Intellectual property law 0198763433

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iGeleaulceuery

Property Law

Lionel Bently Brad Sherman

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OXFORD UNIVERSITY

PRESS

OXFORD UNIVERSITY PRESS Great Clarendon Street, Oxford ox2 6pP

Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of excellence in research, scholarship, and education by publishing worldwide in Oxford New York

Athens Auckland Bangkok Bogota Buenos Aires Cape Town Chennai Dar es Salaam Delhi Florence Hong Kong Istanbul Karachi Kolkata Kuala Lumpur Madrid Melbourne Mexico City Mumbai Nairobi Paris Sao Paulo Shanghai Singapore Taipei Tokyo Toronto Warsaw with associated companies in Berlin Ibadan Oxford is a registered trade mark of Oxford University Press in the UK and in certain other countries Published in the United States by Oxford University Press Inc., New York © L. Bently and B. Sherman 2001 The moral rights of the authors have been asserted Database right Oxford University Press (maker) First published 2001 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means,

without the prior permission in writing of Oxford University Press, or as expressly permitted by law, or under terms agreed with the appropriate reprographics rights organizations. Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Oxford University Press, at the address above You must not circulate this book in any other binding or cover and you must impose this same condition on any acquirer British Library Cataloguing in Publication Data Data available Library of Congress Cataloging in Publication Data Data available ISBN 0—19-876343-3

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PREFACE Intellectual property law seems to be constantly in flux. Each year sees new international initiatives and regional developments. In the last decade we have witnessed the birth of TRIPs, the agreement of the WIPO Copyright and WIPO Performers and Phonograms Treaties, as well as the coming into force of the Madrid Protocol. At a

regional level we have seen the creation of a Community Trade Mark, implementation of the Trade Marks Approximation Directive, numerous

Directives in the field of

copyright and related rights, the Biotechnology Directive, the development of Supplementary Protection Certificates, and most recently a revision of the European Patent Convention. Each new initiative, as it is implemented, spawns new questions for interpretation, and new case law. The resulting case law is not merely generated domestically by UK tribunals and courts. We now have a huge case law of relevance from outside the UK—from the European Patent Office, the Office of Harmonisation in the Internal Market, the Court of First Instance, the European Court of Justice, the

EFTA Court, as well as the Dispute panels of the WTO. All this makes intellectual property law an increasingly difficult subject to manage or explain within a small compass. And, there are always more problems that arise, new technologies or cultural practices (as well as developments in neighbouring legal regimes, such as conflicts of law or human rights, and new proposals for change (at international, regional, and national levels), that need to be accommodated.

Reflecting this constant agitation, intellectual property law has gained increasing attention within universities. Not surprisingly, existing intellectual property courses are attracting more students, and new courses are being laid on. Related to this is the emergence of a burgeoning academic literature, with important contributions from both within and outside law schools. It is not possible to do justice in a book of this sort to the many and varied perspectives on intellectual property that are now represented in what is—thankfully—an increasingly interdisciplinary literature. We have instead tried to provide an overview of the law relating to the subject. In so doing we hope to provide a solid grounding in the law as a starting point from which various political, theoretical or other perspectives can be developed. While we have not assumed any prior knowledge of intellectual property, we intend this book to be more than just an introduction. It is aimed at providing a basis not just for undergraduates but also for postgraduate courses. Despite the immensity of the jurisprudence, we

have tried to accommodate the case law of the European granting authorities as far as possible. Writing this text has been a long and laborious task and we owe numerous debts of gratitude. We would particularly like to thank Stephen Hubicki and Michael Burnett for their. excellent research assistance. We would also like to thank Arash Amel, Antonio Da Rosa, Aaron Dower and Jaishree Jaisinghani for their help.

We would also like to thank Tanya Aplin, Cate Banks, Robert Burrell, Alan

vill

PREFACE

Coulthard, Belinda Isaac, Margaret Llewelyn, Simon Malynicz, Johnson Okpaluba,

and Leanne Wiseman for reading and commenting on chapters. We have also received important institutional support. Lionel Bently benefited from a year as a research fellow at Murdoch University and two months as a visiting fellow at Queensland University of Technology. Thanks go particularly to Michael Blakeney and Leanne Wiseman for facilitating those periods of research. We would also like to thank the publishing team at OUP who over several years have not complained with the passage of one deadline after another: John Whelan, Michaela Coulthard, Tim Barton, Mat-

thew Cotton. Finally, we would also like to apologize to our colleagues, friends, and families who have put up with us while we have whinged and moaned: in particular, Adam, Alex, Alison, Carly, Clair, Colin, Foz, Nicola, and Sam. 9 January 2000.

CONTENTS Abbreviations Useful Websites Table of Cases

XXxi

Table of Statutes

liv

1

INTRODUCTION

PART

I COPYRIGHT

INTRODUCTION SUBJECT

TO COPYRIGHT

27

MATTER

CRITERIA

FOR PROTECTION

AUTHORSHIP NATURE

Dil

AND

OF THE

DURATION

78

FIRST OWNERSHIP

108

RIGHTS

123

OF COPYRIGHT

(INCLUDING

PUBLICATION

RIGHT)

146

INFRINGEMENT

155

DEFENCES

192

10

MORAL

233

11

EXPLOITATION

12

LIMITS

RIGHTS

PART

II

RIGHTS:

PUBLIC

TESS, PAUP!

PERFORMERS’

LENDING

RIGHTS,

RIGHT

DATABASE

RIGHT, 294

PATENTS

INTRODUCTION THE

USE OF COPYRIGHT

ON EXPLOITATION

RELATED AND

AND

NATURE

TO PATENTS

OF A PATENT

PROCEDURE

FOR GRANT

PATENTABLE

SUBJECT

OF A PATENT

MATTER

309 O20 340 362

x

CONTENTS

413

18

NOVELTY

19

INVENTIVE

20

INTERNAL

21

OWNERSHIP

469

22

INFRINGEMENT

486

23

PATENT

EXPLOITATION

513

24

RIGHTS

RELATED

p39

PART

REQUIREMENTS

FOR PATENTABILITY

TO PATENTS

THE

LEGAL

REGULATION

25

REGISTERED

DESIGN

PROTECTION

26

SUBJECT

27

NOVELTY

28

OWNERSHIP

AND

29

COPYRIGHT

PROTECTION

30

UNREGISTERED

PART

III

439

STEP

IV

457

OF DESIGNS Syl 5/9

MATTER

598

TRADE

609

INFRINGEMENT FOR

DESIGN

RIGHT

MARKS

AND

623 632

PASSING OFF AND

OFF

31

INTRODUCTION

32

PASSING

OFF

671

33

MISREPRESENTATION

692

34

DAMAGE

718

35

TRADE

36

SUBJECT

37

ABSOLUTE

38

RELATIVE

39

REVOCATION

843

40

INFRINGEMENT

860

41

TRADE

869

42

EXPLOITATION

MARK

TO PASSING

DESIGNS

TRADE

REGISTRATION

GROUNDS

MARK

760 FOR REFUSAL

776

FOR REFUSAL

811

DEFENCES AND

655

735

MATTER GROUNDS

MARKS

USE OF TRADE

MARKS

898

CONTENTS

PART

V

CONFIDENTIAL

43

IS THE

44

OBLIGATION

45

BREACH,

PART

VI

INFORMATION

LITIGATION

LITIGATION

47

CIVIL AND

Index

CAPABLE

OF BEING

OF CONFIDENCE

DEFENCES,

46

INFORMATION

AND

AND

REMEDIES

PROTECTED?

929 oo 956

REMEDIES 983

CRIMINAL

REMEDIES

1008

1037

ABBREVIATIONS AC AIPC AIP] ALJR

Appeal Cases Australian Intellectual Property Cases Australian Intellectual Property Journal Australian Law Journal Reports

Annand and Norman (1994)

Australian Law Reports R. Annand and H. Norman, Blackstone’s Guide to the

Annand and Norman (1998)

R. Annand and H. Norman, Blackstone’s Guide to the

ALR

Trade Marks Act 1994 (London: Blackstone, 1994) Community Trade Mark (London: Blackstone, 1998) App Cas Arnold Art. BCAP Beav.

Beier and Shricker Berne

Appeal Cases R. Arnold, Performers’ Rights (2nd edn., London: Sweet & Maxwell, 1997) Article

British Code of Advertising Practice Bevan’s Reports FE. K. Beir and G. Shricker, From (Weinheim: IIC/VCH, 1996)

GATT

to TRIPS

Berne Convention for the Protection of Literary and Artistic Works of 9 Sept. 1886 (latest version, Paris

1971)

Blakeney

Bingham, New Cases Directive 98/44/EC of the European Parliament and of the Council of 6 July 1998 on the Legal Protection of Biotechnological Inventions M. Blakeney, TRIPS: A Concise Guide to the Agreement

Brussels

(London: Sweet & Maxwell, 1996) Brussels Convention on Jurisdiction and Enforcement

Bing NC Biotech. Directive

CA CA 1911 CA 1956 CANZ CDPA

Ch Ch App. Ch D CIPA

of Judgments in Civil and Commercial Matters, 1968 Court of Appeal Copyright Act 1911 Copyright Act 1956 Court of Appeal of New Zealand Copyright, Designs and Patents Act 1988 Chancery Chancery Appeal Chancery Division Chartered Institute of Patents Agents Guide to the Patents Act 1977 (4th edn., London: Sweet & Maxwell, 1995)

ABBREVIATIONS

CIPA] CJA CLR CMLR

xili

Journal of the CIPA Civil Jurisdiction and Judgments Act

CMLRev.

Commonwealth Law Reports Commonwealth Market Law Reports Commonwealth Market Law Review

Copinger

K. Garnett, G. Davies, and J. Rayner (eds.), Copinger

Cornish

Sweet & Maxwell, 1999) W. R. Cornish, Intellectual Property London: Sweet & Maxwell, 1999)

and Skone James on Copyright (14th edn., London:

CPA — CPC CPR CPV CPVO CPVR Cr App. Rep. Cro Jac

CTMIR

(4th

edn.,

Civil Procedure Act 1998 Community Patent Convention Civil Procedure Rules, SI 1998/3132

Community Plant Variety Community Plant Variety Office Council Regulation (EC), no. 2100/94 of 27 July 1994

on Community Plant Varieties Criminal Appeal Reports Croke Jacob Reports Commission Regulation (EC), no. 2869/95 of 13 Dec.

1995, implementing Council Regulation (EC), no. 40/

CTMR DACS Database Dir.

Database Regs.

94 on the Community Trade Mark; OJL 303, 15 Dec. 1995 Council Regulation (EC), no. 40/94 of 20 Dec. 1993

on the Community Trade Mark Design and Artistic Copyright Society Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the Legal Protection of Databases Copyright and Rights in Database Regulations 1997, SI 1997/3032

DCES

Department of Culture, Education and Sport

Dean

R. Dean, Law of Trade Secrets (Law Books Co., North

Des. Dir.

Directive of 98/71/EC of the European Parliament

Ryde, NSW, 1990)

and of the Council of 13 Oct. 1998 on the legal protection of designs, OJL 1998, 289/28 DTI Duration Dir.

Duration Regs.

Department of Trade and Industry Council Directive 93/98/EEC of 29 Oct. 1993 harmonizing the term of protection of copyright and certain related rights Duration of Copyright and Rights in Performances Regulations 1995, SI 1995/3297

ABBREVIATIONS

Dworkin and Taylor

G. Dworkin and R. Taylor, Blackstone’s Guide to the Copyright, Designs and Patent Act 1988 (London: Blackstone, 1989)

EBA EC ECDR ECHR ECJ ECLR ECR EEA EHRR EFTA EIPR Electronic Commerce Dir.

EMLR Ent LR EPC EPC Revision Act

EPO EPOR EPR ER ETMR Fawcett and Torremens

Enlarged Board of Appeal European Community European Copyright and Design Reports

European Convention on Human Rights European Court of Justice

European Competition Law Review European Court Reports European Economic Area

European Human Rights Reports European Free Trade Association

European Intellectual Property Review European Council Directive 2000/31/EC of 8 June 2000 on Certain Legal Aspects of Electronic Commerce in the Internal Market Entertainment and Media Law Reports Entertainment Law Review

Convention on the Grant of European Patents, at Munich, 5 Oct. 1973 Act Revising the Convention on the Grant of European Patents (EPC), Munich, 29 Nov. 2000, MR/3/00 Rev. le European Patent Office

European Patent Office Reports European Patent rules English Reports European Trade Mark Reports J. Fawcett and P. Torremans, Intellectual Property and Private International Law (Oxford: Clarendon Press,

1998) FCA

Federal Court of Australia

Fellner

C. Fellner, Industrial Design Law (London: Sweet &

Firth

A. Firth, Trade Marks: The New Law (Bristol: Jordans, 1995)

FSR GATT

Fleet Street Reports General Agreement on Tariffs and Trade Gewerblicher Rechtsschutz und Urheberrecht

Maxwell, 1995)

GRUR Gurry

P. Gurry, Breach of Confidence (Oxford: Clarendon Press, 1984)

Hague

Geneva Act of the Hague Agreement Concerning

ABBREVIATIONS

He TW Hansard Hare

HL ICANN ICR IIC IL] Info. Soc. Dir.

IPI IPJ IPQ IPR IR ITMA

JPTOS

XV

the International Deposit of Industrial Designs, 1999 Hall and Twells Chancery Reports Hansard’s Parliamentary Debates Hare’s Chancery Reports House of Lords Internet Corporation for Assigned Names and Numbers Industrial Court Reports International Review of Industrial Property and Copyright Law Industrial Law Journal Directive 2001/29/EC of the European

Parliament

and of the Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the information society Intellectual Property Institute (formerly Common Law Institute of Intellectual Property) Intellectual Property Journal Intellectual Property Quarterly Intellectual Property Reports Irish Reports

Institute of Trade Mark Agents Journal of the Patent and Trademark Office Society

Jur KB

Jurist

Know How Block Exemption

Commission

Kings Bench Regulation

(EEC),

no.

556/89

of 30

Nov. 1988 on the Application of Article 85(3) of the Treaty to certain categories of Know-how listening Laddie et al.

H. Laddie, P. Prescott, and M. Vitoria, The Modern

Law Copyright (2nd edn., London: LJCh LJChD LR LR Eq LT (NS) Lugano Mac & G MacG CC

Madrid >

Butterworths,

1995) Law Journal, Chancery

Law Journal, Chancery Division Law Reports

Law Reports (Equity) Law Times (New Series)

Lugano Convention of 16 September 1988 MacNaghten and Gordon’s Reports MacGillivray’s Copyright Cases Madrid Agreement Concerning the International Registration of Marks of 14 April 1891

ABBREVIATIONS

Madrid Prot.

Protocol Relating to the Madrid Agreement, adopted

MCPS Michaels

Mechanical Copyright Protection Society A. Michaels, A Practical Guide to the Law of Trade

at Madrid on 27 June 1989

Marks (2nd edn., London: Sweet & Maxwell, 1996) MIP

Managing Intellectual Property

Morcom et al.

C. Morcom, A. Roughton, and J. Graham, The Modern Law of Trade Marks (London: Butterworths, 2000)

OHIM OJ C OJ EPO OJ L OJ OHIM

OJ Sp Ed

Office of Harmonisation in the Internal Market Official Journal of the European Community (C Series) Official Journal of the European Patent Office Official Journal of the European Community (L Series) Official Journal of the Office of Harmonisation in the Internal Market Official Journal of the European Community (Special

PA PA 1949 PAC

Edition) Patents Act 1977 Patents Act 1949 Practice Amendment Circular (of the UK Trade Mark

Registry) Paris Convention for the Protection of Industrial Property of March 1883 (latest revision, Stockholm

Paris

1967, with 1979 amendments)

G. Paterson, The European Patent System: The Law and Practice of the EPC (London: Sweet & Maxwell,

Paterson

1992)

PCT PD PDO PGI Phonograms

Treaty

Piracy and Counterfeiting Reg.

PLR PLRA PP. PPE

Proposed Design Reg.

Patent Co-operation Treaty (1970) Practice Direction Protected Designation of Origin Protected Geographical Indication Convention for the Protection of Producers of Phonograms against Unauthorized Duplication of Their Phonograms, Geneva, 29 Oct. 1971 Council Regulation 3842/86 of 1 Dec. 1986 providing for measures to prohibit the release for free circulation of goods infringing certain intellectual property rights Public Lending Right Public Lending Right Act 1979 Parliamentary Papers Phonogram Performance Ltd Proposal for Council Regulation (EC) on Community Designs COM (1999) final of 22 June 1999

ABBREVIATIONS

Proposed Resale Right Dir.

xvii

Common Position (EC) no. 42/2000 adopted by Council on 19 June 2000 with a view to adopting Directive 2000/ /EC of the European Parliament and of the Council on the resale right for the benefit of the author of an original work of art (OJ 2000 C 300/1, 20 Oct. 2000)

Proposed UM Dir.

Amended Proposal for a European Parliament and Council Directive approximating the legal arrangements for the protection of inventions by Utility Model

Protocol on Jurisdiction

Protocol on Jurisdiction and the Recognition of Decisions in respect to the Right to the Grant of a

(12 Aug. 1999) Brussels COM (1999) 309 final/2

European Patent

Protocol on Litigation PRS PVA PVSA PW PWms QB QBD QdR v RDA RDAT RDR Reid

Protocol to the Community Patent Convention on Litigation Performing Right Society Plant Varieties Act 1997 Plant Varieties and Seeds Act 1964 Patent World Peere Williams Chancery Reports Queens Bench Queens Bench Division

Queensland Reports rule Registered Designs Act 1949 Registered Designs Appeal Tribunal Registered Design Rules, SI 1995/2912 B. Reid, A Practical Guide to Patent Law (3rd edn., London: Sweet & Maxwell, 1999)

Related Rights Regs.

Copyright and Related Rights Regulations 1996, SI

Rental Dir.

Council Directive 92/100/EEC of 19 Nov. 1992 on rental and lending right and on certain rights related to copyright in the field of intellectual property

Ricketson

S. Ricketson, The Berne Convention for the Protection

1996/2967

of Literary and Artistic Works (London: Kluwer &

QMW, 1987) RIDA Rio Convention Rome

Revue international du droit d’auteur Convention on Biological Diversity of 5 June 1992 signed at Rio de Janeiro International Convention for the Protection of Performers, Producers of Phonograms, and Broadcasting Organizations, Rome, 26 Oct. 1961

Xvlii

Rothnie

ABBREVIATIONS

W. Rothnie, Parallel Imports (London: Sweet & Maxwell, 1993)

RPC Russell-Clarke Satellite Conv.

Satellite Dir.

SCER

SCt Software Dir. Sherman and Bently Sherman and Strowel

Report of Patent Cases M. Howe (ed.), Russell-Clarke on Industrial Designs (6th edn., London: Sweet & Maxwell, 1998)

Convention Relating to the Distribution by Programme Carrying Signals Transmitted by Satellite, Brussels, 21 May 1974 Council Directive 93/98/EEC of 27 Sept. 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission Scottish Criminal Case Reports Supreme Court

Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs B. Sherman and L. Bently, The Making of Modern Intellectual Property Law (Cambridge: CUP, 1999) B. Sherman and A. Strowel (eds.), OfAuthors and Ori-

gins: Essays on Copyright Law (Oxford: Clarendon Press, 1994) Singer

R. Singer, The European Patent Convention, R. Lunzer

SPC

Supplementary Protection Certificate

SPC (MP) Reg.

Council Regulation

SPC (PPP) Reg.

tection certificate for medicinal products [1992] OJ [182/1 Council Regulation (EC), no. 1610/10 of the Euro-

(ed.) (London: Sweet & Maxwell, 1995) (EEC), no.

1768/2 of 18 June

1992 concerning the creation of a supplementary pro-

pean Parliament and of the Council of 23 July 1996 concerning the creation of a supplementary protection certificate for plant protection products [1996] OJ L198/30-5

Strasbourg

Strasbourg Convention on the Unification of Certain Points of Substantive Law on Patents for Inventions (1963) ETS, no. 47

TBA

TDA Terrell

Technical Board of Appeal Trade Descriptions Act 1968 S. Thorley, R. Miller, G. Burkill, and C. Birss (eds.),

Terrells Law of Patents (15th edn., London: Sweet & Maxwell, 2000)

TEU The Treaty

Treaty Establishing the European Union Treaty Establishing the European Community

ABBREVIATIONS

xix

TLR To TMA TMA 1938 TM Dir.

Times Law Reports Trademark Law Treaty, signed 28 Oct. 1994 Trade Marks Act 1994 Trade Marks Act 1938 First Council Directive 89/104 of 21 Dec. 1988 to approximate the laws of member states relating to trade marks

TMR

Trade Marks Rules 2000, SI 2000/136

TM Rep. TMR Work Manual TRIPs

Trademark Reporter Trade Mark Registry Work Manual Agreement on Trade related Aspects of Intellectual Property Rights 1994 Commission Regulation (EC) no. 240/96 of 31 Jan. 1996 on the Application of Art. 85(3) of the Treaty to certain categories of Technology Transfer Agreements Universal Copyright Convention Unregistered Design Right International Convention for the Protection of New

TTR

UCC UDR UPOV

Varieties of Plants of 2 Dec. 1961 (latest revision 19 Mar. 1991) VRR

Wadlow (1995)

Commission Regulation 2790/99 on the application of Article 81(3) of the Treaty of Categories of Vertical Agreements and Concerted Practices C. Wadlow, The Law of Passing Off (London: Sweet & Maxwell, 1995)

Wadlow (1998)

C. Wadlow, Enforcement of Intellectual Property in European and International Law (London: Sweet & Maxwell, 1998)

Washington WCT

Whitford Committee

WIPO WLR

Worsdall and Clark

Treaty on Intellectual Property in Respect of Integrated Circuits, Washington, DC, 26 May 1989 WIPO Copyright Treaty adopted by the Diplomatic Conference on 20 Dec. 1996 Whitford Committee, Report of the Committee on Copyright and Designs Law, Cmnd. 6732 (London: HMSO, 1977) World Intellectual Property Organization Weekly Law Reports A. Worsdall and A. Clark, Anti-Counterfeiting: A Practical Guide (Bristol: Jordans, 1998)

WPPT WTO

WIPO Performers and Phonograms Treaty adopted by the Diplomatic Conference on 20 Dec. 1996 World Trade Organization

USEFUL

WEBSITES

Advertising Standards Authority Chartered Institute of Patent Agents Competition Commission

Community Plant Variety Office Department of Culture, Media, and Sport

Department of Trade and Industry European Commission European Court of Justice European Free Trade Association

European Patent Office Her Majesty’s Customs and Excise House of Lords (judicial decisions) Institute of Trade Mark Agents

Ministry of Agriculture, Fisheries, and Food Office of Harmonization in the Internal Market Parliamentary Debates The Patent Office (UK)

Performing Rights Society Plant Varieties Office Public Lending Right UK Government UK Courts

US Patent Office World Intellectual Property Organization World Trade Organization

htttp://www asa.org.uk cipa.org.uk competition-commission.org.uk cpvo.fr culture.gov.uk dti.gov.uk europa.org curia.eu.int efta.int epo.co.at hmce.gov.uk parliament.the-stationery-office.co.uk itma.org.uk maff.gov.uk oami.eu.int parliament.the-stationery-office.co.uk patent.gov.uk prs.co.uk maff.gov.uk plr.uk.com open.gov.uk courtservice.gov.uk uspto.gov

wipo.org wto.org

TABLE

OF CASES

A &M Records v Video Collection [1995] EMLR 25d ampli

Ss 142)

OJEPO 95; [1986] EPOR 210...

A Pressler & Co v Gartside & Co (1933) 50 RPC

240... 600, 609 AB v South West Water Services [1993] QB 507 . 1026 BGRG62111),...25.515;,568

Aberdale Cycle v Charles Twigg (1952) 69 RPC 613

460

Air Products/Removal of Hydrogen Sulphide 1271/84 [1987] OJEPO 405; [1987] EPOR 23 Gite

490

AIRC v PPL [1994] RPC 143...

AB Volvo v Erik Veng (UK) Case 238/87 [1988]

WSL...

Air Products/Redox Catalyst T171/84 [1986]

291

Aktiebolaget Manus v RJ Fulwood and Bland

(1948) 66 RPC 71 (CA)... 853, 854

Aktiebolaget Volvo v Heritage [2000] FSR 265 s ncenuO/Dy O20

Abernethy v Hutchinson (1824) 1 H & Tw 28; 47 ER 1313... 920, 924

Alan Clark v Associated Newspapers [1998] RPC 261... 680

ABKCO Music & Records Inc v Music Collection Internation & Anr [1995] RPC

Alcan/Aluminium Alloys T465/92 [1995] EPOR

657...

141

501...

AC Edwards v Acme Signs [1990] RPC 621 ... 464

RPC147......

464, 465, 466

901

1010, 1014, 1015, 1016

RPC

145...

785, 786

Aljose Fashions v Alfred Young & Co [1978] FSR 364...

1014

Allen & Hanbury v Generics [1986] RPC 203

Accutron Trade Mark [1966] RPC 152... 781 Ackroyds London v Islington Plastics [1962] RPC Oa,

953, 941

S/R

DAZ

2 Loo

Ad-Lib Club [1976] FSR 256...

769,

683

Adhesive Dry Mounting v Trapp (1910) 27 RPC Adidas Case C—223/98 [2000] FSR 227; [1999] 19, 1018

Adolf Schindling/Iluminating Device T324/94 [1997] EPOR 146...

444

Advanced Semiconductor Products/Limiting feature G1/93 [1994] OJEPO 541; [1995] EPOR 97 (EBA)... 330, 358, 465, 467

Adventure Films v Tully [1993] EMLR 376 . 114

AEI Rediffusion Music v Phonographic Performance [1998] RPC 335... 264 AG Spalding Bros v AW Gamage (1915) 32 RPC ..'/08

AGIP (Africa) v Jackson [1992] 4 All ER 385 Stele

476,478

Allen West & Co Ltd v British Westinghouse Electric & Manufacturing Co Ltd (1916) 33 RPC 157... 566, 605 Allied Signal/Polyoefin fiber T793/93 [1996] EPOR

427

3 CMLR 895...

681,

Allen v Rawson (1845) 1 CB 551; 135 ER 656 ...

AD 2000 Trade Mark [1997] RPC 168... 779, 783, 785

341...

(HL)... 515,518

Allen v Brown Watson [1965] RPC 191... 682

Acohs Pty v RA Bashford Consulting Pty (1997)

joe

.

Alfred Dunhill’s Trade Mark Application [1982]

Acclaim Entertainment /Super Soccer League R 372/2000-1 (15 Sept 2000) ... 793 Accurist Watches v King [1992] FSR 80... 900,

2/3

841

Alfred Dunhill v Sunoptic SA [1979] FSR 337

AC Edwards v Acme Signs [1992] RPC 131 (CA) ...

441, 443

Alexander Pirie & Sons’ Application (1933) 50

104...

421, 423

Alpha Therapeutic Corpn/ FAST PREP R 111/98—1 (29 Oct 1998)...

