k dílům hudebním o.s. v Léčebné lázně Mariánské Lázně a.s.43 If there is only one collecting society in a Member State which also managed rights of foreign rightholders, there is potentially an infringement of Article 102.44

The AEC test (‘as efficient competitor test’) 15.26 In Intel Corpn Inc v European Commission,45 Intel made central processing units (CPUs) and other semiconductor components. Intel granted

41

Case C-203/02, EU:C:2004:695. The price was fixed at 10 per cent of a bookmaker’s gross profit or 1.5 per cent of its turnover. 43 Case C-351/12, EU:C:2014:110. 44 Autortiesību un komunicēšanās konsultāciju aģentūra/Latvijas Autoru apvienība v Konkurences padome, Case C-177/16: EU:C:2017:689. 45 Case C-413/14 P, EU:C:2017:632. 42

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Abuses of a dominant position 15.28 conditional rebates to computer manufacturers such as Dell, HP and Lenovo to encourage them to buy nearly all their CPU chips from Intel and also made payments to them to delay, cancel or restrict the marketing of products using a competitor’s CPUs. The Commission imposed a fine on Intel of €1.06bn. An appeal to the General Court was unsuccessful and Intel appealed to the Court of Justice of the EU. 15.27 Intel submitted that a finding of an abuse of a dominant position under Article 102 of the TFEU requires a consideration of all the relevant circumstances, including the level of the rebates in question, their d uration, the market shares concerned, the needs of customers and the capability of the rebates to foreclose an as efficient competitor (as efficient competitor test, ‘the AEC test’). The Court of Justice said that the purpose of Article 102 was not to prevent an undertaking from acquiring, on its own merits, a dominant position in the market. Nor does it seek to ensure that less efficient competitors should remain on the market. As the AEC test played an important role in the Commission, the General Court should have considered all of Intel’s arguments concerning that test. The General Court had not placed any importance to the AEC test and did not consider Intel’s criticisms of the test and its application by the Commission. The case was, therefore, remitted back to the General Court.

Tying products together 15.28 Tying one product with another may amount to an abuse under Article 102. This is where the undertaking in a dominant position forces a customer wishing to buy one product to buy other products. For example, in Windsurfing International Inc v Commission to the European Communities,46 it was held that tying the purchase of sailboards and rigs was an abuse. Similarly, tying the purchase of nails to cartridges for nail guns was held to be an abuse in Hilti AG v Commission to the European Communities.47 Hilti was fined ECU 6m for this breach of the previous equivalent of Article 102.48

46

Case C-193/83, EU:C:1986:75. Case T-30/89, EU:T:1991:70. An appeal brought before the Court of Justice was dismissed: Hilti AG v Commission to the European Communities, Case C-53/92 P, EU:C:1994:77. 48 The ECU (European Currency Unit was replaced by the Euro at parity on1 January 1999). 47

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15.29 Competition law 15.29 The Microsoft Corporation distributed Windows Media Player bundled in with its Windows 2000 software package. The European Commission held that this constituted an abuse of a dominant position and the General Court confirmed this in Microsoft Corpn v Commission to the European Communities.49 The court required that, in future, Microsoft must distribute its Windows software package with the Media Player being included only as an option.

Failing to provide information 15.30 The Directive on the legal protection of computer programs50 provides for a ‘decompilation right’.51 This allows licensees and others having a right to use a computer program to reproduce and translate computer program code in order to obtain the information necessary to write a new computer program that will interoperate with that or another computer program.52 In practical terms, it is very difficult if not impossible to decompile a computer program; that is, convert a program in a low level language into a version expressed in a higher level language. Where this is the case, and it is with very large and complex software packages such as Microsoft Windows, the permitted act is illusory. 15.31 Sun Microsystems Inc applied to the Microsoft Corporation requesting information which would allow its work group server operating systems to interoperate with the Windows client PC operating system. When Sun did not obtain all the information it sought, it lodged a complaint with the European Commission which imposed a fine of €497,196,304, holding that failing to make the interoperability information available to competitors was an abuse of a dominant position under Article 102.53 The Commission

49 50 51 52 53

Case T-201/04, EU:T:2007:289. At the time, the terminology was the Commission to the European Communities and the Court of First Instance. Directive 2009/24/EC of the European Parliament and of the Council of 23 April 2009 on the legal protection of computer programs (codified version), OJ L 111, 05.05.2009, p 16. This is implemented by a special permitted act under section 50B of the Copyright, Designs and Patents Act 1988. This is subject to the information not previously been readily available to the person seeking to achieve interoperability. Commission Decision 2007/53/EC of 24 March 2004 relating to a proceeding pursuant to Article 82 (EC) and Article 54 of the EEA Agreement against Microsoft Corp. The fine included an amount for the objectionable tying of Windows Media Player.

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Abuses of a dominant position 15.33 also required Microsoft to submit a proposal for a mechanism which included a monitoring trustee with the power of access to Microsoft’s information, documentation, employees and source code without recourse to the Commission with costs to be borne by Microsoft and a right reserved to the Commission to impose such a mechanism. Microsoft’s appeal failed in respect of the abuse of a dominant position and the level of the fine, but it succeeded in relation to the imposition of the monitoring mechanism.54 15.32 Following a failure to pay and numerous hearings and appeals,55 the Microsoft case finally came to a head in Microsoft Inc v European Commission56 in which the periodic penalty imposed against Microsoft was set at around €860m. Microsoft had complied with an obligation to offer reasonable prices for non-patented and non-inventivetechnologies which helped reduce the final award. At the time of writing, Google were involved in negotiations with the European Commission aimed at ending an Article 102 case against it in relation to its search engine.57 15.33 In parallel with the proceedings before the European Commission, there were proceedings in the United States against the Microsoft Corporation under US anti-trust law. Eventually a settlement was reached between Microsoft and the US Department of Justice and the Attorney Generals of nine States. Microsoft agreed to draw up the specifications of the communication protocols used by the Windows server operating systems in order to ‘interoperate’, that is to say, to make them compatible with the Windows client PC operating systems and to grant third parties licences relating to those specifications on specific conditions. Secondly, Microsoft was required to allow original equipment manufacturers and end users to activate or to eliminate access to its middleware which included Windows Media Player. This was intended to ensure suppliers of media software could develop and distribute products which would function properly with Windows. The settlement was

54

Microsoft Corpn v Commission to the European Communities, Case T-201/04, EU:T:2007:289. 55 Including claims by Microsoft that the obligations failure of which would trigger the periodic payments were insufficiently specified. 56 Case T-167/08, EU:T:2012:323. 57 European Commission, Press Release, 25 April 2013, Commission sought feedback on commitments offered by Google to address competition concerns. See infra for the latest fines imposed on Google and its parent company Alphabet Inc.

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15.34 Competition law affirmed by the Court of Appeals, District of Columbia in Commonwealth of Massachusetts v Microsoft Corp.58

Google’s comparison shopping service and search engine 15.34 Google Inc, now a subsidiary of Alphabet Inc, operated a specialised search engine which displayed results from its own shopping service more favourably than those of third party shopping services. Clearly, this gave Google’s own comparison shopping service an edge over those of competitors. The Commission to the European Communities found that this offended against Article 102 of the TFEU and also Article 54 of the Agreement on the European Economic Area.59 A total fine was imposed by the Commission of around €2.42bn.60 Moreover, the infringement was required to be brought to an end within 90 days of the Commission Decision and Google and Alphabet were ordered to refrain from repeating the infringement or any act or conduct having the same or equivalent object or effect. 15.35 In reaching its conclusion, the Commission took into account the following factors: (a) the national markets for comparison shopping services and general search services are of significant economic importance and, consequently, any anti-competitive behaviour on the markets is likely to have a considerable impact; and (b) throughout the duration of the infringement, Google not only held a dominant position in the 13 national markets for general search services in which the conduct took place, but its market shares were much higher than those of its competitors. The infringement commenced from January 2008 in the UK and Germany and later in the other thirteen Member States. A further factor was the need

58

373 F 3d 1199 (2004). Commission Decision of 27.6.2017 relating to proceedings under Article 102 of the Treaty on the Functioning of the European Union and Article 54 of the Agreement on the European Economic Area, AT.39740 Google Search – (Shopping), Brussels, 27.06.2017 C(2017) 444 final. 60 Around €524m of which was imposed on Alphabet Inc, jointly and severally with Google Inc. 59

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Abuses of a dominant position 15.37 to ensure that the fine had a sufficiently deterrent effect not only on Google and Alphabet, but also on undertakings of a similar size and with similar resources. The Commission also noted that Alphabet Inc had a turnover in 2016 of over €82bn and, as a double-check, the fine was less than 10% of Alphabet’s annual turnover, so no further adjustment was necessary.61 15.36 Under Council Regulation 1/2003,62 the Commission has a discretion to choose between imposing behavioural or structural remedies proportionate to the infringement to bring it effectively to an end (for example, by means of a fine) under Article 7 of that Regulation or to accept commitments made by the undertakings found to have infringed. In the present case, in spite of having at one time considered adopting a decision under Article 9 of the Regulation but, having reverted to the Article 7 procedure, the Commission was entitled to make use of its full powers under the Regulation. 15.37 Almost exactly one year after the above Commission Decision, the Commission fined Google LLC (formerly Google Inc) €4.34bn in respect of its illegal restrictions placed on manufacturers of Android devices and mobile network operators in order to strengthen its dominant position in general search engines and apps.63 Three particular forms of abuse were identified, in particular, being that Google: 1

required manufacturers to pre-install the Google Search app and Browser app (Chrome), as a condition of licensing Google’s app store (the Play Store);

2

made payments to certain large manufacturers and mobile network o perators on condition that they exclusively pre-installed the Google Search app on their devices; and

61

See Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003, OJ C 210, 01.09.2006, p 2 and European Commission, Fines for breaking EU Competition Law, November 2011, available at: http://ec.europa.eu/ competition/cartels/overview/factsheet_fines_en.pdf. 62 Council Regulation 1/2003/EC of 16 December 2002 on the implementation of the rules on competition laid down in Article 81 and 82 of the Treaty, OJ L 1, 04.01.2003, p 1. The references should now be taken to be to Articles 102 and 102 of the TFEU. 63 European Commission, Press Release, 18 July 2018, Antitrust: Commission fines Google €4.34 billion for illegal practices regarding Android mobile devices to strengthen dominance of Google’s search engine. The full text of the Commission Decision was not available at the time of writing.

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15.38 Competition law 3

prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called ‘Android forks’).64

EU ANTITRUST DAMAGES DIRECTIVE65 15.38 Directive 2014/104 provides for actions for damages for infringement of competition law provisions of Member States.66 The UK Competition Act 1998 already had some provisions for actions for damages by persons adversely affected by competition law infringements and these were modified to comply with the Directive, although further amendment may be required after the UK leaves the EU. National implementation of the Directive was required by 27 December 2016. The Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 made the changes necessary to bring the UK Competition Act 1998 in alignment with the Directive.67 15.39 The recitals to the Directive note that the public enforcement of competition rules by the Commission is supplemented by private enforcement by national courts, ruling on competition issues between individuals, plays an equally essential role in applying competition rules. Bearing in mind that undertakings which operate in a number of Member States may be subject to different regimes for redress for infringements of competition rules in different Member States and major infringements may have cross-border impacts, it is important to approximate national procedures and rules applicable to infringements of EU and national competition rules.

64

A ‘fork’ in this context is independent software based on and developed from pre-existing software, often open source software. Forking can be seen as a threat to standardisation but preventing it may lead to undesirable monopolies. When Google develops a new version of Android, it publishes the source code online, see: https://source.android.com/. 65 The following description of the Directive is in outline only and restricted to the most important provisions. 66 Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union, OJ L 349, 05.12.2014, p 1. 67 SI 2017/385. The Regulations came into force on 9 March 2017.

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EU Antitrust Damages Directive 15.42 15.40 Article 1 of the Directive explains that it sets out the rules for ensuring that anyone suffering harm caused by an infringement of competition law (EU and national law) by an undertaking or an association of undertakings (for example, a cartel) can effectively exercise the right to claim compensation for the harm resulting. Rules are also included providing for the enforcement of competition rules by competition authorities and the enforcement of those rules in actions for damages before the national courts. A competition authority means the Commission or national competition authority or both.68 In the UK, the national competition authority is the Competition and Markets Authority. 15.41 Under Article 3, any natural or legal person who suffers harm from an infringement of competition law must be able to claim and obtain full compensation for the harm caused by the infringement. The compensation should be assessed on tortious principles, that is, to place the person harmed by the infringement in the position that person would have been had the infringement not been committed. This is to cover actual loss and loss of profits plus interest. However, full compensation must not lead to overcompensation, whether by means of punitive, multiple or other forms of damages. Article 4 sets out the principles of effectiveness and equivalence between EU and national competition law and procedures, for example, national rules and procedures for infringement of Articles 101 and 102 of the TFEU should not be less favourable to those governing similar actions under national law. 15.42 Articles 5 to 8 deal with discovery of evidence. For example, Article 5 provides that, in an action for damages, national courts may, where a claimant has presented a reasoned justification, order the defendant or a third party to disclose relevant evidence in their control. Likewise, a claimant or a third party may be required to disclose relevant evidence under their control.69 Disclosure of evidence must be precisely and narrowly defined within the reasonably available facts in the reasoned justification and disclosure must also be proportionate considering the legitimate interests of all the parties and third parties. Factors include the extent to which the claim or

68 69

See Article 2 on the definitions used in the Directive. Without prejudice to Council Regulation 1206/2001/EC of 28 May 2001 on cooperation between the courts of the Member States in the taking of evidence in civil or commercial matters, OJ L 174, 27.06.2001, p 1.

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15.43 Competition law defence is supported by the available facts and evidence justifying the request, the scope and cost of the disclosure and the arrangements for protecting any confidential information disclosed. 15.43 Article 6 applies in addition to Article 5 where, in an action for damages, national courts order the disclosure of evidence in a file of a competition authority.70 Additional rules include, inter alia, whether the request for disclosure was specific or non-specific in terms of the nature, subjectmatter or contents of documents submitted to a competition authority; there can be no disclosure until a competition authority has closed its proceedings, where relevant. Furthermore, there can be no disclosure of evidence relating to leniency statements and settlement submissions. A leniency programme applies in relation to Article 102 of the TFEU,71 a participant in a secret cartel cooperates with the competition authority in return for immunity from, or a reduction in fines. A leniency statement is an oral or written submission made to a competition authority for the purpose of obtaining immunity from, or a reduction of fines. It does not include pre-existing information. Essentially, a settlement submission is a voluntary presentation made to a competition a uthority that was drawn up specifically to enable the competition authority to apply a simplified or expedited procedure. 15.44 Other aspects of the Directive cover limitation periods, which must be a minimum of five years, joint and several liability in cases involving joint infringers,72 provisions on overcharges, the passing on of overcharges and rules applicable in the case of indirect purchasers and different levels in the supply chain. An overcharge is the difference between the price actually paid and the price that would otherwise have prevailed in the absence of the infringement of competition law. For example, where the only two suppliers of a particular raw material agree to fix prices at £2,500 per tonne when the

70

Without prejudice to Regulation 1409/2001/EC of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents, OJ L 145, 31.05.2001, p 43. It is also without prejudice to rules and practices under Union or national law for the protection of internal documents of competition authorities and correspondence between competition authorities. 71 Or, equivalent national law. 72 Subject to a derogation, for example, where the undertakings market share is less than 5% during the period of infringement and the application of normal rules of joint and several liability would irretrievably jeopardise its economic viability and cause its assets to lose all their value: Article 11.

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Exhaustion of rights 15.45 previous price was £1,850 per tonne and there are no other factors contributing to the price differential, the overcharge would be £650 per tonne. Manufacturers buying the raw material would be affected and they would be likely to raise the price they charge for the manufactured product. The Directive requires Member States to lay down procedural rules to avoid overcompensation. Other aspects of the Directive cover consensual dispute resolution and its effects, suspensive and otherwise. The Commission is required to review the Directive and submit a report on the Directive to the European Parliament and the Council by 27 December 2020.73

EXHAUSTION OF RIGHTS 15.45 Articles 34 and 35 of the TFEU prohibit, as between Member States, quantitative restrictions on imports and exports and all measures having equivalent effects. Article 36 derogates from this if justified for a number of reasons, including the protection of industrial and commercial property, providing that they do not constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. These provisions give effect to one of the key aims of the TFEU, being the freedom of movement of goods. This has resulted in the doctrine of exhaustion of rights.74 In context, this means that the owner of an intellectual property right cannot use that right to interfere with the further commercialisation of goods which have been placed on the market within the EEA by or with the consent of the owner of the right.75 Thus, the owner of copyright or related rights in computer software who sells copies on tangible media, such as a compact disk or DVD, within the EEA cannot complain if someone acquires them legitimately and exports them to another Member State of the EEA and resells them there. The functioning of the internal market would be prejudiced otherwise, and owners of intellectual property rights would be able to sell the relevant goods at different prices in different Member States, thereby partitioning the market.

73

Being four years after the compliance date of the Directive. Although of general application, some Directives and EU Regulations make express provision for exhaustion of rights, for example, in respect of the trade marks Directive, the EU trade marks Regulation and the Community design Regulation. 75 The doctrine applies on the scale of the EEA. The effect of Article 36 in this setting allows a rightholder to object to the further commercialisation of his goods where the condition of the goods has been changed or impaired after being put on the market. 74

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15.46 Competition law 15.46 The doctrine of exhaustion of rights does not apply to works and other subject matter which are made available online. Recitals 28 and 29 of the Directive on copyright in the information society76 make this clear. Exhaustion only applies where the original work or copies of it have been sold by the rightholder or with his consent. In particular: The question of exhaustion does not arise in the case of services and on-line services in particular. This also applies with regard to a material copy of a work or other subject matter made by a user of such a service with the consent of the rightholder.77 15.47 The principle of exhaustion of rights does not extend to goods placed on the market outside the EEA.78 This means that the owner of an intellectual property right may still enforce his rights to prevent importation into the EEA. For example, the jeans manufacturer Levi Strauss & Co could prevent Tesco importing and selling in the UK jeans sourced in the US and Mexico.79 Nevertheless, enforcing rights in respect of goods first placed on the market outside the EEA could, in the right circumstances, be considered to be an abuse of a dominant position under Article 102 TFEU.80 In Micro Leader Business v Commission to the E uropean Communities,81 a French company, Micro Leader, imported into France, French language copies of Microsoft software which it had purchased in Canada. Eventually, Micro Leader was unable to obtain further copies and brought an action based on a breach of Articles 101 and 102 by Microsoft Corporation. The Court of First Instance (now General Court of the EU), in annulling the decision of the Commission in rejecting the complaint,82 ruled that, although the holder of a copyright could prevent the importation of goods into the EEA which had been placed on the market outside the EEA, this is not a breach of Article 102, per se. However, in exceptional circumstances it could be.

76

77 78 79 80 81 82

Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10. Recital 29. See also, Articles 3(3) and 4(2) of the Directive. Or, in the case of Community-wide rights, the EU. Zino Davidoff AG v A & G Imports Ltd and Levi Strauss & Co v Tesco Stores Ltd, Joined Cases C-414/99 to C-416/99, EU:C:2001:617. Or Article 54 of the EEA Agreement, as appropriate. Case T-198/98, EU:T:1999:341. On the basis of a manifest error of assessment of the evidence.

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Exhaustion of rights 15.50 15.48 Until the recent change from analogue to digital terrestrial broadcasting, manufacturers of games consoles sometimes took advantage of differences in television standards in various parts of the world. All of Europe, apart from France, used the PAL system. The US and Japan each had their own systems. This meant that a game bought in Japan would not work on a UK television set and vice versa. 15.49 In Sony Computer Entertainment Inc v Ball83 the defendants made, sold and installed computer chips, called ‘Messiah2’. These allowed Sony PlayStation consoles to play Sony’s games imported from other parts of the world. The games CDs and DVDs contained embedded codes recognised by the consoles. It was described by the judge as a lock and key system. Copying the CDs and DVDs using standard copying equipment did not copy the embedded codes. Because of different television standards in different parts of the world Sony was able to prevent the importation into Europe of games sold in the US and Japan. The Messiah2 chips overcame this form of copy-protection by tricking the console into believing that the CD or DVD contained the relevant embedded codes. Not only could games imported from other parts of the world be played but unauthorised copies of the games could also be played. A defence submission that the technical device had to be contained in the computer program rather than the hardware was rejected by the judge. He said that there was nothing in the wording of section 296 of the Copyright, Designs and Patents Act 1988 which limited where the device should be. The device was applied to the computer program whether it was on the program or the hardware which read it or both.84 15.50 There was no submission made about whether Sony’s activities amounted to an abuse of a dominant position. Although the doctrine of exhaustion of rights does not apply to goods first put on the market outside the EEA, it is arguable that Sony’s practices amounted to an abuse of

83 84

[2004] EWHC 1738 (Ch), [2005] FSR 9. Before amendment, section 296 applied to all forms of copyright work, not just computer programs, and was clearer in that all it required was that the work was issued to the public in electronic form which was copy-protected. Copy-protection was defined as including any means intended to prevent or restrict copying of a work. Now, forms of copyright works other than computer programs are covered by the provisions in sections 296ZA to 296ZF of the Copyright, Designs and Patents Act 1988.

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15.51 Competition law a dominant position. It would, however, depend on whether there were particular abuses present such as excessive pricing in the EEA. The Article 102 point was not raised in the proceedings.85 Although the defendant’s chips could be used to enable games imported into the EEA to be played on consoles plugged into televisions bought in the EEA, the main purpose may well have been to facilitate the making and playing of unauthorised ‘pirate’ copies of games originally sold within the EEA. If that was so, one can have little sympathy for the defendant.

Parallel imports 15.51 The doctrine of exhaustion is important to parallel importers. Particularly in relation to pharmaceuticals, the parallel importer may have to repackage goods and/or apply the proprietor’s trade mark, especially where the trade mark proprietor uses different trade marks in different Member States. As a general rule, reliance on trade mark rights to oppose the subsequent commercialisation of goods put on the market in the EU by or with the consent of the trade mark proprietor must not lead to the artificial partitioning of the markets between Member States. Moreover, it must be objectively necessary for the parallel importer to repackage the goods in order to market the product in the Member State of importation.86 15.52 The existence of any prejudice amongst consumers or pharmacists against the use of anything but the trade mark name could mean that, without using the proprietor’s trade mark, market access by a parallel importer in the importing country was not effective. In Speciality European Pharma Ltd v Doncaster Pharmaceuticals Ltd,87 the practice amongst pharmacists was to supply the trade mark drug when filling generic prescriptions. A significant part of the market at the level of the prescribing doctor and the pharmacist was inaccessible to the parallel importer and the adoption of its own trade mark brand was not a realistic option. Thus, the enforcement of the proprietor’s trade mark in the light of national practices did result in an

85

Articles 101 and 102 and the equivalent provisions in the Competition Act 1998 may be raised as a defence in proceedings. 86 See Bristol-Myers Squibb Co v Paranova A/S, Joined Cases C-427/93, C-429/93 and C-436/93, EU:C:1996:282 which sets out the criteria applicable to repackaging and trade marks. 87 [2015] EWCA Civ 54, [2015] RPC 20.