781

ALZA/Infuser T514/88 [1990] EPOR 157...

466

Amber Size & Chemical Co v Menzel [1913] 2 Ch 2397.2

9535963

American Cyanamid Co’s Patent (Fenbufen) [1990] RPC 309... 537

American Cynamid/Melamine derivatives T279/93 [1999] EPOR 88...

432

American Cyanamid v Ethicon [1975] AC 396 (HL)...

1007, 1009, 1010, 1011, 1016

American Cyanamid v Ethicon [1979] RPC 215 .2.

451,999

American Cyanamid’s Patent (Dann) [1971] RPC 425...

335, 450

TABLE

American Home Products v Novartis [2000] RPC 547...

460

Amersham International v Corning [1987] RPC

Arthur Fairest’s Application (1951) 68 RPC 197 ... 805, 806 Artifakts Design Group v NP Rigg [1993] 1 NZLR 196 oy.

SE esctor ey

Ames Crosta v Pionex International [1977] FSR 46...

OF CASES

OL

Artistic Upholstery v Art Forma (Furniture) [1999] 4 All ER 277...

1014

680, 691, 807

Amoco Corporation/Alternative claims T153/85

Asahi Kasei Kogyo [1991] RPC 485 (HL)... 315,

Amoena v Truelife (unreported, 25 May 1995,

Ashmore v Douglas Home [1987] FSR 553 ... 86, 106

[1988] OJEPO 1; [1988] EPOR 116... 419

SRIS C/72/95) ...

636, 643

Amp/Connector T66/85 [1989] EPOR 283; [1989] OJEPO 167...

465, 465

... 581, 583, 584, 585, 586, 588, 589, 595, 618, 766

Anacon Corporation v Environmental Research Technology [1994] FSR 659... 52, 167 Anchor Building v Redland Roof Tiles [1990] 500

Anderson’s Trade Mark (1884) 26 Ch D 409 hier

Anheuser-Busch Inc v Budejovicky Budvar Narodni Podnik [1984] FSR 413... 685, 687

All ER 535; [1991] FSR 380... USGA

694, 696, 714,

Associated Newspapers Group v News Group Newspapers [1986] RPC 515... 196, 202, 205, 206, 1012 Association of Independent Radio Companies (AIRC) v Phonographic Performance [1994] 264, 265

Athanasios Kalfelis

v Bankhaus Schroder Case

189/87 [1988] ECR 5565... 1001

Athletes Foot Marketing Association Inc v Cobra

Annabel’s Berkeley Square v Shock [1972] RPC L721

LAS:

Antiphon’s Application [1984] RPC 1... 351 Anton Piller v Manufacturing Processes [1976] Ch 55. +. 989

685, 687, 1011

we

450

Attorney-General v Blake [1996] FSR 727

A82 975 Attorney-General v Blake [1998] 1 All ER 833 (CA)...

940, 950, 953, 975

Attorney-General v Blake [2000] 3 WLR 625

Antoni & Alison’s Application/Vaccum Packing R 497-2 [1998] OJ OHIM 3/180; [1998] ETMR 460... 740, 741 Apple Computer v Computer Edge [1984] FSR 53,54

: 122,:951,974;975

Attorney-General v Guardian Newspapers [1987] 1 WLR 1248 (1253 Ch D, 1271 CA, 1282 HL) -.. 929, 944

Attorney-General v Guardian Newspapers (No 2)

Apple Corporation v Apple Computer Inc [1992] FSR 43 leeeeors

Application by L Edwards Trade Mark (1946) 63 RPC 19... 804 Application of Merri-Meyers Head (Trading as Comfort and Joy); Opposition of Jean Patou [1997] ETMR 577...

Sports [1980] RPC 343...

Atlantic Works v Brady 107 US 192 (1883)

Antec International v South-Western Chicks (Warren) [1998] FSR 738... 676, 708, 710,

481...

51/107

Associated Newspapers v Insert Media [1991] 3

RPC 143...

oe|

S38hoR

Associated Colour Printers’ Design 54 RPC 203 Sas

Amp Inc vUtilux Proprietary [1972] RPC 103

RPC 283 (CA)...

351, 417, 422, 460, 461, 462

816

Attorney-General v Jonathan Cape [1976] QB TIL

OOD

Attorney-General v Newspaper Publishing [1988] Ch'333i(CA)

Aquaculture v New Zealand Mussel (1985) 5 IPR 399.55 O31 Aquaculture v New Zealand Mussel (1988) 10 IPR 319; [1990] 9 IPR 527; 3 NZLR (New Zealand

CA)... 973,974

Archbold v Sweet [1832] 172 ER 947... Argyll v Argyll [1967] Ch 302...

[1990] 1 AC 109 (117 Ch D, 174 HL)... 106, 122, 925, 928, 930, 934, 944, 947, 948, 961, 966, 973, 974

252

924, 940, 970

Arlite Trade Mark [1995] RPC 504...

847

Arsenal v Reed (6 Apr 2001; 1 May 2001)... 868

97

Attorney-General v Turnaround Distributors [1989] FSR 169... 929 ATT/System for generating code T204/93 (unreported)...

391

Attwood v Lamont [1920] 3 KB 571...

951

Au Printemps Trade Mark [1990] RPC 518 OO

Auchinloss v Agricultural & Veterinary Supplies

[1997] RPC 649... 507

TABLE

Auchinloss v Agricultural & Veterinary Supplies [1999] RPC 397 (CA) ... 502, 507, 508 Auckland Medical Aid Trust v Commissioner of Police [1976] 1 NZLR 485... 215

Audi-Med Trade Mark [1998] RPC 863... 817, 829, 833, 834, 838

Auvi Trade Mark [1995] FSR 288... 55, 121 Availability to the Public Decision G1/92 [1993] EPOR 241; [1993] OJEPO 277... 420, 423,

S52

354...

444, 445, 455

BASF v Bureau voor de Industriele Eigendom Case C—258/99 (30 Nov 2000)...

554

BASF v CEP [1996] ETMR 51... 837 Baskin-Robbins Ice Cream Co v Gutman [1976] FSR 545...

685, 687

Bassett v SACEM Case 402/85 [1987] ECR 1747

426

Aveley/Cybervox v Boman & Sign Electronic Signal [1975] FSR 139... 953 Avnet Inc v Isoact [1998] FSR 16... 738, 739, 774, 816

FSR 533...

914,915

[1996] FSR 139... 255,984

BatMark/Viceroy Case R 5/97—1 [1998] ETMR

464

449...

Baby Dan v Brevi [1999] FSR 377...

633, 636,

642, 643

Bach Flower Remedies v Healing Herbs [1999] RPGs

772

Bach Flower Remedies v Healing Herbs [2000]

RPC 513...

769, 770, 771, 772, 780, 799

Bach v Longman (1777) 2 Cowp 623... Bach’s Design (1889) 6 RPC 376...

Bacony [1989] NJ 835...

61

EPOR 363...

366, 368

881

Bayer/Amino Acid Derivatives T12/90 [1991] EPOR 312...

414

Peo

DS

Bayer/Carbonless Copying T1/80 [1979-85] B

REC 359 . 5.461

EPOR 250...

854

Bali Trade Mark (No 2) [1978] FSR 193... Balmoral Trade Mark [1999] RPC 297...

841 811,

813, 817, 821, 822

Balston v Headline Filters [1990] FSR 385 DAO; 951,952,

Bampals Materials Handling Ltd’s Design [1981] 602

Bank Mellat v Nikpour [1985] FSR 87... 989 Barclays Bank v RBS Advanta [1996] RPC 307

... 870, 871, 872 Barier v News Group Newspapers [1997] FSR 812 202, 203, 260

Barker v Associated Manufacturers (Gowns and (1933) 50 RPC 332...

Baume v Moore [1958] Ch 907... 876, 877 Baxter/Blood Extraction Method T329/94 [1998]

Bayer/ Benzyl Esters T110/82 [1983] OJEPO 274

Badische Anilin v Societe Chimique (1898) 15

RPC 44...

127, 164,

182

...

580, 605

768

Bali Trade Mark [1966] RPC 387...

750

Bauman v Fussell [1978] RPC 485...

Bayer AG v Commission T—41/96 (26 Oct 2000)

BACTA v PPL [1992] RPC 149... 291

Mantles)

wl d5 292

BAT Cigaretten-Fabriken GmbH v EEC [1985] Batjac Productions Inc v Simitar Entertainment

B & R Relay’s Application [1985] RPC 1

...

940, 941

BASF/Metal Refining T24/81 [1979-85] EPOR B

[1995] RPC 683... 128, 157, 158, 163, 165, 167, 182, 183, 184, 625

iw,

FSR 600... ie

865

Autospin (Oil Seals) v Beehive Spinning (A Firm)

...

FSR 462... 673, 691, 705, 1011, 1012, 1015, 1017 Barry Artist Trade Mark [1978] RPC 703... 790 Barrymore v News Group Newspapers [1997] BASF AG’s SPC Application [2000] RPC 1

Autodrome Trade Mark [1969] RPC 564 fan

XXxiii

OF CASES

610

Barker v Huton (1912) 28 TLR 496... 72 Barker v Stickney [1919] 1 KB 121... 254, 258 Barnsley Brewery Company v RBNB [1997]

440

Bayer/Diastereomers T12/81 [1982] OJEPO 296; [1979-85] B EPOR 308... 414, 421, 423, 438

Bayer/Plant growth regulating agent G6/88 [1990] EPOR 257...

435

Bayer/Polyamide Moulding Composition T150/82 (1981) OJEPO 431...

337

Bayer/Thermoplastic moulding composition T68/83 [1979-85]

C EPOR 71...

447

Bayer’s Application G6/88 [1990] OJEPO 114 here 439

Bayerische Motorenwerke AG and BMW Nederland BV v Ronanl Karel Deenik Case C—63/97 [1999] CMLR 1099; [1999] All ER (EC) 235... 822, 823, 831, 879, 891

Baywatch Productions v The Home Video

Channel [1997] FSR 22... 837, 838, 1013

BBC [1976] CMLR D—89 (ECn)...

284

Xxiv

TABLE

BBC/Colour television signal T163/85 [1990] EPOR 599; [1990] OJEPO (Supplement) 19 cg

SLURS OO

[1926] Ch 433...

BBC Worldwide v Pally Screen Printing [1998] 627, 628, 702 158

Beattie/Marker T603/89 [1992] EPOR 221 RS 87,

Beautimatic International v Mitchell International Pharmaceuticals [1999] ETMR 863, 864, 865, 878

Beautimatic International v Mitchell International Pharmaceuticals [2000] FSR 267 O16, 1021

BV Case B 1604 [1999] ETMR 20... 816

814,

Beecham Group v Bristol Laboratories International [1978] RPC 521 (HL)... 470 Beecham Group v Bristol Laboratories [1978] 504

Beecham Group v Norton Healthcare [1997] FSR 81...

1001

Biogen v Medeva [1993] RPC 475... 985 Biogen v Medeva [1995] RPC 25 (CA)... 353, 445

360, 371, 375, 443, 448, 452, 457, 458, 459, 460, 462, 463, 558

Biogen v Smith Kline Beecham Biologicals SA [1997] RPC 833)...

552

Biotrading & Financing Oy v Biohit Ltd [1996] FSR 393; [1998] FSR 109 (CA)... 87, 167, 176 Birkett v James [1978] AC 297... 1030 Birmingham Vinegar Brewery v Powell [1897] AG TiLK

Beauty Shop Application; Opposition of Evora

RPC 153 (HL)...

1735...

Biogen v Medeva [1997] RPC 1 (HL)... 339,

Beal, Ex parte (1868) LR 3 QB 387...

be,

[1976] ECR

Billhofer Maschinenfabrik v Dixon & Co (1990] ESR91'05 25s.al/Oy77.

92

BBC Enterprises v Hi-Tech Xtravision [1992] RPE 16/74 4189

912...

Biba Group v Biba Boutique [1980] RPC 413 ... 693, 876 Bier v Mines de Potasse d’Alsace Case 21/76

BBC vTalbot [1981] FSR 228... 681, 682, 712 BBC vWireless League Gazette Publishing Co

FSR 665...

OF CASES

2696

Bissell AG’s Design [1964] RPC 125... 602 Black N’ Red Trade Mark [1993] RPC 25...

Blair v Osborne & Tompkins [1971] 2 QB 78 EPS OSS)

Blaschim/Rearrangement Reaction T597/92 [1996] EPOR 456...

1004

Beechams Group (Amoxcyillan) Application [1980] RPC 261 (CA)... EMLR 349...

113,114

Belgische Radio en Televise (BRT) v SABAM Case 127/73 [1974] ECR 313... 15, 288, 289

Beloffv Pressdram [1973] RPC 765; [1973] 1 All ER 241... 119,192; 195, 197, 202; 209, 210, 254, 967, 1026

Beloit Technologies v Valmet Paper Machinery [1995] RPC 705...

454, 505

445

Blueco/Blue Water R 117/1998-1 [1999] ETMR 394...

451, 452

Beggars Banquet Records v Carlton TV [1993]

796

Black v Murray (1870) 9 Macph 341... 89 Blacklock v Pearson [1915] 2 Ch 376... 56, 89

744

Boardman v Phipps [1967] 2 AC 46... 940 Bodley Head v Flegon [1972] 1 WLR 680... 104, 105

Boehringer (1991) RPC 195... 442 Boehringer Mannheim v Genzyme [1993] FSR 716...

437

Boeing/General Technical Knowledge T195/84 [1986] OJEPO 121; [1986] EPOR 190... 446, 453

446,

Beloit Technologies v Valmet Paper Machinery

Bollinger v Costa Brava Wine Co [1960] RPC 16

Beloit Technologies v Valmet Paper Machinery [1997] RPC 489 (CA)... 446, 499, 500 Benchairs Ltd v Chair Centre Ltd [1974] RPC 429 508 SRR

Bollinger v Costa Brava Wine Co [1960] Ch 262

[1996] FSR 718 (CA)... 997

Sa

Berkeley Administration v McClelland [1990] FSR 505...

960 684, 685

Bernstein v Murray [1981] RPC 303...

64, 72

Besant v Wood (1879) 12 Ch D 605...

970

Best Products v Woolworths [1964] RPC 226 PROLD OL.

Betts v Willmott (1871) 2 Ch LR6...

690, 698, 724, 725

Bon Matin Trade Mark [1989] RPC 537... 849 Bondax Carpets v Advance Carpet Tiles [1993] FSR 162...

984

Bonz Group (Pty) v Cooke [1994] 3 NZLR 216

Bernadin vPavilion [1967] RPC 581...

a2

...

ees)

(NZ High Court) ...

Bookmakers’ Afternoon v Gilbert [1994] FSR 723 Sent

490

68, 70, 71, 72

Bonzel v Intervention (No 3) [1991] RPC 553 aan 46D OM

Boosey v Whight (1900) 1 Ch 122...

127

TABLE

Bosch/Electronic computer components T164/92 [1995] EPOR 585... 382, 392 Bostik v Sellotape GB [1994] RPC 556... 707 Bostitch Trade Mark [1963] RPC 183... 848, 857, 858

Boston Scientific v Palmaz (unreported, 20 Mar 2000)...

OF CASES

Bristol & West Building Society v Mothew [1998] Ch1... 940 British Acoustic Films v Nettlefordfold Productions (1936) 53 RPC 221... 446 British Actors Film Co v Glover [1918] 1 KB 299 ion) 20952560,.255

British Airways plc v The Performing Right

358

Society [1998] RPC 581... 290, 291

Bourjis v British Home Stores (1951) 68 RPC 280 ... 615, 616

British Airways plc v Ryanair (5 Dec 2000)

Bowden Controls v Acco Cable Controls [1990] RPC 427... 992

British Association of Aesthetic Plastic Surgeons v

Bowden Wire Limited v Bowden Brake Co (1914) 31 RPC 385... 848

British Biotech/Heterocyclic compounds T684/96

BP v European Petrol [1968] RPC 54... 785 BP Refinery (Westernport) Pty v Hastings Shire Council (1977) 16 ALR 363...

259

BPI v MCPS [1993] EMLR 86; 22 IPR 325 mets Uy LIU 2k Bradbury Agnew v Day (1916) 32 TLR 349

Cambright [1987] RPC 549... [2000] EPOR 190...

1015

464, 465

British Broadcasting Corporation v British Satellite Broadcasting [1992] Ch 141... 204 British Diabetic Association v The Diabetic Society [1996] FSR1...

672, 680

British Fish Canners [1984] IPD 1063... 782 British Franco Electic Pty Ltd v Dowling Plastics

. 127, 134, 182 Bradbury Hotten (1872) LR8 Ex1...

ose

Pty Ltd [1981]

156

1 NSWLR 448 ...

599, 603

Brain v Ingledew Brown Bennison & Garrett

British Industrial Plastics v Ferguson [1940] 1 All

Brain v Ingledew Brown Bennison & Garrett (No 2) (1997 FSR271 .. 209,210 S47230 Si52) eee > s 174(1)(b)... 212 (3) a SA/S

sanee

2... LOS

(1)... 104 ‘CA

Rewer

(3)... 104 (4)(a)... 104 (ii)... 104 (b)... 104 (iv)... 2104 (Sy... 104 (6)...

295 '295 295, 299, 300 Up

ss 182A—B...

297

S1S2C elo (2) a Mis2 S821 Qaee297 (A); Meh 97.

s 183... 295,296 5 184... 295, 296 (2)... 1023 $185... 298, 300 (2). 298

(3)... 298, 300 S186. eoo SOY ee S188 3295 SOD euadoy 27, S192... 298 (2)... 298 (3)... 298 SOAS ood SIOUB a 20 SISUE 2 ae2807297, SU9IG. 2s 2807297 Qirer 2297, SOV e297 SOTIS)2ee1025 S LOU 1023511027, s 191K... 1020, 1024, 1029 Sa OUeee 964 s\192'.. 29298 SDZACy=e 296 S194 eloo Se ee ee ek) $196... 299, 988 SHLOT oe. 2965299 $198... 296, 299, 1031, 1032 SS99=207 , 9299 $204...

1022

s205B... S206...

290 299

(Hise. $208...

300 299

(Geoc AES

104

SATS 2G 3-79; 97; 104, 1095115; 108) 121; 029, 185, 198, 213, 226, 251

s 180... (2) ti ase s 181... SO? Chee

lix

S216).

633

(3)\(a)' en 587 (b)(i)... 634 (il) eee O37, (Ce) Beyntayey!! (4)... 639 $214...

140, 641

s215(1)...

641

(2)... 641 (3)... 641 $218... 641 $219... 641 $226... 627 (1);4.G42 (2)... 642, 644 (3)... 642

TABLE

$229)...

1023

(3YS) 7 10m $230... 1022 $231... 1022 s 233(1)... 1023 (2), 2023 5 236... 646, 647, 648 $237... 642 s 239(1)(c)... 1024, 1029 $251... 998 $253... 991 (1)... 993 (2)... 993 (3)... 992 $255... 641 $256... 641 $259... 984 s 263... 641 $268... 611 s 287... 995 5289... 995 (2)... 995 s 292(1)... 995 $296... 188 s 296A... 219 (1)(a)... 193, 287 (b) ... 193, 287 (Gc) Fe

193521185287

s296B... 5 193 , 287 S 2970... 18951031 SOT

Ae

eso atOsl

s 298... 189 S299 72. 189 sched], paral? =). 118 para l2Q)e se 15) (d)—(e)... (4)

151

(6) eceanl5a 149

para 14(3)... pata 22,

186

242

para 23(2)—(3)...

para 30... 261 para 35... 105 para 36... 102 sched 2...

Vict,c 17)...

564

Copyright (EC Measures Relating to Pirated Goods and Abolition of Restriction on the Import of Goods) Regulations 1995 (SI 1995/1445)...

298, 303

sched 5, paral9...

342

1019

Copyright (Educational Establishments) (No2) Order 1989 (SI 1989/1068) ...

212

Copyright (Industrial Process and Excluded Articles) (No2) Order 1989 (SI 1989/ 1070)... 629

Copyright (Librarians and Archivists) (Copying of Copyright Material) Regulations 1989 Order (SI 1989/1212) Part A, sched 1... 211 Copyright (Recording for Archives of Designated Class of Broadcasting and Cable Programmes) (Designated Bodies)

Order 1993 (SI 1993/74) ... 216

Copyright and Related Rights Regulations 1996 (SI 1996/2967) ... Pe.

20S

PNG...

104.153

112, 137, 250

(4)... 154 (3) liste ALC O2i es Q)iker

843 776, 807, 811, 843, 899 751, 843 812, 839, 840 ATG DS ner 876 (2) ae 880 Art 5528: 776 Art 64... 730 Art 84... 751 ATtiSo'.os 751 Art 88(1) -.. 748 Art89 2... 748 (Q)ia.% 748 ATEOO Mes 1005 ATED x5, 999 FaN Pee 776 ATESme 860 )es 1005 Art 95(1) ... 843 Gadi 869 ATt 960% 776 ATES aoe 860 AT SOR 1020 Art 99(2) ... 860 Art 106.. . 880 Art 107.. . 880 Art 108.. sf? (2)(b).Sey Art Wisc . 824 Council Regulation (EC) No 2100/94 of 27 July 1994 on Community Plant Variety Rights [1994] OJ L227/1...

INRIA AES a. (2)eee . ATE)... TSE oye Ate Sis JN ) oo

541, 545 396, 542 543 542, 543, 544 544 545 545

Atel OYers 543 Arita tere 546

CDSs

545

Jeo Pe:

541

PNA See (2a. GES.

546 546 548

AGRA S03 549

One ) ee

549 511, 549

OF STATUTES

Art 15... 548 Art 16... 548 Art 19... 546 Art 20... 542,998 Art 21... 542, 998 Art 23... 546 (2)... 545 Art 29... 549 Art 50... 542 (3)... 542 Art 53... 542 Art 54... 542 Art 55... 542 Art 59... 542 Art 63... 542,548 Art 92... 541 (1)... 546 Art 94... 1023 Art 95... 542 Art 105... 998 Art 106(2)...

Recital5...

998

540

Council Regulation (EC) No 3288/94 of 22 Dec 1994 amending Council Regulation No 40/94 on the Community Trade Mark [1994] OJ L 349/83...

748

Council Regulation (EEC) No 3295/94 of 22 December 1994 laying down measures to prohibit the release for free circulation, export, re-export or entry for a suspensive procedure of counterfeit and pirated goods [1994]

OJ L 341

18

Art 1(2)(a)... 1018, 1033 (4). a LOLS ATE 2s - 1018 AYE Sy - 1018

(2). (4)?

..

1018

..

1018

Art4.. - 1018

Art 8.. LOS Art dye a LOS? Council Regulation (EC) No1610/96 concerning the creation of a supplementary protection certificate for plant protection products [1996] OJ L 198/ BU AG 4 Silt) Are (1) ees 551

(2) OOD) (3). peo) eis) (8) . Be Sess)

TABLE

OF STATUTES

ATESC1) (Gj) hen 552 ATti4y... 553 AriS:.:... 564 ATT... S52 Axtl2 ».. 393 Art 13... 554

(2),.. (6) Gigs Arbor... ATGIO Arh). 5. CU)(a)i

(b) Rol

Council Regulation (EC) No 2470/96 of 17

December 1996 providing for an extension of the terms of the Community plant variety right in respect of potatoes [1996] OJ L 335/10 ... 546 Council Regulation (EC) 241/99 of 25 January

1999 amending Council Regulation (EEC) 3295/94[1999] OJ L 27 5

LOL7.

December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial 981

Directive 97/55/EC of the European Parliament and Council of 6 October 1997 amending Directive 94/450/EEC concerning misleading advertising so as to include comparative advertising

[1997] OJ L290/18... 669

Art 2(2)... Art 2a... Art3...

874

874 875

Directive 98/71/EC of the European Parliament and of the Council of 13 October 1998 on the legal protection of designs [1998] OJL 289/28...

617 Art1... 593 (b)... 593, 594 (c),.0.° 594

Art3... 593 (2)... 607 (3)... 594, 595 (4)... 595 Art 4... 607 Art 5... 607, 608 Art6... 607 (1)... 608 (2)... 608 (3)... 608 Art7...,595

Art 2... 126, 143 Art 3(1)... 49

(2)... 49, 144

LO

COS.. 5.143 Q)e neo (a) camels

874, 875

Recitals 13-15...

information society [2001] OJ L 167/10... 49, 123, 126, 143

ATC S ase

874

Art 7(1)...

596

Directive 2001/29/EC of the European Parliament and of the Council of 22 May 2001 on the harmonization of certain aspects of copyright and related rights in the

Art4... 130 2) lees 0)

874

Art 3a...

Avtar ToT VN i is els sy"72 AT re OSL ATE 1S ~ 4.4996 Recitals 1-4... 568 Recital 8... 569 Recital 13... 608 Recital 14...

Council Regulation (EC) No 44/2001 of 22

matter [2001] OJ L 12/1...

596 596 621 $9.62 622 rte 622

571,

(b)... 229 (c)ineegZ30 (CHEcass 23 (C)iterncs

(SB) ee228 (Ey) Sty OH

(Dies JOU (c) ee

230

(aie 230 (elie. (231 (f)’Hee 231

(g)... 231 (Dh) Raza

(Q)yran 2 Osea 238 (i) pemezol (erezoa: (a) ieee 2 (ie.

25

Ixxvi

TABLE

OF STATUTES

(O)Feee231 G) eas 228 Art 6... 49, 189 Art 7 .- 495190 (Qin. 190 Art 8... 145 Recital ener 45

225 ..>.020 249... 18 295... 10, 14, 265, 279 300... 21

(2)—(3)3 Art 308...

16

Protocol on the Application of the Principles of Subsidiarity and Proportionality

Recital 25...

144

Recital 32...

228

para6...

16

Recital 33...

143

para9...

16

Recital 35... Recitals rage Recital 41... Recital 42...

229 so, 2B) 231 230, 231

Recital 43...

231

Recital 48...

190

Recital 49... 190 Recital 50... 190 Recital 51... 287 Recital 58... 144 European Council Directive 2000/31/EC of June 8, 2000 on Certain Legal Aspects of Electronic Commerce in the Internal Market [2000] OJ L 178/1 ATED)

e 2On

Arts 12-15...

eal

Treaty on European Union of Maastricht (1993) (TEU) Art6e2).©9 Arts 29-30...

9

Treaty of Nice (2000)... 20 Treaty of Rome (1957) (’The Treaty’)...

186,

902

Art 30... 490, 508, 881, 892 Arts 31-5... 892 Art 36... 41, 881, 884, 892 Art 85... 278, 283, 284, 285, 291, 520, 895, 908, 910, 913, 914, 915 (3)... 285, 908 Art 86... 265, 267, 288, 291 Art 222 ten 265; 279

48, 144

Treaty of Amsterdam (1997) ATE 2s 209 INS) ct, © ALCS

Art Art Art Art

0

Art 28... 10, 22, 881, 882, 892 Art 29... 892 Art 30... 10, 11, 22, 41, 881, 882, 884, 892 ATC49y 10 Art 81... 11, 12, 14,15, 22, 278.979, 293, 284, 285, 286, 291, 292, 293, 520, 521, 895, 896, 908, 910, 911, 913, 914, 915

(1)... 14, 15, 279, 520, 521, 908, 910, 913, 914 Q)eo. 14 (3)... 15,278, 520, 909, 910, 913

Art 82... 14, 15, 22, 265, 267, 288, 291, 292, 293, 526 Art 85(3)... 522 Art 94... 16 Art 95... 16 Art 133... 20,21 (S)k. 2021 Mi.” See e.g. Deutsche Grammophon Gesellschaft mbH v. Metro GmbH, Case 78/80 [1971] ECR 487; Music

Vertrieb Membran GmbH and K-tel International v. GEMA, Cases 55 and 57/80 [1981] ECR 147; EMI Electrola GmbH v. Patricia Im-und Export, Case 341/87 [1989] ECR 79. 58 Deutsche Grammophon v. Metro, Case 78/80 [1971] ECR 487 (subsidiary); Keurkoop BV v. Nancy Kean Gifts BV, Case 144/81 [1982] ECR 2853.

°° THT International Heiztechnik v, Ideal-Standard, Case C-9/93 [1994] 1 ECRI-2789. This reversed Sirena,

Case 40/70 [1971] ECR 3711 and Hag I, Cases 192/73 [1974] ECR 731.

6° Whether the agreement is treated as market sharing will depend on the context, the commitments, the intention of the parties, and the consideration provided. See Establiss ements Consten SARL and GrundigVerkaufs -GmbH v. EEC Commission, Case 58/64 [1966] ECR 299 (assignme nt void). But in IMT Internati

onal Heiztechnik v. Ideal-Standard, Case C-9/93 [1994] 1 ECR I-2789 the assignment had been prompted by the assignor’s financial difficulties. 61 H. Cohen Jehoram, ‘The Ideal Standard Judgment: An Unheede d Warning’ [1999] IPQ 114.

INTRODUCTION

13

the right owner will have been taken to have consented to the marketing of those

goods and so have exhausted their rights. (g) Where intellectual property rights subsist in country A but are subject to a compulsory licence (i.e. any person may exploit the intellectual property right on payment of a fee), the rights are not exhausted when goods are manufactured under such a licence. Here, the intellectual property right owner will be able to use national laws to prevent importation into country B.°

(h) Where goods have been marketed in the EC by the intellectual property right holder (or with their consent), the right of the owner of the goods to resell might permit behaviour (such as advertising) that overrides other aspects of the proprietor’s intellectual property rights.™ (1) Where goods have been marketed in the EC by the intellectual property right holder (or with their consent), but the goods have subsequently been altered, a series of specific rules have been developed that define when a resale is legitimate. These are considered in the context of trade marks later.® (j) Where goods have been marketed outside the EC by the intellectual property right holder (or with their consent), the principle of exhaustion has no application. In the absence of harmonization, it is for member states (and where there has been harmonization, the ECJ) to determine the effects of such marketing.©

Although the doctrine of exhaustion of rights has reduced some of the disruption that national intellectual property laws pose to the internal market, it has not provided a complete solution. This is because the national intellectual property laws of the member states can vary significantly. Since the principle of exhaustion comes into effect when the right owner consents to goods being placed on the market, that consent will not exist where a third party makes and distributes goods in a country where the right does not exist or has lapsed.°’ It is largely for this reason that the Commission set about to harmonize intellectual property laws in Europe. 62 Merck & Co. v. Stephar BV & Exler, Case 187/80 [1981] ECR 2063 (marketing of drug in Italy when patent protection was not available); Merck & Co. v. Primecrown, Cases C-267/95 and C-268/95 [1996] ECR 1-6285 (affirming Merck v. Stephar). See P. Torremans and I. Stamatoudi, “Merck is Back to Stay; The Court of Justice’s Judgment in Merck v. Primecrown’ [1997] EIPR 545. 63 Pharmon v. Hoechst, Case 19/84 [1985] ECR 2281 (import into the Netherlands of drugs manufactured under compulsory licence in the UK); Music Vertrieb Membran GmbH and K-tel International v. GEMA, Case 55 and 57/80 [1981] ECR 147. One problem with this effect is that it may undermine compulsory licences which are intended to induce voluntary licensing arrangements, since the latter (but not the former) will be treated as exhausting the intellectual property owner’s rights. 64 Parfums Christian Dior SA v. Evora BV, Case C-337/95 [1998] 1 CMLR 737. 6 See below at pp. 883-92. 66 EMI Records v. CBS United Kingdom, Case 51/75 [1976] ECR 811 (stopping importation of copyright works from the US); Polydor and RSO Records v. Harlequin Record Shops and Simons Records, Case 270/80 [1982] ECR 329 (stopping importation of copyright works from EFTA countries); Sebago and Ancienne

Maison Dubois etfils SA v. GB-Unic SA, C-173/98 [1999] CMLR 1317. 67 Bassett v. SACEM, Case 402/85 [1987] ECR 1747; EMI Electrola GmbH v. Patricia Im-und Export, Case

341/87 [1989] ECR 79.

14

4.2

INTRODUCTION

COMPETITION

RULES

The second way in which European initiatives have exerted an influence over British intellectual property law is through the rules on competition contained in Articles 81 and 82 EC (formerly Articles 85 and 86 of the Treaty). These provisions are designed to prevent anti-competitive agreements and practices, as well as abusive conduct by monopolies. These provisions impact on intellectual property law in a number of ways. Articles 81 and 82 EC are both couched as prohibitions and thus automatically render certain arrangements between ‘undertakings’ to be void (and therefore unenforceable).®* In certain cases, they also provide the basis for an

action for damages, a ground for applying to the Commission for a compulsory licence to exploit an intellectual property right, and a defence (aka a ‘Eurodefence’) to an action for infringement of intellectual property rights.”? Articles 81 and 82 EC are both enforced by the Commission.” If an undertaking is found to have been acting anti-competitively, the Commission has the ability to impose serious

fines.”

Article 81 prohibits ‘all agreements between 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.’ Article 81 goes on to outline certain practices, such as price-fixing and market-sharing, which will normally be prohibited. As the term ‘undertakings’ has been interpreted liberally, Article 81 potentially applies to agreements concerning the licensing and assignment of intellectual property rights,’> whether between competitors or parties at different levels of distribution (for example, exclusive distribution agreements). Even though the Treaty is not meant to prejudice the rules in member states governing the system of property ownership,”* the Commission and the Court have had little hesitation in applying Article 81(1) to agreements involving intellectual property rights. According to the Court, interference with intellectual property rights is justified on the basis that it ‘does not affect the grant of those rights but only limits their exercise to the extent 68 Art. 81(2). This might be a significant penalty where a patentee has carefully calculated the terms of the licence, only for it later to be held to be void.

°° RTE and ITP v. EC Commission, C-241/91 and C-242/91 [1995] ECR 808.

70 Whether abuse can be used as a defence is a controversial issue. See Chiron Corp. v. Organon Teknika

[1993] FSR 324; [1994] FSR 202.

7! Or when the Commission investigates. 72 Council Regulation no. 17/62 of 6 Feb. 1962: First Regulation Implementing Arts. 85 and 86 of the Treaty OJ Sp Ed 1962 no. 204/62 p. 87, reg. 15(2) fines of up to 1 million euro or 10% turnover in the preceding business year. The fines can be applied even where breach of Art. 81 or 82 was negligent. 73 e.g. Establissements Consten SARL and Grundig- Verkaufs-GmbH v. EEC Commission, Case 58/64 [1966] ECR 299. (German manufacturer G appointed French company C as exclusive distributor in France. C had registration of GINT mark in France. The EC] agreed with the Commission’s view that the agreement was contrary to Art. 85, including the agreement allowing C to register the mark in France.) Minor agreements are excluded: Commission Notice on Agreements of Minor Importance which Do Not Fall Within the Meaning

of Art. 85(1) of the Treaty Establishing the EEC 97/C373/04 [1997] OJ C 372/13 (where the aggregate market share is under 10%).

’* Art. 295 EC (formerly Art. 222 of the Treaty).

INTRODUCTION

15

necessary to give effect to the prohibition under [Art. 81].’”° Article 81 also applies to institutions and arrangements for the collective administration of rights: a common

feature of copyright exploitation.”° Given the potential breadth of Article 81, it is important to note that Article 81(3) allows for Article 81(1) to be ‘declared inapplicable’ in a number of circumstances.” Such exemptions must ‘contribute 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.’ An agreement may be declared to be exempt after an application has been made to the Commission, or because it falls within one of

the block exemptions issued by the Commission.”* The Commission has issued a number of such ‘block exemptions’ in the form of Commission Regulations, the most important relate to ‘technology transfer agreements’ and ‘vertical agreements.’” Article 82 EC prohibits an undertaking from abusing a dominant position. This prohibition has primarily affected intellectual property law in two ways. First, it provides a basis to regulate collective organizations that administer intellectual property rights on behalf of owners and which occupy a dominant position in the market. To prevent abuse, organizations in a dominant position are only able to impose obligations and restrictions that are necessary to achieve their legitimate aims.*? Secondly, Article 82 provides a remedy for misuse or abuse of intellectual property rights. On one reading of Article 82, it is possible to argue that as intellectual property rights confer monopoly rights, they necessarily place owners in a dominant position for the market covered by the intellectual property right. On this basis, all activities carried on by intellectual property right holders would need to be scrutinized to ensure that they were not abusive. However, the European Court of Justice has declined to use Article 82 in this way. Instead, the Court has made it clear that ownership of an intellectual property right does not of itself confer dominance in a market. As a consequence, a refusal to license an intellectual property right only constitutes an abuse of a dominant position in exceptional circumstances.®*! 72 Establissements Consten SARL and Grundig- Verkaufs-GmbH v. EEC Commission, Case 58/64 [1966] ECR 299. Cf. Panayiotou v. Sony Music Entertainment |1994] EMLR 229.

76 See below at pp. 261-71, 287-293. 77 Regulation No. 19/65/EEC. 78 Regulation 17/62 of 6 Feb. 1962: First Regulation Implementing Arts. 85 and 86 of the Treaty OJ Sp Ed 1962, No. 204/62 p. 8, Art. 9. Where there has been no notification to the Commission and an agreement falls outside the scope of a block exemption, the national court may not authorize an agreement. If faced with such a situation the court should seek information from the Commission or refer the case to the ECJ. See Notice on Cooperation between National Courts and the Commission in Applying Arts. 85 and 86 EEC [1993] OJ C39/6.

79 TTR; VRR. 80 These are discussed below at pp. 288-9. Re GEMA

(No. 1) [1971] CMLR D35; Belgische Radio en

Televise (BRT) v. SABAM, Case 127/73 [1974] ECR 313.

81 Thus, it was not an abuse for a designer and manufacturer of automobiles to refuse to license its intellectual property rights to persons wishing to manufacture replacement parts for vehicles. AB Volvo v. Erik Veng (UK), Case 238/87 [1988] ECR 6211; CICRA v. Regie Nationale des Usines Renault, Case 53/87 [1988]

ECR 6039. However, an abuse of dominant position was found where a broadcasting organization which generated programme schedules in which copyright was held to subsist, refused to license a newspaper to

16

4.3

INTRODUCTION

CENTRALIZATION

AND

HARMONIZATION

While the doctrine of exhaustion has reduced the impact of national intellectual property rights on the completion of the internal market, it has been unable to guarantee that barriers to trade would not arise where national laws differed in terms of substance or duration. Consequently, it soon became apparent that to achieve the holy grail of an internal market, some level of harmonization would be necessary. There are three ways in which the Community is able to harmonize national laws. The Council is able to issue directives for the approximation of the laws of member states ‘as directly affect the establishing and function of the common market’.22 Under this process a Commission issues a proposal and then consults with the European Parliament and Economic and Social Committee. To be passed, a proposal must be approved unanimously by the Council. The Council is also able to adopt measures (not just directives) ‘for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market’.8 Typically, this process begins with a Commission proposal, which must be approved by the Council and the European Parliament. As only a qualified majority of the Council must support the proposal it is not necessary to have the unanimous approval of all the member states. Thirdly, if action by the Community is ‘necessary to attain, in the course of the operation of the common market, one of the objectives of the Community, and this Treaty has not provided the necessary powers, the Council shall, acting unanimously on a proposal from the Commission after consulting the European Parliament, take the appropriate measures.’*° This provision may only be used where no other provision of the Treaty gives the Community institutions the necessary power to act.*° It has usually been the basis for the establishment of Community offices.®’ Community involvement with intellectual property can be divided into four stages.

In the 1970s, the focus of attention was on the establishment of a Community patent

system, that is a system in which a single patent would be granted for the whole of the Community, enforceable in Community patent courts. To this end, in 1975 the Community Patent Convention was agreed to at an intergovernmental level between the (then nine) member states. However, the political will to introdu ce the scheme never

publish those schedules on a weekly rather than daily basis, RTE and ITP v. EC Commission, C-241/91 and C-242/91 [1995] ECR 808 (the Magill Case).

82 Art. 94 EC. 83 Art.95 EC (formerly Art. 100A of the Treaty). 84 The Protocol on the Application of the Principles of Subsidia rity and Proportionality states that the Community should legislate only to the extent necessary and that, in general, directives should be preferred to Regulations, and framework directives preferred to detailed measures (para. 6). It also requires the Commission to consult widely before Proposing legislation (para. 9). Such consultation is usually by way of issuing Green Papers and holding meetings of ‘interested parties’. 85 Art. 308 (formerly Art. 235 of the Treaty).

86 Commission v. Council, Case 45/86 [1987] ECR 1493, para. 13. 87 e.g CTMR, recital 4.

INTRODUCTION

yy

materialized.** In part this was because in 1973 a separate instrument for the granting of patents, the European Patent Convention (EPC), had been agreed to between states (a number of which were then outside the EC). As such, there was little urgency to implement the distinct (though linked) Community patent. Despite attempts to revive the Treaty through a 1989 Protocol in Luxembourg,” it is only in the last couple of years that a real will for a single Community patent regime has emerged. This has taken shape in the form of a Commission proposal to introduce a Community patent by way of a Community Regulation.”’ In the meantime, the existence of the European Patent Convention has limited the ability of the Community to harmonize national patent laws. The reason for this is that all member states are parties to and therefore bound by the EPC. At the same time, they cannot amend the Convention without the assent of the non-EC participants. In the two fields where Community action has

taken place, the proposals have been made to appear as if they leave the EPC untouched. The two Regulations on Supplementary Protection Certificates are worded so as to avoid appearing to be extensions of the patent term.”! Similarly, the Directive of the European Parliament and Council on the Legal Protection of Biotechnological Inventions, which attempts to harmonize patent law for biological inventions, is presented as a Directive to harmonize the ‘interpretation’ of existing provisions of the EPC, rather than amending or modifying those provisions. In the 1980s, attention turned to the harmonization of trade mark law. The first

part of a two-pronged strategy was to approximate national trade marks laws. This was eventually completed by way of a directive.” The second prong saw the establishment of a single office that granted Community trade marks enforceable in the courts of member states designated as Community Trade Mark Courts. The Community trade mark was introduced by way of a Council Regulation, and in 1996 the Office of Harmonization in the Internal Market was established in Alicante, Spain.” As the substantive rules of the Regulation are virtually identical to those of the Directive, decisions

of the Office of Harmonization

offer valuable

guidance

to

national authorities. At the end of the 1980s, the third wave of harmonization began when the Commission set out to harmonize a number of aspects of copyright law.** The need for harmonization arose because the different levels of copyright protection in different member states was seen to constitute a potential barrier to trade.” The Commission also aimed to set the standard of protection to be given to creators at a ‘high level’.”° 88 89 90 91

[1976] OJ L 17/43. Luxembourg agreement of 15 Dec. 1989 relating to Community Patents (1989) OJL 401/1. See below at pp. 325-6. SPC (MP) Reg.; SPC (PPP) Reg.

92 Trade Marks Directive.

°3 CITMR. 94 See below at pp. 41-8. 95 It was also motivated by the prompting of the ECJ, e.g. in EMI Electrola GmbH v. Patricia Im-und Export, Case 341/87 [1989] ECR 79. 96 e.g. Duration Dir. Recital 10.

18

INTRODUCTION

The 1990s also witnessed Community intervention in relation to a number of the so-called sui generis intellectual property rights. A Community Plant Variety Regulation established a Community Office in Angers, France. In contrast to the strategy in relation to trade marks, no harmonization directive was passed regulating national law.”’ A directive was also passed relating to the harmonization of the law relating to designs. This is to be followed by a Regulation introducing a Community Registered Design (to be issued by the Office of Harmonization in the Internal Market), and a

Community Unregistered Design Right.*® The latter will be the first Europe-wide, unitary right to be granted automatically, rather than after application to an office. Finally, the Commission has put forward a proposal to harmonize the law on utility models. This will require member states to supplement patent protection with a system for issuing a second tier of rights for inventions that will be available for a shorter term and more readily than patents.” Given the breadth of European intervention in intellectual property law, it is not surprising that a number of challenges have been made to particular European initiatives. In most cases, such challenges must be brought by national governments before the Court of Justice.'° National courts do not have the power to declare acts of the

Community institutions to be invalid.'°' If past experiences are much to go on, it seems that attempts to set aside Community legislation are unlikely to be !” successful, 4.3.1 Implementation

In the UK, directives have been implemented through the introduction of new statutes (as with the Trade Marks Act 1994), or more commonly by amending existing statutes (by way of statutory instrument).'°? When implementing directives, the UK government has tended to rewrite the (often vague) provisions into the language that is more commonly found in UK statutes. Unfortunately, such rewriting can make interpretation doubly difficult, and a number of UK High Court judges have made adverse comments about this practice.! In the case of Regulations, the legislation does not need to be implemented to be effective.!°5 However, where national

°7 °8 9 100

CPVR. See below at pp. 539-50. See below at pp. 568-9. See below at pp. 555-60. The locus standi rules mean that the applicant must normally be a member state or community

institution rather than an individual. But in certain circumstances an individual may challenge EC legislation, see Codorniu SA v. Council, C-309/89 [1994] ECR 1853 (Spanish producers of sparkling wine also owners of

graphic trade mark ‘Gran Cremand de Codorniw’ successfully objected to regulation restricting legitimate use

of “cremant’ to wine made in France or Luxembourg).

101 Foto-Frost, Case 314/85 [1987] ECR 4199. 102 Spain v. The Council of the European Union, Case 350/92 [1995] ECR I-1985; Metronome Music v. Music

Point Hokamp GmbH, Case C-200/96 [1998] ECR I-1953. 103 European Communities Act 1972, s. LQ):

104 Philips Electronics BV v. Remington Consumer Products [1998] RPC 283. 105 Art. 249 EC (formerly Art. 189 of the Treaty)

INTRODUCTION

19

procedures must be established (as with the Regulations on Supplementary Protection Certificates), some action must necessarily follow. If a government fails to implement a directive or implements it partially or tardily, a number of consequences follow.'° First, in accordance with general principles of European law the provision has a direct effect ‘vertically’ on state bodies, including rights-granting bodies such as the Patent Office or Trade Marks Registry. This direct effect only applies where the provision is clear and unconditional.'*” Secondly, the national courts must interpret existing national law in line with the unimplemented provisions of a directive: a consequence sometimes referred to as ‘indirect effect’.!° Where this is not possible, individuals are not able to rely on the unimplemented provisions to bring an action against other private bodies: there is no ‘horizontal’ direct effect. While in these circumstances private individuals may not get the remedy they would have been entitled to if the directive had been implemented, they are not left without a course of action. This is because if a private individual has suffered damage as a result of a government’s failure to implement a directive the member state may be required to compensate the individual. For this to occur, the claimant must show that the object of the directive was to create rights, that the scope of rights is identifiable, and that failure to introduce such rights caused the damage.!”” 4.3.2 Interpretation

When interpreting provisions that are intended to give effect to a European directive, not surprisingly the directive will be a critical aide to interpretation. For the uninitiated common

lawyer, European

directives may seem

strange since they are often

formulated in relatively vague language. In such cases, the provisions should be interpreted purposively.'!? While the text of the directive remains critical, particular attention should be given to the recitals at the front of the directive, since these often provide specific examples explaining what a clause is intended to cover. The material available to assist in the interpretation of a directive will be different

106 Pp, Nissen and I. Karet, ‘The Trade Marks Directive: Can I Prevail if the State Has Failed?’ [1993] EIPR 91. The Commission is likely, ultimately, to bring an action against the non-implementing country before the ECJ: it did so where provisions of UK law were not compatible with the Treaty in Commission v. United Kingdom, Case C-30/90 [1992] ECR 1-829; and has recently brought an action against the Republic of Ireland for failure to implement the Rental Directive: Commission v. Ireland {2000] ECDR 201.

107 NV Algamene Transport en Expeditie Onderrenning van Gend Loos v. Nederlandse administratie der Belastingens, Case 26/62 [1963] ECR 1. These conditions have been whittled away, so the question may well now be whether the provision is capable of being applied by a court to a specific case: H.J. Banks & Co. v. British Coal Corporation, Case C-128/92 [1994] ECR I-1209, 1237 (Advocate General Gerven). For an example, see Mister Long Trade Mark [1998] RPC 401 (TM Dir. Art. 13). 108 Marleasing v. La Comercial Internacional de Alimentacion, C-106/89 [1990] ECR 1-4135; Silhouette

International Schmied GmbH & Co. KG v. Hartlauer Handegesellschaft mbH, C 355/96 [1998] CMLR 953, 979; Webb v. EMO Cargo [1992] 2 All ER 43; [1995] 4 All ER 577.

109 Francovich v. Italian Republic, C-6&9/90 [1991] ECR 1-5357 (paras. 31-45); R v. Secretary ofState for Transport, ex. p. Factortame [1999] 3 CMLR 597. 110 Re Adidas AG, Case C-223/98 [1999] 3 CMLR 895 (under Community law legislation is to be interpreted by reference to the wording taking into account the context and object of the legislation).

20

INTRODUCTION

from the material that is used to interpret British statutes. Whereas it is possible to look to Hansard when interpreting (purely) UK law, when considering the implementation of a European directive, what is said in the British Parliament will be of little

assistance.''! Instead, attention must be paid to the European ‘travaux preparatoires’, such as Commission proposals. In some cases it may be helpful to refer to the socalled ‘Agreed Statements’, that is to the minutes of what was agreed between the Commission and the Council.!” When interpreting British law implementing a directive, it may be important to take account of decisions of other European courts.'!° Occasionally decisions given by the courts of member states before the adoption of the directive may provide some indication of what the directive was intended to achieve. Where a directive is meant to correspond to pre-harmonized law in one jurisdiction, the decisions of that jurisdiction may carry special weight.'!* While the judgments of the courts of member states as to the meaning of a directive may be helpful, there is no obligation to follow the interpretation of the first court to interpret a directive. Decisions of the courts of all member states are meant to be equally persuasive. Ultimately, the question of the way a directive is to be interpreted is decided by the ECJ. The Court is assisted by one of the nine Advocates General, who make reasoned submissions in order to assist the Court. The Advocate General’s opinion may be a useful interpretative tool to resolve doubts over a decision of the ECJ. In some cases,

the Court of First Instance will first hear an application.!!5 In cases involving the interpretation of the Community Trade Mark Regulation, appeals from the Boards of Appeal of the OHIM are initially made to the Court of First Instance. 4.4

EXTERNAL

RELATIONS

Another way in which the European Community is involved in intellectual property law is through the role it plays in negotiating and signing treaties. The Community’s treaty powers are set out in Article 133 EC (formerly Article 113 of the Treaty).!!® This 'll’ British Sugar v. Robertson [1996] RPC 281, 292 (no room for the application of Pepper v. Hart or the White Paper), cf. R. Burrell, H. Smith, and A. Coleman, ‘Three-dimensional Trade Marks: Should the Directive be Reshaped?’ in N. Dawson and A. Firth (eds.), Trade Marks Retrospective: Perspectives in Intellectual Property, vol. 7 (2000) 137, 160 n. 5.

'12 But only if they are public documents: Wagamama v. City Centre Restaurants [1995] FSR 713, 725. 13 e.g. in Philips Electronics NV v. Remington Consumer Products [1999] RPC 809, 820-1 reference is made to the Swedish decision in Ide Line Aktiebolag AG y. Philips Electronics NV [1997] ETMR.377; and in Premier Brands UK v. Typhoon Europe [2000] FSR 767 reference is made to a number of German decisions. '14 But for them to do so there must be solid evidence of the relevant legislative intention: Wagamama v. City Centre Restaurants [1995] FSR 713, 725. 115 Art. 225 EC (formerly Art. 168a of the Treaty). 116 Note that the Nice Treaty will amend Art. 133. Art. 133(5) will state that the provisions on common

commercial policy also apply to the negotiation and conclusion of agreements relating to ‘the commercial aspects ofintellectual property’. Art. 133(7) of the amended text (which replicates Art. 133(5) of the existing text) will continue to provide for the possibility of further powers to enter into treaties relating to intellectual property.

INTRODUCTION

21

gives the Community the exclusive power to enter into treaties with respect to common commercial policy.''” Article 133(5) EC provides that the Council may confer power on the Community to enter into international agreements relating to intellectual property,''® as long as it acts unanimously on a proposal by the Commission and after consulting the European Parliament.'? If this power were exercised, the Council would confer exclusive competence on the Community. However, the decision to do so has not yet been taken by Council. The Community is now a party to TRIPs; bilateral agreements with Morocco, Tunisia, and Australia for the protection of denominations of wine;!*° and a Council decision has been taken to accede to the

WIPO Copyright Treaty and WIPO Performers and Phonograms Treaty.'”! In the light of expanding Community activity in the international arena, an interesting issue has arisen as to the status of international treaties in domestic law. Traditionally in the UK and Scandinavian countries,’ treaties are not self-executing and

need to be implemented by legislation (though the courts may have resort to such treaties when interpreting statutes and the common law). In contrast, in the majority of the member states of the EC treaties are self-executing: individuals can bring civil actions based on treaties, even where the treaty has not been implemented. The question arose as to whether Community ratification of a treaty required implementation or was self-executing.’” In ex parte Lenzing'** it was held that the TRIPs was not directly effective, and thus required implementation, but the matter has yet to be considered by higher courts. 4.55

EUROPEAN

ECONOMIC

AREA

To understand intellectual property law in the UK, it is important to be familiar with the European Economic Area (EEA). This is an initiative entered into between the EC '17 Agreements are concluded by the Council, which must comply with various procedural requirements designed to ensure the agreement of the European Parliament: Art. 300(2)—(3) EC (formerly Art. 228 of the Treaty).