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Freedom to provide services 15.54 artificial partitioning of the market, meaning that enforcement of the trade mark against the parallel importer was in conflict with the second sentence in Article 36 of the TFEU which states: The provisions of Articles 34 and 35 shall not preclude prohibitions or restrictions on imports, exports or goods in transit justified on grounds of public morality, public policy or public security; the protection of health and life of humans, animals or plants; the protection of national treasures possessing artistic, historic or archaeological value; or the protection of industrial and commercial property. Such prohibitions or restrictions shall not, however, constitute a means of arbitrary discrimination or a disguised restriction on trade between Member States. (emphasis added.)

FREEDOM TO PROVIDE SERVICES 15.53 Article 56 of the TFEU prohibits restrictions on the freedom to provide services within the EU.88 In Football Association Premier League Ltd v QC Leisure,89 the Football Association Premier League (FAPL) granted licences of three-year duration to broadcasters such as BSkyB to allow them to show broadcasts of English Premier League football matches to their viewers. The licences were granted through an open competitive tendering system in which broadcasters could bid on a global, regional or territorial basis. Because most broadcasting organisations are based territorially, most of the licences were limited to the territory of the broadcaster. The licence agreements required the broadcasters: ••

to encrypt the broadcasts;

••

not to allow the public outside the licensed territory to receive the broadcasts;

••

not to supply decoders and cards to operate the decoders to persons who would use them to receive the broadcasts outside the licensed territory.

15.54 By means of its licences, FAPL maximised the revenues from broadcasts of football matches on behalf of its members which included the

88 89

The EEA Agreement contains an equivalent provision in Article 36. Joined Cases C-403/08 and C-429/08, EU:C:2011:631.

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15.55 Competition law English Premier League football clubs. Because of differences in disposable income and interest in the matches, the licences in some countries, especially the UK, were considerably more expensive than in some other countries, such as Greece. Some of the defendants had obtained decoders and cards from Greece, apparently by giving the Greek licensee false names and addresses. They then sold the decoders and cards in the UK to public houses, bars and restaurants. Proceedings were commenced against these defendants under section 298 of the Copyright, Designs and Patents Act 1988 for importing, selling or distributing apparatus designed or adapted to c ircumvent encrypted broadcasts. In a second joined case, one Mrs Murphy, the manager of a public house90 in which a foreign decoder was being used had been prosecuted under section 297(1) of the Copyright, Designs and Patents Act 1988 (dishonest reception of a programme included in a broadcast with intent to avoid payment). In both cases, the English courts submitted questions to the Court of Justice of the EU for a preliminary ruling under Article 267 of the TFEU. 15.55 The Court of Justice held, inter alia, that national law making it unlawful to import, sell and use foreign decoding devices giving access to encrypted satellite broadcasts from another Member State which includes material protected in that first State, is contrary to the freedom to provide services under Article 56 of the TFEU. This was so even though the decoders and/or cards in question had been obtained or enabled by giving a false identity and address with the intention of circumventing the territorial limitation. Nor was it affected by the fact that the decoders or cards had been supplied for private use but had been used for commercial purposes. 15.56 Owners of intellectual property rights are entitled to exploit their works commercially in return for an appropriate remuneration, and payment of a premium for territorial exclusivity may be acceptable. However, in a case such as the present one, where broadcasters are effectively involved in an ‘auction’ for territorial broadcast rights, this results in artificial price differences in partitioned national markets. This is irreconcilable with a fundamental aim of the TFEU which is the completion of the internal market. 15.57 Although the price differentials were contrary to the functioning of the internal market, they reflected commercial reality in that broadcasters

90

The Red White and Blue public house, Southsea.

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Freedom to provide services 15.57 of encrypted services in one Member State, such as the UK, might be able to charge subscribers more than in other Member States, such as in Eastern Europe. One would expect private individual viewers and commercial enterprises such as public houses in the UK would be better able and prepared to pay considerably more than in other countries such as Greece where the percentage of the population interested in the English Premier League might not be so great, nor their ability to pay the same as in the UK.

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Chapter 16

Jurisdiction and intellectual property aspects of information technology

INTRODUCTION 16.1 Intellectual property rights are territorial in nature. Thus, a UK patent extends to the territory of the UK only1 and cannot be infringed by activities performed outside the territory of the UK.2 If patent protection is required elsewhere, patents must be obtained for those other territories. There are some exceptions to this basic rule. European Union-wide rights such as the EU trade mark or Community design afford protection throughout the territory of the EU.3 Some rights are extended to associated territories, for example, UK patents have force in the Channel Islands and the Isle of Man. Because of the Berne Convention for the Protection of Literary and Artistic Works, Convention Countries must extend their protection to nationals of other Convention Countries.4 But, overall, the general rule is that intellectual property rights apply only in the territory in respect of which they were acquired and may only be litigated in those territories.5 1 2

3 4

5

And to some other countries to which the UK patent has been extended by legislation. For example, in Lacroix Duarib SA v Kwikform (UK) Ltd [1998] FSR 493, the defendant made scaffolding in the UK to be used in large hollow structures in South Korea. However, the scaffolding was only in collapsed form in the UK and was assembled in South Korea. The patent did not extend to the collapsed form and, therefore, there was no infringement of the UK patent. Any acts within the claims of the patent took place only in Korea. Database protection under the Directive on the legal protection of databases has been extended to the Isle of Man which is not part of the EU. Thus, if I have a UK copyright and its subject matter is copied in France, I have the same rights as a French citizen to bring proceedings in France. An early example of litigation brought on this basis was Hanfstaengl v Empire Palace [1894] 2 Ch 1 in which a German author sued in London on the basis of an alleged infringement of his artistic work by a tableau vivant in a London Theatre. There are exceptions, such as where co-defendants are domiciled in different Member States under Article 8(1) of Regulation 1215/2012/EU, discussed infra.

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Layout of this chapter 16.3

LAYOUT OF THIS CHAPTER 16.2 Before looking at the present situation there is a brief description of the development of the rules on jurisdiction. This is intended to give a better insight into the present position, particularly within the EEA which is covered by an EU Regulation on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the ‘Regulation on jurisdiction’).6 There is an equivalent and parallel Convention, the Lugano Convention,7 which extends similar rules to the remaining Member States of the EEA, apart from Liechtenstein, and also applies to Denmark and Switzerland. In applying these rules, two points are important. First, infringement of intellectual property rights is a tort and, secondly, there are rules providing for exclusive jurisdiction where the registration or validity of rights such as patents, registered trade marks and registered designs are concerned.8 There follows a brief discussion of the modification of these rules as they apply to EU-wide rights, such as the EU trade mark. 16.3 We then turn our attention to jurisdiction in relation to specific rights in the context of the internet and websites. Some mention is made of the basic rules that apply to patents which can only be described as unsatisfactory but which, hopefully, will be eased by the introduction of a unitary patent system and the Unified Patent Court administered by the European Patent Office (EPO).9 As placing a trade mark, for example, on a website is not, per se, tantamount to using it in a trade mark sense globally, the courts here and in other jurisdictions have developed tests for determining the territories in which a website advertiser targets his customers.

6

7 8

9

Regulation 1215/2012/EU of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (recast), OJ L 351, 20.12.2012, p 1. This replaces, as from 10 January 2015, Council Regulation 44/2001/EC of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, L 12, 16.01.2001, p 1. In this chapter, reference will be made to the provisions of the 2012 Regulation, as amended. However, under the transitional arrangements in Article 66, the previous Regulation applies in respect of legal proceedings instituted on or after 10 January 2015. The latest version is dated 2007 which entered into effect on 1 January 2010. That is, rights which are subject to registration or by deposit (for example, of a sample). Actions concerning the registration or validity of these rights can only be heard before the courts of the State in which they are registered. Whether this will apply to the UK is in the balance because of Brexit.

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16.4 Jurisdiction and intellectual property aspects of IT

DEVELOPMENT OF RULES ON JURISDICTION 16.4 Before proceeding further, it is useful to quickly look at previous law on jurisdiction which has now largely been swept aside but can explain the somewhat cautious approach of the English courts. A basic principle that used to apply was that the courts in England would not interfere in a case that would impinge on the sovereignty of another state. The first major case was British South Africa Co v Companhia de Moçambique.10 The House of Lords confirmed that the courts in England had no jurisdiction to hear an action concerning the entitlement to, or the right of possession of, land situated in another country. This rule can explain the provisions in the jurisdiction Regulation concerning land11 and rights registered or obtained by deposit12 in other Member States. Another old rule was that in Phillips v Eyre13 in which it was held that for a tort, committed outside England, to be actionable in England must constitute a tort both in England and in that other country. This became known as the ‘double-actionability rule’ and was one reason why the courts eventually recognised that they lacked jurisdiction to hear intellectual property cases involving foreign rights.14 For example, in the Australian case of Potter v Broken Hill Pty Co Ltd,15 it was pointed out that, as intellectual property rights are territorial, a New South Wales patent could not be infringed by acts taking place in Victoria. This was followed in cases such as Tyburn Productions Ltd v Conan Doyle16 which applied the rule to copyright. However, because of the intervention of the European Conventions and Regulations on jurisdiction, these no longer apply in relation to intellectual property rights within the EU and EEA where the Regulations and Conventions on jurisdiction apply. 16.5 In a case involving the helmets worn by the Imperial storm-troopers in the ‘Star Wars’ films, Lucasfilm Ltd v Ainsworth,17 the Supreme Court 10 11 12 13 14 15 16 17

[1893] AC 602. Article 24(1) gives exclusive jurisdiction to a Member State in relation to rights in rem or tenancies exceeding 6 months of immovable property situated in that Member State. Article 24(2). In some Member States, utility model protection is obtained in some countries by deposit as is plant variety protection. (1870) LR 6 QB 1. The double-actionability rule was abolished by section 11(1) of the Private International Law (Miscellaneous Provisions) Act 1995 as regards torts committed after 1 May 1996. (1906) 3 CLR 479. [1991] Ch 75 involving alleged US copyrights in Sherlock Holmes novels. [2011] UKSC 39, [2012] 1 AC 208. The court also held that the helmets were not sculptures.

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Development of rules on jurisdiction 16.6 considered whether a claim of infringement of a United States copyright was justiciable in the UK providing it had in personam jurisdiction over the defendant.18 It held that this was the case, overruling Tyburn v Conan Doyle. Moreover, this jurisdiction could extend to questions of validity of foreign intellectual property rights except those subject to registration or deposit in another country, in which case that other country has exclusive jurisdiction. The policies underlying the Regulation on jurisdiction, and the broadly equivalent Lugano Convention, clearly have in mind that fact that torts committed in one Member State can be heard in other Member States, subject to the rules set out in the Regulations.19 16.6 The doctrine of forum non conveniens meant that a court might refuse jurisdiction on the basis that it was not the most appropriate court to hear the action and that the courts of another country might be best suited to hear the action. This could take account of factors such as the applicable law, the location of the evidence and residency and nationality of witnesses and the enforceability of witnesses. Guidelines were set out by Lord Goff in the leading case of Spiliada Maritime Corpn v Cansulex Ltd.20 The Regulation on jurisdiction makes no mention of the doctrine but the position was unclear where the case involved a party outside the EU. In Owusu v Jackson21 the claimant, domiciled in England, was on holiday in Jamaica at a villa owned by the first defendant, who was also domiciled in England. The claimant was badly injured after diving into the sea nearby and commenced proceedings in England against the defendant and three other Jamaican defendants involved in one way or another in the management of the beach. The Court of Justice of the EU confirmed that the basic rule (defendants should be sued in the courts of the country in which they are domiciled) still applies even where only one country is a party to the Regulation on jurisdiction.

18

As it did here as the defendant was a British citizen. Moçambique rule still has limited applicability as regards disputes as to entitlement to land situated in countries outside the EEA. It must still apply to actions involving the registration or validity of intellectual property rights registered in countries outside the EEA. It would be unthinkable, for example, for an English court to rule on the validity of a United States patent. 20 [1987] AC 460. The case involved a Liberian owned vessel chartered to carry a load of sulphur from Vancouver to India. The vessel was damaged as a result of the cargo being wet when loaded. 21 Case C-281/02, EU:C:2005:120. The case concerned the Brussels Convention, the forerunner of the Regulation on jurisdiction. 19 The

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16.7 Jurisdiction and intellectual property aspects of IT There was no room for the doctrine of forum non conveniens even in such a case.22 The basic rule in the Regulation was mandatory. Consequently, the doctrine has very limited scope now. It might still apply to cases outside the scope of the Regulation or to cases where the jurisdiction of constituent parts of the UK are involved.23

THE ‘BRUSSELS REGULATION’ AND THE BASIC RULES 16.7 In the EU, the Regulation on jurisdiction applies.24 In particular, this Regulation25 sets out rules determining where legal proceedings can take place and the enforcement of judgments in other European countries. As the provisions of the new recast Regulation largely follow those of the previous Regulation for the purposes of this chapter, reference will be made to the new Regulation unless otherwise inappropriate. The Regulation has been amended twice. First, to take account of the ‘common courts’, being the Unified Patent Court26 and the Benelux Intellectual Property Office. The second provides for a certificate in relation to judgments in commercial and civil matters. The following description covers only those parts relevant to intellectual property

22

23

24

25

26

See also Lungowe v Vedanta Resources Plc [2016] EWHC 975 (TCC), [2016] BCC 774 confirming that Zambian citizens could bring a claim against the English parent company and its Zambian subsidiary in the English courts in relation to personal injury claims. The company’s appeal against that decision was dismissed in Lungowe v Vedanta Resources plc [2017] EWCA Civ 1528, [2017] BCC 787. A further appeal is pending. Sawyer v Atari Interactive Inc [2005] EWHC 2351 (Ch). The Scottish claimant established that England was the most appropriate forum, especially as the contract between the parties was subject to English law. The new Regulation applies as from 10 January 2015. There is a parallel Convention, the Lugano Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, 1988 revised in 2007. Signatories are the EU, Iceland, Norway, Switzerland and Denmark. The latter, although an EU Member State is covered by the Lugano Convention in preference to the Regulation. If the UK leaves the EU, the UK will most likely ratify the Lugano Convention. References to the Regulation on jurisdiction relate to this Regulation which is equivalent, mutatis mutandis, to the previous Regulation, which applied to legal proceedings commenced prior to 10 January 2015. However, many cases still refer to the previous Regulation and, where this is so, there is a reference to the equivalent provision under the new Regulation, usually given in a footnote. If it comes into operation.

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The ‘Brussels Regulation’ and the basic rules 16.10 issues and aspects of information technology related to malicious falsehood and defamation. 16.8 The basic rule is set out that defendants domiciled in a Member State should be sued in that Member State, whatever their nationality.27 However, there then follows a number of exceptions to that basic rule. Where the matter relates to tort (or, in Scotland, delict or quasi-delict), as an alternative, the defendant may be sued in the Member State in which the tort occurred or may occur.28 This will apply, for example, to claims in negligence, defamation or malicious falsehood. Infringement of intellectual property rights is, in most cases, also a tort. Where there are a number of defendants and the claims are so closely connected that it is expedient to hear them together to avoid the danger of irreconcilable judgments resulting from separate hearings, proceedings may be brought against them all in any Member State in which any of them are domiciled.29 16.9 There is an important caveat to these rules and, under Article 24(4), the courts of a Member State have exclusive jurisdiction in a case where a patent, trade mark, design or other right is protected by registration or deposit in that Member State and the registration or validity of the right is in issue. However, in respect of the equivalent provision under the previous Regulation,30 the Court of Justice of the EU ruled that it should be narrowly construed and did not apply to proceedings to determine whether a particular person has been correctly registered as the proprietor of a registered trade mark.31 16.10 There is thus a distinction between ‘hard IPR’ (that is rights obtained through registration or deposit) and ‘soft IPR’ (such as copyright and related rights) and other torts. For the latter, Article 24(2) is inapplicable. The following figure sets out the position and may help to understand the application of the rules. 27

Article 4 of the Regulation. Article 7(2). Of course, infringement of an intellectual property right is a tort, apart perhaps from the case of breach of confidence which is a creature of equity: see, for example, Conductive Inkjet Technology Ltd v Uni-Pixel D isplays Inc [2013] EWHC 2968 (Ch), [2014] FSR 22. 29 Article 8(1). 30 Article 22(4) of Regulation 44/2001. 31 Hanssen Beleggingen BV v Prast-Knipping, Case C-341/16, EU:C:2017:738. 28

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Is the case concerned with the registration or validity of hard IP?

660

YES

NO

How many defendants are there?

More than 1

1 ONLY

Proceedings may be brought in: Proceedings must be brought in the Member State in which the right is registered or protected through deposit

(a) Member State in which defendant is domiciled, or (b) In Member State in which harmful event occurred or may occur (where the damage occurred or where the event giving rise to the damage took place).

Figure 16.1 Where proceedings may be brought in the EU

Are the claims so closely connected that it is expedient to hear the case against them together?

YES

NO

Separate proceedings must be brought in:

Proceedings may be brought in:

(a) each Member State in which each defendant is domiciled, or (b) in the Member State(s) where harmful event(s) occurred or may occur

(a)

any Member State in which any are domiciled, or (b) in Member State where harmful event occurred or may occur

16.10 Jurisdiction and intellectual property aspects of IT

Start

The ‘Brussels Regulation’ and the basic rules 16.13 16.11 The rule in Article 24(2) does not apply in a case involving ‘hard ip’ unless the registration or validity are in issue. For example, in Celltech Chiroscience Ltd v Medimmune Inc,32 Jacob J ruled on whether certain acts fell within the scope of the claims of a US patent, applying US patent law.33 There had been no challenge to the validity of the patent. However, this is a rare example and in the vast majority of cases validity is put in issue. For defendants it is often a most attractive form of defence. If the right is ruled invalid wholly or to a relevant extent, there is no infringement no matter how close the copy. If Article 24(2) applies, it matters not whether the issue of validity applies in respect of a claim or counterclaim.34 16.12 The final point to note about the Regulations for our purposes is that once proceedings are commenced in the courts of one Member State,35 the courts in other Member States must stay proceedings until such time as jurisdiction in the first court is established where the same parties and cause of action is involved.36 This is to prevent parallel proceedings in the courts in different Member States between the same parties on the same issues. For example, X owns a UK copyright. Y is domiciled in Italy and makes infringing copies of the work on behalf of Z, domiciled in the UK, who imports the infringing copies into the UK. One would expect that X would bring proceedings in the UK against Y and Z.37 However, Z might commence proceedings in Italy for a declaration of non-infringement. If proceedings are commenced first in the UK, the Italian courts must decline jurisdiction, and vice versa. 16.13 Where related actions are pending in the courts of different Member States any court other than the first seised may stay proceedings.38 Actions are related if they are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting 32 33

34 35 36 37 38

[2002] EWHC 2167 (Pat), [2003] FSR 433. The parties were the licensor and licensee to a licence agreement which was stated as being subject to English law and the sole jurisdiction of the English courts. The jurisdiction Regulation allows parties to agree as to which country has jurisdiction: Article 25. Gesellschaft für Antriebstechnik mbH & Co. KG v Lamellen und Kupplungsbau Beteiligungs KG, Case C-4/03, EU:C:2006:457. That is, the relevant court is the court ‘first seised’. Article 29. X can choose to sue in Italy or the UK. Article 30. A court is deemed seised when the document initiating proceedings is first lodged with the court and the necessary steps are then taken: Article 32(1).

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16.14 Jurisdiction and intellectual property aspects of IT from separate proceedings.39 However, this is not a mechanical test as under the exclusive jurisdiction test under Article 24 and the court is not bound to consider actions to be related simply because there is a risk of irreconcilable judgments.40 In FKI Engineering Ltd v Stribog Ltd,41 proceedings were brought between the parties in England and in Germany. The German proceedings were first in time but soon after the English proceedings had been initiated, the German proceedings were modified so to include the same cause of action as in the English case. The Court of Appeal held that the correct way of applying the Regulation on jurisdiction was: ••

first, determine which court was first seised (rather than look at the particular issues at this stage);

••

secondly, consider whether the issues were related so that there was a risk of irreconcilable judgments;

••

if this was so, the court first seised had jurisdiction and the second court had a discretion to stay the action which it should exercise.

We now turn to the working of the rules of jurisdiction applicable to copyright and related rights, patents, design rights and trade marks. First, for the sake of completeness, the position with EU-wide rights are considered.

European Union wide rights 16.14 The European Union trade mark and Community design are effective throughout the territory of the EU. The question is in which Member State may an action involving either of those rights be brought. Both the EU Trade Mark Regulation and the Community Design Regulation each contain their own rules for determining jurisdiction. Each Member State has designated EU trade mark courts and Community design courts.42 These courts have exclusive jurisdiction, subject to the rules determining which country has actual jurisdiction, in cases concerning infringement, threats, declarations of non-infringement and counterclaims for revocation or invalidity.

39

Article 30(3). Research in Motion UK Ltd v Visto Corporation [2008] EWCA Civ 153, [2008] FSR 20. 41 [2011] EWCA Civ 622, [2011] 1 WLR 3264. 42 For example, in England and Wales these are the Patents County Court, the High Court and the Court of Appeal. 40

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The ‘Brussels Regulation’ and the basic rules 16.18 16.15 Determining which country has actual jurisdiction depends on an application of the Regulation on jurisdiction as amended for the EU-wide rights. They are: 1

the Member State in which the defendant is domiciled, or if not domiciled in any Member State, a Member State where he has his establishment;

2

where (1) does not apply, the Member State in which the claimant is domiciled or his establishment if not domiciled in any Member State;

3

if neither (1) nor (2) apply, proceedings must be brought in the Member State in which the European Union Intellectual Property Office is situated, presently Spain.

16.16 In Tech 21 UK Ltd v Logitech SA,43 a claim was brought in England for a declaration of non-infringement of an unregistered Community design. However, Articles 81(b) and 82(1) of the Community Design Regulation states that an action for a declaration of non-infringement must be brought in the Member State in which the defendant is domiciled, or if not domiciled in any Member State, the Member State in which the defendant has an establishment. Logitech was not domiciled in any Member State but had establishments in the Netherlands and Croatia and it was in either of those Member States in which the action must be brought. Consequently, the English court had no jurisdiction. 16.17 There are some other possibilities, for example, in preference to the above, the parties may agree in which Member State the EU trade mark courts or design courts should have jurisdiction. This is likely to be most relevant in the context of an assignment or licence agreement. A further possibility is that an action may be brought in the relevant courts in the Member State where infringement is alleged to have taken place or may take place. 16.18 These rules do not always operate as effectively as they should. In Samsung Electronics (UK) Ltd v Apple Inc,44 the English Chancery Division, acting as a Community design court, was the court first seised. HHJ Birss QC gave judgment to the claimants, holding that the defendants’ 43

[2015] EWHC 2614 (Ch), [2016] FSR 14. See also, Bayerische Motoren Werke AG v Acacia Srl, Case C-433/16, EU:C:2017:550. 44 [2012] EWHC 1882 (Pat), [2013] ECDR 1.

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16.19 Jurisdiction and intellectual property aspects of IT Community registered design was not infringed by the claimant. This declaration of non-infringement had EU-wide scope. However, the defendants issued proceedings in Germany and the courts there eventually granted a pan-European injunction against Samsung. Apparently, the German courts proceeded on the basis that it was the court first seised as the action was brought against Samsung (UK) Ltd’s German subsidiary not Samsung (UK) itself. As Sir Robin Jacob said in the Court of Appeal,45 this was commercially unrealistic. To all intents and purposes, they were the same undertaking. In any case, the German courts should not have tried to interfere with the grant of the EU-wide declaration of non-infringement, After all, the English court was acting as a Community design court. 16.19 Showing images of goods on a website and how they correspond with goods protected by Community designs may fall within the limitation of ‘citation’ under Article 20(1)(c) of the Community Design Regulation, if the purpose is to explain the use of goods shown as accessories and the like, subject to the conditions in that provision.46 The Court of Justice of the EU so ruled in Nintendo Co Ltd v BigBen Interactive.47 In that case, BigBen in France made remote controls and accessories compatible with the claimant’s Wii video console. It sold to consumers in France, Belgium and Luxembourg via its website. It also sold remote controls and accessories to BigBen G ermany which then sold these via its website to consumers in Germany and Austria. 16.20 An action was commenced before the Dusseldorf High Regional Court which referred a number of questions to the Court of Justice of the EU for a preliminary ruling. The jurisdiction of the German court was based on Article 89(1) of the Community Design Regulation in respect of BigBen Germany and under Article 6(1) of the then applicable Brussels R egulation48 in respect of the French co-defendant, which made and supplied the German

45

Samsung Electronics (UK) Ltd v Apple Inc [2012] EWCA Civ 1339, [2013] FSR 9. If this was compatible with fair trade practice, it does not unduly prejudice the normal exploitation of the design and mention of the source is given. This being a matter for the national court. 47 Joined Cases C-24/16 and 25/16, EU:C:2017:724. 48 Now Article 8(1) of the current Regulation allowing a co-defendant to be sued in another Member State where the claims are so closely connected that it is expedient to hear and determine them together to avoid the risk of irreconcilable judgments resulting from separate proceedings. 46

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Copyright and related rights 16.22 defendant with goods which it sold. The Court of Justice ruled that a Community design court may, at the applicant’s request, adopt orders in respect of the French co-defendant with measures under Article 88(2) providing for the application of national law by the court in matters not covered by the Community Design Regulation. The supplementary orders sought by Nintendo included discovery of information, accounts and documents, orders for compensation and destruction or recall of the goods in question, publication of the judgment and reimbursement of lawyer’s fees. Importantly, the Court confirmed that a Community design court could make such orders with a scope extending throughout the EU. 16.21 Article 8(2) of Rome II49 states that: In the case of a non-contractual obligation arising from an infringement of a unitary Community intellectual property right, the law applicable shall, for any question that is not governed by the relevant Community instrument, be the law of the country in which the act of infringement was committed. In Nintendo v BigBen Interactive, the Court of Justice also ruled that ‘the country in which the act of infringement was c ommitted’ meant the country where the event giving rise to the damage occurred. Where the same defendant is accused of various acts of infringement in various Member States, the correct approach for identifying the event giving rise to the damage is not to refer to each alleged act of infringement, but to make an overall assessment of that defendant’s conduct in order to determine the place where the initial act of infringement at the origin of that conduct was committed or threatened by it.

COPYRIGHT AND RELATED RIGHTS 16.22 Although copyright is, as with other intellectual property rights, a territorial right, Article 5 of the Berne Convention for the Protection of Literary and Artistic Works 1886 requires that authors, who are nationals of other Convention countries, enjoy the same rights as those enjoyed by the nationals of the country in question. This means that a UK national, for example, can bring proceedings in any Convention country where his copyright is being infringed. In terms of the EU, all Member States protect 49

Regulation 864/2007/EC of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II), OJ L 199, 31.07.2007, p 40.

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16.23 Jurisdiction and intellectual property aspects of IT copyright and related rights automatically under the Directive on copyright and related rights in the information society.50 But, because copyright and related rights are territorial, an author of a copyright work has, in effect, 28 separate copyrights in the work, one for each Member State of the EU.51 The author may bring infringement actions in each of the Member States in which territory the copyright is infringed. Where the infringing work is made available on a website, theoretically, an action can be commenced in each and every Member State. However, there may be significant differences in the quantum of damages in different Member States. 16.23 In Gareth Pearce v Ove Arup Partnership Ltd,52 the claimant, a British citizen, created architectural drawings for a new town hall for London Docklands. He claimed he had a UK copyright and a Dutch copyright in the drawings. He alleged that the second and third defendant copied his plans and used them to construct a building called the Kunsthal in Rotterdam, built by the first defendant. The fourth defendant was the owner of the building. On that basis, the claimant alleged there was an infringement of his Dutch copyright. He sued in England on the basis of the then applicable Brussels Convention, Article 6(1),53 in that at least one of the defendants (the civil engineers engaged for the construction of the Kunsthal) was domiciled in the UK. One of the main issues in the case was whether the action was justiciable in the English courts.54 16.24 The English court accepted that it had jurisdiction to hear the claim of infringement of Dutch copyright against the first, English domiciled defendant and, by the operation of Article 6(1) of the Convention, the court also had jurisdiction to hear the action against the other defendants.55 Lloyd J remarked

50

51 52 53

54 55

Directive 29/2001/EC of the European Parliament and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society, OJ L 167, 22.06.2001, p 10. At least until the UK leaves the EU. [1997] FSR 641, approved by the Court of Appeal in Fort Dodge Animal Health Ltd v Akzo Nobel NV [1998] FSR 222, a patent case. This was replaced by the Brussels Regulation, in turn soon to be replaced by the new Regulation on jurisdiction: see Article 8(1). The basis was that the actions between the defendants were so closely connected that it would be expedient to hear them together. The other main issue was whether the action should be struck out as an abuse of process, being purely speculative. On this point the defendants succeeded. Before the Brussels Convention and the Regulations on jurisdiction, the Moçambique rule and the double actionability rule would have prevented this result. See British South Africa

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Copyright and related rights 16.25 on the possibility of ‘forum shopping’, where a claimant takes into account the procedures and remedies available in different States where he has a choice, and accepted that, in appropriate circumstances, an English court might not be able to refuse jurisdiction to hear cases involving, for example, infringement of the French law of privacy or the German law of unfair competition or some other action in foreign law not having a direct equivalent in English law.56 However, at first instance, in the Gareth Pearce case, Lloyd J struck out the action as being an abuse of process as there was insufficient similarity between the drawings submitted by the claimant and those for the building in Rotterdam. The claimant appealed to the Court of Appeal,57 which confirmed that the English courts had jurisdiction but dismissed the appeal. Not only can an English court deal with issues of infringement of a foreign copyright where subsistence is not an issue, in appropriate cases, it can also deal with subsistence of a foreign copyright.58 16.25 What is the position if someone places a work of copyright on the internet,59 without the licence of the copyright owner, so that it may be viewed and downloaded by anyone accessing it? We have seen in Chapter 7 that there a number of provisions to deal with issues like this, some of which involve criminal offences in the UK.60 Following Lucasfilm v Ainsworth, jurisdiction should not be an issue provided the relevant acts take place in jurisdiction or the defendant (or one of them in closely connected claims) is in jurisdiction. This is so even if the defence involves claims that the claimant is not the owner of the copyright or that copyright does not subsist in the work in question. Unlike the case with trade marks, there normally would be no issues about which territories were targeted by the person using the trade mark.61 The fact that the work is made available online on a world-wide basis coupled with evidence of substantial numbers of downloads might be a factor in awarding additional damages. However, only downloads in jurisdiction could be properly considered otherwise there could be a danger Co v Companhia de Moçambique [1893] AC 602 and Def Lepp Music v Stuart Brown [1986] RPC 27. The double-actionability rule was repealed by section 10 of the Private International Law (Miscellaneous Provisions) Act 1995. 56 [1997] FSR 641 at 652. 57 Gareth Pearce v Ove Arup Partnership Ltd [1999] FSR 525. 58 Lucasfilm Ltd v Ainsworth [2011] UKSC 39, [2012] 1 AC 208, supra. 59 Or work subject to a related right such as a database right or right in a performance. 60 Including provisions protecting service providers, such as those relating to temporary reproduction and acting as a mere conduit, and in respect of caching and hosting. 61 See infra.

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16.26 Jurisdiction and intellectual property aspects of IT of a double-counting of damages if proceedings were brought in other countries where there was evidence of significant numbers of downloads of the work. 16.26 Where a copyright work is placed on a website without the authorisation of the copyright owner, it is tempting for the owner to bring proceedings in the courts in the country in which he is domiciled. Some care is needed and it is important to consider in which country the greatest damage occurred or may occur. In Pez Hejduk v EnergieAgentur.NRW GmbH,62 the claimant was a photographer who had taken photographs of buildings designed by an architect. The photographs had been taken with the authorisation of the architect who used the photographs at a conference organised by the defendant. Later, the photographs were placed on the defendant’s website located on a computer server in Germany, from where they could be viewed and downloaded, without the claimant’s permission and without attributing authorship to the claimant. The claimant, who was domiciled in Austria, brought proceedings in an Austrian court. The defendant argued that the Austrian court did not have jurisdiction as the website was not directed at Austria. 16.27 The Court of Justice of the EU rejected the claimant’s argument and noted that the ‘place where the harmful event occurred or may occur’ under Article 5(3) of Regulation 44/200163 covers both the place where the damage occurred and the place of the event giving rise to it. The defendant may be sued in either place, at the option of the claimant.64 The Court of Justice ruled, therefore, that Article 5(3) of the Regulation must mean that, in relation to an alleged infringement of a copyright or related right a court in a Member State has jurisdiction to hear a damages action in respect of infringement by placing the protected work on a website accessible within the court’s territorial jurisdiction. However, that court only has jurisdiction to award damages caused in the Member State where it is situated. A distinction between this case and the Gareth Pearce case is that, in the latter, there were a number of defendants domiciled in different countries sued under the rule in Article 6(1) of the Regulation.65 62

Case C-441/13, EU:C:2015:28. Now Article 7(2) of Regulation 1215/2012. 64 Coty Germany GmbH v First Note Perfumes NV, Case C-360/12, EU:C:2014:1318 at para 46. 65 Providing for an action against a number of defendants domiciled in different Member States where the claims are so closely connected that it is expedient to hear and determine them together. See now, Article 8(1) of Regulation 1215/2012. 63

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Patents 16.29 16.28 In an earlier copyright case, Pinckney v KDG Mediatech AG,66 the claimant, domiciled in Toulouse, France, was the author of a musical work, recorded on a vinyl record. It was alleged that the recording had been copied onto CDs by the defendant in Austria and sold in the UK through various websites. The claimant commenced proceedings in France for infringement of copyright. The Court of Justice confirmed that the French court had jurisdiction to hear the action under Article 5(3) of Regulation 44/2001 but the court could only award damages attributable to infringement occurring in France.

PATENTS 16.29 Patents are a jurisdictional nightmare. Although the Regulation on jurisdiction allows other Member States to have jurisdiction to hear cases on infringement, for example, only the courts in the Member State in which the patent is registered may hear cases involving the registration or validity of the patent. Most patent infringement cases involve counterclaims for invalidity of the patent wholly or in part. In many cases, a patent proprietor may hold a number of identical patents in different Member States, relating to the same invention, acquired typically through the EPO. If these patents are infringed in several Member States and validity is likely to be an issue, the proprietor may have no option but to bring parallel proceedings in each of those Member States. This type of situation was described in Sepracor Inc v Hoechst Marrion Roussel Ltd67 by Laddie J as Kafkaesque. Although a bundle of national patents may be obtained for the same invention under the European Patent Convention, there is no provision for a single procedure to determine infringement and validity under that Convention. Indeed, Article 22(4) of the Brussels Regulation states that each Member State has exclusive jurisdiction in proceedings related to the registration or validity of any European patent granted for that State.68 The working of this rule risks irreconcilable judgments in respect to what is effectively the same patent. It also provides a bounty for patent lawyers as litigating patents for the 66

Case C-170/12, EU:C:2013:635. [1999] FSR 746. 68 To allow otherwise would undermine sovereign acts of each States in granting the patents. EPC patents when granted by the EPO devolve to national patents. Obtaining national patents through a single application procedure at the EPO should not compromise sovereignty as each Member State of the EPC has agreed to this procedure. 67

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16.30 Jurisdiction and intellectual property aspects of IT same invention in five Member States will result in five separate actions and ten teams of lawyers! 16.30 These problems will be eased if the proposed unitary patent system comes into effect. This could happen fairly quickly and some legislative measures have already been made and more are in the pipeline. This system, which would be administered by the EPO would do much to prevent a multitude of parallel actions by the establishment of a Unified Patent Court.69 There is a delay in setting up the Unified Patent Court caused by a challenge in Germany on constitutional grounds. This means that the UK could leave the EU before the commencement of the Unified Patent Court, which may make it doubtful as to whether the UK can participate. This would be a great shame and jeopardise the position of proprietors of multiple patents, including a UK patent, for the same invention.

Software patents and the internet 16.31 The internet presents two particular problems in the case of software patents. First, the use in the UK of a software invention on a webpage or an offer to deliver software advertised on a webpage (whether or not delivered online) could infringe patents in other jurisdictions even if there are no relevant patents in the UK. This is a particular problem, bearing in mind the apparent ease with which some software inventions have been granted patents in the US.70 Infringement of a patent includes using a patented product or process and offering to sell a patented product or process in the relevant jurisdiction. Another form of infringement is supplying the means, relating to an essential element of the invention, for putting the invention into effect knowing, or where it would be obvious to a reasonable person in the circumstances, that those means are suitable for putting, and are intended to put, the invention into effect in the UK.71 16.32 In Menashe Business Mercantile Ltd v William Hill Organisation Ltd,72 Dr Julian Menashe was the proprietor of a patent in respect of a system 69

See Chapter 11 on the unitary patent. For example, see US patent number 4,646,250 (a data entry screen) and US patent number 6,272,493 (a system and method for facilitating a windows-based content manifestation). 71 Section 60(2) of the Patents Act 1977. 72 [2002] EWHC 397 (Pat), [2002] RPC 47. 70

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Patents 16.33 for playing an interactive casino game. The patent claimed a computer terminal connected to a host computer by communication means. A gambler could use his own computer to access the host computer on which the gambling software was located by means of the internet. The claimant c ompany had an exclusive licence to work the patent. The defendant was a bookmaker who decided to operate a gaming system. Punters in the UK were supplied with CDs containing a computer program which they installed on their own computers. This enabled the gamblers’ computers to communicate via the internet with the defendant’s host computer which was situated first in Antigua and, later, in Curaçao. The claimants sued the defendant on the basis of section 60(2) of the Patents Act 1977 alleging that the defendant had supplied and/or offered to supply in the UK the means, relating to an essential element of the invention, for putting the invention into effect, knowing or where it would be obvious to a reasonable person in the circumstances that those means were suitable for putting, and were intended to put, the invention into effect in the UK. The defendant argued that it did not infringe the patent because its host computer and part of the communication means were situated outside the UK. The court had to determine a preliminary question concerning whether the fact that the host computer and part of the communication system which were located outside the UK was a defence to an infringement action under section 60(2). 16.33 On appeal, the Court of Appeal noted that infringement of a patent under section 60 could only occur if a person does an act within the UK without the proprietor’s consent.73 However, that does not assist with the meaning of the phrase in section 60(2) ‘… to put, the invention into effect in the United Kingdom’. The court said that where the invention is an apparatus what is required is that the means are intended to put the apparatus into effect so that the apparatus becomes effective. Therefore, in the present case, the means, being the CDs, must be suitable for putting the apparatus into a state of effectiveness: that is, to put it into an infringing state in the UK. The Court of Appeal held that where an invention is an apparatus, it is irrelevant to the question of infringement if part of the apparatus is situated outside the UK and it is wrong to apply old notions of location to inventions such as that in the present case. The answer in such a case is to consider who is making use of the system and where he is located when he makes that use. As the punters used the system in the UK they could be said to use the host computer

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[2002] EWCA Civ 1702, [2003] RPC 31.

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16.34 Jurisdiction and intellectual property aspects of IT in the UK even though it was physically situated outside the UK. Therefore, supplying gamblers with CDs in the UK to enable them to use the gambling system was supplying the means relating to an essential element of the invention, intended to put the invention into effect in the UK and was not a defence to an infringement action under section 60(2).

JURISDICTION, TRADE MARKS AND WEBSITES 16.34 In general terms and without wishing to repeat what has been said in Chapters 13 and 14, to infringe a registered trade mark a trader must use a sign identical to or similar to the registered trade mark in relation to identical or similar goods or services or, in some cases, non-similar goods or services. Registered trade mark rights are territorial and can only be infringed in the territory for which they are registered. If a trader places a sign on a website in what territories does he use it for the purposes of infringement? Placing a sign on a website is, at first sight, using it globally. So, under what circumstances can it infringe? Before looking at the case law on this consider this question: does a trader who puts a sign on a website, that has the potential to infringe registered trade marks, use that sign in all the territories in which conflicting trade marks are registered? 16.35 Compared with the internet, traditional forms of advertising and marketing are fairly predictable as regards their catchment area. As soon as material is available online, things are different. This applies not only to websites run by retailers, manufacturers, distributors and the like but also to news media, television and cable programmes, films and audio works available for access and/or downloading from anywhere in the world.74 In the ‘good old days’ a trader advertising in his local evening paper would have a pretty good idea as to the geographical reach of his advertisement. Any issues of infringement caused, for example, by someone posting a copy of the paper to a relative in a far-flung place would be unlikely to attract the interest of a trade mark proprietor in that place on the basis that any use was de minimis. 16.36 As the internet is a global environment, traders need to exercise greater care when using signs or trade marks that could, potentially, infringe trade 74

A yet to be litigated problem is where a commercial television programme, complete with advertisements, is watched in other countries using software such as the ITV Player. Although it is becoming increasingly common for such systems to require the viewer to have an account and to log on with a password.

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Jurisdiction, trade marks and websites 16.37 marks registered in other jurisdictions. An example of the possible difficulties is provided by Euromarket Designs Inc v Peters and Crate & Barrel.75 The defendant had a shop in Dublin and placed an advertisement on its website, using its trading name ‘Crate & Barrel’. It was a local business and there was no evidence of sales in the UK. Jacob J rejected the argument that the advertisement was directed at anyone in the UK. Any person using a search engine often retrieves numerous irrelevant ‘hits’, many of which will be foreign.76 If, in this case, it could be said that the defendant was using the trade mark ‘Crate & Barrel’ in the UK, this would mean that the defendant was using the trade mark in every country in the world. Jacob J distinguished the present case with Amazon.com, a company that actively seeks worldwide trade. However, such companies now tend to use specific top-level domains, such as ‘amazon.co.uk’, ‘amazon.de’, ‘amazon.fr’, ‘amazon.cn’, etc. 16.37 In an earlier case, 1800-FLOWERS Trade Mark,77 at first instance, Jacob J rejected the notion that placing a trade mark on a website was a potential trade mark infringement all over the world as this was tantamount to use in an ‘omnipresent cyberspace’ and was ‘putting a tentacle’ into the computer of each and every user accessing the site. He gave an example of a fishmonger from Bootle (Lancashire) who advertised on his own website. Anyone accessing that website from another country would realise that it was not directed to him.78 In practice it will depend on the circumstances. The website owner’s intention and the impact on persons accessing the website will be important, especially what a person accessing the website would understand. On appeal, in the 1800-FLOWERS case above, Buxton LJ said:79 There is something inherently unrealistic in saying that A ‘uses’ his mark in the United Kingdom when all that he does is to place the mark on the internet, from a location outside the United Kingdom, and simply wait in the hope that someone from the United Kingdom will download it and thereby create use on the part of A … the very idea of ‘use’ within a certain area would seem to require some active step in that area on the part 75

[2001] FSR 20. Simply visiting a website, per se, does not create a business relationship nor a business within jurisdiction: Plentyoffish Media Inc v Plenty More LLP [2011] EWHC 2568 (Ch), [2012] RPC 5. 77 [2000] FSR 697. 78 Provided, of course, that the fishmonger did not supply frozen fish to other countries. 79 1-800 FLOWERS Inc v Phonenames Ltd [2001] EWCA Civ 721, [2002] FSR 12 at paras 136–139. 76

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16.38 Jurisdiction and intellectual property aspects of IT of the user that goes beyond providing facilities that enable others to bring the mark into the area. Of course, if persons in the United Kingdom seek the mark on the internet in response to direct encouragement or advertisement by the owner of the mark, the position may be different … 16.38 Factors to be considered in determining whether a trader had targeted the UK through website advertising were considered in Dearlove (t/a Diddy) v Combs (t/a Sean Puffy Combs, Puffy and P.Diddy).80 The defendant advertised on a website at ‘www.diddyonline.com’. In deciding whether the advertising was directed to persons in the UK, Kitchen J thought it was a question whether the average consumer in the UK would consider that the advertisement was directed to him. All the material circumstances would include the nature of the goods or services, the appearance of the website, whether it was possible to buy goods or services from the website, whether there was evidence of any actual sales in the UK and any evidence of the advertiser’s intention.81 16.39 Thus far, a sensible and realistic approach has been adopted in the UK. As far as traders using websites to advertise their wares are concerned, they ought to consider including statements making the geographic boundary of their prospective target audience quite clear unless they do intend to sell anywhere (in which case, they must ensure that there are no conflicting trade marks anywhere else). In the Euromarket case, the Irish defendant had foolishly advertised the prices of its goods in US dollars though this was later changed to Irish punts. 16.40 In the United States, the focus has been on the footprint of the territories in which consumers have been targeted by the advertising. A United States registered trade mark is effective throughout the territory of the United States but an action for infringement must be commenced in a State where the infringement is alleged to have occurred. In Zippo Manufacturing Co v Zippo Dot Com Inc,82 the claimant made cigarette lighters and sued the defendant

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[2007] EWHC 375 (Ch), [2008] EMLR 2. These factors were applied in Yell Ltd v Goboin [2011] EWPCC 009 by Judge Birss QC in the Patents County Court in which he found the defendant infringed the claimant’s trade marks by its use of ‘YELLOW PAGES’ and the two-finger logo on its website located outside the UK. 82 952 F Supp 1119 (WD Pa 1997). 81

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Jurisdiction, trade marks and websites 16.42 which operated a web-based subscription news service on the ground of trade mark dilution by its use of zippo.com and other domain names. The claimant sued in the State of Pennsylvania, where its company was based. The defendant argued that the courts there did not have jurisdiction as its p rincipal place of business was in California and it had no physical presence in Pennsylvania. The court in Pennsylvania rejected that argument as the defendant had several thousand subscribers there and actively sought business there. The use of the Zippo name was targeted there by the use of the domain name. In deciding this preliminary issue, the court developed a useful test, known as the ‘Zippo sliding scale’. 16.41 At one end of the scale, a defendant has an interactive website and makes contracts with residents within the particular jurisdiction. This involves the knowing and repeated transmission of files over the internet. In such a case, the defendant is clearly doing business and is using the trade mark for trade mark purposes within that jurisdiction. At the other end of the scale, the website is passive in nature. This is where the person responsible for the site has done no more than to post information on it which, although accessible by persons within the jurisdiction concerned, is not associated with commercial activity. The trade mark is not used in a trade mark sense.83 There is a middle ground, however, where the website is interactive and where the user can exchange information with the host computer. In such cases, it is a question of looking at the level of interactivity and the commercial nature of the website to decide whether the trade mark is used in a particular jurisdiction.84 This is a good workable test even though the case does not appear to have been referred to in English cases. 16.42 If a trade mark registered in one Member State is used on a website in another Member State under a top-level domain name for that other Member State, does that give the courts in the first Member State jurisdiction to hear a trade mark infringement action? In Wintersteiger AG v P roducts 4U

83 In

Buttress BV v L’Oreal Produits de Luxe France [2008] ETMR 51, Cour de Cassation, France, the defendant sold goods under ‘NUTRI-RICH’ in Europe, except for France where it used a different name. A claim of infringement in France by website advertising using ‘NUTRI-RICH’ failed as the defendant did not offer or sell products under that name in France, where it used a different trade mark. 84 See also Banyan Tree Holdings (P) Ltd v Reddy [2010] FSR 8, High Court of Delhi. The court applied the Zippo test.