118 Tn a case concerning the powers of the Community to enter TRIPs, the European Court of Justice held that Art. 113 (as it then was) did not cover treaties relating to intellectual property rights, except in so far as they related to border measures, Opinion 1/94 [1994] ECR 1 5267, 5316. The TRIPs Agreement was entered into by the Community (under implied powers) and member states. Opinion 1/94 [1994] ECR 1 5267. 119 A, Dashwood, ‘External Relations Provisions of the Amsterdam Treaty’ (1998) 35 CMLRev. 119; P. Pescatore, “Opinion 1/94 on Conclusion of the WTO Agreement: Is There an Escape from a Programmed Disaster?’ (1999) CMLRev, 387.

120 Under Art. 133. Council Regulation (EEC) no. 482/77 of 8Mar. 1977 OJ 1977 L 65/1; Council Regulation (EEC) no. 3618/87 of 30 Nov. 1987 [1987] OJL 3618/87; Council Decision 89/146/EEC of 12 Dec. 1988 [1989] OJL 56/1

121 Council Decision 2000/278 of 16 Apr. 2000, OJ 2000 L89/6. 122 Sometimes this is referred to as the dualistic doctrine: see J. Rosen, ‘Free Trade, Competition and Copyright: Viewpoints from the Nordic EFTA-Countries’ in W. Cornish (ed.), Copyright in Free and Competitive Markets (1986), 67. 123 Agreements concluded under the conditions of Art. 300 EC are ‘binding on the institutions of the Community and on Member States.’ See G. Bebr, ‘Agreements Concluded by the Community and their Possible Direct Effect: From International Fruit Company to Kupferberg’ (1983) 20 CMLRev. 35.

aE S997) RPC 245,

22

INTRODUCTION

and certain satellite countries who are members of the European Free Trade Area (EFTA). In 1994, the majority of the countries then in EFTA decided to enter into a joint EC-EFTA initiative and form the European Economic Area.’ The countries that joined the EEA from EFTA undertook to implement domestic provisions on the free movement of goods (similar to those in Articles 28 and 30 EC), on competition (equivalent to Articles 81 and 82), and a raft of EC directives (including those on

trade marks and copyright).'*° These provisions are enforced by the ‘EFTA Surveillance Authority’ and the ‘EFTA Court’.'”” In return, the EC agreed to extend its provisions to the EEA countries. As a result where the term ‘Community’ or ‘common market’ are used in provisions falling within the EEA, they refer to the territories of the contracting parties.'** Moreover, the doctrine of exhaustion and the jurisprudence of the ECJ on Article 28 EC explicitly apply to goods placed on the market in the EEA,!??

4.5.1 ‘Europe Agreements’

With an eye to future expansion, the EC has entered into ‘Europe Agreements’ with Turkey, Malta, Cyprus, Hungary, Poland, Bulgaria, the Czech Republic, Romania, the

Slovak Republic, Estonia, Latvia, Lithuania, and Slovenia. The agreements, which aim to establish a free-trade area, contain a number of provisions in relation to intellectual property. For example, the Agreement with Poland includes prohibitions on ‘quantitative restriction on imports and measures having equivalent effect’,!>° as well as competition provisions similar to Articles 81 and 82 EC.'! The Agreement also requires Poland to apply to become a member of the European Patent Convention, to accede to the Berne Convention, the Rome Convention, and the Madrid

Protocol, and to approximate its laws on intellectual property with those of the EG.8

125 Although the EFTA countries at one time included Austria, Finland, and Sweden, they have since acceded to the EC. The EFTA countries that are parties to the EEA are: Iceland, Norway, and Liechtenstein. The only remaining EFTA country, Switzerland refused to join the EEA. 126 Agreement on the European Economic Area OJL 001, 3/1/1994, 3. See esp. Arts. 11, 13, 53, 54. On the implementation see the AIDA (Acquis Implementation Database) at >www.efta.int /structure/Surv/

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PART

I

COPYRIGHT

v4 INTRODUCTION COPYRIGHT

TO

1 INTRODUCTION In British legal parlance, ‘copyright’ is the term used to describe the area of intellectual property law that regulates the creation and use that is made of a range of cultural goods such as books, songs, films, and computer programs.’ The intangible property protected by copyright law is distinctive in that it arises automatically and

usually for the benefit of the author.’ Various rights are conferred on the owner of copyright, including the right to copy the work and the right to perform the work in public.* (“Work is the term used in British law to describe the various objects that are protected by copyright.) The rights vested in the owner are limited, notably in that they are not infringed when a person copies or performs a work that they have created themselves. The rights given to a copyright owner last for a considerable time: in many cases for seventy years after the death of the author of the work.* The basic framework of British copyright law is largely to be found in the Copyright, Designs and Patents Act 1988,° as amended, most significantly to implement European Community directives. This chapter provides an outline of certain background matters that will make the following chapters easier to follow. We begin by looking at some of the concepts that we will encounter in the following chapters. We then turn to look at the history and functions of copyright law, as well as international and European influences on British copyright law.

! P. Goldstein, ‘Copyright’ (1990-1) 38 Journal of the Copyright Society of the USA 109.

2 See Ch. 5. 3 See Ch. 6. 4 See Ch. 7. > Certain related rights, such as the ‘publication right’ and the ‘database right’, are found in statutory instruments.

28

COPYRIGHT

2 ‘COPYRIGHT AND ‘DROIT D’AUTEUR’ Many factors shape the way we view British copyright law. To some, it may appear as an unnecessary restriction on their ability to express themselves. For others copyright law provides the means to protect investment and labour. More generally the image we have of British copyright law is shaped by the way we think it relates to other legal regimes. On the one hand, British copyright law is often seen as a gift that was bequeathed to colonial countries. At the same time British copyright law (and its ‘unruly colonial children’) is seen to be distinct from the ‘copyright law’ that exists in other countries. Most famously, common law copyright is said to be distinct from and in many ways in opposition to the civil law droit d’auteur system (of France). While there is now a growing body of literature that questions the accuracy of these portrayals,° nonetheless these caricatures have had and undoubtedly will continue to have an impact on the way the law develops. The common law copyright model is said to be primarily concerned with encouraging the production of new works.’ This is reflected in copyright law’s emphasis on economic right, such as the right to reproduce copies. Another factor that is said to typify the copyright model is its relative indifference to authors. This is said to be reflected in the fact that British law presumes that an employer is the first owner of works made by an employee, the paucity of legal restrictions on alienability, and the limited and half-hearted recognition of moral rights.* In contrast, the civil law droit d’auteur model is said to be more concerned with the natural rights of authors in their creations. This is reflected in the fact that the civil law model not only aims to secure the author’s economic interests, but also aims to protect works against uses which are prejudicial to an author’s spiritual interests (in particular through moral rights).

3 AUTHOR’S

RIGHTS

AND

NEIGHBOURING

RIGHTS

While British copyright law abandoned the formal distinction between different categories of works with the passage of the 1988 Act, nonetheless an informal distincti on is still drawn between two general categories of subject matter. More especially a distinction is drawn between what are known as ‘authorial works’ and ‘entrepre neurial works’ (or ‘neighbouring rights’). This reflects the distinction drawn in many legal systems between ‘author’s rights’ and ‘neighbouring rights’. Author’s rights refer to works created by ‘authors’ such as books, plays, music, art, and films. In contrast, © G. Davies, Copyright and the Public Interest (1994); J. Ginsburg, ‘A Tale of Two Copyrights: Literary Property in Revolutionary France and America’, in Sherman and Strowel; A Strowel, ‘Droit d’Auteur and Copyright: Between History and Nature’, in Sherman and Strowel; Sherman and Bently, ch. 11. 7 For a classic statement see A. Sterling, World Copyright Law (1999), para. 16.06. 8 See below at pp. 116-20, 254-6, and Ch. 10.

INTRODUCTION

TO COPYRIGHT

29

neighbouring rights (which are sometimes called ‘related rights’ or ‘droits voisins’) refers to ‘works’ created by ‘entrepreneurs’, such as sound recordings, broadcasts,

cable programmes, and the typographical format of published editions. The rationale for differentiating between these two categories of subject matter lies in the facts that neighbouring (or entrepreneurial) rights are typically derivative, in the sense that they use or develop existing authorial works; that they are a product of technical and organizational skill rather than authorial skill; and that the rights are initially given not to the human creator, but to the body or person that was financially and organizationally responsible for the production of the material.

4 HISTORY The history of copyright is a complex, subtle, and rich subject. Depending on one’s interest it is possible to highlight many different themes and trends. For example a history of copyright could look at the gradual expansion of the subject matter and the rights granted to owners, the role that copyright law plays in shaping the notion of authorship, or the impact that copyright has on particular cultural practices. Most histories of British copyright law tend to focus on the origins of copyright, which are usually traced back to the 1710 Statute of Anne, or occasionally to the practices developed in the sixteenth century to regulate the book trade.’ In this section we limit ourselves to a brief chronological account of some of the more important political

and legal events that frame and shape the current law. While aspects of copyright law have a long history, copyright law did not take on its modern meaning as a discrete area of law that grants rights in works of literature and art until at least the mid-nineteenth century.!° Moreover, it was not until the passage of the 1911 Copyright Act that copyright law was rationalized and codified into the type of modern, abstract, and forward-looking statute that concerns us here. The 1911 Act was also important in so far as it abolished common law copyright in unpublished works and also repealed the plethora of subject-specific statutes that existed at the time. In their place the 1911 Act established a single code which conferred copyright protection on a number of works (whether published or not, and including many previously unprotectable works such as works of architecture, sound recordings, and films).'! In most cases, protection lasted for fifty years after the death of the author of

9 A. Birrell, Seven Lectures on Copyright (1898); Copinger, ch. 2; B. Kaplan, An Unhurried View ofCopyright (1967), 1-25 Laddie et al., para. 17-25, 184-9; L.-R. Patterson, Copyright in Historical Perspective (1968);

M. Rose, Authors and Owners (1993); D. Saunders, Authorship and Copyright (1992). For a different emphasis see C. Seville, Literary Copyright Reform in Early Victorian England (1999). 10 See Sherman and Bently, 111-28; B. Sherman, ‘Remembering and Forgetting: The Birth of Modern

Copyright Law’ (1995) 10 IPJ 1. 11 Films were protected as ‘photographs’, without prejudice to copyright in the dramatic works embodied in films. Sound recordings were deemed to be musical works: CA 1911 s. 19.

30

COPYRIGHT

the work.'* At the same time, the 1911 Act abandoned all requirements concerning formalities (in particular the need for registration with the Stationers’ Company). Infringement was also expanded to include translations and adaptation as well as reproductions ‘in a material form’. Following a periodic review by the Gregory Committee in 1952, the 1911 Copyright Act was replaced by the 1956 Copyright Act.'* This extended the scope of copyright to encompass sound and television broadcasts, as well as typographical formats of published editions. Along with sound recordings and films (which were now recognized as having copyright in their own right), these new rights were placed in a special category in Part II of the 1956 Act.'? The 1956 Act was amended on a number of occasions, primarily to take account of new technologies such as cable television and computer software.'® A further periodic review by the Whitford Committee in 1977 proposed a general revision of the 1956 Act.!” After further negotiations and refinement, these proposals led to the passage of the Copyright, Designs and Patents Act 1988.'8

The 1988 Act substantially reorganized the statutory regime. In particular, it removed the distinction between ‘Part 1 works’ and ‘Part 2 subject matter’. This was achieved by treating films, sound recordings, and broadcasts (along with the authorial works) within a single general category of ‘copyright works’. In many cases, these changes were not intended to alter the substantive law.'? However, the rights given to copyright owners were expanded significantly (notably by the introduction of a distribution right and a rental right). At the same time, the Copyright Tribunal was established to ensure that copyright owners did not exercise their rights in an anticompetitive manner.” The 1988 Act also introduced a new category of non-assignable ‘moral rights’ for authors.”' Performers’ rights, which were formerly dealt with under special Acts, were also included within the 1988 Act (where they are protected separately under Part II.””) The 1988 Act also created a new automatic form of short-term protection for designs, known as the unregistered design right.’

'2 Literary, dramatic, musical, and artistic works other than photographs, which received a term of fifty years from making.

1 CA I911 s..1(2): '4’ Report of the Gregory Committee on the Law of Copyright (Cmnd. 8662, 1952).

1S CA 1956 ss. 12-16.

16 Cable and Broadcasting Act 1984 (adding cable programmes to protected subject matter); Copyright (Computer Software) Act 1985 (establishing copyright protection for computer programs). The Design Copyright Act 1968 sought to remedy certain problems in relation to copyright protection for designs. '7 Report of the Committee on Copyright and Designs Law (Cmnd. 6732, 1977). 18 See Green Paper, Reform of the Law relating to Copyright, Designs and Performers’ Protection (Cmnd. 8302, 1981); Green Paper, Intellectual Property Rights and Innovation (Cmnd. 9117, 1983); White Paper,

Intellectual Property and Innovation (Cmnd. 9712, 1986).

19 CDPA s. 172.

20 See below pp. 289-91.

21%Se6:Ch. 12. 22 See below pp. 294-300. 23 See Ch. 30.

INTRODUCTION

TO COPYRIGHT

31

Although the 1988 Act forms the basis of contemporary copyright law, it has been amended on a number of occasions since it came into force in August 1989. In most cases, these amendments were made to give effect to obligations imposed by European Community directives. As we will see, while the Community has stopped short of a wholesale approximation of copyright law, a series of specific interventions has altered the contents of the 1988 Act to such an extent that a recodification of national law would be desirable. In particular, two new rights

related to copyright, which are currently found in statutory instruments (namely the database right and the publication right) could usefully be incorporated into the statutory regime.

5 JUSTIFICATIONS The existence of copyright in a particular work restricts the uses that can be made of the work. For example, a person who purchases a book in which copyright subsists cannot legally photocopy the book. Similarly a person who buys a protected CD cannot legally make a tape of that CD for a friend. As well as being inconvenient and/ or expensive, copyright has the potential to inhibit the public’s ability to communicate, to develop ideas, and produce new works. For example, in order for a person to parody a song it will normally be necessary for them to reproduce a substantial proportion of the lyrics and the music from the song. In the UK, this would usually require the permission of the copyright owner, who in the circumstances may be reluctant to grant permission.

Because copyright law has the potential to inhibit the way people interact with and use cultural objects, it is important that we constantly reassess its legitimacy. More specifically, we need to ask whether (and why) copyright is desirable. In this context it is important to note that not everyone thinks that copyright is a good thing.” In fact, with the advent of the Internet, there are many who think that copyright unjustifiably stifles our ability to make the most of the new environment. Others consider that while some aspects of copyright are justifiable, others are not.” In response to these copyright sceptics or critics, three basic arguments are used to support the recognition (and further extension) of copyright: natural rights arguments, reward arguments, and incentive arguments.

24 For an early example see the minority report of Sir Louis Mallet, Report of the Royal Commission on Copyright, C 2036 (1878) 24 PP. More recent attacks have been associated with the Austrian school of freemarket liberal economics, e.g. A. Plant, “The Economics of Copyright’ (1934) Economica 167. 25 For a general discussion see W. Grosheide, ‘Paradigms in Copyright Law’ in Sherman and Strowel, 223 (identifying two extremes thus: ‘One is the view that traditional copyright law must be purified and updated; the other is the notion that copyright is an integral part of intellectual property law, and that a more liberal and unorthodox approach to copyright law should be adopted’).

32

5.1

COPYRIGHT

NATURAL

RIGHTS

According to natural rights theorists, the reason why copyright protection is granted is not because we think that the public will benefit from copyright. Rather, copyright protection is granted because it is right and proper to do so. More specifically, it is right to recognize a property right in intellectual productions because such productions emanate from the mind of an individual author. For example, a poem is seen as the product of a poet’s mind, their intellectual effort and inspiration. In short, it is an expression of the author’s personality. On the assumption that a work created by an individual reflects the unique nature of them as an individual, natural rights arguments require that we recognize the resulting creation as the exclusive property of its creator. In the words of an ancient aphorism, ‘to every cow its calf’. The corollary of this is that the copying of another person’s work is a usurpation of their property, which is equivalent to theft. It is also an imposition on their personality. Copyright is the positive law’s realization of this self-evident, ethical precept. 5.2

REWARD

According to reward arguments, copyright protection is granted because we think it is fair to reward an author for the effort expended in creating a work and giving it to the public. Copyright is a legal expression of gratitude to an author for doing more than society expects or feels that they are obliged to do. Ina sense, the grant of copyright is similar to the repayment of a debt. However, in contrast with other systems of reward (such as the Booker Prize), copyright allows the general public to determine who should be rewarded and the size of that reward: the more copies of a book that are purchased, or the more a record is played on the radio, the greater the financial reward that accrues to the copyright owner.”® 5.3.

INCENTIVE-BASED

THEORIES

In contrast with the natural rights and reward theories, the third argument for copyright is not based on ideas of what is right or fair to an author or creator. Rather, it is based on an idea of what is good for society or the public in general. The incentive argument presupposes that the production and public dissemination of cultural objects such as books, music, art, and films is an important and valuable activity. It also presupposes that without copyright protection, the production and dissemination of cultural objects would not take place at an optimal level. The reason for this is that while works are often very costly to produce, once published they can be readily

copied. For example, while this textbook took a considerable amount of time and

energy to write, once published, it can be easily and cheaply reproduced. Consequently, in the absence of copyright protection, a competitor could reproduce

26 Thus Bentham argued that ‘An exclusive privilege is of all rewards the best proportioned, the most

natural, and the least bothersome’: A Manual of Political Economy, in J. Bowring (ed.), The Works of Jeremy

Bentham, iii (Edinburgh: Tait, 1843) 31, 71.

INTRODUCTION

TO COPYRIGHT

33

Bently and Sherman’s Intellectual Property Law without having to recoup the expense of its initial production. In so doing they could undercut Oxford University Press. According to the incentive argument, if Bently, Sherman, and Oxford University Press were not given any legal protection, Intellectual Property Law would never have been written or published—and the world would have been a commensurably poorer place. The legal protection given by copyright is intended to rectify this ‘market failure’ by providing incentives that encourage the production and dissemination of works. In short, copyright provides a legal means by which those who invest time and labour in producing cultural and informational goods can be confident that they will not only be able to recoup that investment, but also to reap a profit proportional to the popularity of their work.

5.4

THE

PLACE

OF JUSTIFICATIONS

There is a large body of literature criticizing, developing, and refining these three justifications. There is not room here to recount and assess this literature further. Nevertheless, two points are worth noting about the ways these theories are marshalled in support of legal arguments relating to copyright. First, it is often said that a natural-rights-based justification for copyright inevitably produces a different conception of copyright than is produced by an incentive argument. More specifically, it is argued that a natural rights conception of copyright leads to longer and stronger protection for authors (and copyright owners) than an incentive-based conception. This is because a natural rights argument for copyright is assumed to result in a form of property that is perpetual and unqualified.”’ In contrast, an incentive-based argument only justifies the grant of the minimum level of protection necessary to induce the right-holder to create and release the work. While there is a sense of truth in these arguments, they should not be overstated. The reason for this is that the copyright law that operates in the UK today is a product of a range of different factors, only a few of which could be said to have been influenced by the justificatory theories.” Although the various theories have relatively distinct philosophical pedigrees, when they have been employed in support of various claims little if any attention is given to such niceties. Instead, the three arguments are typically deployed side by side. In fact, in most cases where a claim is made for the legal protection of works not previously protected (such as television formats) or the expansion of the rights conferred by the law in respect of such works, one can reasonably anticipate that the three types of justification will be used. While it is understandable that lobby groups use (or abuse)

27 See Millar v. Taylor (1769) 4 Burr 2303, 98 ER 201, 218-22 (Aston J), 252 (Mansfield CJ).

28 Most important is the prevailing understanding of the processes of ‘authorship’: where ‘authorship’ is understood in its ‘romantic’ sense as the outpouring of the soul, so that the resulting work is the unique product of its author, no doubt a natural right justification does lead to a maximalist conception of copyright.

In contrast, where the processes of authorship are perceived as processes of a combination of existing texts, of bricolage, and collocation, a natural rights approach might only justify a short-term and a highly qualified ‘property in the resulting work.

34

COPYRIGHT

the various justifications to further their ends, more problems arise when people begin to believe the rhetoric and assume that copyright law is determined and shaped by these philosophical ideals.

6 INTERNATIONAL

INFLUENCES

One of the constant themes in the history of British copyright law is that it has been influenced by foreign and international trends and developments. While the sources may have changed, contemporary law is no different.”” There are a number of international treaties that impact upon British copyright law.°? Here, we will limit ourselves to the five most significant treaties. These are the Berne Convention, the Rome Convention, TRIPs, the WIPO Copyright Treaty, and the WIPO Performances and Phonograms Treaty.

6.1

BERNE

CONVENTION

(1886-1971)

The most important international influence on the development of UK copyright has been the Berne Convention on the Protection of Literary and Artistic Works. The Berne Convention was drawn up in 1886 as a small treaty allowing for mutual recognition of rights amongst a few largely European countries. Since then, the treaty has been revised on a number of occasions,*! and the membership expanded to 147.°? In its earliest form, there were two key provisions of the Berne Convention. The

first was the adoption of the principle of national treatment. This meant that with certain exceptions a country of the Union should not discriminate between its own nationals and those of other countries of the Union.*’ For example, under the principle of national treatment, French law was obliged to confer the same rights on a British author as it conferred on French authors. In addition to the principle of national treatment, the Berne Convention has long required that the ‘enjoyment and exercise’ of copyright in the works of the Convention should not be ‘subject to any formality’. This means that registration or notices cannot be made prerequisites for 22 Under the powers conferred by the International Copyright Act 1844 (7 & 8 Vict. c. 12) Britain had begun to build bilateral arrangements with other countries for mutual recognition of copyrights. 30 Also important are the Universal Copyright Conventions (last revised at Paris in 1971); the Geneva Convention on Phonograms of 1971; and the Convention Relating to the Distribution of ProgrammeCarrying Signals Transmitted by Satellite, Brussels, 21 May 1974. 31 The last revision was at Paris on 24 July 1971, and amended on 28 Sept. 1979. 32 15 Oct. 2000. The Convention applies to all works in which copyright has not expired at the time of accession to the Convention: Berne Art. 18. 33 Berne Art. 5(1). These are to be enjoyed by authors who are nationals of one of the countries of the Union, for their works, whether published or not; and authors who are not nationals of one of the countries of the Union, for their works first published in one of those countries: Berne Art. 3. The exceptions to national treatment relate to (i) copyright terms which exceed the Berne minimum Art. 7(8); (ii) copyright in applied art; (iii) droit de suite Art. 14 ter(2).

INTRODUCTION

TO COPYRIGHT

35

protection.** Because international protection is to be automatic, there is no need for international bureaucratic regimes to simplify registration processes. Over time the Berne Convention has come to demand that members of the Union provide certain minimum standards of protection to copyright owners and authors.

These include the right to reproduce the work,** to perform the work publicly, to translate the work,*’ to adapt the work,** and to broadcast the work.*? Members of the Union are also to give authors (rather than copyright owners) the moral rights of attribution and integrity.*° In recognition of the need for the public to be able to utilize works without payment, there is limited scope for members of the Union to create exceptions.*! In relation to the reproduction right, these exceptions must satisfy the so-called three-step test. This requires that all exceptions must be limited to certain special cases, not conflict with a normal exploitation of the work, and not

unreasonably prejudice the legitimate interests of the author.*” Moreover, protection is to last at least for the life of the author, plus fifty years thereafter.”

6.2

ROME

CONVENTION

(1961)

The coverage of the Berne Convention is limited to literary and artistic works, which include cinematographic works.“ It does not include provisions for the protection of performers, producers of sound recordings, broadcasters, publishers, and many others. Despite several attempts to expand the coverage of the Berne Convention to include performers and sound recordings, these were resisted.** The various authors’ societies opposed the inclusion of such works within the Berne Convention on the 34 Berne Art. 5(2). For consideration as to whether the requirement of assertion of the right of attribution complies with this, see below at p. 238. 35 Berne Art. 9 (countries to recognize the exclusive right of authorizing the reproduction of works ‘in any manner

or form’); Art. 9(3) specifically states that a sound or visual recording is to be considered

a

reproduction. 36 Berne Art. 11 (for dramatic, dramatico-musical, and musical works); Art. 11 ter (public recitation and

communication of literary works). 37 Berne Arts. 8 and 11(2) (translation); Art. 12 (adaptations, arrangements, and other alterations); Art. 11 ter(2) (communication of translations),

38 Berne Art. 12 (authorizing adaptations, arrangements, and other alterations of their works); Art. 14 (cinematographic adaptation). 39 Berne Art. 11 bis.

40 Berne Art. 6 bis. See Ch. 10. 41 Minor exceptions are permitted in accordance with the understandings expressed at various conferences but these must be de minimis: see WTO Panel Report, June 2000. Compulsory licences are permitted under Art. 11 bis (2) and Art. 13 (mechanical copying).

42 Berne Art. 9(2). Note also Art. 10(2) (use by way ofillustration in publications for teaching); Art. 10 bis (use for reporting current events).

43 Berne Art. 7. Certain exceptions are possible relating to cinematographic works, pseudonymous and anonymous works (where a 50-year minimum operates), and photographic works and works of applied art in so far as they are protected as artistic works (where a minimum of 25 years operates).

44 Berne Art. 14 bis. 45 e.9. at the Rome Revision in 1928. Opponents included France and Hungary: see Ricketson, para. 15.40—54.

36

COPYRIGHT

grounds that they are non-creative and derivative in character,*° and that recognition of performers’ rights might reduce the royalties available for authors.” Similar arguments were also used to oppose the introduction of sound recordings into Berne (though additional arguments were made that sound recordings are properly seen as industrial, not literary or artistic,“® and that there are difficulties in identifying an author of a sound recording). Eventually, it became clear that international recognition of the rights of phonogram producers, performers, and broadcasters would need to be sought under a separate instrument. In 1961 an international agreement on these ‘neighbouring rights’ was reached at the Rome Convention (which now has sixty-seven signatories).°° Like the Berne Convention, the central principle of the Rome Convention is

national treatment: national treatment must be provided to performances that take place in a Convention country.”! The Rome Convention also requires that phonogram producers, performers, and broadcasters be granted certain substantive rights. For performers these are relatively limited, being largely restricted to matters relating to ‘bootlegging’ (that is, the fixation of their unfixed performances without their consent), the broadcasting of their

unfixed performances without their consent, and the duplication of any such recordings which have been made illicitly.°* Notably, contracting states are not required to give performers rights to control the reproduction, distribution or public communication of legitimately made recordings of their performances. (As a result there is no requirement, for example, that performers be paid when films are shown at a cinema.) The protection that is given is to last for twenty years from the first fixation of the performance, or if it has not been fixed twenty years from the date when the performance took place. Producers of phonograms and broadcasting organizations received better treatment. Producers of phonograms are to be granted the right to prevent the reproduction of those recordings for twenty years.°® Broadcasting organizations are to be given exclusive rights, for a minimum of twenty years from when a broadcast took place, to authorize or prohibit the rebroadcasting of their broadcasts, the fixation of their 46 So are translations, adaptations, and films, though these are protected under Berne. 47 On so-called ‘cake theory’ see Ricketson, para. 15.52-3. 48 Ricketson, para. 6.76 (arguing that explanation for inclusion of photographs and films but exclusion of sound recordings and broadcasts from Berne is best explained by the historical fact that when claims to include the former were made the idea of separate neighbouring rights regimes had not developed). 49 The making of a recording is typically a collective exercise and protection is sought by corporate authors. However, so is the making of a film. For a comparative account, see G. Boytha, “The Intellectual Property Status of Sound Recording’ (1993) 24 HC 295. Note, in particular, that the USA did not give protection at a Federal level until 1971, with the Sound Recording Amendment Act of 15 Oct. 1971.