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16.43 Jurisdiction and intellectual property aspects of IT Sondermaschinenbau GmbH,85 the claimant was the proprietor of the Austrian trade mark ‘Wintersteiger’. The defendant, based in Germany, placed advertisements on ‘google.de’ for its products which included accessories for Wintersteiger ski products. It also registered the AdWord ‘Wintersteiger’ with ‘google.de’.86 The google.de website was accessible from Austria and, of course, it was in the German language. The defendant argued that the Austrian court did not have international jurisdiction to hear the claim.87 16.43 As in the copyright cases, supra, the Court of Justice ruled that the term ‘place where the harmful event occurred or may occur’ in Article 5(3) of Regulation 44/2001 was capable of two meanings.88 The first is the place where the damage occurred and, secondly, the place of the event giving rise to the damage. In the present case, the first place is where the trade mark was registered (Austria) and, in the second case, the place of establishment of the advertiser (Germany). Thus, the claimant could choose between those countries in which to bring proceedings. On the one hand, the Austrian courts would be better placed to assess the damages resulting from the trade mark infringement. But on the other hand, a German court would be better placed to take evidence and conduct the proceedings.

Jurisdiction and passing off on the internet 16.44 There are some similarities between trade mark infringement and passing off by website advertising. But, whereas trade mark cases are concerned with the territories in which the trade mark is registered, and whether the defendant’s advertising targets those territories, passing off depends first and foremost on the presence of goodwill in the relevant territory. For instance, if we consider the territory of the UK, does the claimant have goodwill there or in a relevant part of it.89 One question is whether a website operated by a trader situated outside the UK can have goodwill there even though he carries on no trade in the UK and even though he may have a reputation there.90 85 86 87 88 89 90

Case C-523/10, EU:C:2012:220. The AdWord was not registered against ‘google.at’, the Austrian google top-level domain. The trade mark was registered in Austria but not in Germany. Now Article 7(2) of Regulation 1215/2001. Bearing in mind goodwill may apply in a relatively small locality. Of course, passing off protects goodwill which must be distinguished from reputation. A foreign company may have a reputation in the UK but no actual trade there. Evidence of customers and business in the UK is required.

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Jurisdiction, trade marks and websites 16.47 16.45 A website established outside the UK may be freely accessed from the UK but there must be evidence of c ustomers in the UK. Where a service is conducted through a website, access to the website is normally free but the service may only be available to persons who subscribe to receive the service. There are many examples of such websites, for example, genealogy websites. In Plentyoffish Media Inc v Plenty More LLP,91 the claimant ran a free online dating agency under ‘www.plentyoffish.com’ from Vancouver. It was funded by advertising and was free to users. The defendant also ran an online dating service but the service was only available to customers who paid by credit card. The defendant had registered ‘plentymorefish’ as a trade mark and the claimant sought a declaration of invalidity of the trade mark on the ground that its use would constitute passing off. There was evidence of over 4 million hits on the claimant’s website from the UK. 16.46 It was held that, although the claimant had a reputation in the UK on the basis of the evidence of visits to the website from within the UK, because of the lack of customers there, it had not established that it had goodwill in the UK. Focussing attention on the number of hits was simply side-stepping the requirement to adduce evidence of the presence of active customers, being persons who had joined as members and used the dating service. It was accepted, however, that goodwill could be established even by evidence of persons availing themselves of the claimant’s dating service even though it was free. 16.47 In Starbucks (HK) Ltd v British Sky Broadcasting Group plc,92 the claimants operated an internet television service broadcast in Asia but available globally through ‘www.now.com’. It was accepted that the claimant’s goodwill could potentially exist in the UK as it had a reputation amongst the Chinese ethnic minority. However, the mere fact that the website was visible and accessible throughout the world for free was not sufficient to show goodwill for the purposes of passing off. What was needed was evidence of targeting the UK and the existence of UK customers.93 Arnold J accepted that it was possible to generate goodwill by advertising goods or services not yet available but to be launched in the future. He also

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[2011] EWHC 2568 (Ch), [2012] RPC 5. [2012] EWHC 3074 (Ch), [2013] FSR 29. 93 The court also held that the claimant’s CTM for the word ‘NOW’ with rays spreading from the letter ‘O’ was invalid and not infringed. 92

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16.47 Jurisdiction and intellectual property aspects of IT accepted that goodwill could be generated by a website which could be freely accessed. However, what goodwill existed at the relevant date was goodwill in Hong Kong. The Supreme Court confirmed that there can be no actionable goodwill without business carried out within the jurisdiction even though there is a customer base within the jurisdiction who may make use of the subscription service when they visit Hong Kong.94

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Starbucks (HK) Ltd v British Sky Broadcasting Group plc [2015] UKSC 15, [2015] FSR 29. See Chapter 14 for more on the Supreme Court judgment.

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Glossary

COMPUTER TERMS Algorithm A structured set of rules or operations defining a logical solution to a problem or a methodology to achieve some end result. An algorithm may be expressed in the form of a flow chart.

App ‘App’ is short for application program used to perform applications for the benefit of the user of the device in question. Apps are commonly used on computers, computer tablets, smartphones and such like. Application programs are used to manipulate data, access web-based systems, transmit messages, play games or carry out specific functions, such as enabling a mobile phone to take, store, retrieve and display photographs. Most people understand what an ‘app’ is but would not know what an application program is.

Application program and operating system program An application program is one which performs a specific application, such as a word processor, spreadsheet, graphic manipulation program, database operation program or internet access program. Operating systems programs are different in principle in that they organise and control the internal processes within a computer such as file handling, memory allocation, writing data to a storage device and so on.

Compilation (noun) A collection of works, information or data, or other materials. For copyright purposes a compilation must be distinguished from a database.

Compilation (verb) The process of converting a program in source code (as written by the programmer) into object code, the version which can be run on a computer. Normally, a program known as a compiler program carries out the conversion process. 679

Glossary

Computer hardware The physical pieces of equipment that make up a computer system including, but by no means limited to, a computer, peripheral devices such as a printer, scanner, telecommunications equipment, a wireless router and games consoles. Many items of equipment, not normally thought of as computers, contain computer technology, such as telephone systems, televisions, printers, scanners, smartphones, digital cameras and some later models of analogue cameras, engine management systems, hospital equipment such as CT scanners and X-ray machines, activity trackers, washing machines and so on. The list is endless.

Computer program A series of instructions which control or condition the operation of a computer. Computer programs may be stored on magnetic or optical media or in solid state devices such as a ‘memory stick’ or a semiconductor product such as a ‘computer chip’. Software tools are available to automate some of the process of writing computer programs. There is no relevant definition of a computer program in UK legislation or in European Union (EU) Directives concerning the protection of computer software and online activities. In terms of copyright protection, computer programs are treated differently to other works of copyright, including databases. In the EU, computer programs are taken to include their preparatory design material. This might include specifications, designs of variables, screen display layouts, input and output formats, graphic user interfaces and flowcharts. The form of a computer program is not relevant to protection under the Directive on the legal protection of computer programs, whether in source code or object code form and includes programs incorporated into computer hardware. Section 101 of the US Copyright Act 1976, as amended, defines a computer program as ‘a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result’

Computer programming language A language used to write source code computer programs or to interact with computer programs. There are many programming languages. Some are known as high-level languages and resemble English with mathematical formulae. Some have line numbers and the facility for the programmer to add remarks or comments. A high-level language is fairly remote from the object code which can be run on a computer. A low-level language is much nearer the object code version and resembles mnemonics, letters and numbers. 680

Glossary It is sometimes referred to as being in assembly language form. It may also be possible to add comments to a low-level language version of a computer program. Interaction with some computer programs and associated software items may involve the use of a ‘query language’ or codes. For example, a user might have to enter something like ‘ALHRNCE07JUL’ to find available seats on flights from Heathrow to Nice airport on 7 July. It is arguable that a set of such codes, including a set of rules from which such codes are derived, constitute computer programming languages. Generally, computer programming languages, to the extent they comprise ideas and principles, are not protected by copyright. They may be protected as confidential information if not made public. Software companies usually regard the source code versions of their programs as highly confidential and only distribute object code versions to their clients and customers.

Computer software This term lacks precise definition but can be taken to include computer programs and data and information stored in a computer, on magnetic, optical or solid-state devices or on an integrated circuit, such as a computer chip. All forms of works or other materials stored or transmitted in digital form also fall within the term. This could include, for example, works of copyright and performances such as films and music, compilations and databases, photographs, graphic works, maps, plans, images of three-dimensional works and data representing them, and broadcasts. Also included are all sorts of images such as designs, trade marks, software fonts and any material available online, for example, on websites and social media.

Data and databases Data (the singular is ‘datum’) are information in digital form (a series of magnetic or electronic signals representing 0’s and 1’s in the most basic form). Data can represent digital signals for transmission, object code programs, works of copyright such as literary, musical and artistic works and films. A collection of data is called a database which can be a set of information such as pertaining to customers, suppliers or financial transactions or relating to football leagues and matches or horseracing. Databases may contain a collection of works of copyright or other materials or information. Many databases are complex, having an elaborate internal structure and some software applications and include numerous related databases. Computer programs are used to add to, modify, retrieve or carry out calculations or transformations of data in databases. A legal definition of ‘database’ for the purpose of both 681

Glossary copyright and database right is ‘a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means’. Databases may be protected by copyright if they result from the author’s own intellectual creation or the sui generis database right if the database is the result of a substantial investment. Some databases may be subject to both rights.

Decompilation (verb) This is the conversion of an object code program into a higher-level language version of the program. It is akin to reverse engineering and seeks to retrieve the source code version of the program though this is not possible in most cases where the source code version is in a high-level language. Usually, what is obtained is a low-level version in assembly language. Strictly speaking this process is known as disassembly but, from a legal perspective, the distinction is of no consequence. In either case, the programmer’s comments and remarks contained in the original source code program are not retrieved, as these are not compiled into object code form.

Domain name The unique name that is the address of a website or its URL (Uniform Resource Locator) that describes the location of the site. The author of this book has a number of domain names including the website of his village at http://www. eckington.info.

HTML HyperText Markup Language, used to create the files that are used to display and format webpages on a website. They contain the text used on a page and data to retrieve images and sounds. They also contain links to other pages on a website (internal links) and to other websites (external links). The latter may link to a website’s front page or other pages (this is known as ‘deep-linking’). Styling HTML files may be done internally or by reference to an external file. A system called ‘Cascading Style Sheets’ is used. HTML may also be used to format documents available online including electronic mail. HTML can define, for example, font size, type and colour, tables, lists, the insertion of pictures and internal and external links. HTML files may include Javascript, a programming language, and other systems for web development exist, such as XML.

682

Glossary

Ideas and principles Generally, ideas and principles are not protected under copyright law or under patent law. For example, ideas and principles underlying elements of a computer program, including its interfaces, are not protected by the copyright protection afforded to computer programs. The TRIPs Agreement denies copyright protection to ideas, procedures, methods of operation and mathematical concepts, as such. Schemes, rules or methods for performing mental acts, playing games or doing business, and programs for computers are not, as such, patentable under the European Patent Convention.

Integrated circuit A small piece of semiconducting material which together with layers of conducting and insulating materials make up a micro-electronic circuit. Computer programs, data and other materials may be permanently stored on integrated circuits, known as Read Only Memory (‘ROM chips’). Some integrated circuits contain transient data. These are known as Random Access Memory (‘RAM chips’). These typically make up the volatile memory of a computer, for example, recording keystrokes or cached information (a cache is temporary memory where, for example, a webpage is stored so that it may be retrieved later more quickly than by downloading it again from a website). The contents of RAM chips are lost once a computer is switched off. However, some cached data may be retained. Another form of integrated circuit is Erasable Programmable Read Only Memory (‘EPROM chips’). The programs and data on these can be electronically erased and they can be re-used to store other programs and data. When a computer is switched off, the contents of an EPROM are not lost and remain there until reprogrammed.

Internet service providers Organisations providing online services, such as internet service providers, online auction sites and such like, may be a conduit through which infringing material is available. They may also be potentially liable for hosting illegal services or storing illegal materials. Bearing in mind the chilling effect of civil and criminal liability for illegal activities and materials about which they have no knowledge, specific defences are provided for them. These are subject to the service providers having no actual knowledge of the illegal nature of the activity or material. They are not required to police the information stored in flowing through their computer servers but their defence is lost if they do not erase or disable access to the material once they become aware of its true

683

Glossary nature. Injunctions may be granted to rightholders requiring service providers to block access to sites containing infringing material.

Object code The version of a computer program, converted from the source code version, which can be run on a computer. Although usually generated automatically from the source code, it is clear that object code programs are protected by copyright.

Social media Online web-based networks for the creation and sharing of information between individuals. The information may include a person’s profile, interests, hobbies, school or career, text posted by individuals, digital photos, items for sale, videos, etc. The information may be available to the public or restricted to certain ‘friends’ or groups. Examples of social media include Facebook, YouTube, WhatsApp, Instagram and Twitter. Social media may be beneficial, for example, by contributing to the social cohesion of a group and increasing the availability of relevant information to that group. However, it may be used to spread misinformation and to prejudice intellectual property and other rights, such as rights to privacy, without the checks and balances associated with other more traditional forms of communication.

Source code The version of a computer program as written by the programmer. A source code program must be converted to object code before it can be run on a computer.

User interface The means by which computer software interacts with the user. This may be by means of a query language. Increasingly, many user interfaces contain graphics including graphical icons and are known as graphical user interfaces or GUIs. Menu systems are widely used to facilitate the user’s choices or requirements.

Website We are all now so familiar with websites that they need no definition. However, a number of points may be worthwhile considering. First, in relation to advertising, by the use of traditional means such as newspapers, magazines and television broadcasts, advertisers were reasonably sure of the geographical reach of their advertising. Online advertising via websites is a 684

Glossary different matter and a website may be visited by persons all over the world. This has implications in terms of trade mark law and the law of passing off. Secondly, buying online is not the same as buying from a ‘bricks and mortar store’. There is more scope for deception, for example, as to the source of goods or the identity of the retail outlet. In terms of trade mark infringement, the use of AdWords (a Google service whereby subscribers reserve words to be used by search engines to retrieve their entries in sponsored links) is a controversial issue which has resulted in significant case law. Another Google service, AdSense, may also be relevant in terms of infringement.

LEGAL AND QUASI-LEGAL TERMS Assignment The transfer of the ownership of an intellectual property right. The person transferring the right is the assignor and the person acquiring the right is the assignee. To be effective at law, assignments of copyright are required to be in writing and signed by or on behalf of the assignor. Other formalities exist for other intellectual property rights. An assignment need not be in relation to the entire right and may be partial and limited to only some of the restricted acts or limited in terms of geographic area or duration. Where the intellectual property right is subject to formal registration, the fact of the assignment must itself be registered. Failure to do so may prejudice an award of costs or expenses in any subsequent infringement action even though the assignee is otherwise successful in the action.

European Economic Area (EEA) The EEA consists of the countries of the EU together with Norway, Iceland and Liechtenstein and the EU itself. The Directives covered in this book have EEA relevance. The EU Trade Mark and Community Design do not extend to the territories of the other EEA States, though persons and organisations resident and established there or elsewhere in the world may apply for a EU Trade Mark or a Community Design. There is an unregistered version of the latter.

European Patent Office (EPO) The EPO deals with applications to acquire patents under the European Patent Convention. Applicants name a number of Contracting States for which they want patent protection for their invention. Once granted by the EPO, the p atents devolve down to national patents for the Contracting States 685

Glossary nominated by the applicant. The EPO has its own examination and opposition divisions as well as Boards of Appeal and an Enlarged Board of Appeal. There are provisions for a European patent with unitary effect and a Unified Patent Court.

European Union (EU) EU Directives are a form of legislation of the EU which must be implemented by Member States into their own domestic laws. Much of the law described in this book is the result of EU Directives such as those on the legal protection of computer programs, the legal protection of databases, copyright and related rights in the information society, the approximation of the laws of the Member States relating to trade marks, and on orphan works. Most provisions in D irectives are required to be implemented faithfully. Sometimes, Member States can choose whether or not to implement a particular provision. EU Regulations set out and implement the EU Trade Mark and the Community Design. These EU-wide rights are very important and attractive in that they provide a single unitary right that applies throughout the EU. There is also an important Regulation on jurisdiction and the enforcement of judgments, a new version of which was adopted in 2015.

European Union Court of Justice and the General Court In terms of the context of this book, the Court of Justice of the European Union is important for its rulings in response to preliminary references where the court is asked by national courts to rule upon uncertainties or ambiguities in EU law, such as where the meaning of a provision in a Directive or Regulation relevant to a particular case is uncertain. Such references are made under Article 267 of the Treaty on the Functioning of the European Union. The General Court hears appeals from the European Union Intellectual Property Office, previously known as the Office for the Harmonisation of the Internal Market (Trade Marks and Designs) and from Decisions of the Commission to the European Union, for example, in relation to competition law, subject to further appeal to the Court of Justice.

European Union Intellectual Property Office (EUIPO) This office is responsible for the registration of the EU Trade Mark and the Community Design and also has obligations in respect of orphan works. It has its own examination and cancellation divisions and boards of appeal. Appeals from EUIPO go to the General Court of the European Union and, from there, to the Court of Justice of the European Union. 686

Glossary

Exhaustion of rights A doctrine whereby the owner of an intellectual property right such as a copyright, patent or trade mark loses the right to control the subsequent commercialisation of products subject to the right after they have been put on the market in the EU or EEA by or with the consent of the owner of the right. The doctrine does not apply in relation to products placed for the first time on the market outside the EEA. Nor does it apply generally to works such as music or software made available online (as opposed to goods ordered online).

FRAND Licence A FRAND licence is one granted on fair, reasonable and non-discriminatory terms. Intellectual property rights holders for official standards adopted in industries such as telecommunications (for example, ETSI) are required to offer FRAND licences to third parties seeking licences to make use of the relevant standard.

Licence A licence is a permission to carry out a specific act or acts which would otherwise infringe a right. For example, a copyright owner (‘licensor’) might grant a person (‘licensee’) a licence to make and sell copies of his copyright work. Licences may be exclusive or non-exclusive. A licensee under an exclusive licence is entitled to carry out the licensed acts to the exclusion of all others including the licensor. A non-exclusive licence is appropriate where the licensor wishes to grant a number of persons the right to carry out the same act or acts in relation to the subject-matter. A typical example is in relation to conventional computer software or computer games. Licences may be subject to formalities. For example, exclusive copyright licences must be in writing and signed by or on behalf of the copyright owner. Some licences must be registered, for example, patent licences. Licences may be in relation to the whole right or they may be partial.

Moral rights The rights that the author of a work of copyright has independent of the economic rights of the copyright owner. The moral rights are: to be identified as the author of the work (or the director of a film) and to be able to object to a derogatory treatment of the work. These rights leave the author with some control over his work even if he does not own the copyright. Any person also has a right, under copyright law, not to have a work falsely attributed to him. 687

Glossary Moral rights have also been extended to performers in respect of their live performances and recordings thereof.

Non-textual copying A form of copying a work without taking the actual text of the work copied. Typically it applies to computer programs but may also apply to other works, such as the look and feel of a website or an artistic work where it may be called non-exact copying. The ideas, principles, logic, and other elements not expressed literally in the text, such as its structure, may be used as the basis to create a new work. It is possible to write a new computer program to emulate the functions and operations of an existing program without access to the source code of that program. This form of copying is also known as nonliteral copying and will not infringe copyright, if restricted to the acts which lawful users are permitted to do under the Directive, and the actual code of the program is not copied. Copyright may be infringed, however, by copying associated works such as user manuals.

Orphan work An orphan work is one where the copyright owner cannot be found, after a diligent search. Or, if found, his or her whereabouts are not known. Certain bodies, such as libraries and archives are permitted to make use of orphan works. The UK also has a scheme for the licensing of orphan works.

Publicity order In the context of intellectual property, it is an order of the court requiring a losing party to publicise the relevant aspects of the judgment. This is in accordance with the Directive on the enforcement of intellectual property rights. Typically, the order might require an appropriate notice to placed in advertising or on the party’s website for a period of time. An example is the order in the Apple v Samsung case discussed in Chapter 8.

Search order (formerly known as an Anton Piller order) This is an order of the court allowing a claimant, in the company of solicitors, to search the defendant’s premises for evidence of the alleged wrong and to take copies of or remove alleged infringing material or other evidence as appropriate. Carefully governed to prevent abuse, its main purpose is the preservation of evidence that might otherwise be destroyed or concealed.