50 15 Oct. 2000. Though significantly not the USA, as a result of its refusal to give broadcasting organizations copyright. 51 Rome Art. 4 (performers); Art. 5 (phonograms); Art. 6 (broadcasts). National treatment is defined in Rome Art. 2.

52 Rome Art. 7. Note also Art. 19. 53 Rome Art. 10. If formalities are required, they are complied with by using the ‘P’ symbol: Rome Art. 11.

INTRODUCTION

TO COPYRIGHT

a7

broadcasts, and the reproduction of fixations of their broadcasts. Broadcasters were also given the right to control the showing of television broadcasts in places accessible to the public (against payment of an entrance fee).™ The three divergent interests that coexist in the Rome Convention gave rise to one further and important compromise. This was that contracting states are to confer a right to a single equitable remuneration when phonograms are broadcast or played in public.* This right to remuneration must be provided either to the performers whose performances are embodied on phonograms or on the producers of phonograms or both. This means that broadcasters, nightclubs, restaurants, etc. must pay a single fee

to play sound recordings. It is left to the contracting states whether the beneficiary of the right is to be the performer or the phonogram producer, or both. Contracting states are permitted to make these rights subject to defences as regards private use, news reporting, ephemeral recordings, and teaching and scientific research,” as well as the same kind of limitations as are provided for literary and artistic works under the Berne Convention.*”

6.3."

TRIPS

The third important international development that impacts upon British copyright law is TRIPs.*® There are a number of provisions in TRIPs that relate to copyright. The most important of these is that members must implement Articles 1-21 of the Berne Convention (but not Article 6 bis dealing with moral rights).°? One of the consequences of this is that disputes over compliance with Berne can now be considered by the WTO.” While the TRIPs Agreement does not require member states to adhere to the Rome Convention, Article 14 of TRIPs contains substantively similar provisions to Rome (though the term of protection in such cases is substantially longer under TRIPs).°!

In addition, the TRIPs Agreement contains certain “Berne-plus’ features, as regards various aspects of copyright. Some of these are responses to new technologies that w

4 Rome Art. 13; Art. 14; see Ricketson, paras. 15.41 ff.

ws) Rome Art. 12. These can be excluded under Art. 16. 6 Rome Art. 15(1). 57 Rome Art. 15(2). ww

8 See above at pp. 7-8. 59 TRIPs Art. 9(1). 60 As has occurred in the WTO Dispute Panel Report on US limitations on the public performance right. WT/DS160/R

(15 June 2000).

According

to TRIPs

Art.

performances and phonograms apply to existing works: used to induce Japan to comply with this requirement.

14(6)

the provisions

the WTO

Dispute

on

neighbouring

Resolution

rights in

procedure

was

61 TRIPs Art. 14. The term of protection for performers and producers of phonograms is extended to 50 years from fixation of the performance or the date of the performance: Art. 14(5). As regard broadcasts, Art. 14(3) requires that broadcasting organizations are to have right to various rights (to prohibit the fixation,

reproduction of fixations and rebroadcasting of broadcasts, and communication to the public of the same), but a derogation provides that “Where Members do not grant such rights to broadcasting organizations, they shall provide owners of copyright in the subject matter of broadcasts with the possibility of preventing the above acts, subject to the provisions of the Berne Convention (1971).

38

COPYRIGHT

have given rise to new sorts of works and new modes of distribution. For example, under TRIPs, protection must be given to computer programs as literary works within the Berne Convention; and to compilations of data or other material which by reason of the selection or arrangement of their contents ‘constitute intellectual creations’.® Reflecting the impact of new modes of distribution, members must (in most

cases) give copyright owners the right to authorize rental of computer programs, cinematographic works, and phonograms.™ Other provisions flow from more general concerns as to the nature of copyright protection. In particular, copyright is defined generally as covering ‘expressions’ and not ideas or methods.® Moreover, TRIPs requires that all limitations and exceptions (rather than the right to reproduction as in Berne) must satisfy the three-step test.

6.4

WIPO

COPYRIGHT

TREATY

(1996)

In December 1996, two treaties were agreed at Geneva: the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty.® In part, these grew out of the frustration at the inability to produce a revised version of the Berne Convention and subsequent attempts to produce a ‘Protocol’ to the Berne Convention (possibly incorporating the rights of record producers and performers within a single treaty). Both treaties are intended to supplement the existing Conventions to reflect, in particular, technological changes and changes in practice. For the most part, the WIPO Copyright Treaty (WCT), which is yet to come into force,” repeats many of the extensions effected in the TRIPs Agreement,”? though importantly the WCT places them back under the supervision of the WIPO. Some of these are extended. For example, contracting parties must provide copyright owners with the exclusive right of distribution of fixed copies that can be put into circulation as tangible objects.’ In addition, contracting parties must provide copyright owners whose works are embodied in phonograms (not just those in computer programs or cinematographic works) with the exclusive right to authorize the commercial rentals

of those fixed copies.” The WCT also embodies three provisions that reflect the so-called “digital agenda’. (In essence these are responses to concerns raised by copyright owners about new 62 TRIPs Art. 10(1); see also, WCT

Art. 4.

63oO TRIPs Art. 10(2). 64 TRIPs Art. 11, Art. 14(4).

65wn TRIPs Art. 9(2).

66 TRIPs Art. 13. 67 JP. Saunders and B. Sherman (eds.), From Berne to Geneva (1997). 68 WCT Art. 1 defines the Treaty as a ‘special agreement’ within Art. 21 Berne. 6° There were fifty-one signatories and so far there have been twenty-one ratifications. 70 Art.2 WCT is ona par with TRIPs Art. 9(2); Art. 4WCT is on a par with TRIPs Art. 10(1); Art. 5 WCT is on a par with TRIPs Art. 10(2); Art. 10 WCT

is on a par with TRIPs Art. 13; Art. 14 WCT

TRIPs Art. 41.

71 WCT Art. 6; ‘Agreed Statement’ concerning Arts. 6 and 7. 72 WCT Art. 7. Note the qualifications in Art. 7(2)—(3).

is on a par with

INTRODUCTION

TO COPYRIGHT

39

digital communication technologies.)”* First, as part of the “communication right’, contracting parties must provide copyright owners with the exclusive rights to make their works available to the public in such a way that members may access the work from a place and at a time individually chosen by them.” (This is intended to cover, for example, the placing of a work on a website that can be accessed by the public.) Secondly, contracting parties must provide adequate legal protection against the circumvention of ‘effective technological measures’ used by authors to protect their rights.”> Thirdly, contracting parties must provide adequate remedies to those who tamper with ‘rights management information’, that is information used to facilitate the identification or exploitation of those works.’”°

6.5

WIPO

PERFORMANCES

AND

PHONOGRAMS

TREATY

(1996)

Although the WIPO Performances and Phonograms Treaty (“WPPT’) was intended to supplement the Rome Convention, it only contains provisions relating to rights of performers and phonogram producers, and not broadcasters.” The WPPT upgrades the position of performers whose performances are embodied on phonograms. However, largely as a result of the resistance of the American film industry, it does little for actors. Under the WPPT, contracting parties must confer rights on all performers against bootlegging equivalent to those in the Rome Convention. This is upgraded from ‘the possibility of preventing’ to an exclusive right.”* Performers in the music industry (whose performances have been ‘fixed in phonograms’) are to be given three extra rights. First, they are to be given rights to control various acts in relation to fixations of their performances, that is the reproduction, distribution, rental, and making available of copies of such fixations.” Secondly, where there is public performance or broadcasting of such fixations, contracting states are to ensure that performers receive a share in the remuneration that is paid.*° Thirdly, contracting states are to confer moral rights of attribution and integrity on the performers of ‘live aural performances or performances fixed in phonograms’.*! The upshot of this is that while recording artists and musicians will get rights which are equivalent to those given to authors, actors, and other individuals whose performances are embodied in 73 The Preamble recognizes ‘the profound impact of the development and convergence of information and communication technologies on the creation and use of literary and artistic works’. Note the Agreed Statement concerning WCT Art. 1(4) which defines reproduction to include the storage of a work in digital form in an electronic medium.

74 WCT Art. 8. Note also the ‘Agreed Statement’ annexed to the treaty stating that the mere provision of physical facilities for enabling or making a communication does not in itself amount to a communication. 73, WCT Art. 11.

76 WCT Art. 12. 77 The treaty is not yet in force. There were fifty signatories and so far there have been eighteen ratifications.

78 WPPT Art. 6. 79 WPPT Arts. 7-10. 80 WPPT Art. 15.

81 WPPT Art. 5.

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COPYRIGHT

films/audiovisual works, these rights will be confined to the right to prevent first fixation (etc.) without their consent.

The WPPT also extends the rights given to producers of phonograms. Contracting states are not only to confer on the producers of phonograms the right to control reproduction, but also the exclusive right to control the distribution, rental, and making available of copies of phonograms.** The WPPT also requires certain action for the benefit of both performers and phonogram producers. In particular, the WPPT replicates the three provisions of the WCT on the digital agenda, that is the ‘making available’ right, the requirements relating to technological measures of protection, and the provisions on rights management information. The treaty also provides that contracting states may only create exceptions and limitations to the rights of performers or phonogram producers if those limitations pass the three-step test.**

7 EUROPEAN

INFLUENCES

In the last decade or so, European initiatives have had an important and growing impact on British copyright law. This is because various European Directives now prescribe in some detail when and in what manner member states must (and often may) recognize intellectual property rights in this field. As we saw in Chapter 1, the need for harmonizing legislation arose because, despite the efforts of the European Court of Justice (notably through the doctrine of exhaustion),*4 differences in national laws relating to copyright and related rights operate to produce barriers to trade within the internal market. Perhaps the clearest example of this was in the decision in EMI Electrola GmbH v. Patricia Im-und Export.®° This grew out of the fact that because of differences in the terms of copyright in sound recordings in Germany and Denmark,® the sound recording rights in songs by Cliff Richard had expired in Denmark but not in Germany. Patricia attempted to import the records from Denmark (where the records were lawfully available) back into Germany. The Euro-

pean Court of Justice held that even though the copies were lawfully marketed in Denmark (because the copyright had expired there), the German right-holder was entitled to prevent the importation of the recordings into Germany where copyright continued to subsist. This was because as the copyright owner had not consented to the marketing of those copies in Germany, they had not exhausted their rights. The Court observed that ‘in the present state of the Community, characterized by an 82 WPPT Arts. 11-14. 83 WPPT Art. 16.

84 Deutsche Grammophon v. Metro, Case 78/80 [1971] ECR 487.

85 Case no. 341/87 [1989] ECR 79. See also Warner Bros v. Christiansen, Case 158/86 [1988] ECR 2605 (rental right).

86 Both countries granted terms of 25 years but from differing starting dates, Denmark favouring fixation and Germany publication.

INTRODUCTION

TO COPYRIGHT

41

absence of harmonization, it is for national legislatures to specify the conditions and rules for such protection’. Such restrictions are justified by Article 30 EC (formerly Article 36 of the Treaty) if the period of protection is inseparably linked to the existence of the exclusive rights. By the time of the Patricia decision, the Commission had already decided that if the plan for an internal market free from barriers was to be made good, then certain

aspects of copyright had to be harmonized. The first step in the harmonization programme was the publication of the Green Paper, Copyright and the Challenge of Technology.*’ This set out a basic plan to harmonize specific areas of copyright, particularly those relating to new technologies. Given that it was widely believed that national copyright traditions were very different, it was decided that the wholesale approximation of copyright law was impossible. In the light of comments on the Green Paper,** the Commission expanded its proposals in 1990.8? The subsequent decade has seen the formulation and passage of successive Directives on software, cable and satellite broadcasting, rental and lending, and ‘neighbouring rights’, the duration of copyright, and databases. The trend looks set to continue if the proposed Information Society Directive is passed. While we look at these Directives at appropriate points in the following chapters, it may be useful to outline their key features here. Before doing so, it may be helpful to highlight some of the themes that are beginning to develop in the European legislation, some of which have been interpreted as representing a step towards a coherent European copyright policy.”° One trend that is notable is that the Directives consistently distinguish between two categories of works: ‘copyright’ which means authorial works falling under the Berne Convention; and ‘related rights’ (specifically not ‘neighbouring rights’) which means various rights of performers, phonogram producers, the producers of the first fixations of films, and broadcasting organizations. The related rights given to producers of the first fixations of ‘films’ by various Directives are important in that they are not confined to audiovisual or cinematographic works, but also extend to other moving images (such as films of sporting events). Another notable aspect of the Directives concerns the way they manage the (supposed) differences between the different legal regimes (copyright and droit d'auteur). Given that the Directives are largely the result of lobbying and horse-trading between interest groups and member states, it is not surprising that the end-results are a hybrid mix of concepts taken from both the droit d’auteur and copyright law.”! For example, 87 Interestingly, it had been the subject of discussion as early as 1980: S. von Lewinski, “EC Proposal for Council Directive Harmonizing the Term of Protection of Copyright and Certain Related Rights’ (1992) 23 IIC 785 n. 1.

88 The Green Paper received a luke-warm reception. See A. Francon, “Thoughts on the Green Paper’ (1989) 139 RIDA

128; M. Moller, ‘On the Subject of the Green Paper’ (1989) 141 RIDA 22 (1989); G. Shricker,

‘Harmonization of Copyright in the EEC’ (1989) 20(4) IIC 466, 475. 89 Follow Up to the Green Paper, 17 Jan. 1991 Com (90) 584 Final.

90 H. Comte, ‘The Rental Rights Directive: A Step towards a Copyright Europe’ (1993) 158 RIDA 2. 91 See e.g. E. Derclaye, ‘Software Copyright Protection: Can Europe Learn from American Case Law?’ [2000] EIPR 7, 9-10.

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there is recognition of an unwaivable right to ‘equitable remuneration’ for the authors of works which are the subject of rental and lending. This corresponds to similar (though more general) provisions in French and German law guaranteeing author’s proportionate remuneration.” On the other hand (much to the disappointment of some French commentators), computer programs are recognized as literary works.” In addition, where a computer program is made by an employee in the course of employment, the economic rights are given to the employer, rather than to the employee.” In some ways, the form that the Directives have adopted is a return, at least from the British perspective, to the openly hybrid nature of intellectual property statutes in the nineteenth century. Another trend that is apparent is that while the need for harmonization arose because variations in the law of member states posed a potential barrier to trade, the Commission has tended to harmonize ‘upwards’. That is, the EC has tended to

strengthen the protection given to copyright owners. The most obvious example of this was the decision to increase the term of copyright to the term of life plus seventy years which existed in Germany, rather than ask that the German term be reduced to life plus fifty (which was the term then used by many member states). While the strengthening of protection has sometimes been explained in terms of legislative convenience, it also suggests that it is at least an implicit agenda that aims to maximize copyright protection. This can be detected in Recital 10 to the Duration Directive which says that ‘these rights are fundamental to intellectual creation . . . their protection ensures the maintenance and development of creativity in the interests of authors, cultural industries, consumers and society as a whole.”? Another example of the strengthening of the position of right-holders has been the progressive restriction of the defences or exceptions that member states are able to use in their laws.”° This is particularly noticeable in the Database Directive where the option of a ‘private use’ defence is excluded where the database is in an electronic form, and where use in scientific research is confined to uses for ‘non-commercial purposes’. Another notable trend that is apparent from the Directives is that the Commission is developing a series of conceptual solutions that may ultimately form the basis for a harmonized law. The most obvious example of this is in relation to the notion of originality, which we discuss in Chapter 4. By harmonizing the originality requirement in an identical manner for computer programs,”” photographs, and databases, the Commission has set upon a single European standard, namely that works should only be protected where they are their author’s “own intellectual creations’. With these general points in mind, we now outline the main features of the five Directives. .

92 Rental Directive, Art. 4. 94 Tbid., Art. 2(3).

93 Software Directive, Art. 1. 95 Duration Directive, Recital 10.

96 Rental Directive, Art. 10(1).

97 Software Directive, Art. 1(3).

INTRODUCTION

7.1

COMPUTER

PROGRAMS

TO COPYRIGHT

DIRECTIVE

43

(1991)

The first European initiative in the copyright field was the Computer Programs Directive, which had to be implemented by 1 January 1993. The Computer Programs Directive addressed the question of whether computer programs should be protected by copyright, patents or a sui generis right. Fearing that the member states might have responded differently, the Commission sought a swift and unified response. After consulting with interested parties, it was decided that computer programs should be protected by copyright. This is reflected in the fact that the Directive requires member states to protect computer programs as literary works under the Berne Convention. To ensure that this operates as a matter of substance as well as form, the Directive also harmonized the criteria of protection. Prior to the Directive, there were wide divergences as to what member states required of computer programs before they could be regarded as original, with German law setting the level of originality at a particularly high level. Ultimately, the Directive requires member states to protect computer programs as long as they are original in the sense that they are their author’s own intellectual creation. The Computer Programs Directive also goes some way to harmonizing the protection member states must give to computer programs. More specifically, the Directive requires member states to confer certain rights on the owners of copyright in computer programs, including the right to control temporary reproduction, the running and storage of the program, the translation or adaptation, distribution or rental of programs;” as well as certain liabilities for ‘secondary infringers’.”” The Directive also requires member states to recognize certain exceptions to the exclusive rights. Negotiations over these exceptions caused intense and acrimonious lobbying in Brussels. Ultimately, the Directive requires member states to enact four exceptions. First, as

regards acts done by a lawful acquirer of a program which are necessitated by use of the program for its intended purpose. Second, to allow the making of back-up copies. Third, to permit the studying and testing of the program. Fourth, and most controversially, to permit—in very limited circumstances—the decompilation of

programs.’ One final provision in the Computer Programs Directive of interest concerns the way it allocates the ownership of copyright. In the case of programs that are made by employees in the course of their employment, the Directive requires member states to allocate the copyright in such programs to the employer.'”!

98 Tbid., Art. 4. See Ch. 6. 100 Tbid., Arts. 5 and 6. See further Ch. 9.

99 Tbid., Art. 7. See Ch. 8. 101 Tbid., Art. 2(3). See Ch. 5.

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7.2

RENTAL

DIRECTIVE

(1992)

The Rental Directive is in two parts, one part dealing with the specific issues of rental and lending, the other dealing with related rights.'°* The second part comes as close to the codification of copyright as any of the European Directives. Most of the provisions

in the Directive had to be implemented by 1 July 1994.1 Chapter 1 of the Directive was drafted in response to the increasing economic importance of home rental as a source of revenue for copyright owners. Some member states had decided to confer a rental right, and some had adopted provisions relating to the public lending of works. The Directive attempts to avoid the development of divergent approaches by harmonizing the law relating to rental and lending.’ It requires member states to confer on authors (of works within the Berne Convention), performers, phonogram producers, and film producers the exclusive right to control the rental and lending of copies (or in the case of performers, fixations) of their works.'°° However, member states are given a number of options:

sometimes in derogation from the exclusive rights. The most important of these is the option not to recognize an exclusive right to authorize ‘public lending’ if authors receive remuneration of some sort for such lending.'°° Member states may also exempt certain establishments from the payment of remuneration for lending.'”” Chapter 1 of the Directive also includes some interesting provisions on the ownership of the rental right. The Directive recognized the need for creators to obtain an ‘adequate income as a basis for further creative and artistic work’.'® As a result, a fiercely debated provision requires member states to confer on authors and performers an ‘unwaivable right to equitable remuneration’ when copies of films or phonograms are rented.’ In turn, it was decided that this required further definition of

who is the author of a cinematographic or audiovisual work (a matter on which there are wide divergences under the laws of different countries).'!? The Directive requires that member states recognize that the ‘principal director’ is one of the authors of such a work."!! Chapter 2 of the Rental Directive requires member states to confer various rights 102 The Rental Directive emerged in part in response to the European Court of Justice’s decision in Warner Bros. v. Christiansen, Case 158/86 [1988] ECR 2605. For background see G. Reinbothe and S. von Lewinski,

The EC Directive on Rental and Lending Rights and on Piracy (1993). 103 Rental Directive, Art. 13. 104 In Metronome Music v. Music Point Hokamp GmbH, Case C-200/96

[1998] ECR I-1953, 1978-80

(paras. 21-2), the EC] held that the Directive was legitimate despite its impact on the freedom to pursue trade because it effected an objective of general interest pursued by the Community and did not constitute a disproportionate and intolerable interference impairing the very substance of freedom to pursue a trade. 105 Rental Directive, Art. 2(1). Rental and lending are defined in Art. 1. Note also Recital 13. See Ch. 6.

106 Rental Directive, Art. 5(1). See below at pp. 133, 212, 305-6. 107 Tbid., Art. 5(3). See below at pp. 133, 212. 108 Jbid., Recital 7. 109 Tbid., Art. 4. See below at p. 280. 110 Tn the original proposal this was left as a matter for member states. The provision originated in an amendment to the proposed Directive by the European Parliament Committee on Culture. 111 Rental Directive, Art. 2(2). Reiterated in Duration Directive, Art. 2(1). See below at pp. 113-14.

INTRODUCTION

TO COPYRIGHT

45

on performers, producers of phonograms, broadcasters, and cable distributors (in addition to the rental and lending rights conferred by Article 2). Performers are to be

given the exclusive right to authorize or prohibit the fixation,''? broadcasting, or communication to the public of their unfixed performances.'!’ They are also to be given the right to control the direct or indirect reproduction and distribution of fixations of their performances.''* Performers are also granted the right to share in the remuneration paid for the right to broadcast or play in public phonograms embodying their performances.''* In turn, phonogram producers are to be given the exclusive right to authorize or prohibit the direct or indirect reproduction, and the distribution of their phonograms.''® They are also given a right to share in remuneration paid for the right to broadcast or play in public phonograms embodying their performances.''” Broadcasting organizations are to be given the exclusive right to authorize or prohibit the fixation''® of their unfixed broadcasts;'” the direct or

indirect reproduction and distribution of fixations of their broadcasts; or the rebroadcasting or communication to the public of their broadcasts.!”° Part 2 also requires member states to confer similar rights on the producers of first fixations of films. In the European schema, ‘first fixations of films’ is a category of related rights over and above the category of ‘cinematographic and audiovisual works’, which covers all fixations of moving images. A film of a football match, for example, would be a first fixation of a film, even though it might not be a cinematographic work. The producers of these fixations are to be granted the exclusive right to authorize or prohibit the reproduction and distribution of their films.'?!

7.3

CABLE

AND

SATELLITE

DIRECTIVE

(1993)

The third European initiative, the Cable and Satellite Directive, was a response to technological developments. The Directive required member states (by 1 January 1995) to recognize that copyright and related rights include the right to authorize communication to the public by satellite.'’? The most notable feature of the Directive concerns the definition of the place where the communication takes place. Prior to the Directive, different jurisdictions responded differently to the question of whether a satellite broadcast takes place in the country where the broadcast originated, the

112 Rental Directive, Art. 6(1). See below at pp. 295-6.

113 Ybid., Art. 8(J). 114 Tbid., Art. 7(1); Art. 9. See below at pp. 296-7. 115 Tbid., Art. 8(2). See below at pp. 297-8.

116 Tbid., Art. 7(1); Art. 9. 17 Thid., Art. 8(2). See Ch. 6. M18 Tbid., Art. 6(1). 119 Tbid., Art. 8(1). 120 [bid., Art. 7(1); Art. 9(1); Art. 8(1). See Ch. 6.

121 Jbid., Art.,7, Art. 9(1). For the problems UK law has with films, see below at pp. 61, 72-74. 122 Satellite Directive, Arts. 2 and 4. (It also permits member states to require ‘collective administration’ of some such rights, but only in the case of simulcasts ofterrestrial broadcasts.) See below at 139.

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country from which the signals are sent, the satellite itself, or the countries where the signal can be received (this is known as the ‘footprint’). Opting for the simplest solution, the Directive requires member states to treat a satellite broadcast as taking place where the signals are introduced. This is the simplest solution because permissions to broadcast the various works to be included in a satellite broadcast are only required from the copyright owners in the country of introduction.'”7 The Directive also addresses issues relating to cable retransmission of broadcasts. The Directive requires member states to give copyright owners and the owners of related rights the right to grant or refuse authorization to a cable operator who wishes to retransmit a broadcast.'4 Except for the situation where the rights are owned by broadcasting organizations, the Directive requires that the rights granted in relation to the cable retransmission of broadcasts shall only be exercised through a collecting society. !*°

7.4

DURATION

DIRECTIVE

(1993)

The Duration Directive was adopted in response to the Patricia decision, which made it clear that varying terms of protection posed a hurdle to the completion of the internal market.!”° Prior to its adoption, most member states granted copyright protection for a period of fifty years after the author’s death. However, some countries granted a sixty-year post mortem term and Germany a seventy-year term. Preferring

to harmonize upwards, the Duration Directive required member states, by 1 July 1995, to grant a term of protection for copyright works (including original photographs) lasting for the life of the author plus seventy years.!”’ In the case of cinematographic works, the duration is seventy years from the death of the principal director, author of the screenplay, author of the dialogue, and composer of music.'** Terms of protection for related rights (including broadcasting organizations and film producers) are to be based on a fixed fifty-year term.’”? However, where the country of origin of the work is a third country, and the author is not a Community national, these terms of protection are to be restricted so that the terms expire in the EEA no later than their date of expiry in their country of origin. The Directive also requires member states to grant a new right, called the ‘publication right’, where previously unpublished works in which copyright has expired are published for the first time.'°°

123 Satellite Directive, Art. 1. See below at pp. 136-7. 124 Thid., Art. 9. See below at pp. 138-9.

125 Tbid., Art. 9(2), Art. 10. 126 See above at pp. 12, 40-2. 127 Duration Directive, Art. 1. Original photographs are defined as those which are their author’s own intellectual creation. Recital 17 suggests that this means the photograph must reflect the personality of the author. Member states may protect non-original photographs. See below at pp. 94-7.

128 Tbid., Art. 2(2). 129 Tbid., Art. 3. See below at pp. 151-2. 130 Tbid., Art. 4. See below at pp. 152-4.

INTRODUCTION

7.5

DATABASE

DIRECTIVE

TO COPYRIGHT

47

(1996)

The Database Directive, which member states were obliged to implement by 1 January 1998, attempts to harmonize the laws of copyright in the field of databases. It also requires member states to introduce a new sui generis right in non-original databases. This was seen to be necessary to sustain investment in the production and exploitation of electronic databases equally throughout the Community. While digital technologies had enhanced the potential of databases, differences in national laws

(particularly as to originality) meant that databases were probably only protected by copyright in a few member states. This presented the possibility of distortions within the internal market. The Directive attempts to remedy this problem by requiring member states to ensure that their copyright laws protect some databases. It also requires that member states introduce new sui generis rights to protect other databases (no matter how mundane the arrangement of the material). In a sense, the two-

tiered system recognizes that copyright only protects the selection or arrangement of materials, whereas the database right protects the collection and verification of the materials themselves. The Directive requires member states to grant copyright to ‘original databases’. A ‘database’ is defined rather vaguely as a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means.'*! A database is only original where ‘by reason of the selection or arrangement of their contents’ the database constitutes the author’s own

intellectual creation.’ Member states are to give the owner of copyright in a database the exclusive right to reproduce the database, to translate it, to adapt, arrange or alter it, distribute it, and communicate it to the public.!*? Member states must provide a defence to the lawful user of a database who commits acts that are necessary to access the contents of the database and to use those contents normally.’* A limited list of optional defences is also prescribed.!*° The Directive also requires member states to introduce a new sui generis right (which is reviewed in Chapter 13). For the moment

it is worth observing that the

database right arises where the maker of a database has made a substantial investment in either the activities of obtaining, verifying or presenting the contents of the database. The maker of such a database is to be granted a right to prevent extraction or reutilization of the whole or substantial parts of the database. In certain circumstances, they also prevent the systematic extraction and/or reutilization of insubstantial parts.'°° Member states may subject the database right to certain limited defences and exceptions as regards private use of non-electronic databases, use for illustration of teaching and in non-commercial scientific research, public security, and

131 Database Dir., Art. 1. See pp. 58-9. 133 Tbid., Art. 5. See Ch. 6.

132 Thid., Art. 3. See pp. 94-7. 134 Thid., Art. 6(1). See p. 221.

135 Tbid., Art. 6(2). See p. 201.

136 Tbid., Art. 7.

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COPYRIGHT

administrative or judicial procedures.'*” This right is to last for fifteen years from completion of the database or its publication, and a new right can arise where there is

a substantial new investment in an existing database.'*® 7.6

ELECTRONIC

COMMERCE

DIRECTIVE

(2000)

The EC Directive on Certain Legal Aspects of Electronic Commerce in the Internal Market aims to promote electronic commerce within the European Union, that is the

provision of goods and services on-line. As such, it encompasses matters such as electronic contracts, unsolicited communications, and codes of conduct which are outside the scope of this text. However, a number of Articles impact upon intellectual property more directly, probably the most important of which concern the liability of service providers. As we will see, important questions arise as to whether people who provide the infrastructure and facilities for electronic communications become liable for the actions of those to whom their services are provided.'*? Articles 12-15 of the Directive differentiate between situations where services are mere conduits and where they are involved in caching and hosting. The E-Commerce Directive requires member states to provide that a mere conduit is not liable, except under a ‘prohibitory injunction’ for information transmitted on the network. Moreover, a provider shall not be liable for ‘caching’, that is the automatic, intermediate, and temporary storage of information, as long as it complies with a series of conditions. Finally, the Directive states that a provider shall not be liable for ‘hosting’, that is storage of information at the request of a recipient, provided the provider does not have actual knowledge that the activity is illegal and, as regards claims for damages, is not aware of facts or circumstances from which illegal activity is apparent; or upon obtaining such knowledge or awareness, acts expeditiously to remove or disable access to the information.

8 THE

FUTURE

The final task of this introductory chapter is to prepare the reader for impending changes to UK copyright law. In some cases, changes are likely to occur in order to bring into effect the norms which have already been agreed at an international level. To this end, the Copyright Directorate of the Department of Trade and Industry has already embarked on a consultation process with a view to introducing moral rights for performers.'° In addition, the European Council and Parliament has adopted 137 Database Dir., Art. 9.

138 Tbid., Art. 10(3). 139 See below at pp. 142, 144-5. 140 See Copyright Directorate, Moral Rights for Performers: A Consultation Paper on Implementation in the UK of the WIPO Performances and Phonograms Treaty Obligations on Performers’ Moral Rights and on Further Developments in WIPO on Performers’ Moral Rights (1999).

INTRODUCTION

TO COPYRIGHT

49

Directive on Copyright in the Information Society. Both of these instruments are aimed at giving effect to the two WIPO Treaties. There are also other initiatives emerging on the horizon: some at an international level, some at regional level, and others at the national level.

8.1

INTERNATIONAL

CHANGES

At an international level, WIPO has four initiatives of importance. The first concerns ‘audiovisual performances’. This is the subject matter largely excluded from the WPPT (because of opposition from US-based interests).'*! Although a diplomatic conference was held in Geneva in December 2000 with a view to adoption of either a treaty or a protocol to the WPPT, it proved impossible to reach complete agreement. However, because nineteen of twenty paragraphs were agreed, a further conference is proposed to resolve the outstanding issues (which relate to methods of assignment of such rights). The second concerns the protection of indigenous culture.'” The third, concerns databases. When the WIPO Treaties were agreed to in 1996, a third treaty on databases had been proposed, but this was left on the table. Fourthly, there are proposals for a further international agreement on the rights of broadcasting organizations.

8.2

EUROPEAN

INITIATIVES

At a regional level, there are two initiatives worth noting. The first is the Information Society Directive. In large part, this is intended to implement the two WIPO Treaties agreed in Geneva in December 1996. For example it introduces a ‘making available right’ and controls over technological measures of protection and rights management information.'*? However, it goes much further in responding to the perceived change brought about by digital technology to the environment in which copyright law operates. In particular, it proposes to limit the limitations and exceptions that a national regime can operate.'* It is proposed that many of what were previously defences are now subject to requirements that right-holders receive fair compensation. The Directive was adopted on 22 May 2001 and must be implemented by 22 Dec. 2002.

The other proposed Directive concerns the droit de suite, or as it is also known the ‘artist’s resale royalty. A number of European countries currently offer artists a right to participate in the resale value (or profits from the resale) of their works. The 141 Diplomatic Conference on the Protection of Audiovisual Performances Fourth Session Geneva, 8-20 Dec. 2000.

142 See M. Blakeney, ‘The Protection of Indigenous Knowledge under Intellectual Property Law’ [2000] EIPR 251.

143 Art. 3(1) (authors) and 3(2) (related rights); Art. 6 (technological measures); Art. 7 (rights management information). See below at pp. 143-4.

1AS-Art.'5(2).'

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COPYRIGHT

Commission took the view that in the absence of harmonization variations in national rights could affect the operation of the art market. Consequently, a harmonized provision has been proposed. While the UK, which has a substantial art market but no resale right has strongly resisted adoption of the Directive, it seems that these efforts will be in vain. The proposal is discussed further in Chapter 11.

8.3

NATIONAL

INITIATIVES

One of the underlying themes of this introductory chapter is that there is progressively less and less scope for independent national legislation on copyright, and that the sources of UK copyright law are increasingly international and regional. Occasionally, however, indigenous issues do arise. Over the last few years, one of the most sustained discussions has been over possible legislation relating to rights in formats for television programmes, though the Government’s interest in this issue appears to have subsided. More recently, there has been a private member’s initiative in the House of Lords to extend certain liabilities for secondary infringement of copyright and increase penalties for criminal infringements.'*° While unsuccessful, it may spur government action in the field of piracy. 145 Copyright and Trade Marks Bill 2000. The Bill was introduced by Lord McNally on behalf of the Alliance against Counterfeiting and Piracy, and withdrawn on 17 Mar. 2000 without a second reading. See Hansard (HL) (17 Mar. 2000) col. 1885 ff.

3 SUBJECT

MATTER

1 INTRODUCTION This chapter examines the subject matter protected by copyright law. In contrast with some other jurisdictions where the subject matter protected by copyright is defined by statute in broad and open-ended terms,’ the 1988 Act provides a detailed and exhaustive list of the types of creations protected by copyright law. In order for a creation to be protected by copyright it must fall within one of the following nine categories of works: (1) literary works, (2) dramatic works, (3) musical works, (4) artistic works, (5) films, (6) sound recordings, (7) broadcasts, (8) cable programmes, and (9)

published editions (or typographical works). Before looking at the categories of subject matter in more detail, it is necessary to make some preliminary points. The first is that as the 1988 Act provides an exhaustive list of the protected subject matter, there is little opportunity for the courts to recognize new forms of subject matter, other than through the creative interpretation of the existing categories. The closed nature of the categories, especially when combined with the fact that the UK has no law of unfair competition, has meant that at times copyright has been ‘stretched to give protection to creative

talents and activities the protection of which was never in the contemplation .. of those who from time to time have been responsible for the framing of the successive statutes.’ A notable feature of the 1988 Act is that all of the subject matter that is protected by copyright are called ‘works’. This is in contrast to the 1956 Copyright Act where a distinction was drawn between Part I ‘works’ (literary, dramatic, musical or artistic works) and Part II ‘subject matter’ (sound recordings, films, broadcasts, cable programmes, and typographical arrangements). It is also in marked contrast to the position in civil law systems, such as in France, which distinguish between ‘author's rights’ (or droit d’auteur) and ‘neighbouring rights’ or entrepreneurial works (droit voisins). Author’s rights typically cover literary, dramatic, musical, and artistic work, whereas neighbouring rights are afforded to sound recordings, broadcasts, and ! e.g. French law protects ‘toutes les oeuvres de lesprit: French Intellectual Property Code, 1992, Art. L-112-1. Berne, Art. 6.

2 CBS v. Ames Records [1981] RPC 407, 417.

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performers.’ This distinction is also reflected in the International Conventions: with the 1886 Berne Convention protecting ‘author’s rights’ and the 1961 Rome Convention protecting ‘neighbouring rights’. Under EC law, ‘neighbouring rights’ are usually classed as ‘related rights’. While the 1988 Act may have jettisoned the distinction between works and subject matter other than works, it should not be assumed that all

works are treated the same. Indeed, as will become apparent in the following chapters, the conditions under which rights are granted as well as the scope, nature, and duration of those rights differ, sometimes considerably, between different classes of

works. It is also important to note that although British law may have abandoned the formal distinction between authorial works (literary, dramatic, musical, and artistic works) and entrepreneurial works (sound recordings, films, broadcasts, cable pro-

grammes, and typographical works),* nonetheless copyright law treats these two broad categories differently. While there are problems with this distinction, notably now that films occupy a space somewhere in between the two categories, it provides a useful way of describing the subject matter of copyright. It should also be noted that the legal categories do not necessarily correspond to the objects commonly associated with copyright law. Instead, individual tangible objects may embody a number of different copyright works. For example, a book might contain a literary work, an artistic work, and a typographical arrangement; a song may consist of literary and musical works (the lyrics being a literary work); and a CD might contain a sound recording, a musical work, and a literary work. While the legal categories do not necessarily correspond to the objects protected by copyright, in most cases there have been few problems in matching a particular creative act to one of the protected categories. In some cases, however, the question has arisen as to whether it is possible for a particular creation to fall within two categories simultaneously. This question arose in Electronic Technique v. Critchley when Laddie J was called upon to consider whether a circuit diagram could simultaneously be a literary work and an artistic work. Laddie J said that although it might be possible in theory to say that a single piece of creative effort may ‘give rise to two or more copyrights in respect of the same creative effort’, nonetheless ‘there are compelling arguments that the author must be confined to one or the other of the possible categories.’ However, other judges have taken a different view.° While it is still unclear whether the same creative effort can simultaneously give rise to both a literary work and an artistic work, in Norowzian v. Arks (No. 2) the Court

of Appeal accepted that the maker of a film may simultaneously produce two

> The division of subject matter into ‘authorial’ and ‘entrepreneurial’ works is based upon a belief that copyright for authors is the pure form and should not be conflated or equated with rights given in return for investment.

4 e.g. as to the requirement oforiginality (see Ch. 4) or the concept of reproduction (see pp. 126-30). 5 [1997] FSR 401. ® Anacon Corporation v. Environmental Research Technology [1994] FSR 659 (Jacob J suggesting that a circuit diagram is both a literary and artistic work). Surely a poem in a particular shape could be an artistic work as well as a literary work.

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MATTER

53°

copyright works: a film copyright in the fixation and a dramatic work in the ‘cinematographic work’.’ With these general points in mind, we now turn to look at the nine types of works recognized by copyright law.

2 LITERARY

WORKS

Literary works have been protected from unauthorized reproduction since at least 1710.° Literary works are defined in section 3(1) to mean ‘any work, other than a dramatic or musical work, which is written, spoken or sung, and accordingly 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’. It is important to note that literary works are not limited to works of literature, but include all works expressed in print or writing (other than dramatic or musical works).? It is also important to note that protection is not limited to words, but also includes things such as symbols and numerals. The scope of the subject matter protected as a literary work is enhanced by the fact that a work will be protected irrespective of the quality or style of the creation in question: copyright law does not pass judgment over the standard of the work. As a result, the types of things that will be protected as a literary work include novels by Salmon Rushdie, poems by Ted Hughes, lyrics by Courtney Love, as well as advertising slogans, railway timetables, and examination papers.'° The fact that literary works include works that are spoken means that spontaneous conversations, interviews, and the like may also be protected (although, as we shall see, copyright does not subsist in a spoken work unless it is recorded).

For the most part, there have been few problems in deciding what is meant by a literary work. Where problems have arisen, the courts have tended to rely on the test set out in Hollinrake v. Truswell where it was said that to qualify as a ‘book’ under the Literary Property Act 1842, the creation must afford ‘either information and instruction, or pleasure, in the form of literary enjoyment’.'’ While this was not intended to provide a comprehensive or exhaustive definition,'* it provides useful guidance as to where the boundaries of the category are to be drawn. 7 [2000] EMLR 67. 8 The Statute of Anne 1710 and the Literary Copyright Act 1842 used the term ‘book’. However, since 1911 the statutes have referred to literary works. 9 University of London Press v. University Tutorial Press [1916] 2 Ch 601.

10 Tbid. 11 (1894) 3 Ch 420. The Court of Appeal held that a cardboard sleeve chart (i.e. a representation of a sleeve

designed for a lady’s arm with certain scales or measurements on it, intended for practical use in dressmaking) was not a ‘book’ within the 1842 Act. Under the CDPA such a work would almost certainly be treated as an artistic work. 12 Apple Computer v. Computer Edge [1984] FSR 481, 495 (Fed. Crt. Australia). Cf. Laddie et al., para. 2.30.

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Most of the cases where the meaning of literary work has arisen have been concerned with works that afford information or instruction. These cases have made it clear that for a work to provide information or instruction, it must be capable of conveying an intelligible meaning.’ In line with the principle that protection should not be dependent upon the quality of the work, the courts have been willing to accept a very low threshold when considering whether a work ‘conveys an intelligible meaning’. For example, in one case it was accepted that sequences of letters set out in grids published in a newspaper provided information as to whether a reader had won or lost a bingo game and, as such, were literary works.'* In order for a work to ‘convey an intelligible meaning’ it is not necessary that the work be understood by the general public; it is sufficient if the work is understood by a limited group with special knowledge. Thus a telegraphic code has been held to be a literary work, even though the words of the code were meaning-

less in themselves.'* It has also been held that ciphers, mathematical tables, systems of shorthand, and Braille catalogues convey meaning and as such qualify as literary works.!®© One of the few situations where works have been held not to provide information or instruction is where the work is meaningless or gibberish.'’ Another situation where a work fails to provide information is where it is an invented name. For example, it was held that the word Exxon, which had been created to act as a company name, conveyed no information and hence was not protected as a literary work. (Although, as we will see, there may have been other grounds for this decision.) !® In contrast to informational works, there has been little discussion as to what is

meant by works that ‘provide pleasure in the form of literary enjoyment’. The need for a work to provide literary enjoyment and pleasure seems to suggest a qualitative test. If so, it would run counter to the widely accepted principle that the quality of the literary work is not to be taken into account when deciding whether a work should be protected. With these general points in mind, we now turn to look in more detail at the types of thing that are protected as literary works. After looking at names and titles (which are not protected), we turn to look at tables and compilations, computer programs, preparatory material for computer programs, and databases.

2.1

NAMES

AND

TITLES

Despite the fact that names and titles may take a considerable amount of time and effort to develop and are often traded for substantial amounts of money, the UK (like 13 Apple Computer v. Computer Edge [1984] FSR 481,521 (Fed. Crt. Australia). 4 Express Newspapers v. Liverpool Daily Post [1985] 3 All ER 680. 5 D.P. Anderson v. Lieber Code Company [1917] 2 KB 469.

16 Apple Computer v. Computer Edge [1984] FSR 481, 521 (Fed. Crt. Australia). 17 Tbid., 495 (‘meaningless rubbish would plainly be excluded’). 18 Exxon Corporation v. Exxon Insurance [1982] RPC 69, 90.

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MATTER

55

most countries) refuses to protect them as literary works.'? Thus, invented words such as EXXON (which had been invented by Esso Petroleum as a trade name),”” titles of

game shows such as ‘Opportunity Knocks’,”! or song titles such as “The Man Who Broke the Bank at Monte Carlo’ have been held not to be literary works. There are a number of reasons why names and titles may be excluded from the remit of copyright law. Perhaps the main reason for not protecting names and titles relates to the general inconvenience that would arise if someone was able to control the way certain words and phrases were used.” It is also said that there is no need for names and titles to be protected by copyright law given that they are adequately protected by passing off, trade-mark law,” and artistic copyright.”* In most countries titles are not protected by copyright because they are not normally sufficiently creative to pass the originality threshold.”° One of the advantages of this approach is that creative titles may still qualify for copyright protection.”” While some UK cases have adopted this approach,”* most cases have accepted that where a title has been invented it will be original.” Instead, most courts have proceeded on the basis that titles do not

19 See R. Stone, ‘Copyright Protection for Titles, Character Names and Catch-phrases in the Film and Television Industry’ [1996] Ent L R 178. For related regimes see R. Stone, “Titles, Character Names and Catchphrases in the Film and Television Industry: Protection under the Trade Marks Act 1994 and Alternative Registration Systems’ [1997] Ent L R 34.

20 Exxon Corp. v. Exxon Insurance [1982] RPC 69. 21 Green v. Broadcasting Corporation of New Zealand [1989] RPC 469, 472, 475, 490 (CA of New Zealand). 22 Francis Day and Hunter v. 20th Century Fox [1940] AC 112 (copyright in the song “The Man Who Broke the Bank at Monte Carlo’ was not infringed by the performance of a motion picture of the same title). See also Dick v. Yates [1881] Ch 6 (no copyright in ‘Splendid Misery’). 23 In Exxon Corporation v. Exxon Insurance [1982] RPC 69. Graham J said that no one could refer to the claimant’s company or to any of their goods without having the claimant's licence to do so. Furthermore the Bishop of Exeter could not use the word Exon as part of his name. See also Francis Day Hunter v. 20th Century Fox [1940] AC 112; Rose v. Information Services [1987] FSR 254.

24 The corollary of this is while a person is usually free (as far as copyright is concerned) to appropriate names and short titles, care must be taken to ensure that the use of such a title cannot be seen as passing off or a trade-mark infringement. The plaintiff in Exxon succeeded in their passing off claim: [1982] RPC 69, 75 (Graham J), but nevertheless appealed on the copyright issue. 25 ‘Karo Step’ Trade Mark [1977] RPC 255 (a pictorial mark may be an artistic work); Auvi Trade Mark [1995] FSR 288 (High Court, Singapore); Hutchinson Personal Communications Ltd. v. Hook Advertising Ltd. [1996] FSR 549 (logo consisting of inverted ‘R’ with a dot assumed to be protected by copyright); News Group v. Mirror Group [1989] FSR 126 (masthead from The Sun newspaper). 26 See P. Geller and M. Nimmer, International Copyright Law and Practice (2000), FRA-32 (France), GER-27 (Germany).

27 In Francis Day and Hunter v. 20th Century Fox [1940] AC 112, the Privy Council indicated that if a title was extensive and important enough it might be possible for a title to be protected. For cases of protection see Weldon v. Dicks [1878] Ch 247 (‘Trial and Triumph’ protected); Lamb v. Evans [1893] 1 Ch 218 (headings in trade directory protected) and Shetland Times v. Dr Jonathan Wills [1997] FSR 604 (arguable that newspaper

headlines of eight or so words such as ‘Bid to save centre after council funding cock up’ was protected because it was designedly put together for the purpose of imparting information). 28 In Rose v. Information Services [1987] FSR 254 Hoffman J denied the existence of copyright in the title ‘The Lawyer’s Diary’ on the ground that there was too slight a degree of skill and labour: i.e. it was not original. Cf. in Exxon where the claimant had expended a great deal of labour, skill, etc. and produced the single word. 29 In Exxon Corp. v. Exxon Insurance [1982] RPC 69.

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qualify as literary works. While the courts have agreed that names and titles should not be protected by copyright, the reasoning used in support of this conclusion has been less consistent. Some courts have asserted that titles are not “sufficiently substantial’ to warrant protection as literary works,*° while others have relied on the principle de minimis non curat lex.*! It has also been said, though not without some criticism,”

that invented words do not provide the requisite ‘information, instruction or pleasure’ to be characterized as a literary work.*?

2.2

TABLES

AND

COMPILATIONS

(OTHER

THAN

DATABASES)

Section 3(1)(a) of the 1988 Act specifically states that literary work includes ‘tables or compilations (other than a database’).*4 As a part of the reforms made to accommodate the Database Directive, section 3 was amended as of 1 January 1998 to add the

rider that tables and compilations no longer includes databases. At the same time, the definition of literary work was amended so as specifically to recognize databases as a separate type of literary work.*? The reason why databases were placed in a separate category was to enable the 1988 Act to impose a different requirement of originality on databases from that applied to tables and compilations. Prior to these amendments, a wide range of subject matter had been protected as compilations. This included football pools coupons,” a leaflet conferring information about herbicides,*” TV schedules, directories listing the names and addresses of solicitors,” a compilation of computer programs,“ a timetable index,"! trade cata-

logues,” and street directories. As we will see, a database is defined in very wide terms. As a result, it is possible that most if not all of the subject matter previously 30 Francis Day and Hunter v. 20th Century Fox [1940] AC 112. 31 Sinanide v. La Maison Kosmeo (1924) LTR 365.

32 For criticisms of this rationale see G. Dworkin and R. Taylor, Blackstone’s Guide to the Copyright Designs and Patents Act 1988 (1989), 21-2; J. Cullabine, ‘Copyright in Short Phrases and Single Words’ [1992] EIPR 205, 208.

33 Exxon Corp. v. Exxon Insurance [1982] RPC 69. 34 Berne Art. 2(5) (collections of literary or artistic works); TRIPs Art. 10(2); WCT Art. 5 (compilations of data or material).

35 CDPA s. 3(1)(d). 3© Ladbroke v. William Hill {1964] 1 All ER 465, 471. Lord Evershed said that the coupon is ‘a compilation in the sense that it is made up by putting together in writing (that is, in print) a number of individual items or components.’ See also Football League v. Littlewoods [1959] Ch 637 (fixture lists); Greyhound Services v. Wilf Gilbert (Staffs) Ltd. [1994] FSR 723 (advance programme of greyhound races). 37 Elanco v. Mandops [1980] RPC 213. 38 Independent Television Publications v. Time Out [1984] FSR 64.

39 Waterlow Directories v. Reed Information [1992] FSR 409; Waterlow Publishers v. Rose [1995] FSR 207 (suggesting such a work might be protected even though it has no identifiable author). See also Kelly v. Morris (1866) LR 1 Eq. 697.

49 Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275 (comprising 335 program files, 171 record layout files, and 46 screen layout files was held to be a compilation). 41 Blacklock v. Pearson [1915] 2 Ch 376.

42 Purefoy v. Sykes Boxall (1955) 72 RPC 89.

43 Kelly v. Morris (1866) LR 1 Eq 697.

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MATTER

57

protected as compilations would now be protected as databases.” If this is the case, it will leave little or no room for ‘tables and compilations’ in the future.

2.3

COMPUTER

PROGRAMS

After considerable debate at both national and international level over whether computer programs should be regulated by copyright law, patent law or by a sui generis regime, it was decided in the 1980s that computer programs ought to be protected as literary works.** This position is now well entrenched in European and international intellectual property law.*® In line with these trends, the 1988 Act protects computer programs as literary works.’” While the 1988 Act does not define what is meant by a computer program,” it is clear that it includes source code,” assembly code, and object code. It is also clear that computer program is not synonymous with software. On this basis it has been held that the definition of computer program includes instructions permanently wired into an integrated circuit (that is firmware).°°

2.4

PREPARATORY

DESIGN

MATERIAL

FOR

COMPUTER

PROGRAMS

To bring British law into conformity with the EC Software Directive, preparatory

design material for computer programs is now included within the general definition of literary works.*! It has been suggested that this is an inappropriate way of implementing the Directive and that preparatory design material should be treated as part of a computer program.”

44 Copyright and Rights in Databases Regulations 1997 (SI 1997/3032) implementing Database Directive. 45 The judiciary were willing to accept that software was protected under the CA 1956: Gates v. Swift [1982] RPC 339-40; Sega Enterprises v. Richards [1983] FSR 73 (‘assembly code’ was a literary work); Thrust-

code v. WW Computing [1983] FSR 502 (literary copyright is capable of subsisting in a computer program). 46 TRIPs Art. 10(1); WCT Art. 4.

47 CDPA s. 3(1)(b). The Copyright (Computer Software) Act 1985 had declared only that computer programs were to be considered as literary works. 48 WIPO model provisions on Protection of Computer Software (1978) defined computer program as a set of instructions expressed in words, codes, schemes or in any other form, which is capable, when incorporated in a machine-readable medium, of causing a computer—an electronic or similar device having information processing capacities—to perform or achieve a particular task or result. A similarly vague definition has been adopted in the USA: see 17 USC s. 101 (A ‘computer program’ is a ‘set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.’) 49 Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275. 50 Software Directive, Recital 7. 51 For background see ibid. For implementation, see Copyright (Computer Programs) Regulations 1992 (SI 1992/3233), operative from 1 Jan. 1993.

52 Software Reg., reg. 3. For commentary, see S. Chalton, ‘Implementation of the Software Directive in the UR [1993] EIPR 138, 140; A. Meijboom, in A. Meijboom and H. Jongen (eds.), Software Protection in the EC (1993), 8. Compare letter by S. Cooper, ‘Implementation of the Software Directive’ [1993] EIPR 385, with P. Britton’s response, ‘Implementation of the Software Directive’ [1994] EIPR 88 (doubting whether drawings of characters for computer games amount to design material for computer programs).