688

Index All references are to paragraph number. Abuse of dominant position comparison shopping services, 15.34–15.37 decompilation, and, 15.30 efficient competitor test, 15.26–15.27 examples, 15.17 failing to provide information, 15.30–15.33 generally, 15.15–15.25 tying, 15.28–15.29 Accessible copies for the visually impaired copyright, and, 2.99–2.106 Accounts of profits breach of confidence, and, 10.45–10.46 Community design, and, 8.50 copyright, and, 2.66 database right, and, 6.87 patents, and, 11.42 registered trademarks, and, 13.43 Acquiescence registered trademarks, and, 13.33 Adaptation computer programs, and error correction, 3.132–3.136 generally, 3.95–3.102 introduction, 3.69 lawful acquirer, by, 3.125–3.136 copyright, and, 2.63–2.65 databases, and, 5.55–5.57 Additional damages computer programs, and, 3.158 copyright, and, 2.66 Administrative procedure copyright in databases, and, 5.68 copyright in the information society, and, 7.83 database right, and, 6.76–6.77 AdSense trademarks on the internet, and, 14.70–14.73 Advertising trademarks on the internet, and, 14.5

AdWords advertising function, 14.60–14.61 detriment to mark of repute, 14.64–14.69 essential function, 14.58–14.59 generally, 14.49–14.55 guaranteeing origin, 14.58–14.59 injunctions against service providers for infringement, and costs of compliance, 14.78–14.81 generally, 14.74–14.77 Interflora v Marks & Spencer advertising function, 14.60–14.61 application of the ruling, 14.66–14.69 detriment to mark of repute, 14.64–14.69 essential function, 14.58–14.59 generally, 14.56–14.49 guaranteeing origin, 14.58–14.59 investment function, 14.62–14.63 unfair advantage, 14.64–14.69 introduction, 14.7 investment function, 14.62–14.63 overview, 1.22 unfair advantage, 14.64–14.69 Algorithms computer programs, and, 3.64–3.66 Alteration computer programs, and, 3.95–3.102 Anti-competitive agreements block exemptions contract product, 15.14 generally, 15.13–15.14 technology transfer agreements, 15.14 concerted practices, 15.5–15.9 contract product, 15.14 exemptions, 15.13–15.14 generally, 15.5–15.9 horizontal agreements, 15.6 luxury goods, 15.10–15.12 remedies for breach, 15.9 restrictive trade agreements, 15.5–15.9

689

Index Anti-competitive agreements – contd selective distribution systems, 15.10–15.12 software licences, 15.6 technology transfer agreements, 15.14 vertical agreements, 15.6 Architecture works copyright, and, 2.15 Arrangements computer programs, and error correction, 3.132–3.136 generally, 3.95–3.102 introduction, 3.69 lawful acquirer, by, 3.125–3.136 copyright in databases, and, 5.55–5.57 database right, and, 6.10 Artificial intelligence (AI) patents, and example application, 12.115–12.116 generally, 12.113–12.114 Artistic workmanship copyright, and, 2.15 Artistic works copyright in the information society, and, 7.14–7.16 duration, 2.34–2.39 forms of protection for software, and, 1.13 generally, 2.13–2.15 introduction, 2.10–2.12 meaning, 2.15 overview, 2.8 Assignment Community design, and, 8.40 copyright, and, 2.113–2.115 copyright in databases, and, 5.48 database right, and, 6.37 patents, and, 11.30 registered trademarks, and, 13.37 Audio-visual works on VOD platforms Digital Single Market Directive (proposed), and, 7.179 Authorising infringement computer programs, and, 3.72–3.74 Authorship See also Ownership copyright, and generally, 2.21–2.23 overview, 2.8 databases, and, 5.43–5.46

Back-up copies computer programs, and, 3.137–3.138 copyright, and, 2.92 Bad faith registered trademarks, and, 13.14–13.16 Berne Convention 1886 computer programs, and, 3.11–3.12 copyright, and, 2.4 Blind persons copyright, and, 2.99–2.106 Block exemptions contract product, 15.14 generally, 15.13–15.14 technology transfer agreements, 15.14 Blocking injunctions costs of implementation, 7.143–7.149 generally, 7.129–7.137 live streaming services, and, 7.138–7.142 Blurring generally, 14.32–14.41 introduction, 14.30–14.31 Breach of confidence accounts of profits, 10.45–10.46 basic requirements for action introduction, 10.8 obligation of confidence, 10.16–10.19 quality of confidence, 10.9–10.15 unauthorised use, 10.20 consultants, 10.30–10.31 Council of Europe Convention, 10.5 damages, 10.44–10.47 data protection, and conditions for lawful processing, 10.102 data controllers, 10.97 data protection officers, 10.97 data protection principles, 10.98–10.101 data subject, 10.95 data subjects rights, 10.105–10.109 freedom of information, 10.110–10.115 GDPR, 10.92–10.94 generally, 10.92–10.97 personal data, 10.95–10.96 processing, 10.98–10.104 processing special categories of personal data, 10.103–10.104 defence, 10.37–10.39

690

Index Breach of confidence – contd development of protection for software, and, 1.19 Directive, 10.6 employees, 10.21–10.29 Enforcement Directive, 10.48–10.51 forms of protection for software, and, 1.13 freedom of information, 10.110–10.115 human rights, and, 10.52–10.66 injunctions generally, 10.40–10.43 interim injunction, 10.42 introduction, 10.40 ‘springboard’ injunction, 10.43 introduction, 10.1–10.7 obligation of confidence, 10.16–10.19 public interest defence, 10.37–10.39 quality of confidence, 10.9–10.15 remedies accounts of profits, 10.45–10.46 damages, 10.44–10.47 Enforcement Directive, 10.48–10.51 injunctions, 10.40–10.43 interim injunction, 10.42 introduction, 10.40 ‘springboard’ injunction, 10.43 restraint of trade covenants, 10.32–10.36 right to respect for private and family life, 10.52–10.66 self-employed persons, 10.30–10.31 ‘springboard’ injunction, 10.43 trade secrets, and acquisition, 10.77 decision on merits of the case, 10.86–10.89 definition, 10.71 disclosure, 10.77 EU Directive, 10.72–10.89 introduction, 10.67–10.70 lawful acquisition, use and disclosure, 10.77 measures, procedures and remedies, 10.81–10.89 provisional measures, 10.84–10.85 scope of Directive, 10.75–10.76 TRIPS Agreement, 10.71 UK regulations, 10.90–10.91 unlawful acquisition, use and disclosure, 10.78–10.80 use, 10.77 unauthorised use, 10.20

‘Brexit’ design law, 8.76–8.78 generally, 1.31–1.36 semiconductor topography right, 9.43 Broadcasts copyright, and generally, 2.18 overview, 2.8 Brussels Regulation 1215/2012 jurisdiction, and, 16.7–16.13 Business logic emulation of functionality, and, 4.34–4.39 Business methods computer-implemented inventions, and, 12.72–12.74 Caricature, parody or pastiche copyright in the information society, and, 7.86 Certification marks registered trademarks, and, 13.56 Charts copyright, and, 2.15 Circulating infringing copies computer programs, and, 3.160 Circumvention of technological measures civil remedies circumvention, as to, 7.98–7.101 devices and services, as to, 7.112–7.116 computer programs, and, 3.162–3.171 criminal offences, 7.102–7.111 database right, and, 6.100 effective technological measures, 7.90–7.93 generally, 7.89 introduction, 7.87–7.88 remedies where permitted acts prevented, 7.117–7.122 scope of protection, 7.94–7.97 ‘technological measures’, 7.90–7.93 Collages copyright, and, 2.15 Collection of information about online infringers copyright in the information society, and, 7.150–7.154 Collective marks registered trademarks, and, 13.56 Command sets computer programs, and, 3.52–3.55

691

Index Commands emulation of functionality, and, 4.40–4.43 4 Communication to the public Article 5(3) exceptions, 7.83–7.86 communication, 7.38–7.43 computer programs, and, 3.112–3.113 copyright, and criminal offence, 2.79–2.82 generally, 2.61–2.62 databases, and, 5.4 exceptions, 7.61 exhaustion of rights, and, 7.56–7.58 file sharing, 7.53–7.55 generally, 7.35–7.37 introduction, 7.2 public and new public, 7.44–7.48 Community registered design accounts of profits, 8.50 application, 8.24 assignment, 8.40 damages, 8.50 dealings, 8.40–8.41 ‘design’, 8.24 duration, 8.38 entitlement, 8.39 exceptions and limitations, 8.47–8.49 exhaustion of rights, 8.48 experiments, 8.47 generally, 8.23–8.26 groundless threats of infringement actions, 8.52 individual character, 8.34–8.37 infringement, 8.42–8.46 injunctions, 8.50 introduction, 8.4 jurisdiction, and, 16.14–16.21 licensing, 8.40–8.41 novelty generally, 8.30–8.32 period of grace, 8.33 ownership, 8.39 period of grace, 8.33 private use, 8.47 remedies, 8.50–8.51 restricted acts, 8.42–8.46 seizure, 8.47 subsistence individual character, 8.34–8.37 introduction, 8.27

Community registered design – contd subsistence – contd novelty, 8.30–8.33 technical function, 8.28–8.29 teaching, 8.47 technical function, 8.28–8.29 term of protection, 8.38 threats of infringement actions, 8.52 unjustified threats defences, 8.63 generally, 8.52–8.53 immunity for professional advisers, 8.64 permitted communication, 8.57–8.61 remedies, 8.62 threat of proceedings, 8.54–8.56 use of design prior to filing, 8.49 Community trademarks And see Registered trademarks generally, 13.57–13.62 jurisdiction, and, 16.14–16.21 Community unregistered design generally, 8.23 Comparative advertising malicious falsehood, and, 14.116–14.117 registered trademarks, and generally, 13.28–13.30 use on the internet, and, 14.8 Comparison websites trademarks on the internet, and, 14.8 Competition law abuse of dominant position comparison shopping services, 15.34–15.37 decompilation, and, 15.30 efficient competitor test, 15.26–15.27 examples, 15.17 failing to provide information, 15.30–15.33 generally, 15.15–15.25 tying, 15.28–15.29 ‘AEC test’, 15.26–15.27 anti-competitive agreements block exemptions, 15.13–15.14 concerted practices, 15.5–15.9 contract product, 15.14 exemptions, 15.13–15.14 generally, 15.5–15.9 horizontal agreements, 15.6 luxury goods, 15.10–15.12

692

Index Competition law – contd anti-competitive agreements – contd remedies for breach, 15.9 restrictive trade agreements, 15.5–15.9 selective distribution systems, 15.10–15.12 technology transfer agreements, 15.14 vertical agreements, 15.6 Antitrust Damages Directive 2014/104, 15.38–15.44 block exemptions contract product, 15.14 generally, 15.13–15.14 technology transfer agreements, 15.14 comparison shopping services, 15.34–15.37 concerted practices, 15.5–15.9 contract product, 15.14 damages for infringement, 15.38–15.44 efficient competitor test, 15.26–15.27 EU law, 15.1–15.2 exhaustion of rights generally, 15.45–15.50 parallel imports, 15.51–15.52 failing to provide information, 15.30–15.33 freedom to provide services, 15.53–15.57 generally, 15.4 Google’s comparison services, 15.34–15.37 horizontal agreements, 15.6 introduction, 15.1–15.2 luxury goods, 15.10–15.12 overview, 1.27–1.28 parallel imports, 15.51–15.52 quantitative restrictions, 15.45 remedies for infringement, 15.38–15.44 restrictive trade agreements, 15.5–15.9 search engines comparison shopping services, 15.34–15.37 selective distribution systems luxury goods, 15.10–15.12 supplementary obligations, 15.17 technology transfer agreements, 15.14 tying products together, 15.28–15.29 unfair trading conditions, 15.17 vertical agreements, 15.6

Compilations computer programs, and generally, 3.50–3.51 suite of programs as, 3.90–3.91 copyright, and, 2.13 copyright in the information society, and, 7.11–7.13 Computer-generated works copyright, and authorship, 2.23 duration, 2.35 generally, 3.174–3.180 moral rights, 2.120–2.123 design rights, and, 8.13 Computer graphics copyright, and generally, 8.5–8.10 introduction, 2.15 nature in moving images, 8.11–8.13 design, and Community design, 8.23–8.70 generally, 8.16–8.22 introduction, 8.1–8.4 UK registered design, 8.71–8.72 emulation of functionality, and, 4.44–4.48 introduction, 8.1–8.2 trademarks, and, 8.14–8.15 Computer icons development of protection for software, and, 1.18 Computer-implemented inventions Article 52 of EPC, 12.31 business methods, 12.72–12.74 case law developments at EPO introduction, 12.31–12.32 post-Vicom decisions, 12.40–12.63 Vicom, 12.33–12.39 case law developments in UK double-exclusion principle, 12.71–12.78 generally, 12.64–12.70 HTC Europe v Apple, 12.102–12.105 Lantana v Comptroller General, 12.106–12.109 post-Aerotel cases, 12.86–12.101 presentation of information, 12.78 recognition of disparity with EPO, 12.79–12.80

693

Index Computer-implemented inventions – contd case law developments in UK – contd rejection of EPO approach by Court of Appeal, 12.81–12.85 technical effect, 12.71–12.78 decisions of EPO Boards of Appeal developments, 12.31–12.63 status, 12.10–12.11 double-exclusion principle business methods, 12.72–12.74 generally, 12.71 mental acts, 12.75–12.77 presentation of information, 12.78 introduction, 12.1–12.7 meaning, 12.8–12.9 mental acts, 12.75–12.77 patentability Patents Act 1949, under, 12.12–12.15 US, in, 12.16–12.30 presentation of information, 12.78 programmed computers, and, 12.9 sufficiency, 12.110–12.112 technical effect business methods, 12.72–12.74 generally, 12.71 mental acts, 12.75–12.77 presentation of information, 12.78 Computer programs adaptation error correction, 3.132–3.136 generally, 3.95–3.102 introduction, 3.69 lawful acquirer, by, 3.125–3.136 additional damages, 3.158 algorithms, 3.64–3.66 alteration, 3.95–3.102 arrangement error correction, 3.132–3.136 generally, 3.95–3.102 introduction, 3.69 lawful acquirer, by, 3.125–3.136 authorising infringement, 3.72–3.74 background, 3.8–3.15 back-up copies, 3.137–3.138 Berne Convention 1886, and, 3.11–3.12 circulating infringing copies, 3.160 circumvention of copy-protection devices, 3.162–3.171 command sets, 3.52–3.55 communication to the public, 3.112–3.113

Computer programs – contd compilations generally, 3.50–3.51 suite of programs as, 3.90–3.91 ‘computer software’, 1.2 copying, 3.69 copyright, and background, 3.8–3.15 decompilation, 3.147–3.157 generally, 2.13 infringement of copyright, 3.67–3.123 introduction, 3.1–3.7 moral rights, 2.123 permitted acts, 3.124–3.146 presumptions, 3.172–3.173 restricted acts, 3.67–3.123 special measures of protection, 3.158–3.171 subsistence, 3.16–3.66 copyright in databases, and excepted from protection, 5.58 generally, 5.4 criminal offences, 3.147 damages, 3.158 databases, and, 3.50 decompilation conditions and caveats, 3.152–3.157 generally, 3.147–3.151 introduction, 3.124 development of legal protection, 1.14–1.19 displays, 4.44–4.48 distribution to the public communication to the public, 3.112–3.113 exhaustion of rights, 3.114–3.123 generally, 3.103–3.106 issuing copies to public, 3.107–3.108 lending, 3.109–3.111 rental, 3.109–3.111 economic justification for legal protection, 1.8 emulation of functionality business logic, 4.34–4.39 concluding remarks, 4.64–4.67 conflicting licence terms, 4.56–4.58 displays, 4.44–4.48 graphics, 4.44–4.48 individual commands, 4.40–4.43 introduction, 4.30–4.31 Navitaire Inc v easyJet, 4.32–4.48

694

Index Computer programs – contd emulation of functionality – contd observing, studying and testing, 4.56–4.58 protectable expression, 4.53–4.55 SAS institute v World Programming, 4.49–4.63 user manuals incorporated into programs, 4.59–4.60 error correction, 3.132–3.136 EU Directive generally, 3.10 implementation, 3.5 exceptions to restricted acts back-up copies, 3.137–3.138 blind persons, 2.99–2.106 decompilation, 3.147–3.157 error correction, 3.132–3.136 generally, 3.124 introduction, 2.92 observing, studying and testing, 3.139–3.146 overview, 3.5 reproduction by a lawful acquirer, 3.125–3.136 translation etc by a lawful acquirer, 3.125–3.136 exclusive rights adaptation, 3.95–3.102 arrangement, 3.95–3.102 authorising infringement, 3.72–3.74 distribution to the public, 3.103–3.123 intellectual creation, 3.75–3.80 introduction, 3.67–3.71 reproduction, 3.81–3.94 substantiality, 3.75–3.80 translation, 3.95–3.102 exhaustion of rights, 3.114–3.123 form of expression, 3.15 forms of legal protection, 1.13 functionality business logic, 4.34–4.39 concluding remarks, 4.64–4.67 conflicting licence terms, 4.56–4.58 displays, 4.44–4.48 graphics, 4.44–4.48 individual commands, 4.40–4.43 introduction, 4.30–4.31 Navitaire Inc v easyJet, 4.32–4.48 observing, studying and testing, 4.56–4.58

Computer programs – contd functionality – contd protectable expression, 4.53–4.55 SAS institute v World Programming, 4.49–4.63 user manuals incorporated into programs, 4.59–4.60 generally, 2.13 graphic user interfaces, 3.94 graphics, 4.44–4.48 historical context, 3.8–3.15 ideas and principles, 3.39–3.45 inclusion of unprotected matter in program, 3.46–3.47 information society, and, 7.3 infringement of copyright adaptation, 3.95–3.102 arrangement, 3.95–3.102 authorising infringement, 3.72–3.74 distribution to the public, 3.103–3.123 intellectual creation, 3.75–3.80 introduction, 3.67–3.71 reproduction, 3.81–3.94 substantiality, 3.75–3.80 translation, 3.95–3.102 intellectual creation generally, 3.34–3.36 substantiality, and, 3.75–3.80 interfaces, 3.18 international conventions, 3.11–3.15 introduction, 3.1–3.7 issuing copies to public, 3.107–3.108 justification for legal protection, 1.8–1.12 legal protection development, 1.14–1.19 forms, 1.13 introduction, 1.1–1.7 justification, 1.8–1.12 lending, 3.109–3.111 literal copying, 3.69 literary works, as, 3.9 logic and algorithms, 3.64–3.66 making copies, 3.69 meaning, 1.2 modification of existing programs, 3.48–3.49 moral justification for legal protection, 1.8 moral rights, 2.123 nature, 3.2

695

Index Computer programs – contd non-textual copying application of Computer Associates decision, 4.25–4.29 emulation of functionality, 4.30–4.67 generally, 4.20–4.24 historical perspective, 4.6–4.9 introduction, 4.1–4.5 post-implementation of Directive cases, 4.29 overview, 3.69 US, in, 4.10–4.19 object code, 3.15 observing, studying and testing, 3.139–3.146 originality, 3.30–3.33 parts of programs, 3.37–3.38 permanent reproduction, 3.81–3.94 permitted acts back-up copies, 3.137–3.138 decompilation, 3.147–3.157 error correction, 3.132–3.136 generally, 3.124 introduction, 2.92 observing, studying and testing, 3.139–3.146 overview, 3.5 reproduction by a lawful acquirer, 3.125–3.136 translation etc by a lawful acquirer, 3.125–3.136 possession of infringing copies for commercial purposes, 3.161 preparatory design material, 3.19–3.29 presumptions generally, 3.172–3.173 overview, 3.6 principles, 3.39–3.45 programming languages, 3.56–3.63 remedies for infringement, circulating infringing copies, 3.160 circumvention of copy-protection devices, 3.162–3.171 generally, 3.158–3.159 possession of infringing copies for commercial purposes, 3.161 rental, 3.109–3.111 reproduction error correction, 3.132–3.136 generally, 3.81–3.89 graphic user interfaces, 3.94

Computer programs – contd reproduction – contd lawful acquirer, by, 3.125–3.136 screen images, 3.92–3.94 suite of programs as compilation, 3.90–3.91 restricted acts adaptation, 3.95–3.102 arrangement, 3.95–3.102 authorising infringement, 3.72–3.74 distribution to the public, 3.103–3.123 exceptions, 3.124–3.146 intellectual creation, 3.75–3.80 introduction, 3.67–3.71 reproduction, 3.81–3.94 substantiality, 3.75–3.80 translation, 3.95–3.102 screen images, 3.92–3.94 secondary infringement circulating infringing copies, 3.160 circumvention of copy-protection devices, 3.162–3.171 generally, 3.158–3.159 possession of infringing copies for commercial purposes, 3.161 source code, 3.15 special measures of protection circulating infringing copies, 3.160 circumvention of copy-protection devices, 3.162–3.171 generally, 3.158–3.159 possession of infringing copies for commercial purposes, 3.161 studying, observing and testing, 3.139–3.146 subsistence of copyright algorithms, 3.64–3.66 command sets, 3.52–3.55 compilations, 3.50–3.51 generally, 3.16–3.17 ideas and principles, 3.39–3.45 inclusion of unprotected matter in program, 3.46–3.47 intellectual creation, 3.34–3.36 interfaces, 3.18 logic and algorithms, 3.64–3.66 modification of existing programs, 3.48–3.49 originality, 3.30–3.33 parts of programs, 3.37–3.38

696

Index Computer programs – contd subsistence of copyright – contd preparatory design material, 3.19–3.29 programming languages, 3.56–3.63 substantiality, 3.75–3.80 suite of programs as compilation, 3.90–3.91 temporary reproduction, 3.81–3.94 testing, observing and studying 3.139–3.146 textual copying, 3.69 translation error correction, 3.132–3.136 generally, 3.95–3.102 lawful acquirer, by, 3.125–3.136 TRIPS Agreement 1994, and, 3.13 unprotected matter in program, 3.46–3.47 US law, 3.9 WIPO Copyright Treaty 1996, and, 3.14 Computer software And see Computer programs legal protection development, 1.14–1.19 forms, 1.13 introduction, 1.1–1.7 justification, 1.8–1.12 meaning, 1.2 Concerted practices anti-competitive agreements, and, 15.5–15.9 Confidential information accounts of profits, 10.45–10.46 basic requirements for action introduction, 10.8 obligation of confidence, 10.16–10.19 quality of confidence, 10.9–10.15 unauthorised use, 10.20 consultants, 10.30–10.31 Council of Europe Convention, 10.5 damages, 10.44–10.47 data protection, and conditions for lawful processing, 10.102 data controllers, 10.97 data protection officers, 10.97 data protection principles, 10.98–10.101 data subject, 10.95 data subjects rights, 10.105–10.109

Confidential information – contd data protection, and – contd freedom of information, 10.110–10.115 GDPR, 10.92–10.94 generally, 10.92–10.97 personal data, 10.95–10.96 processing, 10.98–10.104 processing special categories of personal data, 10.103–10.104 defence, 10.37–10.39 development of protection for software, and, 1.19 Directive, 10.6 employees, 10.21–10.29 Enforcement Directive, 10.48–10.51 forms of protection for software, and, 1.13 freedom of information, 10.110–10.115 human rights, and, 10.52–10.66 injunctions generally, 10.40–10.43 interim injunction, 10.42 introduction, 10.40 ‘springboard’ injunction, 10.43 introduction, 10.1–10.7 obligation of confidence, 10.16–10.19 public interest defence, 10.37–10.39 quality of confidence, 10.9–10.15 remedies accounts of profits, 10.45–10.46 damages, 10.44–10.47 Enforcement Directive, 10.48–10.51 injunctions, 10.40–10.43 interim injunction, 10.42 introduction, 10.40 ‘springboard’ injunction, 10.43 restraint of trade covenants, 10.32–10.36 right to respect for private and family life, 10.52–10.66 self-employed persons, 10.30–10.31 ‘springboard’ injunction, 10.43 trade secrets, and acquisition, 10.77 decision on merits of the case, 10.86–10.89 definition, 10.71 disclosure, 10.77 EU Directive, 10.72–10.89

697

Index Confidential information – contd trade secrets, and – contd introduction, 10.67–10.70 lawful acquisition, use and disclosure, 10.77 measures, procedures and remedies, 10.81–10.89 provisional measures, 10.84–10.85 scope of Directive, 10.75–10.76 TRIPS Agreement, 10.71 UK regulations, 10.90–10.91 unlawful acquisition, use and disclosure, 10.78–10.80 use, 10.77 unauthorised use, 10.20 Confusion trademarks on the internet, and, 14.18–14.24 Content services cross-border portability introduction, 7.155–7.156 not paid for services, 7.162 other provisions, 7.163–7.166 paid for subscriptions, 7.157–7.161 Copies of works copyright, and, 2.20 Copying computer programs, and, 3.69 copyright, and, 2.47–2.53 Copyright accessible copies for the visually impaired, 2.99–2.106 accounts of profits, 2.66 adapting a work, 2.63–2.65 additional damages, 2.66 architecture works, 2.15 artistic workmanship, 2.15 artistic works duration, 2.34–2.39 generally, 2.13–2.15 introduction, 2.10–2.12 meaning, 2.15 overview, 2.8 assignment, 2.113–2.115 authorship generally, 2.21–2.23 overview, 2.8 back-up of programs, 2.92 blind persons, 2.99–2.106

Copyright – contd blocking injunctions costs of implementation, 7.143–7.149 generally, 7.129–7.137 live streaming services, and, 7.138–7.142 broadcasts generally, 2.18 overview, 2.8 charts, 2.15 collages, 2.15 communication of a work to the public criminal offences, 2.79–2.82 generally, 2.61–2.62 compilations, 2.13 computer-generated works authorship, 2.23 duration, 2.35 generally, 3.174–3.180 moral rights, 2.120–2.123 computer graphics generally, 8.5–8.10 introduction, 2.15 nature in moving images, 8.11–8.13 computer programs And see Computer programs background, 3.8–3.15 decompilation, 3.147–3.157 emulation of functionality, 4.30–4.67 exceptions to restricted acts, 3.124–3.146 exclusive rights, 3.67–3.123 generally, 2.13 infringement of copyright, 3.67–3.123 introduction, 3.1–3.7 moral rights, 2.123 non-textual copying, 4.1–4.29 permitted acts, 3.124–3.146 presumptions, 3.172–3.173 restricted acts, 3.67–3.123 special measures of protection, 3.158–3.171 subsistence of copyright, 3.16–3.66 copies of works, 2.20 copying, 2.47–2.53 criminal offences communication to the public, 2.79–2.82 corporate bodies, and, 2.83–2.84 generally, 2.77–2.78 sentencing, 2.85–2.87