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2.5

COPYRIGHT

DATABASES

As we mentioned earlier, in order to comply with the Database Directive the definition of literary works was amended from 1 January 1998 to introduce ‘databases’ as a

distinct class of literary works.°? A database is defined very broadly as “a collection of independent works, data or other materials which (a) are arranged in a systematic or methodical way, and (b) are individually accessible by electronic or other means.’ It seems that the definition is broad enough to cover most if not all of material previously protected as tables and compilations. Ultimately, the scope of the subject matter protected as databases will depend on how the concepts of ‘independent works’ and ‘individual accessibility are interpreted. It is unclear whether the poems in a book of poems by the same poet are ‘independent’. It is also unclear whether the data on a map will be considered to be ‘independent’ or “individually accessible’. A database does not include a computer program used in the making or operation of databases accessible by electronic means,™* or presumably a compilation of programs. It should be noted that a computer program might itself be or include a compilation of information and hence be a database. In so far as a computer program incorporates parts that fall within the definition ofa database, it seems that these components will be independently protected under the sui generis database right. For example, if program interfaces can be characterized as a database, they may be protected by either copyright or the sui generis database right. The fact that a computer program may be protected both as a literary work and by the database right may have a number of important consquences. As the defences available in relation to the database right are less extensive than those offered by copyright, the overlap may undermine the defences to copyright infringement specially tailored for computer programs. In particular, it is possible that the copyright defence that allows decompilation of programs for the purpose of ascertaining interface information may be rendered redundant. One question that has arisen in this context is the extent to which a multimedia work as a whole (as distinct from the sound, pictures, text, and moving images that it

is made up of) can be protected as a database. While individual elements may be protected by copyright, the question has arisen as to whether all the elements combined together can be protected by copyright as a database.°° While there are doubts about whether multimedia works could be protected as compilations (this was because it is unclear whether the protection afforded to compilations is confined to compilations of information or to compilations of literary works), this problem does not arise in relation to databases. This is because databases are defined, seemingly without restriction to the type of material, as a collection of “works data or other 93 CDPA s. 3(1)(d). °4 Database Directive, Art. 1(3). See also J. Reichman and P. Samuelson, ‘Intellectual Property Rights in Data?’ (1977) 50 Vanderbilt Law Review 51, 132.

°° See M. Turner, ‘Do the Old Legal Categories fit the New Multimedia Products? Protection of Multimedia CD Rom as a Film’ [1995] EIPR 107; S. Beutler, “The Protection of Multimedia Products through the European Community’s Directive on the Legal Protection of Databases’ [1997] Ent L R 317; T. Aplin, ‘Not in Our Galaxy: Why Film Won’t Rescue Multimedia’ [1999] EIPR 633.

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materials’. While it may seem odd if a compilation of artistic works or sound recordings were protected as literary works,”° this conclusion now seems unavoidable.

3 DRAMATIC

WORKS

The next general categories of works that are protected by copyright are dramatic works. The 1988 Act does not define what a dramatic work is, except to state that it includes a work of dance or mime.” However, it is relatively clear that dramatic work includes the scenario or script for films, plays (written for the theatre, cinema,

television or radio),°* and choreographic works.°? For a creation to qualify as a ‘dramatic work’, it must be a ‘work of action’ that is ‘capable of being performed’.® While the courts have not yet fully explored what is meant by a ‘work of action’, it is clear that it does not include static objects, sets, scenery, or costumes®! (though these might be protected as artistic works”). It has been said that a film will usually be a dramatic work where there is “cinematographic work’ on the film.® In some limited circumstances a work of action might include sports such as gymnastics or synchronized swimming.™ The requirement that to be a dramatic work the subject matter must be ‘capable of being performed’ initially operated in a restrictive manner. In the Hughie Green case,” Green was the originator and producer of a talent show called ‘Opportunity 56 See Kalamazoo v. Compact Business Systems (1985) 5 IPR 213. One effect could be that a compilation of sound recordings would achieve much longer protection under copyright as a database than a single sound recording.

57 CDPA s. 3(1). 58 Green v. Broadcasting Corporation of New Zealand [1989] RPC 469, 493. 59 The fixation of such a work can be in writing ‘or otherwise’ and may accordingly be, for instance, on film. Where a dramatic work is recorded on a film, the film must contain the whole of the dramatic work in an unmodified state: Norowzian v. Arks (No. 2) [2000] EMLR 67 (dance recorded on film, which was then

edited, could not be protected because the film had been drastically edited and was not therefore a recording of the dance). 69 Norowzian v. Arks (No. 2) [2000] EMLR 67, 73 (CA).

61 Creation Records v. News Group [1997] EMLR 444 (finding no arguable case that a film shoot is dramatic work, since scene was inherently static, having no movement, story, or action).

62 See Shelley Films v. Rex Features [1994] EMLR 134 (seriously arguable that film set prepared for film ‘Mary Shelley’s Frankenstein’ was a work of artistic craftsmanship). Cf. Creation Records v. News Group [1997] EMLR 444 (no arguable cause of action that arranging objects for film shoot for record sleeve was a work of artistic craftsmanship or collage because the composition was intrinsically ephemeral and its continued existence was to be in the form of aphotographic image). 63 Norowzian v. Arks (No. 2) [2000] EMLR 67. (In the view of Buxton LJ such a construction went some way

towards ensuring compliance with Art. 14 bis of the Berne Convention. Nourse LJ said he reached his conclusion without reference to the Convention.)

64 Although a film of a sporting event may be a work of action, it is probably not an ‘original’ dramatic work, being a mere recording of actions. 65 Green v. Broadcasting Corporation of New Zealand [1989] RPC 469, 477 (scripts could not constitute dramatic works because they could not be acted or performed, which is the essence of drama) (CA of New

Zealand); [1989] 2 All ER 1056 (Privy Council).

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Knocks’, a programme which followed a particular format: certain catchphrases were used, sponsors introduced contestants, and a ‘clapometer’ was used to measure audience reaction. Beyond this, the content of the show varied from show to show. The Broadcasting Corporation of New Zealand broadcast a television talent quest that was similar to ‘Opportunity Knocks’ in that the title and catchphrases were the same. It also used a clapometer, as well as the idea of using sponsors to introduce customers.®° Green’s action for copyright infringement against the Broadcasting Corporation of New Zealand failed, primarily because he was unable to show that the programme was a dramatic work. In part, this was because when looked at as a whole, the show lacked the specificity or detail for it to be performed. In particular, the Privy Council said that the scripts only provided a general idea or concept of a talent quest, which was not capable of being protected. The Privy Council also held that the features of the programme that were repeated in each show (namely the format or style of the show) were not dramatic works.

The reason for this was that a dramatic work must have sufficient unity for it to be capable of being performed.®’ On the facts it was held that the particular features which were repeated from show to show (the format) were unrelated to each other

except as accessories to be used in the presentation of some other dramatic performance.® The failure of the Privy Council to protect television formats in the Hughie Green case® prompted a number of (unsuccessful) attempts to have formats recognized by British law.” The proponents of format rights appealed to the usual moral and economic arguments to support their case. In particular it was argued that formats require creative input similar to that involved in existing copyright works. It was also argued that failure to protect formats is not only unjust, but also fails to provide sufficient incentives to television producers. Those opposed to format rights noted the problems of defining what a format is, the anti-competitive effects and the costs of such rights, as well as the potential for nuisance litigation.’ The opponents of format

66 Green v. Broadcasting Corporation of New Zealand [1989] RPC 469, 478, 480, 493. 6? Cf. Ladbroke v. William Hill [1964] 1 All ER 465 where copyright was held to exist in pools coupons even though the matches changed each week. 68 Green v. Broadcasting Corporation of New Zealand [1989] RPC 469, 477; [1988] 2 NZLR 490, 497 (New Zealand Court of Appeal); cf. Television New Zealand v. Newsmonitor Services [1994] 2 NZLR 91 (High Court of Auckland) (TV news programme made up of unscripted and unchoreographed interviews and discussions was not a dramatic work).

6 ‘Until the Hughie Green case the right that we are talking about was thought to exist. There appeared to be no question about that. The point about the Hughie Green case is that it was so amazing. One could hardly believe the decision arrived at’. Lord Peston in 521 Hansard (HL) 26 July 1990, col. 1715. 70 See ‘Programme Formats: A Further Consultative Document’ [1996] Ent LR 216; R. McD. Bridge and S. Lane, ‘Programme Formats: The Write-In Vote’ [1996] Ent LR 212. After the consultation exercise in 1996

a decision was made to neither support nor introduce legislation to give specific copyright protection to television and radio programme formats. There seem to be no plans to reconsider the matter. 71 Mr Mellor, Standing Committee FE, IV Hansard, 8 Mar. 1990, cols. 1293-4.

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MATTER

61

rights favour leaving the developers of formats to the remedies offered by passing

off,” and breach of confidence.” While formats are not protected to the extent that some would like, the need for sui

generis format protection is less pressing as a result of the Court of Appeal decision of Norowzian v. Arks.’* This is because in this case the Court of Appeal liberally interpreted the requirement that a dramatic work must be ‘capable of being performed’ to include performances by artificial means, such as the playing of a film.”” Consequently a cartoon may be a dramatic work. In this decision, the Court of Appeal was called upon to decide whether a Guinness advertisement (which featured an actor dancing while a pint of Guinness was being poured) had infringed copyright in an earlier film Joy (which the advertisement copied). To answer this question it was necessary to determine whether Joy was a dramatic work.”° One of the notable features of Joy was

that it utilized a particular editing technique known as jump-cutting (this is done by cutting segments out of the film to produce a series of artificial effects). One of the consequences of this was that the finished film contained a series of movements that could not be performed by an actor.”’ At first instance it was held that as the (artificial) dance shown on the edited film could not be performed, the film did not

embody a dramatic work. (If the film had shown all the movements of the actor it would have been protected.) However, on appeal it was held that the film itself was a dramatic work. The Court said that as it was possible for the film to be played, it was therefore ‘capable of being performed’.”*

4 MUSICAL

WORKS

The next category of works that are protected under the 1988 Act are ‘musical works’. A musical work is defined to mean ‘a work consisting of music exclusive of any words or action intended to be sung, spoken or performed with the music’.”? Thus, the 72 The New Zealand Court of Appeal unanimously rejected the claim as to passing off because of lack of sufficient goodwill in New Zealand. Green v. Broadcasting Corporation of New Zealand [1989] RPC 469, 474, 480-1, 488-9. The British show had never been broadcast in New Zealand, and the goodwill relied on was that of former British residents living in New Zealand. 73 Lord Sanderson of Bowden, Hansard (HL), 26 July 1990, cols. 1718-19.

74 Norowzian v. Arks (No. 2) [2000] EMLR 67, 73. 75 Thid. 76 Note that the argument on appeal was not that there was copyright in the dance as a dramatic work (recorded on film), but that the film was not merely a ‘record’ of a dramatic work but was itself a dramatic

work: ibid. 77 That is, the finished film owed as much to the editing technique as to the dance that was filmed. 78 In such a case, probably, the editor was the author. Where the film includes a cinematographic work, the scriptwriter and director might be co-authors: See Laddie et al., para. 5.26. 79 CDPA s. 3(1). Sheet music was held to be covered by the term ‘book’ in the Statute of Anne: see Bach v. Longman (1777) 2 Cowp 623, but that merely conferred a right to print and reprint the music. See R. Rabin and §. Zohn, ‘Arne, Handel, Walsh, and Music as Intellectual Property: Two Eighteenth-Century Lawsuits’ (Apr. 1995) 120 Journal of the Royal Musical Association 112.

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words and the music of songs and similar works are treated as the subject matter of distinct copyrights. A song therefore consists of both a musical work and a literary work: the tune and lyrics respectively. There has been very little discussion in the UK as to what is meant by ‘music’, though it is normally understood to include melody, harmony, and rhythm.®° Consequently the contribution made by a drummer in a rock band to a song was recognized as part of the musical work.®! How the courts would react to more avant garde work such as John Cage’s 4 minutes 33 seconds (a work of silence) is more difficult to predict.

5 ARTISTIC

WORKS

The fourth category of works protected by copyright is artistic works. The first artistic works protected by statute were ‘engravings’ (1735). These were followed by calico designs (1787), sculptures (1798 and 1814), drawings, paintings, and photographs (1862), and works of artistic craftsmanship (1911).°* The various artistic works are now collected together in section 4(1) of the 1988 Act which contains a

detailed list of the types of subject matter that are protectable as artistic works. These are divided into the following three categories:* (a) irrespective of artistic quality, a graphic work (including painting, drawing, diagram, map, chart or plan, engraving, etching, lithograph, woodcut, or similar work), a photograph (excluding a film), a sculpture, or a collage; (b) a work of architecture, being a building or fixed structure or a model therefore; or

(c) a work of artistic craftsmanship.

5.1

GRAPHIC

WORKS,

PHOTOGRAPHS,

SCULPTURES,

AND

COLLAGES

The first subcategory of artistic works, which is set out in section 4(1)(a), includes graphic works, photographs, sculptures, and collages. It is important to note that the 80 Some countries have defined music. For example, Canadian law defined music as any combination of melody and harmony or either of them, printed or reduced to writing or otherwise graphically reproduced. This definition was described as ‘unnecessarily limiting’ in that it excluded elements such as rhythm and timbre from protection. In particular, such limited definitions may have negative effects for the protection of traditional music. See J. Collins, ‘The Problem of Oral Copyright: The Case of Ghana’ in S. Frith (ed.), Music and Copyright (1993), 149 (arguing that rhythm is an equal component with lyrics and melody in African music). 81 Stuart v. Barrett [1994] EMLR 448 (this rendered him a co-author). 82 The 1735 Act was amended by Acts in 1766 (7 Geo. 3 c. 38) and 1776 (17 Geo. 3 c. 57). The Sculpture

Copyright Act of 1798 was amended and expanded in 1814 (54 Geo. 3 c. 56); Fine Art Copyright Act 1862 (25 & 26 Vict. c. 68).

83 CDPA s. 4(1).

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MATTER

63

material contained in section 4(1)(a) is protected irrespective of artistic quality. This

ensures that once a creation falls within a particular category of works, copyright protection is not contingent on the work reaching a certain aesthetic standard. As a result, the task of having to decide what is good or bad art and all the associated problems are thus avoided. More controversially, the decision that copyright law should not concern itself with the artistic quality of these types of works has been used to expand the types of subject matter (as distinct from the quality of subject matter) protected as artistic works. While few would have problems with Marchel

Duchamp’s Readymades (for example, his famous urinal) being protected as an artistic work, more problems arise when objects exclusively used for industrial purposes to achieve commercial ends are protected as artistic works. For a period of time, a fear of making aesthetic judgements (when combined with a degree of formalism) led the courts to provide such protection. In recent years, however, the courts have been more willing to use a general sense of what is meant by art to limit the scope of protectable works. 5.1.1 Paintings Graphic works are specifically defined in section 4(1)(a) to include ‘paintings’. For the most part, there have been few problems in determining whether something is a ‘painting’ and thus whether it qualifies as an artistic work. One of the few situations where this was not the case was in Merchandising v. Harpbond,™ where it was argued that the facial make-up of the pop star Adam Ant was a painting and thus protected by copyright. The Court of Appeal rejected this submission, Lawton LJ remarking that it was fantastic to suggest that make-up on anyone’s face could possibly be a painting. He held that a painting required a surface and that Adam Ant’s face did not qualify as such, noting that ‘[a] painting is not an idea: it is an object; and paint without a surface is not a painting’.® See Figure 3.1. The reasoning of Lawton LJ seems odd, for it is difficult to see why Adam Ant’s face is less of a surface than a piece of canvas. The decision could however be justified on the ground that a painting must be intended to be permanent. If so a tattoo would be protected, but dramatic or cosmetic make-up would not.*° Equally, since the make-up in question consisted of two broad red lines with a light-blue line running from nose to jaw, it is arguable that the work did not satisfy the criteria of originality.*’ Alternatively, the decision could be seen as a case of merger of idea and expression (where no protection is granted).** At the end of the day, however, it seems that the reason why Adam Ant failed was because the traditional image of a painting as a framed canvas to be hung on a wall prevailed. 84 [1983] FSR 32.

85 [1983] FSR 32, 46. 86 Davis v. Wright Health Group [1988] RPC 403 may lend support to such a view. Cf. Metix v. Maughan

[1997] FSR 718, 721.

87 Laddie et al. favour the rationalization based on originality. 88 Cf. Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275.

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Fig. 3.1 The defendant’s poster (created by Mr. Langford) 5.1.2 Drawings The next type of subject protected as an artistic work under section 4(1)(a) is

drawings. In addition to the etchings and sketches that we expect to be classified as drawings, protection has been granted to the drawing of a hand on a how to vote card,” typeface design,” architects’ plans (as distinct from actual buildings), and sketches for dress designs.?! Because protection is granted ‘irrespective of artistic quality’, copyright in drawings has been widely used to protect industrial designs. Thus drawings of exhaust pipes, boxes for storing kiwifruit, and the like have been protected.” Importantly, such protection has frequently prevented the copying of the 89 Kenrick v. Lawrence (1890) 25 QBD 99. 90 Stephenson Blake & Co. v. Grant, Legros & Co. (1916) 33 RPC 406.

91 Bernstein v. Murray [1981] RPC 303. %2 British Leyland v. Armstrong [1986] RPC 279; Plix Products v. Frank Winstone [1986] FSR 92 (NZ).

SUBJECT MATTER

65

(three-dimensional) designed artefact itself. As we will see later, section 51 of the 1988

Act has reduced the significance of copyright in drawings for three-dimensional designs, other than for designs for artistic works.”? 5.1.3. Engravings Engravings were first protected by copyright in 1735. For the most part, the way the law has developed since then has provided few surprises: protection being granted to etchings, aquatints, woodcuts, lithographs, and the like. In the last twenty or so years, however, a range of somewhat surprising objects have been protected as engravings.” For example, in Wham-O v. Lincoln Industries the New Zealand Court of Appeal held that both the mould from which a frisbee was pressed and the frisbee itself were engravings.”° In a number of more recent cases, however, the courts have begun to

move away from the formalistic reading of engraving that was used in Wham-O. For example, the Australian Federal Court declined to hold that the drive mechanism of a lawnmower was an engraving.”° As Pincus J said: It is true that the dictionary definition of engraving refers to cutting, but it is not all cutting which is engraving . . . The term does not cover shaping a piece of metal or wood on a lathe, but has to do with marking, cutting or working the surface—typically the flat surface—of an object ... No consideration of policy, or other orthodox approach, could justify straining the English language so far as to call the moulds [of a lawnmower engine] engravings.”

Given that this decision is in line with the approach British courts have taken towards sculptures, it is likely to be followed in the UK. 5.1.4 Photographs Although photographs were protected by copyright shortly after photography was invented in the 1840s,”* copyright law has never been completely comfortable with photographs,” primarily because they seem to be ill-suited to the paradigm of the

93 See below at pp. 626-8. 94 In James Arnold v. Miafern [1980] RPC 397, it was held that the term engraving not only covered the articles made from a block but also the block itself. See also Martin v. Polyplas [1969] NZLR 1046 (coin is an engraving).

9° [1985] RPC 127. 96 Greenfield Products v. Rover-Scott Bonnar (1990) 17 IPR 417 (Fed. Crt. Australia). 97 (1991) 95 ALR 275. In Talk of the Town v. Hagstrom (1991) 19 IPR 649, 655, Pincus J qualified the suggestion that an engraving must be on a 2-dimensional surface.

98 1862 Fine Art Copyright Act. See S. Ricketson, The Berne Convention for the Protection of Literary and Artistic Works (1987), paras. 6.33-43 (protected since beginning, enumerated since 1948). In contrast, Edelman has described how French law was caught out by the emergence of photography in the mid-19th century: B. Edelman, Ownership of the Image (1979); J. Gaines, Contested Culture: The Image, the Voice and the Law (1992), ch. 2.

99 The question of what was an ‘original photograph’ was treated as problematic in Graves Case (1869) LR 4 QB715 and the idea of the ‘author’ of aphotograph was grappled with in Nottage v. Jackson (1883) 11 QB 627, 630 per Brett MR (holding that the author of the photograph was the person who was the effective cause of the picture, that is, the person who superintended the arrangement).

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‘original’ and the ‘copy’.'°° Photographs are defined in the 1988 Act as ‘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’.!°! The definition is broad enough to include digital photographs (where there is no film). Film stills are not treated as photographs.” 5.1.5 Sculpture

Sculptures were one of the earliest kinds of artistic works to be protected from reproduction. The recognition of copyright in sculptures in 1798 is notable because it took ‘copyright’ (in so far as such a concept existed at that time) out of the realm of printing (books, engravings, or calico printing) to cover reproduction more generally. When most people think about sculptures, they may think of a work by Henry Moore displayed in the Tate Gallery, or a statute of Queen Victoria in a town square. While it will come as no surprise to learn that these would qualify as sculptures, it might come as a surprise to learn that for the purpose of copyright law that in WhamO Manufacturing v. Lincoln the New Zealand Court of Appeal held that the wooden model which was used as a mould to make the frisbees was ‘a sculpture’. However, the

court declined to hold that the frisbee itself was a sculpture, since it was created by injecting plastic into a mould and was thus not the product of a sculptor.’ In recent years, the courts have construed the term sculpture more narrowly. For example, in Metix v. Maughan'™ Laddie J said that ‘sculpture’ should be construed narrowly. He added that ordinary usage of the term requires that the maker be concerned with shape and appearance rather than just with achieving a precise functional effect. Consequently, Laddie J held that the argument that moulds for making functional cartridges in the shape of double-barrelled syringes were protected as sculptures had no prospect of success. A similarly restrictive interpretation of the term

was adopted by Falconer J in Breville Europe v. Thorn EMI when he said that the term ‘sculpture’ was to be given its ordinary dictionary meaning. Despite this, Falconer J concluded, rather surprisingly, that copyright would protect scallopedshaped moulds that were used in toasted sandwich-makers as sculptures. Given that sculpture is defined to include ‘a cast or model made for the purposes of sculpture’, it would seem reasonable to expect that a clay bust created by a sculptor would be protected, even before a negative is cast in plaster of Paris and the positive bronze is made from that cast. However, in Davis (Holdings) v. Wright Health Group, it was held that a cast for dental impression trays was not a ‘model or cast intended for 100 K. Bowrey, ‘Copyright, Photography and Computer Works—The Fiction of an Original Expression’ (1995) 18 University ofNew South Wales Law Journal 278.

101 CDPA s. 4(2). Whether something is a photograph may also be important because of CDPA s. 30(2) and CDPA s. 62. 102 Spelling Goldberg Productions v. BPC Publishing [1981] RPC 283, 288, 297, 298, 300 (single frames from Starsky and Hutch were not photographs but part of a film under CA 1956). 103, Wham-O v. Lincoln Industries [1985] RPC 127, 157. 104 [1997] FSR 718, 722.

105 [1995] FSR 77, 94.

SUBJECT

MATTER

67

the purposes of sculpture’ since the cast was made in plasticine and was thus not intended to be permanent.!” In so far as this decision restricts the scope of the subject matter protected as a sculpture, it is in line with recent decisions. However, it has been suggested that the reasoning used in Davis may be erroneous since if it were applied in other contexts it would exclude subject matter, such as ‘ice sculptures’, that ought

otherwise to be protected.!”

5.2

WORKS

OF ARCHITECTURE

The second subcategory of artistic works listed in the Act is ‘works of architecture’: section 4(1)(b).

A work of architecture is defined in the 1988 Act as a building or a

model for a building.'° In turn, a building is defined as including ‘any fixed structure, and a part of a building or fixed structure’. It should be noted that copyright also exists in the architect’s plans as drawings. One question that has arisen is whether buildings include things such as greenhouses, Portakabins, and swimming pools that are built off-site.'°” The main obstacle to protection is that a building is defined as a fixed structure.'!? While this was apparently intended to prevent ships from being protected as works of architecture, the status of articles which are not fixed when they are created, but which are intended to be subsequently fixed or permanently placed, is unclear. In an Australian case, the Supreme Court of the Northern Territory held that a plug and mould used for manufacture of pre-cast fibreglass swimming pools were protected by copyright.'!! Explaining that there was no single test for what is a building, Mildren J said that a number of factors needed to be considered. These included the size of the structure, its proposed use, whether it is fixed or portable, and its degree of permanence. As a result he

concluded that while neither the plug nor the mould were buildings, the pools were. This was because the pools were manufactured off-site and were capable of being removed. In contrast to other types of artistic works, there is no requirement that architectural works (and works of artistic craftsmanship) should be protected ‘irrespective of artistic quality’. This seems to suggest that when deciding whether subject matter qualifies as an architectural work (or as a work of artistic craftsmanship) we should consider whether the work is a work of architecture (or artistic 106 J. & S. Davis (Holdings) v. Wright Health Group [1988] RPC 403. 107 Metix v. Maughan [1997] FSR 718, 721; Laddie et al., para. 3.25. 108 CDPA s. 4(1)(b). Copyright protection for works of architecture was first introduced under the 1911

Act; most probably to give effect to the Berlin Revision of the Berne Convention. S. Ricketson, The Berne Convention for the Protection of Literary and Artistic Works (1987), para. 6.31—2. (Although not referred to in 1886, pressure from particular nations and interest groups spearheaded by an article by Jules Borchgrave [1890] Droit D’Auteur 13, led to their recognition which occurred at the Berlin Revision in 1908.) 109 See also Half Court Tennis (1980) 53 Federal Law Report 240 (half-size tennis court made of concrete

slab with posts was a work). 110 CDPA s. 4(2) (but note the provision says ‘building’ includes ‘any fixed structure’). 111 Darwin Fibreglass v. Kruhse Enterprises (1998) 41 IPR 649.

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craftsmanship); and if so, whether it is it sufficiently artistic. However, the courts have accepted that a work of artistic craftsmanship must by its very nature be sufficiently artistic to attract copyright. The position in relation to architectural works is less clear. If buildings are only protected if they are artistic, it is unlikely that designs for things such as swimming pools would be protected.'’? One factor that suggests that for a work to qualify as a work of architecture it must also be ‘artistic’ is that, in contrast to section 4(1)(a), there is no explicit statement that such works are to be protected

‘irrespective of artistic quality’. However, this interpretation is difficult to square with the legislative history. While under the 1911 Act a work of architecture had to satisfy a qualitative threshold in order to be protected, this was removed under the 1956 Copyright Act. This would suggest that under the 1988 Act the legislature intended that there was no need for a work of architecture to be ‘artistic’ for it to be protected. Unfortunately, the Act is ambiguous. 5.3

WORKS

OF ARTISTIC

CRAFTSMANSHIP

The final category of artistic works listed in the Act is ‘works of artistic craftsmanship’: section 4(1)(c). The legislative origins of this category of works, which first appeared in the 1911 Copyright Act, are obscure.'!* Works of artistic craftsmanship cover creations such as handcrafted jewellery tiles, pots, stained-glass windows, wrought-iron gates, hand-knitted jumpers, and crocheted doilies. In order for a work to fall within this category, it is necessary to show that the work is ‘artistic’ and that it is a work of ‘craftsmanship’. We will deal with each in turn. 5.3.1 The requirement of ‘artistic quality’ A work will only qualify as a work of artistic craftsmanship if it is ‘artistic’: that is, if it has an element of real artistic or aesthetic quality.'’* This approach is unusual in copyright law because it requires the courts to consider whether the work satisfies the qualitative threshold of being artistic. The question of what is meant by a work of artistic craftsmanship was discussed by the House of Lords in Hensher v. Restawile Upholstery.''° As the defendants conceded that the claimant’s prototype of a massmarket upholstered chair was a work of craftsmanship, the only question to be determined was whether the chair was a work of artistic craftsmanship. While all their 112 See Fellner, paras. 2.159-160. ‘13 In George Hensher v. Restawile Upholstery (Lancs) [1976] AC 64 Lord Simon said that ‘when Parliament, in 1911, gave copyright protection to “works of artistic craftsmanship” it was extending to works of applied art the protection formerly restricted to works of the fine arts, and was doing so under the influence of the Arts and Crafts movement.’ That movement, which dated from the 1860s and was led by William Morris, emphasized the importance of handicraft techniques in the applied or decorative arts, restoring the handicraftsman to his creative role in society. However, Lord Simon argued that, given the context, the choice of the word ‘craftsmanship’ rather than ‘handicraft’ was a deliberate indication that the provision was not to be limited to handicraft or exclude products of machine production. "4 Cuisenaire v. Reed [1963] VR719, 730; Hensher v. Restawile Upholstery (Lancs) [1976] AC 64, 77, 78, 81, 85, 86, 96; Merlet v. Mothercare PLC [1986] RPC 115 and Bonz Group v. Cooke [1994] 3 NZLR 216, 222. 115 George Hensher v. Restawile Upholstery (Lancs) [1976] AC 64.