698

Index Copyright – contd Crown copyright, 2.33 damages, 2.66–2.69 databases And see Databases authorship, 5.43–5.46 dealings, 5.48–5.50 duration, 5.47 exceptions to restricted acts, 5.59–5.68 exclusive rights, 5.51–5.58 generally, 2.125 introduction, 5.1–5.9 meaning, 5.11–5.21 moral rights, 5.69–5.71 original work, as, 2.13 ownership, 5.43–5.46 permitted acts, 5.59–5.68 restricted acts, 5.51–5.58 subsistence of copyright, 5.22–5.42 sui generis right, 6.1–6.108 technology, 5.10 dealings assignment, 2.113–2.115 introduction, 2.112 licences, 2.116–2.117 orphan works, 2.118–2.119 decompilation of programs, 2.92 derivative works generally, 2.16 overview, 2.8 development of protection for software, and, 1.16 diagrams, 2.15 Digital Single Market Directive (proposed) audio-visual works on VOD platforms, 7.179 cross-border teaching activities, 7.172–7.174 cultural heritage institutions, 7.175–7.178 data mining, 7.169–7.171 digital teaching activities, 7.172–7.174 digital uses of press publications, 7.180–7.184 fair remuneration, 7.191–7.192 final provisions, 7.193 introduction, 7.167–7.168 rights of reproduction, 7.180–7.184

Copyright – contd teaching activities online, 7.172–7.174 text mining, 7.169–7.171 transparency of remuneration, 7.191–7.192 use of content by information service providers, 7.185–7.190 video-on-demand platforms, 7.179 dramatic works duration, 2.34–2.39 form, 2.14 generally, 2.13–2.15 introduction, 2.10–2.12 meaning, 2.13 overview, 2.8 drawings, 2.15 duration generally, 2.34–2.39 moral rights, 2.124 overview, 2.8 economic rights, 2.126 education, 2.88 employee works generally, 2.24–2.33 overview, 2.8 enforcement, 2.110 engravings, 2.15 estoppel, 2.109 fair dealing, 2.91 films generally, 2.17 overview, 2.8 fonts, 2.15 forms of protection for software, and, 1.13 freedom of expression, and, 2.110–2.111 graphic works, 2.15 harmonisation of law, 2.7 identification as author of a work or director of a film, 2.120 implied consent, 2.109 incidental copies, 2.90 information society, and collection of information about online infringers, 7.150–7.154 cross-border portability of content services, 7.155–7.166 Digital Single Market Directive, 7.167–7.193

699

Index Copyright – contd information society, and – contd electronic rights management, 7.123–7.126 EU Directive, 7.28–7.30 exceptions, 7.61–7.86 injunctions against providers, 7.129–7.149 introduction, 7.1–7.7 limitations, 7.61–7.86 protection of technological measures, 7.87–7.122 remedies, 7.127–7.128 rights, 7.31–7.60 subsistence, 7.8–7.27 infringement, 2.8–2.9 injunctions, 2.70 injunctions against information society service providers costs of implementation, 7.143–7.149 generally, 7.129–7.137 live streaming services, and, 7.138–7.142 international conventions, 2.3–2.4 introduction, 2.1–2.7 issuing copies to the public, 2.54–2.55 jurisdiction, and, 16.22–16.28 lending a work to the public, 2.56–2.59 libraries and archives, 2.88 licensing generally, 2.116–2.117 orphan works, 2.118–2.119 overview, 2.9 literary works duration, 2.34–2.39 form, 2.14 generally, 2.13–2.15 introduction, 2.10–2.12 meaning, 2.13 overview, 2.8 live performances generally, 2.126–2.127 overview, 2.9 making an adaptation, 2.63–2.65 maps, 2.15 meaning, 2.2 moral rights computer programs, and, 2.123 databases, and, 5.69–5.71 generally, 2.120–2.124

Copyright – contd moral rights – contd live performances, 2.126 overview, 2.9 musical works duration, 2.34–2.39 form, 2.14 generally, 2.13–2.15 introduction, 2.10–2.12 meaning, 2.13 overview, 2.8 neighbouring rights generally, 2.126–2.128 overview, 2.6 non-commercial research, 2.88 non-derogation from grant, 2.108 Norwich Pharmacal orders, 2.74 objection to derogatory treatment of a work or film, 2.120–2.121 original works generally, 2.13–2.15 introduction, 2.10–2.12 overview, 2.8 origins, 2.1 orphan works licensing scheme, 2.118–2.119 permitted acts, 2.93–2.98 ownership generally, 2.24–2.33 overview, 2.8 Parliamentary copyright, 2.33 performance rights generally, 2.126–2.127 overview, 2.9 performing, playing or showing a work to the public, 2.60 permitted acts back-up of programs, 2.92 blind persons, 2.99–2.106 decompilation of programs, 2.92 education, 2.88 fair dealing, 2.91 incidental copies, 2.90 introduction, 2.88–2.92 libraries and archives, 2.88 non-commercial research, 2.88 orphan works, 2.93–2.98 overview, 2.9 print-disabled persons, 2.99–2.106 private copying, 2.89 private study, 2.88

700

Index Copyright – contd permitted acts – contd public administration, 2.88 transient copies, 2.90 visually impaired persons, 2.99–2.106 photographs, 2.15 plans, 2.15 primary infringement, 2.9 print-disabled persons, 2.99–2.106 private copying, 2.89 private study, 2.88 public administration, 2.88 public interest, 2.107 publication, 2.11 publication right, 2.128 published editions, 2.19 qualification, 2.11 related rights generally, 2.126–2.128 overview, 2.9 remedies, 2.66–2.74 rental right, 2.56–2.59 requirements, 2.8–2.9 restricted acts adapting a work, 2.63–2.65 communication of a work to the public, 2.61–2.62 copying, 2.47–2.53 generally, 2.40–2.46 issuing copies to the public, 2.54–2.55 lending right, 2.56–2.59 making an adaptation, 2.63–2.65 overview, 2.9 performing, playing or showing a work to the public, 2.60 rental right, 2.56–2.59 rights in performances generally, 2.126–2.127 overview, 2.9 sculptures, 2.15 secondary infringement generally, 2.75–2.76 overview, 2.9 seizure of infringing copies, 2.72–2.73 self-employed contractors, 2.31–2.32 showing or playing a work to the public, 2.60 sound recordings generally, 2.16 overview, 2.8 spare parts and accessories, 2.108

Copyright – contd subsistence, 2.10–2.12 tables or compilations, 2.13 term of protection generally, 2.34–2.39 moral rights, 2.124 overview, 2.8 transfer of ownership, 2.9 transient copies, 2.90 TRIPS Agreement, 2.4 typographical arrangements generally, 2.19 overview, 2.15 utilitarian designs, 2.108 visually impaired persons, 2.99–2.106 without notice searches, 2.71 works, 2.10–2.12 works of architecture, 2.15 works of artistic workmanship, 2.15 ‘writing’, 2.14 Criminal offences Community registered design, and, 8.64–8.70 computer programs, and, 3.147 copyright, and communication to the public, 2.79–2.82 corporate bodies, and, 2.83–2.84 generally, 2.77–2.78 sentencing, 2.85–2.87 database right, and, 6.100 registered trademarks, and, 13.52–13.53 Criticism or review copyright in the information society, and, 7.83 Cross-border portability online content services introduction, 7.155–7.156 not paid for services, 7.162 other provisions, 7.163–7.166 paid for subscriptions, 7.157–7.161 Cross-border teaching activities Digital Single Market Directive (proposed), and, 7.172–7.174 Crown copyright generally, 2.33 Cultural heritage institutions Digital Single Market Directive (proposed), and, 7.175–7.178 Damage to repute or distinctiveness trademarks on the internet, and, 14.31

701

Index Damages breach of confidence, and, 10.44–10.47 Community design, and, 8.50 computer programs, and, 3.158 copyright, and, 2.66–2.69 database right, and, 6.87–6.96 patents, and, 11.42 registered trademarks, and, 13.43 Data mining Digital Single Market Directive (proposed), and, 7.169–7.171 Data protection breach of confidence, and, 10.92 conditions for lawful processing, 10.102 data controllers, 10.97 data protection officers, 10.97 data protection principles, 10.98–10.101 data subject, 10.95 data subjects rights, 10.105–10.109 freedom of information, 10.110–10.115 GDPR, 10.92–10.94 generally, 10.92–10.97 personal data, 10.95–10.96 processing, 10.98–10.104 processing special categories of personal data, 10.103–10.104 Database right accounts of profits, 6.87 accumulation of insubstantial takings, 6.68–6.70 administrative procedure, 6.76–6.77 application, 6.7 arrangement in systematic or methodical way, 6.10 assignment, 6.37 assumption of expiry of right, 6.80–6.81 beneficiaries employee database makers, 6.32–6.33 generally, 6.25–6.27 joint makers, 6.30–6.31 maker of database, 6.28–6.35 circumvention of effective technological measures, 6.100 Commission reports, 6.101–6.104 copyright, and, 2.6 criminal offences, 6.100 damages, 6.87–6.96 data, 6.7 dealings, 6.37–6.40

Database right – contd duration generally, 6.41–6.45 pre-existing databases, 6.46–6.47 employee database makers, 6.32–6.33 EU Directive, 6.3–6.4 evaluation and fitness check roadmap, 6.105–6.108 exceptions assumption of expiry of right, 6.80–6.81 fair dealing, 6.75 generally, 6.72–6.74 legal deposit libraries, 6.78–6.79 public administration, 6.76–6.77 exhaustion of rights, 6.49 extraction exceptions, 6.65 generally, 6.51–6.55 fair dealing, 6.75 generally, 5.2–5.3 independent works, 6.8–6.9 infringement accumulation of insubstantial takings, 6.68–6.70 generally, 6.64–6.67 remedies, 6.93–6.96 vicarious liability, 6.71 injunctions, 6.87 insubstantial takings, 6.68–6.70 introduction, 6.1–6.6 investment in obtaining, verifying or presenting contents forms of, 6.24 generally, 6.11–6.16 obtaining, 6.17–6.23 joint makers, 6.30–6.31 judicial procedure, 6.76–6.77 legal deposit libraries, 6.78–6.79 licensing generally, 6.40 rights of licensees, 6.87–6.88 schemes, 6.97–6.99 maker of database employee database makers, 6.32–6.33 generally, 6.28–6.29 joint makers, 6.30–6.31 other rules, 6.34–6.35 obtaining, 6.17–6.23 ownership, 6.36

702

Index Database right – contd permitted acts assumption of expiry of right, 6.80–6.81 fair dealing, 6.75 generally, 6.72–6.74 legal deposit libraries, 6.78–6.79 public administration, 6.76–6.77 pre-existing databases, 6.46–6.47 private purposes, 6.65 public administration, 6.76–6.77 public security, 6.65 remedies, 6.93–6.96 restricted acts extraction, 6.51–6.55 generally, 6.48–6.50 re-utilisation, 6.56–6.60 substantiality, 6.61–6.63 re-utilisation, 6.56–6.60 rights of database owners extraction, 6.51–6.55 generally, 6.48–6.50 re-utilisation, 6.56–6.60 substantiality, 6.61–6.63 rights of lawful users generally, 6.82–6.86 licensees, 6.87–6.88 presumptions, 6.89–6.92 scientific research, 6.65 statutory authority, 6.76–6.77 subsistence, 6.7–6.10 substantial investment forms of, 6.24 generally, 6.11–6.16 obtaining, 6.17–6.23 substantiality, 6.61–6.63 systematic or methodical arrangement, 6.10 teaching, 6.65 term of protection generally, 6.41–6.45 pre-existing databases, 6.46–6.47 testamentary disposition, 6.38 transfer, 6.37–6.40 vicarious liability for infringement, 6.71 Databases access to and use of database contents, 5.60–5.62 adaptation, 5.55–5.57 administration or judicial purposes, 5.68 administrative procedure, 5.68

Databases – contd arranged systematically or methodically, 5.18–5.20 arrangement, 5.55–5.57 assignment, 5.48 authorship, 5.43–5.46 chapters in a book, 5.15 communication to the public, 5.51 compilations of data or material, 5.22 computer programs, and excepted from protection, 5.58 generally, 5.4 contents, 5.38–5.40 copyright, and authorship, 5.43–5.46 dealings, 5.48–5.50 duration, 5.47 exceptions to restricted acts, 5.59–5.68 exclusive rights, 5.51–5.58 generally, 2.125 introduction, 5.1–5.9 meaning of ‘database’, 5.11–5.21 moral rights, 5.69–5.71 original work, as, 2.13 ownership, 5.43–5.46 permitted acts, 5.59–5.68 restricted acts, 5.51–5.58 subsistence of copyright, 5.22–5.42 technology, 5.10 dealings, 5.48–5.50 definition arranged systematically or methodically, 5.18–5.20 chapters in a book, 5.15 generally, 5.11–5.13 independent works, data or materials, 5.14–5.17 individually accessible by electronic other means, 5.21 distribution to the public, 5.51 duration, 5.47 EC Directive generally, 5.4–5.6 meaning of ‘database’, 5.11 excepted computer programs, 5.58 exceptions to restricted acts, 5.59–5.68 exclusive rights, 5.51–5.58 false attribution, 5.69 generally, 2.125 identification as author or director, 5.69

703

Index Databases – contd illustration for teaching or scientific research, 5.66 independent works, data or materials, 5.14–5.17 individually accessible by electronic other means, 5.21 information society, and, 7.3 intellectual creation, 5.25–5.37 introduction, 5.1–5.9 judicial procedure, 5.68 licensing, 5.48–5.50 literary works, as generally, 5.7 introduction, 5.1 permitted acts, and, 5.67 meaning arranged systematically or methodically, 5.18–5.20 chapters in a book, 5.15 generally, 5.11–5.13 independent works, data or materials, 5.14–5.17 individually accessible by electronic other means, 5.21 moral rights, 5.69–5.71 objection to derogatory treatment, 5.69 original work, as, 2.13 other elements, 5.41–5.42 ownership, 5.43–5.46 performance to the public, 5.51 permitted acts access to and use of database contents, 5.60–5.62 administration or judicial purposes, 5.68 general, 5.59–5.63 illustration for teaching or scientific research, 5.66 literary works, 5.67 optional acts, 5.64–5.68 public security, 5.68 reproduction for private purposes of non-electronic databases, 5.66 private purposes, 5.66 public security, 5.68 reproduction generally, 5.51 private purposes of non-electronic databases, for, 5.66

Databases – contd restricted acts adaptation, 5.55–5.57 arrangement, 5.55–5.57 computer programs, 5.58 exceptions, 5.59–5.68 generally, 5.51–5.54 translation, 5.55–5.57 rights in the contents, 5.38–5.40 scientific research, 5.66 software, and excepted from protection, 5.58 generally, 5.4 statutory authority, 5.64 structure, 5.25–5.37 subsistence of copyright contents, 5.38–5.40 generally, 5.22–5.24 intellectual creation, 5.25–5.37 other elements, 5.41–5.42 rights in the contents, 5.38–5.40 structure, 5.25–5.37 sui generis right And see Database right generally, 6.1–6.108 introduction, 5.2–5.3 teaching, 5.66 technology, 5.10 temporary reproduction, 5.51 translation, 5.55–5.57 Dealings Community design, and, 8.40–8.41 copyright, and assignment, 2.113–2.115 introduction, 2.112 licences, 2.116–2.117 orphan works, 2.118–2.119 copyright in databases, and, 5.48–5.50 database right, and, 6.37–6.40 patents, and assignment, 11.30 FRAND licences, 11.34–11.40 licensing, 11.30–11.28 registration, 11.29–11.33 registered trademarks, and assignment, 13.37 licensing, 13.35–13.36 registration, 13.37 Decompilation abuse of dominant position, and, 15.30 conditions and caveats, 3.152–3.157

704

Index Decompilation – contd generally, 3.147–3.151 introduction, 3.124 permitted acts, and, 2.92 Deep linking copyright in the information society, and, 7.21–7.27 Defamation malicious falsehood, and, 13.72–13.74 Defences breach of confidence, and, 10.37–10.39 patents, and exhaustion of rights, 11.48–11.49 introduction, 11.43–11.44 right to continue prior acts, 11.45 right to repair, 11.46 public interest, 10.37–10.39 Delivery up registered trademarks, and, 13.43 Deposit of materials semiconductor topography right, and, 9.30 Derivative works generally, 2.16 overview, 2.8 Designs Brexit, and, 8.76–8.78 Community registered design accounts of profits, 8.50 application, 8.24 assignment, 8.40 damages, 8.50 dealings, 8.40–8.41 ‘design’, 8.24 duration, 8.38 entitlement, 8.39 exceptions and limitations, 8.47–8.49 exhaustion of rights, 8.48 experiments, 8.47 generally, 8.23–8.26 groundless threats of infringement actions, 8.52 individual character, 8.34–8.37 infringement, 8.42–8.46 injunctions, 8.50 introduction, 8.4 licensing, 8.40–8.41 novelty, 8.30–8.32 ownership, 8.39 period of grace, 8.33 private use, 8.47

Designs – contd Community registered design – contd remedies, 8.50–8.51 restricted acts, 8.42–8.46 seizure, 8.47 subsistence, 8.27–8.37 teaching, 8.47 technical function, 8.28–8.29 term of protection, 8.38 threats of infringement actions, 8.52 unjustified threats, 8.52–8.63 use of design prior to filing, 8.49 Community unregistered design, 8.23 computer-generated works, 8.13 computer graphics Community design, 8.23–8.51 generally, 8.16–8.22 implications of design law, 8.73–8.75 introduction, 8.1–8.4 UK registered design, 8.71–8.72 development of protection for software, and, 1.18 fonts, 8.73–8.75 forms of protection for software, and, 1.13 generally, 8.16–8.22 implications of design law, 8.73–8.75 introduction, 8.1–8.4 registered designs, 8.4 software fonts, 8.73–8.75 topography of semiconductor products, 8.72 UK registered design, 8.71–8.72 UK unregistered design, 8.72 unjustified threats defences, 8.63 generally, 8.52–8.53 immunity for professional advisers, 8.64 permitted communication, 8.57–8.61 remedies, 8.62 threat of proceedings, 8.54–8.56 website images, 8.73–8.75 Destruction of articles breach of confidence, and, 10.40 Diagrams copyright, and, 2.15 Digital Economy Act 2010 copyright in the information society, and, 7.150–7.154

705

Index Digital Single Market Directive (proposed) audio-visual works on VOD platforms, 7.179 cross-border teaching activities, 7.172–7.174 cultural heritage institutions, 7.175–7.178 data mining, 7.169–7.171 digital teaching activities, 7.172–7.174 digital uses of press publications, 7.180–7.184 fair remuneration, 7.191–7.192 final provisions, 7.193 introduction, 7.167–7.168 rights of reproduction, 7.180–7.184 teaching activities online, 7.172–7.174 text mining, 7.169–7.171 transparency of remuneration, 7.191–7.192 use of content by information service providers, 7.185–7.190 video-on-demand platforms, 7.179 Digital teaching activities Digital Single Market Directive (proposed), and, 7.172–7.174 Digital uses of press publications Digital Single Market Directive (proposed), and, 7.180–7.184 Dilution generally, 14.32–14.41 introduction, 14.30–14.31 Displays and graphics emulation of functionality, and, 4.44–4.48 Distribution right generally, 7.59–7.60 introduction, 7.2 Distribution to the public computer programs, and communication to the public, 3.112–3.113 exhaustion of rights, 3.114–3.123 generally, 3.103–3.106 issuing copies to public, 3.107–3.108 lending, 3.109–3.111 rental, 3.109–3.111 databases, and, 5.51 Domain names passing off, and, 14.93–14.104 ‘Double-actionability’ rule jurisdiction, and, 16.4

Double-exclusion principle computer-implemented inventions, and business methods, 12.72–12.74 generally, 12.71 mental acts, 12.75–12.77 presentation of information, 12.78 Dramatic works duration, 2.34–2.39 form, 2.14 generally, 2.13–2.15 introduction, 2.10–2.12 meaning, 2.13 overview, 2.8 Drawings copyright, and, 2.15 Duration of rights Community design, and, 8.38 copyright, and generally, 2.34–2.39 moral rights, 2.124 overview, 2.8 copyright in databases, and, 5.47 database right, and generally, 6.41–6.45 pre-existing databases, 6.46–6.47 patents, and, 11.2 registered trademarks, and, 13.55 semiconductor topography right, and, 9.31–9.33 eBay trademarks on the internet, and, 14.6 Economic rights copyright, and, 2.126 Education copyright, and, 2.88 Efficient competitor test competition law, and, 15.26–15.27 Electronic rights management copyright in the information society, and, 7.123–7.126 Employees 8.39 copyright, and generally, 2.24–2.33 overview, 2.8 Emulation of functionality See also Non-textual copying concluding remarks, 4.64–4.67 introduction, 4.30–4.31 Navitaire Inc v easyJet business logic, 4.34–4.39 displays, 4.44–4.48

706

Index Emulation of functionality – contd Navitaire Inc v easyJet – contd graphics, 4.44–4.48 individual commands, 4.40–4.43 introduction, 4.32–4.33 SAS institute v World Programming application of ruling, 4.61–4.63 conflicting licence terms, 4.56–4.58 introduction, 4.49–4.52 observing, studying and testing, 4.56–4.58 protectable expression, 4.53–4.55 user manuals incorporated into programs, 4.59–4.60 Enforcement copyright, and, 2.110 Engravings copyright, and, 2.15 Erasure registered trademarks, and, 13.43 Estoppel copyright, and, 2.109 ETSI technical standards dealing with patents, and, 11.34–11.40 EU trademarks And see Registered trademarks generally, 13.57–13.62 jurisdiction, and, 16.14–16.21 Exclusive rights And see Restricted acts computer programs, and, 3.67–3.123 databases, and, 5.51–5.58 Exhaustion of rights competition law, and generally, 15.45–15.50 parallel imports, 15.51–15.52 Community design, and, 8.48 computer programs, and, 3.114–3.123 copyright in the information society, and, 7.56–7.58 database right, and, 6.49 patents, and, 11.48–11.49 registered trademarks, and generally, 13.34 use on the internet, 14.26 semiconductor topography right, and, 9.37 Experiments Community design, and, 8.47 patents, and, 11.43

Extraction exceptions, 6.65 generally, 6.51–6.55 Failing to provide information abuse of dominant position, and, 15.30–15.33 Fair dealing copyright, and, 2.91 database right, and, 6.75 Fair remuneration Digital Single Market Directive (proposed), and, 7.191–7.192 False attribution copyright in databases, and, 5.69 File sharing copyright in the information society, and, 7.53–7.55 Films copyright, and generally, 2.17 overview, 2.8 copyright in the information society, and, 7.14–7.16 Fonts copyright, and, 2.15 development of protection for software, and, 1.18 Forum non conveniens jurisdiction, and, 16.6 FRAND licences dealing with patents, and, 11.34–11.40 Freedom of expression copyright, and, 2.110–2.111 Freedom of information breach of confidence, and, 10.110–10.115 Freedom to provide services competition law, and, 15.53–15.57 ‘Free-riding’ generally, 14.32–14.41 introduction, 14.30–14.31 Functionality emulation business logic, 4.34–4.39 concluding remarks, 4.64–4.67 conflicting licence terms, 4.56–4.58 displays, 4.44–4.48 graphics, 4.44–4.48 individual commands, 4.40–4.43 introduction, 4.30–4.31 Navitaire Inc v easyJet, 4.32–4.48

707

Index Functionality – contd emulation – contd observing, studying and testing, 4.56–4.58 protectable expression, 4.53–4.55 SAS institute v World Programming, 4.49–4.63 user manuals incorporated into programs, 4.59–4.60 ‘Gillette’ defence patents, and, 11.44 Goodwill passing off, and, 14.84–14.85 Google AdWords advertising function, 14.60–14.61 detriment to mark of repute, 14.64–14.69 essential function, 14.58–14.59 generally, 14.49–14.55 guaranteeing origin, 14.58–14.59 injunctions against service providers for infringement, and costs of compliance, 14.78–14.81 generally, 14.74–14.77 Interflora v Marks & Spencer advertising function, 14.60–14.61 application of the ruling, 14.66–14.69 detriment to mark of repute, 14.64–14.69 essential function, 14.58–14.59 generally, 14.56–14.49 guaranteeing origin, 14.58–14.59 investment function, 14.62–14.63 unfair advantage, 14.64–14.69 introduction, 14.7 investment function, 14.62–14.63 overview, 1.22 unfair advantage, 14.64–14.69 Goodwill passing off, and, 1.24–1.26 Graphic symbols development of protection for software, and, 1.18 Graphic user interfaces (GUIs) computer programs, and, 3.94 Graphic works copyright, and, 2.15 Graphics copyright, and generally, 8.5–8.10 introduction, 2.15 nature in moving images, 8.11–8.13

Graphics – contd design, and Community design, 8.23–8.70 generally, 8.16–8.22 introduction, 8.1–8.4 UK registered design, 8.71–8.72 emulation of functionality, and, 4.44–4.48 introduction, 8.1–8.2 trademarks, and, 8.14–8.15 Groundless threats See also Unjustified threats generally, 13.45 Honest practices registered trademarks, and, 13.31 Horizontal agreements anti-competitive agreements, and, 15.6 HTML files copyright in the information society, and, 7.9–7.10 Human rights breach of confidence, and, 10.52–10.66 Ideas and principles computer programs, and, 3.39–3.45 Identification as author or director See also Moral rights copyright, and, 2.120 databases, and, 5.69 Implied consent copyright, and, 2.109 Incidental copies copyright, and, 2.90 Individual character Community design, and, 8.34–8.37 Industrial application patents, and generally, 11.18–11.19 implicit in claims, 11.20 Information society administrative procedure, 7.83 artistic works, 7.14–7.16 authors’ rights of reproduction and communication to the public, 7.49–7.52 blocking injunctions costs of implementation, 7.143–7.149 generally, 7.129–7.137 live streaming services, and, 7.138–7.142 caricature, parody or pastiche, 7.86

708

Index Information society – contd circumvention of technological measures civil remedies as to circumvention, 7.98–7.101 civil remedies as to devices and services, 7.112–7.116 criminal offences, 7.102–7.111 effective technological measures, 7.90–7.93 generally, 7.89–7.84 introduction, 7.87–7.88 remedies where permitted acts prevented, 7.117–7.122 scope of protection, 7.94–7.97 ‘technological measures’, 7.90–7.93 collection of information about online infringers, 7.150–7.154 communication to the public right Article 5(3) exceptions, 7.83–7.86 authors’ rights, 7.49–7.52 communication, 7.38–7.43 exceptions, 7.61 exhaustion of rights, and, 7.56–7.58 file sharing, 7.53–7.55 generally, 7.35–7.37 introduction, 7.2 public and new public, 7.44–7.48 compilations, 7.11–7.13 computer programs, and, 7.3 copyright collection of information about online infringers, 7.150–7.154 cross-border portability of content services, 7.155–7.166 Digital Single Market Directive, 7.167–7.193 electronic rights management, 7.123–7.126 EU Directive, 7.28–7.30 exceptions, 7.61–7.86 injunctions against providers, 7.129–7.149 introduction, 7.1–7.7 limitations, 7.61–7.86 protection of technological measures, 7.87–7.122 remedies, 7.127–7.128 rights, 7.31–7.60 subsistence, 7.8–7.27 criticism or review, 7.83

Information society – contd cross-border portability of online content services introduction, 7.155–7.156 not paid for services, 7.162 other provisions, 7.163–7.166 paid for subscriptions, 7.157–7.161 databases, and, 7.3 deep linking, 7.21–7.27 Digital Economy Act 2010, 7.150–7.154 Digital Single Market Directive (proposed) audio-visual works on VOD platforms, 7.179 cross-border teaching activities, 7.172–7.174 cultural heritage institutions, 7.175–7.178 data mining, 7.169–7.171 digital teaching activities, 7.172–7.174 digital uses of press publications, 7.180–7.184 fair remuneration, 7.191–7.192 final provisions, 7.193 introduction, 7.167–7.168 rights of reproduction, 7.180–7.184 teaching activities online, 7.172–7.174 text mining, 7.169–7.171 transparency of remuneration, 7.191–7.192 use of content by information service providers, 7.185–7.190 video-on-demand platforms, 7.179 distribution right generally, 7.59–7.60 introduction, 7.2 electronic rights management, 7.123–7.126 EU Directive generally, 7.28–7.30 introduction, 7.2–7.4 purpose, 7.28 rights provided, 7.31–7.60 exceptions Article 5(2), under, 7.78–7.82 Article 5(3), under, 7.83–7.86 introduction, 7.61–7.62 other, 7.77 temporary reproduction, 7.63–7.76

709

Index Information society – contd exhaustion of rights, and, 7.56–7.58 file sharing, 7.53–7.55 films, 7.14–7.16 format of works, 7.8 HTML files, 7.9–7.10 injunctions against providers costs of implementation, 7.143–7.149 generally, 7.129–7.137 live streaming services, and, 7.138–7.142 introduction, 7.1–7.7 judicial procedure, 7.83 libraries and archives, 7.82 limitations, 7.61–7.86 linking, 7.21–7.27 ‘look and feel’, 7.17–7.20 parody or pastiche, 7.86 PDF files, 7.8 portability of online content services introduction, 7.155–7.156 not paid for services, 7.162 other provisions, 7.163–7.166 paid for subscriptions, 7.157–7.161 private copying, 7.79–7.82 protection of technological measures civil remedies as to circumvention, 7.98–7.101 civil remedies as to devices and services, 7.112–7.116 criminal offences, 7.102–7.111 effective technological measures, 7.90–7.93 generally, 7.89 introduction, 7.87–7.88 remedies where permitted acts prevented, 7.117–7.122 scope of protection, 7.94–7.97 ‘technological measures’, 7.90–7.93 public security, 7.83 published editions, 7.17–7.20 remedies, 7.127–7.128 reporting current events, 7.83 reproduction right Article 5(2) exceptions, 7.78–7.82 Article 5(3) exceptions, 7.83–7.86 authors’ rights, 7.49–7.52 exceptions, 7.61–7.86 generally, 7.32–7.34 introduction, 7.2 temporary reproduction, 7.63–7.76

Information society – contd rights management information, 7.123–7.126 scientific research, 7.83 subsistence of copyright artistic works, 7.14–7.16 compilations, 7.11–7.13 deep linking, 7.21–7.27 films, 7.14–7.16 generally, 7.8 HTML files, 7.9–7.10 linking, 7.21–7.27 ‘look and feel’, 7.17–7.20 published editions, 7.17–7.20 typographical arrangements, 7.17–7.20 webpages, 7.9–7.10 teaching, 7.83 temporary reproduction generally, 7.63–7.71 ruling of Court of Justice in Public Relations case. 7.72–7.76 time shifting, 7.79–7.82 transient reproduction generally, 7.63–7.71 ruling of Court of Justice in Public Relations case. 7.72–7.76 typographical arrangements, 7.17–7.20 webpages, 7.9–7.10 Information society service providers blocking injunctions costs of implementation, 7.143–7.149 generally, 7.129–7.137 live streaming services, and, 7.138–7.142 liability, 1.20–1.21 Information technology (IT) introduction, 1.1–1.7 Infringement Community design, and, 8.42–8.46 computer programs, and adaptation, 3.95–3.102 arrangement, 3.95–3.102 authorising infringement, 3.72–3.74 distribution to the public, 3.103–3.123 intellectual creation, 3.75–3.80 introduction, 3.67–3.71 reproduction, 3.81–3.94 substantiality, 3.75–3.80 translation, 3.95–3.102 copyright, and, 2.8–2.9

710

Index Infringement – contd database right, and accumulation of insubstantial takings, 6.68–6.70 generally, 6.64–6.67 remedies, 6.93–6.96 vicarious liability, 6.71 patents, and, 11.41–11.42 registered trademarks, and, 13.24–13.27 semiconductor topography right, and, 9.34–9.35 Injunctions blocking costs of implementation, 7.143–7.149 generally, 7.129–7.137 live streaming services, and, 7.138–7.142 breach of confidence, and, 10.40–10.43 Community design, and, 8.50 copyright, and, 2.70 copyright in the information society, and costs of implementation, 7.143–7.149 generally, 7.129–7.137 live streaming services, and, 7.138–7.142 database right, and, 6.87 live streaming services, and, 7.138–7.142 patents, and, 11.42 registered trademarks, and, 13.43 service providers for infringement, against costs of compliance, 14.78–14.81 generally, 14.74–14.77 Integrated circuits See also Semiconductor topography right generally, 9.10–9.11 Intellectual creation computer programs, and generally, 3.34–3.36 substantiality, and, 3.75–3.80 databases, and, 5.25–5.37 Intellectual property (IP) introduction, 1.1–1.7 legal protection of software, 1.8–1.19 Interfaces computer programs, and, 3.18 Intermediaries malicious falsehood, and, 14.111–14.115

Internet See also Information society copyright, and collection of information about online infringers, 7.150–7.154 cross-border portability of content services, 7.155–7.166 Digital Single Market Directive, 7.167–7.193 electronic rights management, 7.123–7.126 EU Directive, 7.28–7.30 exceptions, 7.61–7.86 injunctions against providers, 7.129–7.149 introduction, 7.1–7.7 limitations, 7.61–7.86 protection of technological measures, 7.87–7.122 remedies, 7.127–7.128 rights, 7.31–7.60 subsistence, 7.8–7.27 passing off, and, 1.22–1.26 trademarks, and And see Trademarks on the internet AdSense, 14.70–14.73 AdWords, 14.49–14.69 comparative advertising, 14.116–14.117 confusion, 14.18–14.24 damage to repute or distinctiveness, 14.31 domain names, 14.93–14.104 ‘free-riding’, 14.30–14.41 generally, 14.5–14.10 impact of online use, 14.15–14.17 introduction, 14.1–14.4 keyword meta-tags, 14.44–14.48 localised goodwill, 14.108 loss of control, and, 14.11–14.14 malicious falsehood, 14.109–14.117 overview, 1.22–1.26 parisitic advertising, 14.11–14.14 passing off, 14.82–14.108 ‘riding on the coat tails’, 14.30–14.31 tarnishing, 14.42–14.43 third parties advertising online using registered marks, 14.25–14.29 website design, 14.105–14.107

711

Index Inventive step patents, and, 11.15–11.17 Issuing copies to public computer programs, and, 3.107–3.108 copyright, and, 2.54–2.55 Judicial procedure copyright in databases, and, 5.68 copyright in the information society, and, 7.83 database right, and, 6.76–6.77 Jurisdiction Brussels Regulation 1215/2012, 16.7–16.13 Community designs, 16.14–16.21 copyright, 16.22–16.28 development of rules, 16.4–16.6 ‘double-actionability’ rule, 16.4 EU trademarks, 16.14–16.21 forum non conveniens, 16.6 generally, 16.2–16.3 introduction, 16.1 Lugano Convention, 16.2 overview, 1.29–1.30 passing off, 16.44–16.47 patents generally, 16.29–16.30 software on the internet, 16.31–16.33 territorial basis of rights, 15.1 trademarks EU marks, 16.14–16.21 websites, on, 16.34–16.43 trademarks on the internet, 14.10 Keyword meta-tags generally, 14.44–14.48 introduction, 14.7 Lending computer programs, and, 3.109–3.111 copyright, and, 2.56–2.59 Libraries and archives copyright, and, 2.88 copyright in the information society, and, 7.82 database right, and, 6.78–6.79 Licensing Community design, and, 8.40–8.41 copyright, and generally, 2.116–2.117 orphan works, 2.118–2.119 overview, 2.9 copyright in databases, and, 5.48–5.50

Licensing – contd database right, and generally, 6.40 rights of licensees, 6.87–6.88 schemes, 6.97–6.99 emulation of functionality, and, 4.56–4.58 orphan works, and, 2.118–2.119 patents, and, 11.30–11.28 registered trademarks, and, 13.35–13.36 semiconductor topography right, and, 9.39 Linking copyright in the information society, and, 7.21–7.27 Literal copying computer programs, and, 3.69 Literary works computer programs, and, 3.9 databases, and generally, 5.7 introduction, 5.1 permitted acts, and, 5.67 duration, 2.34–2.39 form, 2.14 generally, 2.13–2.15 introduction, 2.10–2.12 meaning, 2.13 overview, 2.8 Live performances copyright, and generally, 2.126–2.127 overview, 2.9 Localised goodwill generally, 14.108 introduction, 14.4 Logic and algorithms computer programs, and, 3.64–3.66 ‘Look and feel’ copyright in the information society, and, 7.17–7.20 Lugano Convention jurisdiction, and, 16.2 Luxury goods selective distribution systems, and, 15.10–15.12 Making adaptations copyright, and, 2.63–2.65 Making copies computer programs, and, 3.69

712

Index Malicious falsehood comparative advertising, 14.116–14.117 generally, 13.72–13.74 intermediaries, 14.111–14.115 online statements, 14.109–14.110 websites, 14.111–14.115 Maps copyright, and, 2.15 Mask work semiconductor topography right, and, 9.11–9.12 Mental acts computer-implemented inventions, and, 12.75–12.77 Meta-tags generally, 14.44–14.48 introduction, 14.7 overview, 1.23 Modification of existing programs computer programs, and, 3.48–3.49 Moral rights computer programs, and, 2.123 databases, and, 5.69–5.71 generally, 2.120–2.124 live performances, 2.126 overview, 2.9 Musical works duration, 2.34–2.39 form, 2.14 generally, 2.13–2.15 introduction, 2.10–2.12 meaning, 2.13 overview, 2.8 Neighbouring rights generally, 2.126–2.128 overview, 2.9 Non-commercial research copyright, and, 2.88 Non-derogation from grant copyright, and, 2.108 Non-textual copying application of Computer Associates decision, 4.25–4.29 emulation of functionality business logic, 4.34–4.39 concluding remarks, 4.64–4.67 conflicting licence terms, 4.56–4.58 displays, 4.44–4.48 graphics, 4.44–4.48 individual commands, 4.40–4.43 introduction, 4.30–4.31

Non-textual copying – contd emulation of functionality – contd Navitaire Inc v easyJet, 4.32–4.48 observing, studying and testing, 4.56–4.58 protectable expression, 4.53–4.55 SAS institute v World Programming, 4.49–4.63 user manuals incorporated into programs, 4.59–4.60 generally, 4.20–4.24 historical perspective, 4.6–4.9 introduction, 4.1–4.5 post-implementation of Directive cases, 4.29 overview, 3.69 US, in, 4.10–4.19 Norwich Pharmacal orders copyright, and, 2.74 Novelty Community design, and, 8.30–8.32 patents, and, 11.11–11.14 Objection to derogatory treatment See also Moral rights copyright, and, 2.120–2.121 databases, and, 5.69 Object code computer programs, and, 3.15 Observing, studying and testing computer programs, and, 3.139–3.146 emulation of functionality, and, 4.56–4.58 Online content services cross-border portability introduction, 7.155–7.156 not paid for services, 7.162 other provisions, 7.163–7.166 paid for subscriptions, 7.157–7.161 Online statements comparative advertising, 14.116–14.117 generally, 14.109–14.110 intermediaries, 14.111–14.115 websites, 14.111–14.115 Originality computer programs, and, 3.30–3.33 copyright, and generally, 2.13–2.15 introduction, 2.10–2.12 overview, 2.8

713

Index Orphan works licensing scheme, 2.118–2.119 permitted acts, 2.93–2.98 Ownership Community design, and, 8.39 copyright, and generally, 2.24–2.33 overview, 2.8 copyright in databases, and, 5.43–5.46 database right, and, 6.36 patents, and, 11.24–11.29 semiconductor topography right, and, 9.29 Parallel imports competition law, and, 15.51–15.52 Parisitic advertising trademarks on the Internet, and, 14.11–14.14 Parliamentary copyright generally, 2.33 Parody or pastiche copyright in the information society, and, 7.86 Parts of programs computer programs, and, 3.37–3.38 Passing off character merchandising, 13.67–13.68 damage, 14.86–14.92 domain names, 14.93–14.104 endorsements, 13.67–13.68 generally, 13.63–13.64 goodwill, 14.84–14.85 implications, 13.71 jurisdiction, and, 16.44–16.47 misrepresentation, 14.86–14.92 online statements generally, 14.82–14.107 introduction, 1.24–1.26 overview, 14.3 remedies, 13.69–13.70 requirements, 13.65–13.66 website design, 14.105–14.107 Patentability computer-implemented inventions, and Patents Act 1949, under, 12.12–12.15 US, in, 12.16–12.30 generally, 11.10 industrial application generally, 11.18–11.19 implicit in claims, 11.20 inventions, 11.21–11.23

Patentability – contd inventive step, 11.15–11.17 novelty, 11.11–11.14 Patents accounts of profits, 11.42 artificial intelligence (AI) example application, 12.115–12.116 generally, 12.113–12.114 assignment, 11.30 computer-implemented inventions, and case law developments, 12.31–12.109 decisions of EPO Boards of Appeal, 12.10–12.11 introduction, 12.1–12.7 meaning, 12.8–12.9 patentability, 12.12–12.30 Patents Act 1949, under, 12.12–12.15 sufficiency, 12.110–12.112 US, in, 12.16–12.30 continuing prior acts, 11.45 damages, 11.42 dealings assignment, 11.30 FRAND licences, 11.34–11.40 licensing, 11.30–11.28 registration, 11.29–11.33 defences exhaustion of rights, 11.48–11.49 introduction, 11.43–11.44 right to continue prior acts, 11.45 right to repair, 11.46 development of protection for software, and, 1.17 duration, 11.2 entitlement, 11.24–11.29 ETSI technical standards, 11.34–11.40 European Patents Convention, 11.3–11.4 exclusions, 11.4 exhaustion of rights, 11.48–11.49 experiments, 11.43 formalities for grant, 11.59–11.61 forms of protection for software, and, 1.13 FRAND licences, 11.34–11.40 ‘Gillette’ defence, 11.44 groundless threats of proceedings, 11.50 industrial application generally, 11.18–11.19 implicit in claims, 11.20 infringement, 11.41–11.42 injunctions, 11.42

714

Index Patents – contd international conventions, 11.3 introduction, 11.1–11.6 ‘invention’, 11.21–11.23 inventive step, 11.15–11.17 jurisdiction, and generally, 16.29–16.30 software on the internet, 16.31–16.33 licensing, 11.30–11.28 novelty, 11.11–11.14 ownership, 11.24–11.29 patentable inventions generally, 11.10 industrial application, 11.18–11.20 inventions, 11.21–11.23 inventive step, 11.15–11.17 novelty, 11.11–11.14 private acts, 11.43 process, 11.2 remedies, 11.42 repair of patented products, 11.46 requirements for grant industrial application, 11.18–11.20 introduction, 11.7 inventions, 11.21–11.23 inventive step, 11.15–11.17 novelty, 11.11–11.14 patentable inventions, 11.10–11.23 sufficiency, 11.8–11.9 Standard-Essential Patent (SEP), 11.34–11.40 sufficiency, 11.8–11.9 technical standard technology, 11.34–11.40 Unified Patent Court composition, 11.68 Court of Appeal, 11.71 Court of First Instance, 11.69–11.70 dispute resolution, 11.74 generally, 11.68 introduction, 11.63 jurisdiction, 11.68 mediation and arbitration centre, 11.74 registry, 11.72–11.73 unitary patents generally, 11.66–11.67 introduction, 11.62–11.65 Unified Patent Court, 11.68–11.74

Patents – contd unjustified threats actionable threat, 11.52 damages, 11.56 declarations, 11.56 defences, 11.57 immunity for professional advisors, 11.58 injunctions, 11.56 introduction, 11.50 permitted communication, 11.53–11.55 remedies, 11.56 threat of proceedings, 11.51–11.52 PDF files copyright in the information society, and, 7.8 Performance to the public copyright, and generally, 2.126–2.127 overview, 2.9 copyright in databases, and, 5.51 Performing, showing or playing a work to the public copyright, and, 2.37 Period of grace Community design, and, 8.33 Permanent reproduction computer programs, and, 3.81–3.94 Permitted acts computer programs, and back-up copies, 3.137–3.138 decompilation, 3.147–3.157 error correction, 3.132–3.136 generally, 3.124 introduction, 2.92 observing, studying and testing, 3.139–3.146 overview, 3.5 reproduction by a lawful acquirer, 3.125–3.136 translation etc by a lawful acquirer, 3.125–3.136 copyright, and accessible copies for the visually impaired, 2.99–2.106 back-up of programs, 2.92 blind persons, 2.99–2.106 decompilation of programs, 2.92 education, 2.88 fair dealing, 2.91

715

Index Permitted acts – contd copyright, and – contd incidental copies, 2.90 introduction, 2.88–2.92 libraries and archives, 2.88 non-commercial research, 2.88 orphan works, 2.93–2.98 overview, 2.9 print-disabled persons, 2.99–2.106 private copying, 2.89 private study, 2.88 public administration, 2.88 transient copies, 2.90 visually impaired persons, 2.99–2.106 copyright in databases, and access to and use of database contents, 5.60–5.62 administration or judicial purposes, 5.68 general, 5.59–5.63 illustration for teaching or scientific research, 5.66 literary works, 5.67 optional acts, 5.64–5.68 public security, 5.68 reproduction for private purposes of non-electronic databases, 5.66 database right, and assumption of expiry of right, 6.80–6.81 fair dealing, 6.75 generally, 6.72–6.74 legal deposit libraries, 6.78–6.79 public administration, 6.76–6.77 semiconductor topography right, and, 9.36–9.39 Photographs copyright, and, 2.15 Plans copyright, and, 2.15 Possession of infringing copies for commercial purposes computer programs, and, 3.161 Preparatory design material computer programs, and, 3.19–3.29 Presentation of information computer-implemented inventions, and, 12.78 Press publications Digital Single Market Directive (proposed), and, 7.180–7.184

Print-disabled persons copyright, and, 2.99–2.106 Private copying copyright, and, 2.91 copyright in the information society, and, 7.79–7.82 Private purposes Community design, and, 8.47 copyright in databases, and, 5.66 database right, and, 6.65 patents, and, 11.43 semiconductor topography right, and, 9.36 Private study copyright, and, 2.88 Programmed computers computer-implemented inventions, and, 12.9 Programming languages computer programs, and, 3.56–3.63 Public administration copyright, and, 2.88 copyright in the information society, and, 7.83 database right, and, 6.76–6.77 Public interest breach of confidence, and, 10.37–10.39 copyright, and, 2.107 Public security copyright in databases, and, 5.68 copyright in the information society, and, 7.83 database right, and, 6.65 Publication right copyright, and, 2.121–2.128 Published editions copyright, and, 2.19 copyright in the information society, and, 7.17–7.20 Quantitative restrictions competition law, and, 15.45 Registered Community designs accounts of profits, 8.50 application, 8.24 assignment, 8.40 criminal offences, 8.64–8.70 damages, 8.50 dealings, 8.40–8.41 ‘design’, 8.24 duration, 8.38 entitlement, 8.39

716

Index Registered Community designs – contd exceptions and limitations, 8.47–8.49 exhaustion of rights, 8.48 experiments, 8.47 generally, 8.23–8.26 groundless threats of infringement actions, 8.52 individual character, 8.34–8.37 infringement, 8.42–8.46 injunctions, 8.50 introduction, 8.4 licensing, 8.40–8.41 novelty, 8.30–8.32 ownership, 8.39 period of grace, 8.33 private use, 8.47 remedies, 8.50–8.51 restricted acts, 8.42–8.46 seizure, 8.47 subsistence individual character, 8.34–8.37 introduction, 8.27 novelty, 8.30–8.33 technical function, 8.28–8.29 teaching, 8.47 technical function, 8.28–8.29 term of protection, 8.38 threats of infringement actions, 8.52 unjustified threats defences, 8.63 generally, 8.52–8.53 immunity for professional advisers, 8.64 permitted communication, 8.57–8.61 remedies, 8.62 threat of proceedings, 8.54–8.56 use of design prior to filing, 8.49 Registered trademarks absolute grounds for refusal bad faith, 13.14–13.16 generally, 13.12–13.13 accounts of profits, 13.43 acquiescence, 13.33 applications for registration in the UK, 13.54–13.56 assignment, 13.37 bad faith, 13.14–13.16 capability of representation and distinguishing, 13.8–13.11 certification marks, 13.56 collective marks, 13.56

Registered trademarks – contd comparative advertising, 13.28–13.30 computer graphics, and, 8.14–8.15 criminal offences, 13.52–13.53 damages, 13.43 dealings assignment, 13.37 licensing, 13.35–13.36 registration, 13.37 delivery up, 13.43 development of protection for software, and, 1.19 distinguishing the goods or services of undertakings, 13.8–13.11 duration, 13.55 earlier use in particular locality, 13.32 erasure of offending signs, 13.43 exhaustion of rights, 13.34 forms of protection for software, and, 1.13 generally, 13.1–13.5 graphical representation, 13.8–13.11 groundless threats, 13.45 grounds for refusal absolute, 13.12–13.16 relative, 13.17–13.23 honest practices, 13.31 infringement, 13.24–13.27 injunctions, 13.43 internet, and, 1.22–1.23 introduction, 13.1–13.7 invalidity, 13.40–13.42 licensing, 13.35–13.36 limitations exhaustion of rights, 13.34 generally, 13.31–13.33 own name and address, 13.31 purpose, 13.1 refusal of grant absolute grounds, 13.12–13.16 relative grounds, 13.17–13.23 registration applications in the UK, 13.54–13.56 registration requirements, 13.8–13.30 relative grounds for refusal, 13.17–13.23 remedies for infringement generally, 13.43–13.44 unjustified threats, 13.48 revocation, 13.40–13.42 rights of proprietor, 13.24–13.27 search orders, 13.43

717

Index Registered trademarks – contd term of protection, 13.55 territorial scope, 13.32 trap orders, 13.44 unjustified threats actionable threats, 13.46 damages, 13.48 declarations, 13.48 defences, 13.49–13.50 immunity for professional advisers, 13.51 injunctions, 13.48 introduction, 13.45 permitted communication, 13.47 remedies, 13.48 threat of proceedings, 13.46 use requirement, 13.38–13.39 validity, 13.40–13.42 Related rights generally, 2.126–2.128 overview, 2.9 Remedies anti-competitive agreements, and, 15.9 breach of confidence, and, accounts of profits, 10.45–10.46 damages, 10.44–10.47 Enforcement Directive, 10.48–10.51 injunctions, 10.40–10.43 interim injunction, 10.42 introduction, 10.40 ‘springboard’ injunction, 10.43 Community design, and, 8.50–8.51 computer programs, and circulating infringing copies, 3.160 circumvention of copy-protection devices, 3.162–3.171 generally, 3.158–3.159 possession of infringing copies for commercial purposes, 3.161 copyright, and, 2.66–2.74 copyright in the information society, and, 7.127–7.128 database right, and, 6.93–6.96 patents, and, 11.42 registered trademarks, and generally, 13.43–13.44 unjustified threats, 13.48 Rental computer programs, and, 3.109–3.111 copyright, and, 2.56–2.59

Repairs patents, and, 11.46 Reporting current events copyright in the information society, and, 7.83 Reproduction right Article 5(2) exceptions, 7.78–7.82 Article 5(3) exceptions, 7.83–7.86 computer programs, and error correction, 3.132–3.136 generally, 3.81–3.89 graphic user interfaces, 3.94 lawful acquirer, by, 3.125–3.136 screen images, 3.92–3.94 suite of programs as compilation, 3.90–3.91 databases, and, 5.51 exceptions, 7.61–7.86 generally, 7.32–7.34 introduction, 7.2 temporary reproduction generally, 7.63–7.71 ruling of Court of Justice in Public Relations case. 7.72–7.76 Restraint of trade covenants breach of confidence, and, 10.32–10.36 Restricted acts Community design, and, 8.42–8.46 computer programs, and adaptation, 3.95–3.102 arrangement, 3.95–3.102 authorising infringement, 3.72–3.74 distribution to the public, 3.103–3.123 exceptions, 3.124–3.146 intellectual creation, 3.75–3.80 introduction, 3.67–3.71 reproduction, 3.81–3.94 substantiality, 3.75–3.80 translation, 3.95–3.102 copyright, and adapting a work, 2.63–2.65 communication of a work to the public, 2.61–2.62 copying, 2.47–2.53 generally, 2.40–2.46 issuing copies to the public, 2.54–2.55 lending right, 2.56–2.59 making an adaptation, 2.63–2.65 overview, 2.9

718

Index Restricted acts – contd copyright, and – contd performing, playing or showing a work to the public, 2.60 rental right, 2.56–2.59 databases, and adaptation, 5.55–5.57 arrangement, 5.55–5.57 computer programs, 5.58 exceptions, 5.59–5.68 generally, 5.51–5.54 translation, 5.55–5.57 database right, and extraction, 6.51–6.55 generally, 6.48–6.50 re-utilisation, 6.56–6.60 substantiality, 6.61–6.63 semiconductor topography right, and, 9.34–9.35 Restrictive trade agreements anti-competitive agreements, and, 15.5–15.9 Re-utilisation database right, and, 6.56–6.60 ‘Riding on the coat tails’ trademarks on the internet, and, 14.30–14.31 Right to respect for private and family life breach of confidence, and, 10.52–10.66 Rights in performances generally, 2.126–2.128 overview, 2.9 Rights management information copyright in the information society, and, 7.123–7.126 Rights of reproduction Digital Single Market Directive (proposed), and, 7.180–7.184 Scientific research copyright in databases, and, 5.66 copyright in the information society, and, 7.83 database right, and, 6.65 Screen displays development of protection for software, and, 1.18 Screen images computer programs, and, 3.92–3.94 Sculptures copyright, and, 2.15

Search engines trademarks, and, 1.22–1.23 Search orders registered trademarks, and, 13.43 Secondary infringement computer programs, and circulating infringing copies, 3.160 circumvention of copy-protection devices, 3.162–3.171 generally, 3.158–3.159 possession of infringing copies for commercial purposes, 3.161 generally, 2.75–2.76 overview, 2.9 Seizure Community design, and, 8.47 copyright, and, 2.72–2.73 Selective distribution agreements luxury goods, 15.10–15.12 Semiconductor topography right background, 9.7–9.20 Brexit, and, 9.43 commissioned topography, 9.29 creation, 9.3 deposit of material, 9.30 design right, and, 8.72 duration, 9.31–9.33 employee-created topography, 9.29 entitlement, 9.29–9.30 EU Directive generally, 9.21–9.23 introduction, 9.1–9.5 EU exit regulations, and, 9.43 exceptions, 9.36–9.39 exclusive rights, 9.34–9.35 exhaustion of rights, 9.37 experiences of protection, 9.41–9.42 generally, 8.72 infringement, 9.34–9.35 ‘integrated circuit’, 9.10–9.11 introduction, 9.1–9.6 licences of right, 9.39 ‘mask work’, 9.11–9.12 ownership, 9.29 permitted acts, 9.36–9.39 private use, 9.36 registration, 9.30 restricted acts, 9.34–9.35 reverse analysis, 9.13 ‘semiconductor chip product’, 9.11 ‘semiconductor product’, 9.11

719

Index Semiconductor topography right – contd subsistence commonplace, 9.25–9.26 concepts, etc not protected, 9.27 introduction, 9.24 other rights not prejudiced, 9.28 substantial similarity, 9.15–9.20 teaching, 9.36 term of protection, 9.31–9.33 third country nationals, and, 9.40 TRIPS Agreement, 9.10–9.11 Showing or playing a work to the public copyright, and, 2.60 Software And see Computer programs ‘computer software’, 1.2 development of legal protection, 1.14–1.19 economic justification for legal protection, 1.8 forms of legal protection, 1.13 justification for legal protection, 1.8–1.12 legal protection development, 1.14–1.19 forms, 1.13 introduction, 1.1–1.7 justification, 1.8–1.12 meaning, 1.2 moral justification for legal protection, 1.8 Sound recordings generally, 2.16 overview, 2.8 Source code computer programs, and, 3.15 Spare parts and accessories copyright, and, 2.108 Standard-Essential Patent (SEP) dealing with patents, and, 11.34–11.40 Statutory authority copyright in databases, and, 5.64 database right, and, 6.76–6.77 Studying, observing and testing computer programs, and, 3.139–3.146 Substantiality computer programs, and, 3.75–3.80 database right, and, 6.61–6.63 Sufficiency computer-implemented inventions, and, 12.110–12.112 patents, and, 11.8–11.9

Sui generis database right And see Database right copyright, and, 2.6 generally, 6.1–6.108 introduction, 5.2–5.3 Suite of programs computer programs, and, 3.90–3.91 Tables or compilations copyright, and, 2.13 Tarnishing generally, 14.42–14.43 introduction, 14.30–14.31 Teaching Community design, and, 8.47 copyright in databases, and, 5.66 copyright in the information society, and, 7.83 database right, and, 6.65 semiconductor topography right, and, 9.36 Teaching activities online Digital Single Market Directive (proposed), and, 7.172–7.174 Technical effect computer-implemented inventions, and business methods, 12.72–12.74 generally, 12.71 mental acts, 12.75–12.77 presentation of information, 12.78 Technical standard technology dealing with patents, and, 11.34–11.40 Technology transfer agreements anti-competitive agreements, and, 15.14 Temporary reproduction computer programs, and, 3.81–3.94 databases, and, 5.51 information society, and generally, 7.63–7.71 ruling of Court of Justice in Public Relations case, 7.72–7.76 Term of protection Community design, and, 8.38 copyright, and generally, 2.34–2.39 moral rights, 2.124 overview, 2.8 copyright in databases, and, 5.47 database right, and generally, 6.41–6.45 pre-existing databases, 6.46–6.47 patents, and, 11.2

720

Index Term of protection – contd registered trademarks, and, 13.55 semiconductor topography right, and, 9.31–9.33 Testamentary disposition database right, and, 6.38 Text mining Digital Single Market Directive (proposed), and, 7.169–7.171 Textual copying computer programs, and, 3.69 Third country nationals semiconductor topography right, and, 9.40 Third parties advertising online using registered marks generally, 14.25–14.29 introduction, 14.6 Threat of proceedings for infringement Community design, and defences, 8.63 generally, 8.52–8.53 immunity for professional advisers, 8.64 permitted communication, 8.57–8.61 remedies, 8.62 threat of proceedings, 8.54–8.56 generally, 13.45 patents, and actionable threat, 11.52 damages, 11.56 declarations, 11.56 defences, 11.57 immunity for professional advisors, 11.58 injunctions, 11.56 introduction, 11.50 permitted communication, 11.53–11.55 remedies, 11.56 threat of proceedings, 11.51–11.52 registered trademarks, and actionable threats, 13.46 damages, 13.48 declarations, 13.48 defences, 13.49–13.50 immunity for professional advisers, 13.51 injunctions, 13.48 introduction, 13.45 permitted communication, 13.47

Threat of proceedings for infringement – contd registered trademarks, and – contd remedies, 13.48 threat of proceedings, 13.46 UK design, and defences, 8.63 generally, 8.52–8.53 immunity for professional advisers, 8.64 permitted communication, 8.57–8.61 remedies, 8.62 threat of proceedings, 8.54–8.56 UK unregistered design right, and, 8.52 Time shifting copyright in the information society, and, 7.79–7.82 Topography of semiconductors background, 9.7–9.20 commissioned topography, 9.29 creation, 9.3 deposit of material, 9.30 design right, and, 8.72 duration, 9.31–9.33 employee-created topography, 9.29 entitlement, 9.29–9.30 EU Directive generally, 9.21–9.23 introduction, 9.1–9.5 exceptions, 9.36–9.39 exclusive rights, 9.34–9.35 exhaustion of rights, 9.37 experiences of protection, 9.41–9.42 generally, 8.72 infringement, 9.34–9.35 ‘integrated circuit’, 9.10–9.11 introduction, 9.1–9.6 licences of right, 9.39 ‘mask work’, 9.11–9.12 ownership, 9.29 permitted acts, 9.36–9.39 private use, 9.36 registration, 9.30 restricted acts, 9.34–9.35 reverse analysis, 9.13 ‘semiconductor chip product’, 9.11 ‘semiconductor product’, 9.11 subsistence commonplace, 9.25–9.26 concepts, etc not protected, 9.27

721

Index Topography of semiconductors – contd subsistence – contd introduction, 9.24 other rights not prejudiced, 9.28 substantial similarity, 9.15–9.20 teaching, 9.36 term of protection, 9.31–9.33 third country nationals, and, 9.40 TRIPS Agreement, 9.10–9.11 Trademarks And see Registered trademarks EU trademarks, 13.57–13.62 internet, and AdSense, 14.70–14.73 AdWords, 14.49–14.69 comparative advertising, 14.116–14.117 confusion, 14.18–14.24 damage to repute or distinctiveness, 14.31 domain names, 14.93–14.104 ‘free-riding’, 14.30–14.41 generally, 14.5–14.10 impact of online use, 14.15–14.17 introduction, 14.1–14.4 keyword meta-tags, 14.44–14.48 localised goodwill, 14.108 loss of control, and, 14.11–14.14 malicious falsehood, 14.109–14.117 overview, 1.22–1.26 parisitic advertising, 14.11–14.14 passing off, 14.82–14.108 ‘riding on the coat tails’, 14.30–14.31 tarnishing, 14.42–14.43 third parties advertising online using registered marks, 14.25–14.29 website design, 14.105–14.107 jurisdiction, and EU registered marks, 16.14–16.21 websites, on, 16.34–16.43 malicious falsehood, and, 13.72–13.74 national trademarks, 13.1–13.56 passing off, and damage, 14.86–14.92 domain names, 14.93–14.104 generally, 14.82–14.83 goodwill, 14.84–14.85 introduction, 1.24–1.26 misrepresentation, 14.86–14.92 overview, 14.3 website design, 14.105–14.107

Trademarks on the internet advertising function AdWords, and, 14.60–14.61 generally, 14.5 impact of online use, 14.15–14.17 AdSense, 14.70–14.73 AdWords advertising function, 14.60–14.61 detriment to mark of repute, 14.64–14.69 essential function, 14.58–14.59 generally, 14.49–14.55 guaranteeing origin, 14.58–14.59 Interflora v Marks & Spencer, 14.56–14.69 introduction, 14.7 investment function, 14.62–14.63 unfair advantage, 14.64–14.69 blurring generally, 14.32–14.41 introduction, 14.30–14.31 comparative advertising introduction, 14.8 malicious falsehood, 14.116–14.117 comparison websites, 14.8 confusion, 14.18–14.24 costs of compliance with injunctions, 14.78–14.81 damage to repute or distinctiveness, 14.31 dilution generally, 14.32–14.41 introduction, 14.30–14.31 domain names, 14.93–14.104 eBay, and, 14.6 EU Directive on electronic commerce, 14.28 exhaustion of rights, 14.26 ‘free-riding’ generally, 14.32–14.41 introduction, 14.30–14.31 generally, 14.5–14.10 Google AdSense, 14.70–14.73 Google AdWords advertising function, 14.60–14.61 detriment to mark of repute, 14.64–14.69 essential function, 14.58–14.59 generally, 14.49–14.55 guaranteeing origin, 14.58–14.59

722

Index Trademarks on the internet – contd Google AdWords – contd Interflora v Marks & Spencer, 14.56–14.69 introduction, 14.7 investment function, 14.62–14.63 unfair advantage, 14.64–14.69 guaranteeing origin AdWords, and, 14.58–14.59 impact of online use, 14.15–14.17 impact of online use, 14.15–14.17 injunctions against service providers for infringement costs of compliance, 14.78–14.81 generally, 14.74–14.77 introduction, 14.1–14.4 investment function AdWords, and, 14.62–14.63 impact of online use, 14.15–14.17 jurisdiction generally, 16.34–16.43 introduction, 14.10 keyword meta-tags generally, 14.44–14.48 introduction, 14.7 localised goodwill generally, 14.108 introduction, 14.4 loss of control, and, 14.11–14.14 malicious falsehood, and comparative advertising, 14.116–14.117 generally, 13.72–13.74 intermediaries, 14.111–14.115 online statements, 14.109–14.110 websites, 14.111–14.115 meta-tags generally, 14.44–14.48 introduction, 14.7 origin function AdWords, and, 14.58–14.59 impact of online use, 14.15–14.17 overview, 1.22–1.26 parisitic advertising, 14.11–14.14 passing off, and damage, 14.86–14.92 domain names, 14.93–14.104 generally, 14.82–14.83 goodwill, 14.84–14.85 introduction, 1.24–1.26

Trademarks on the internet – contd passing off, and – contd misrepresentation, 14.86–14.92 overview, 14.3 website design, 14.105–14.107 ‘riding on the coat tails’, 14.30–14.31 tarnishing generally, 14.42–14.43 introduction, 14.31 third parties advertising online using registered marks generally, 14.25–14.29 introduction, 14.6 use, 14.5–14.10 website design, 14.105–14.107 Trade secrets See also Breach of confidence acquisition lawful, 10.77 unlawful, 10.78–10.80 decision on merits of the case, 10.86–10.89 definition, 10.71 disclosure lawful, 10.77 unlawful, 10.78–10.80 EU Directive, 10.72–10.89 introduction, 10.67–10.70 lawful acquisition, use and disclosure, 10.77 measures, procedures and remedies decision on merits of the case, from, 10.86–10.89 general provisions, 10.82–10.83 introduction, 10.81 provisional, 10.84–10.85 provisional and precautionary measures, 10.84–10.85 scope of Directive, 10.75–10.76 TRIPS Agreement, 10.71 UK regulations, 10.90–10.91 unlawful acquisition, use and disclosure, 10.78–10.80 use lawful, 10.77 unlawful, 10.78–10.80 Transfer And see Dealings copyright, and, 2.9 database right, and, 6.37–6.40

723

Index Transient copies copyright, and, 2.90 Transient reproduction copyright in the information society, and, generally, 7.63–7.71 ruling of Court of Justice in Public Relations case. 7.72–7.76 Translation computer programs, and error correction, 3.132–3.136 generally, 3.95–3.102 lawful acquirer, by, 3.125–3.136 databases, and, 5.55–5.57 Trap orders registered trademarks, and, 13.44 TRIPS Agreement computer programs, and, 3.13 copyright, and, 2.4 databases, and, 5.22 semiconductor topography right, and, 9.10–9.11 Tying abuse of dominant position, and, 15.28–15.29 Typographical arrangements copyright in the information society, and, 7.17–7.20 development of protection for software, and, 1.18 generally, 2.19 overview, 2.15 UK registered design generally, 8.71–8.72 UK unregistered design And see Semiconductor topography right generally, 8.72 Unfair trading conditions abuse of dominant position, and, 15.17 Unified Patent Court See also Unified patents composition, 11.68 Court of Appeal, 11.71 Court of First Instance, 11.69–11.70 dispute resolution, 11.74 generally, 11.68 introduction, 11.63 jurisdiction, 11.68 mediation and arbitration centre, 11.74 registry, 11.72–11.73

Unitary patents See also Patents generally, 11.66–11.67 introduction, 11.62–11.65 Unified Patent Court, 11.68–11.74 Unjustified threats Community design, and defences, 8.63 generally, 8.52–8.53 immunity for professional advisers, 8.64 permitted communication, 8.57–8.61 remedies, 8.62 threat of proceedings, 8.54–8.56 generally, 13.45 patents, and actionable threat, 11.52 damages, 11.56 declarations, 11.56 defences, 11.57 immunity for professional advisors, 11.58 injunctions, 11.56 introduction, 11.50 permitted communication, 11.53–11.55 remedies, 11.56 threat of proceedings, 11.51–11.52 registered trademarks, and actionable threats, 13.46 damages, 13.48 declarations, 13.48 defences, 13.49–13.50 immunity for professional advisers, 13.51 injunctions, 13.48 introduction, 13.45 permitted communication, 13.47 remedies, 13.48 threat of proceedings, 13.46 UK design, and defences, 8.63 generally, 8.52–8.53 immunity for professional advisers, 8.64 permitted communication, 8.57–8.61 remedies, 8.62 threat of proceedings, 8.54–8.56 UK unregistered design right, and, 8.52 Unprotected matter computer programs, and, 3.46–3.47

724

Index User manuals emulation of functionality, and, 4.59–4.60 Utilitarian designs copyright, and, 2.108 Vertical agreements anti-competitive agreements, and, 15.6 Vicarious liability database right, and, 6.71 Video-on-demand (VOD) platforms Digital Single Market Directive (proposed), and, 7.179 Visually impaired persons copyright, and, 2.99–2.106 Website design passing off, and, 14.105–14.107 Webpages copyright in the information society, and, 7.9–7.10 Websites trademarks, and And see Trademarks on the internet AdSense, 14.70–14.73 AdWords, 14.49–14.69 comparative advertising, 14.116–14.117 confusion, 14.18–14.24 damage to repute or distinctiveness, 14.31

Websites – contd trademarks, and – contd domain names, 14.93–14.104 ‘free-riding’, 14.30–14.41 generally, 14.5–14.10 impact of online use, 14.15–14.17 injunctions against service providers, 14.74–14.81 introduction, 14.1–14.4 keyword meta-tags, 14.44–14.48 localised goodwill, 14.108 malicious falsehood, 14.109–14.117 overview, 1.22–1.26 passing off, 14.82–14.108 ‘riding on the coat tails’, 14.30–14.31 tarnishing, 14.42–14.43 third parties advertising online using registered marks, 14.25–14.29 website design, 14.105–14.107 Without notice searches copyright, and, 2.71 Works copyright, and, 2.10–2.12 Works of architecture copyright, and, 2.15 Works of artistic workmanship copyright, and, 2.15

725

726