SUBJECT MATTER

69

Lordships agreed that the chair was not artistic, they all differed in their explanations as to why. Lord Reid said that objects could be said to be artistic if a person gets “pleasure or satisfaction ... from contemplating it’. As a result, Lord Reid said that the test to decide whether a work was artistic was whether ‘any substantial section of the public genuinely admires and values a thing for its appearance and gets pleasure or satisfaction, whether emotional or intellectual, from looking at it.’ Lord Reid said that ‘look-

ing nice appears to me to fall short of having artistic appeal’. While the intention of the author that the resulting product is artistic may be important, Lord Reid said it was neither ‘necessary or conclusive’. Since there was no evidence that anyone regarded the furniture in issue as artistic, Lord Reid concluded that the prototype was not protected by copyright. Lord Morris said that in this context, the word ‘artistic’ required no interpretation.

However, he acknowledged that as the question of whether a particular artefact was artistic was a matter of personal judgement, courts might be faced with differences of opinion. Because of this, Lord Morris said that a court should look to see if there was a

general consensus of opinion ‘among those whose views command respect’. The views of the artist and the person acquiring the object might act as pointers as to whether something is artistic. However, the question was ultimately one for the court, guided by evidence (particularly of specialists). Since the most favourable thing that had been said about the prototype chair was that it was distinctive, Lord Morris was content to conclude that it was not artistic. Lord Kilbrandon said the question whether something was a work of art depended on whether it had come into existence as the product of an author who was con-

sciously concerned to produce a work of art. For Lord Kilbrandon, this must be judged from the work itself and the circumstances of its creation. A work did not become a work of art as a result of the opinions of critics, or the public at large. As a consequence, expert evidence was irrelevant. Instead, it was for the judge to determine whether the author had the “desire to produce a thing of beauty which would have an artistic justification for its own existence’. Since in the case in hand the objective was to produce a commercially successful chair, it was not a work of artistic craftsmanship. In deciding whether a craftwork was artistic, Viscount Dilhorne explained that this was really a question of fact for the court to answer. As such, he declined to elaborate much further on the meaning of artistic. He did say, however, that a work would not be artistic merely because there was originality of design, but that it could be artistic even if it was functional. Viscount Dilhorne said that while expert evidence and public opinion would be relevant, in the end it seems that Viscount Dilhorne preferred to act

on his own intuition as to what was a ‘work of art’. However, since no witness had described the chair as a work of art, he said that this was not even a borderline case:

the prototype was not protected by copyright. Lord Simon took a rather different approach from his colleagues, in so far as he emphasized that it was the craftsmanship rather than the work that must be artistic. Lord Simon also said that the fact that the work ‘appeals to the eye of the beholder,

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giving him visual pleasure’ was irrelevant. Examples of ‘artistic craftsmen’ included hand-painters of tiles, the maker of stained-glass windows, and wrought-iron gates, but not ‘plumbers’. Lord Simon said that many craftsmen fell into an intermediate category: some of their products being the result of artistic craftsmanship, while others were the product of craftsmanship. In making the decision as to whether a particular object was created by a person who was an “artist craftsman’, Lord Simon took the view that ‘the most cogent evidence is likely to be either from those who are themselves acknowledged artistic-craftsmen or from those who are concerned with the training of artist-craftsmen—in other words, expert evidence.’ Lord Simon added, however, that the crucial question was ‘the intent of the creator and its result’. Like the other Law Lords, he found the application of his test to the facts relatively easy: none of the experts had regarded the settee as exhibiting anything more than originality of design and appeal to the eye. The settee was an ordinary piece of furniture, and not an example of artistic-craftsmanship. The question of what is meant by an ‘artistic’ work was also considered in Merlet v. Mothercare,''® where Walton J had to decide whether a baby’s cape made by Madame

Merlet was a work of artistic craftsmanship. In so doing, he had to decide which of the many ‘different and apparently irreconcilable’ tests employed in Hensher to follow. After reviewing the judgments, Walton J said that the majority in Hensher had held that the relevant question in determining whether a work was artistic was whether the object in question was a work of art.'!” However, given the warning not to exercise a value judgment, he concluded that in the first instance the question is whether the artist-craftsman intended to create a work of art. If the intention was present and the creator had not ‘manifestly failed’ in this regard, then the work was a work of art.!!® As Madame Merlet had not set out to create a work of art, but instead had utilitarian

considerations in mind (she hoped the cape would shield her son from the rigours of the climate when visiting her mother in the Scottish Highlands), Walton J concluded that the baby cape was not a work of artistic craftsmanship. The suggestion in Merlet that the starting point for deciding whether a work was artistic was the intention of the craftsperson is problematic in that it renders the fate of a work dependent upon the self-conceptions of the author. It is also problematic in that it seems to make protection dependent upon the status of the creator. Indeed, Walton J noted that when a previously unrecognized artist-craftsman claims to have created a work of art, the court may well look upon that claim ‘with just suspicion’. In contrast, ‘it will be much easier to recognize the claim if the craftsman is already a recognized artist.’ Such a status-related approach seems to build into copyright a questionable discrimination between creators and hence a failure to treat all creators with equal respect.

116 Merlet v. Mothercare [1986] RPC 115. The Court of Appeal (at 129 ff.) only considered issues relating to infringement of copyright in Mme Merlet’s drawings. 17 Tbid., 125-6 citing Viscount Dilhorne, Lord Simon, and Lord Kilbrandon.

118 Bonz Group v. Cooke [1994] 3 NZLR 216, 223-4 (High Court of New Zealand).

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MATTER

71

5.3.2 The requirement of ‘craftsmanship’ As well as showing that the work is artistic, it is also necessary to show that it is a work of ‘craftsmanship’. In Hensher v. Restawile Lord Simon defined a work of craftsmanship as presupposing ‘special training, skill and knowledge’ for its production. He also said that it implied ‘a manifestation of pride in sound workmanship’. A rather different definition was provided by Lord Reid, who referred to a work of craftmanship as ‘a durable, useful handmade object’. Lord Reid seemed to suggest that if the defendant had not conceded that the prototype was a work of craftsmanship, he would not have been inclined to that view. This was because the prototype, which was a flimsy, temporary, knock-up which had subsequently been destroyed, was better described as a step in a commercial operation’ with no value of its own rather than as a work of craftsmanship.''? While wooden rods (used to teach addition and subtraction to children) have been held not to be products of craftsmanship,'”° knitting has been held to be a craft;!?! and the baby’s cape in Merlet v. Mothercare was said to be ‘very much on the borderline’.!” One problem with the courts’ failure to provide a helpful definition of craftsmanship is that it is unclear whether the work needs to be handmade to be protected. In Hensher v. Restawile, Lord Reid and Viscount Dilhorne suggested that craftsmanship implied that it was handmade.’”* In contrast, Lord Simon said that ‘craftsmanship’ could not be limited to handicrafts, nor was the word ‘artistic incompatible with

machine production.’* The approach of Lord Simon was recently followed by the Federal Court of Australia in Coogi Australia v. Hysport International.'”? There, Drummond J held that the stitch structure of a fabric made up of different yarns (used to make jumpers), which was constructed in such a way as to produce a mixture of textured surfaces—some flat, some rolled, some protruding —was a work of artistic

craftsmanship. Drummond J said that the way the designer had used the stitch structures and colour to produce an unusual textured and multi-coloured fabric meant that the design was artistic. This was so even though the design was mass-produced and had been formulated on a computer, rather than using traditional craft techniques.'”° As regards the issue of mass-production, Drummond J reviewed the 119 George Hensher v. Restawile Upholstery (Lancs) [1976] AC 64, 77. 120 In Cuisenaire v. Reed [1963] VR719 (Supreme Court ofVictoria); Komesaroffv.Mickle [1988] RPC 204,

210 (Supreme Court of Victoria) chosen amounts of selected sands, craftsmanship in performing those 121 Bonz Group v. Cooke [1994] 122 [1986] RPC 115, 122.

held that while assembling picture windows and dispensing into them liquid, and a bubble-producing substance might be artistic, there was no acts. 3 NZLR 216 (NZ High Court).

123 George Hensher v. Restawile Upholstery (Lancs) [1976] AC 64, 77 (Lord Reid ), 84 (Viscount Dilhorne:

made by hand and not mass-produced).

124 Thid., 90. 125 (1999) 157 ALR 247 (Fed. Crt. of Australia).

126 “There is no necessary difference between a skilled person who makes an article with hand-held tools and a skilled person who uses those skills to set up and operate a machine which produces an article. Such an article can still be a work of craftsmanship even though the creator has used a highly sophisticated computercontrolled machine to produce it, if nevertheless it is a manifestation of the creator’s skill with

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authorities and found that he preferred Lord Simon’s approach in Hensher v. Restawile. To hold otherwise, he said, would be to import a Luddite philosophy into copyright legislation which was enacted against a background of modern industrial organization and was intended to regulate rights of value to persons in the area of activity. As Drummond J’s approach presents a realistic and workable approach to this issue, hopefully it will be followed in the UK. Another aspect of the notion of artistic craftsmanship that has proved to be problematic is whether the requirements of artistic quality and craftsmanship must emanate from the same person. In Burke v. Spicer’s Dress Designs'*’ Clauson J suggested as much when he said that a woman’s dress was not a work of artistic craftsmanship because the artistic element (the sketch of the dress) did not originate from the person

who made the dress (the dressmaker).'"8 However in Bonz Group v. Cooke”? the New Zealand High Court held that hand-knitted woollen sweaters depicting dancing lambs and golfing kiwis was a work of artistic craftsmanship: the handknitters being craftspersons and the designer an artist. Tipping J observed that there are some passages in the authorities that suggest that it is essential that the same person both conceive and execute the work. For myself I do not regard that as being necessary. If two or more people combine to design and make the ultimate product I cannot see why that ultimate product should not be regarded as a work of artistic craftsmanship.'°°

One problem with the conclusion in Bonz Group v. Cooke is that it is difficult to reconcile with the conventional understanding of ‘joint authorship’ in section 10 of the 1977 Act, which requires the ‘collaboration’ of two or more authors. The consequence of this is that while two people (an artist and a craftsperson) who are unknown to each other may create a work of artistic craftsmanship, they may not be considered to be co-authors of that work: a perplexing result.

6

FILMS

Moving pictures were first produced towards the end of the nineteenth century. Initially, films were only indirectly protected in the UK as series of photographs!*! or computer-controlled machinery, knowledge of materials and pride in workmanship.’ For similar reasoning in relation to computer-related literary works, see Whitford J in Express Newspapers v. Liverpol Daily Post [1985] FSR 306.

;

127 [1936] 1 Ch 400, 408.

128 This approach is consistent with the views of Lord Simon in George Hensher Ltd. v. Restawile Upholstery (Lancs) [1976] AC 64 to the effect that a work of artistic-craftsmanship is the work of a person who is an

‘artist-craftsman’. 129 Bonz Group v. Cooke [1994] 3 NZLR 216 (High Court of New Zealand). See also Spyrou v. Radley [1975] FSR 455; Bernstein v. Sydney Murray [1981] RPC 303; Merlet v. Mothercare [1986] RPC 115, 123-4. 130 Bonz Group v. Cooke [1994] 3 NZLR 216, 224 (High Court of New Zealand).

131 Barker v. Huton [1912] 28 TLR 496; Nordish Films v. Onda [1917-23] MacG C C337.

SUBJECT MATTER

73

as dramatic works.'*? At an international level, films were gradually recognized as the subject matter of authors’ rights protection. However, it was only with the rise of the

notion of the ‘director as author’ (or auteurism)'*’ that copyright law came to embrace films as copyright subject matter on a par with literary and artistic works.'*4 Under the 1988 Act, films are defined to mean a recording on any medium from which a moving image may be produced by any means.'*° This broad definition encompasses celluloid films and video recordings or disks.'*° Multimedia products may sometimes be protected as films.!*” The EC Duration and Rental Directives, which required directors to be recognized as authors, distinguishes between cinematographic works and related rights in mere fixations, so-called ‘films’ or ‘videograms’.'** This approach has not been followed in the UK where the 1988 Act only acknowledges one copyright work, a film. Provisions are made for circumstances where there is no principal director, nor any author of screenplay, dialogue or music.'*? Moreover, there is no requirement under UK copyright law that films be original, as is the case with literary, dramatic, musical, and

artistic works. However, it has now been accepted that films which would be ‘cinematographic works’ under the Berne Convention are also ‘dramatic works’ under UK copyright, of which at least the director and scriptwriters may be co-authors.!*° The soundtrack accompanying a film is treated as part of the film. As we will see, there is no reason why such a soundtrack would not also qualify as a sound recording. This leads to a potential problem of overlap. Section 5B(3) clarifies the position by stating that (i) references to the showing of a film include playing the film soundtrack to accompany the film and (ii) references to playing a sound recording do not include playing the film soundtrack to accompany the film. Consequently if a cinema wished 132 Pp Kamina, ‘Authorship of Films and Implementation of the Term Directive’ [1994] EIPR 217. Films were registered as series of photographs at the Stationers’ Company, as required under the Fine Art Copyright Act 1862. 133M. Salokannel, ‘Film Authorship in the Changing Audio-visual Environment’ in B. Sherman and A. Strowel (eds.), Of Authors and Origins: Essays on Copyright (1994), ch. 3. 134 Prior to the amendments in 1996, copyright in films was treated in a similar manner to that in sound recordings and broadcasts, with the producer being designated as the sole ‘author’. Films now have a hybrid status under CDPA s. 9(2)(ab) which gives the principal director joint authorship with the producer of films made on or after 1 July 1994.

135 CDPA s. 5B(1). Cf. CA 1956, s. 13(10) and Spelling Goldberg Productions v. BPC Publishing [1981] RPC 283. (Film has three characteristics: sequence of images, recorded on material, capable of being shown as a moving picture.) 136 Television New Zealand [1994] 2 NZLR 91 (High Court of New Zealand) (holding that videotape is a species of ‘cinematographic film’).

137 M. Turner, ‘Do the Old Legal Categories Fit the New Multimedia Products? A Multimedia CD Rom as a

Film’ [1995] EIPR 107. 138 See below at pp. 113-14. 139 CDPA s. 13B(9). For an argument that this fails to implement the Directives see P. Kamina, ‘British Film Copyright and the Incorrrect Implementation of the EC Copyright Directives’ [1998] Ent LR 109.

140 Norowzian v. Arks [2000] EMLR 67. This had been suggested in P. Kamina, ‘Authorship of Films and Implementation of the Term Directive’ [1994] EIPR 217; ‘British Film Copyright and the Incorrect Implementation of the EC Copyright Directives’ [1998] Ent LR 109. For criticism, see T. Rivers, ‘Norowzian Revisited’ [2000] EIPR 389 (arguing that the case creates problems identifying the author).

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to show a film which included a soundtrack, the cinema would only need to obtain rights clearances from the owner of copyright in the film.'*! In contrast, where the soundtrack is played without the moving images, for example on a jukebox in a pub, it

is only necessary to obtain the consent of the right-holder in the sound recording of

the soundtrack.”

7 SOUND

RECORDINGS

Sound recordings were first given protection under the 1911 Copyright Act where they were protected as musical works.'** It soon became apparent that sound recordings were fundamentally different from musical works. The change of attitude was summed up in Gramophone Company v. Stephen Cawardine'** where Maugham J considered the creative contribution to the gramophone record “Overture to the Black Domino’. He said [I]t is not in dispute that skill, both of a technical and of a musical kind is needed for the making of such a record as the one in question. The arrangement of the recording instruments in the building where the record is to be made, the building itself, the timing to fit the record, the production of the artistic effects . . combine together to make an artistic record, which is very far from the mere production of a piece of music.'*

These sentiments are now reflected in the 1988 Act, where sound recordings are defined to mean ‘(a) a recording of sounds, from which the sounds may be reproduced’, or ‘(b) a recording of the whole or any part of a literary, dramatic or musical work, from which sounds reproducing the work or part may be produced, regardless of the medium on which the recording is made or the method by which the sounds are reproduced or produced.’ It thus covers vinyl records, tapes, compact discs, digital audiotapes, and MP3s which embody recordings. As the definition of sound recording requires that there be ‘sounds’, it appears to exclude a single sound from protection (even though a considerable amount of production work may go into its recording).'*” Interesting questions have also arisen as to how the limits of a sound recording are to be determined. We review these issues '41 See also P. Kamina, ‘The Protection of Film Soundtracks under British Copyright after the Copyright Regulations 1995 and 1996’ [1998] Ent L R 153.

142 CDPA s. 5B(2)-(3). M43 Panayiotou v. Sony Music Entertainment [1994] EMLR 229, 348 (brief history of recorded music). Gaines has argued that print-based concept of copyright had difficulties accommodating sounds. This was clearly not the case in the UK. See J. Gaines, Contested Culture: The Image, the Voice and the Law (1992). 144 [1934] 1 Ch 450.

145 Tbid., 455. 146 CDPA s. 5B(1).

147 P. Theberge, “Technology, Economy and Copyright reform in Canada’, in S. Frith (ed.), Music and Copyright (1993), 53; S. Jones, ‘Music and Copyright in the USA’, in S. Frith (ed.), Music and Copyright

(1993), 67.

SUBJECT MATTER

75

when we look at copyright infringement.'“* Because sound recordings exist irrespective of the medium on which the sounds are recorded, a soundtrack of a film is a sound

recording. However, the soundtrack of a film will also be treated as part of the film in so far as the soundtrack ‘accompanies’ the film.'"? The effect of this is the public showing of a film and its soundtrack only requires the consent of the owner of copyright in the film.'°° In contrast, where the soundtrack is played without the moving images'*! this would only require the consent of the holder of rights in the sound recording.!**

8 SOUND

AND

TELEVISION

BROADCASTS

Broadcasts were first included as copyright works in the 1956 Copyright Act. Subsequently, they were deemed to be suitable subject matter of protection by neighbouring rights at the 1961 Rome Convention.'°*!** The decision to extend copyright protection to broadcasts marked an important change in copyright law. In contrast with art, literature, films, and recordings, a broadcast is essentially the provision of a service which involves a communication: it is the not the creation of a thing, but an action. This is because broadcasts are not fixed or embodied (though they can be), they are ephemeral acts of communication. This means that a broadcast does not protect any fixed entity per se. Instead, what are protected are the signals which are transmitted. In a sense copyright law recognizes the value in the act of communication itself, as distinct from the content of what is being communicated. Under the 1988 Act, a ‘broadcast’ is defined as a transmission by wireless telegraphy of visual images, sounds, or other information which is capable of lawful reception by the public or which is made for presentation to the public." Broadcasts thus cover radio, television, and other broadcasts (such as teletext), as well as both analogue and 148 Hyperion Records v. Warner Bros (unreported). The case concerned an application for summary judgment by Hyperion against Warner Bros which had reproduced on an album by The Beloved samples of recordings in which the plaintiff owned copyright. The plaintiff argued that the samples were themselves works, so that there could be no argument over whether the defendant had appropriated a ‘substantial part’, since it had used the whole work. Judge Hugh Laddie QC refused summary judgment. 149 This gives effect to Duration Directive Art. 3, which required that the term ‘film’ be defined as ‘a cinematographic or audiovisual work or moving images, whether or not accompanied by sound’.

150 CDPA s. 5B (3)(a). 151 CDPA s. 5B(3)(b). 152 Contrast the current position with the position under the 1988 ‘sound recordings’ and ‘films’ were mutually exclusive. This meant that required the consent of both the copyright holder in the moving images soundtrack. 153 Rome Art. 6, Art. 13, Art. 14, Art. 16(1)(b). Broadcasts were not Treaties.

Act as initially enacted where the showing of a film in public and the copyright owner of the

the subject of the recent WIPO

154 TRIPs Art. 14(3). The UK is also party to the European Agreement of 1960 on the Protection of Television Broadcasts.

+5 (CDP 5 6(1).

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digital broadcasts. Broadcasts differ from cable primarily in the manner of their transmission: the latter are sent down a wire rather than over the airwaves.!*° The definition of broadcast covers both terrestrial and satellite transmission. It also takes into account the forms of satellite broadcasting which may be directly received by individuals or may be received by subscribers who obtain a decoder.!%”

9 CABLE

PROGRAMMES

Cable programmes have been protected by copyright since 1 January 1985.'** ‘Cable programmes’ are defined to mean any item included in a cable programme service. That is, a service which exists wholly or mainly in sending visual images, sounds, or other information by means of a telecommunication system, otherwise than by wireless telegraphy, for reception either (a) at two or more places (not necessarily simultaneously) or (b) for presentation to members of the public.’ In addition to familiar cable television services, a cable programme service might include a non-interactive on-line database service.!© A number of exceptions exist to the definition of cable programme services. One of these, the so-called ‘interactivity exception’, provides that cable programme services do not include a service of which it is an essential feature that information may be sent from each place of reception by the receiver for reception either by the provider or other recipients. This excludes interactive systems such as teleshopping. While it might have been assumed that the interactivity exclusion would have excluded most Internet activities,'®' in the Shetland Times case it was held that it was arguable that a newspaper website which was linked to another site was a cable programme service.! The court also accepted that it was arguable that the interactivity exclusion would only apply to those sites where receivers can add material or otherwise modify information. While readers were able to comment on the news service, the primary function of the site was to distribute information. As such, the service fell outside the interactivity exception.

Other services which fall outside the definition of cable programme

services

relate to internal business services, individual domestic services, services on single-

occupier premises otherwise than by way of business amenity, and services for those

156 On telextext see Laddie et al., para. 7.33.

197 That is, any encrypted broadcast, whether terrestrial or by satellite relay, is awfully’ received if decoding equipment has been made available through the person transmitting it in encrypted form. CDPA s. 6(2). 158 Cable and Broadcasting Act 1984, s. 22, adding CA 1956, s. 14A. Although diffusion services existed in 1956, they merely relayed BBC and ITA broadcasts to subscribers in areas where the signals were weak.

15? (CDPA s.-7(1). 160 Dun & Bradstreet v. Typesetting Facilities [1992] FSR 320.

POISED PAYS. 7(2). 162 Shetland Times v. Dr Jonathan Wills [1997] FSR 604.

SUBJECT MATTER

yi

running broadcasting or cabling services or programmes for them.'®’ These operate to exclude things such as Intranets.' There is also no copyright in a cable programme

that consists of reception and immediate re-transmission of a broadcast.'©°

10

PUBLISHED

EDITIONS

The final category of works that are protected by copyright is ‘typographical arrange-

ments of published editions’. This category of works was first introduced in 1956.'° A ‘published edition’ means ‘a published edition of the whole or any part of one or more literary, dramatic or musical works’.'®’ In this context, the copyright in the published edition protects the image on the page of literary, dramatic or musical works. In so doing, it protects the publisher’s investment in typesetting, as well as the processes of design and selection that are reflected in the appearance of the text.’ There is no requirement that the published edition must be a previously unpublished work. It therefore covers modern editions of public domain works (such as the complete works of Shakespeare), and prohibits the reproduction of the layout (but not the work itself). It should be noted that the concept of reproduction of a typographical arrangement is extremely narrow, being restricted to facsimile reprography. Consequently, the reproduction of the material contained in a published work will not infringe this limited copyright where a different layout is employed. It has been suggested that typographical arrangements may also be protected as ‘photographs’.' EeOSEDPA s. 7(2). 164 That is systems of electronic communication linking terminals within a single business or location.

165 CDPA s. 7(6)(a). a

166 CA 1956 s. 15. See Report of the Copyright Committee (Cmd. 8662), para. 306-10. 167 CDPA s. 8(1). Cf. Art. 5 Duration Directive which permits member states to create a publishers’ right in critical and scientific works which have fallen into the public domain. Cornish has suggested that this may require the UK to limit the scope of section 8. See Cornish, 3rd edn., 344 n.14. But this seems implausible: either the Directive has no impact on this issue, or it covers it and the UK should abandon the typographical arrangement copyright altogether. 168 Newspaper Licensing Agency v. Marks & Spencer [2000] 3 WLR 1256, 1281 (Mance LJ) (CA). 169 Laddie et al., para. 8.4. See also Sterling and Carpenter (1986), para. 244 (publishers have copyright in photographic plates used in printing process).

a CRITERIA

FOR

PROTECTION

1 INTRODUCTION In order for a work to be protected by copyright, it is necessary to show that as well as falling within one of the nine categories of works listed in the Act, that the work also satisfies the particular requirements that are imposed on it. As we will see, the requirements that need to be complied with vary, sometimes considerably, between different categories of works. (i) The first general requirement for copyright to subsist is that the work must be recorded in a material form. As we will see, this only applies to literary, dramatic, and musical works. (ii) The second requirement that must be satisfied for protection to arise is that the

work must be ‘original’. It should be noted that this only applies to literary, dramatic, musical, and artistic works. In contrast, there is no need for entrepreneurial works (sound recordings, films, broadcasts, cable programmes, and typographical arrangements) to be ‘original’ for them to qualify for protection. Instead the 1988 Act declares that copyright only subsists to the extent that such works are not copied from previous works of the same sort.! (iii) The third requirement that must be satisfied for a work to be protected, which applies to all works, is that it is necessary to show that the work is sufficiently connected to the UK to qualify for protection under UK law. (iv) The fourth requirement is that the work is not excluded from protection on public policy grounds. Occasionally the courts have said that works which are immoral, blasphemous, or libellous or which infringe copyright will not be protected. We will deal with each of these requirements in turn.

1 CDPA ss. 5(2), 6(6), 7(6), 8(2).

CRITERIA FOR PROTECTION

2 RECORDED

IN MATERIAL

79

FORM

There is no requirement that a work be registered for copyright protection to arise. Instead, the right arises automatically. However, the 1988 Act provides that copyright does not subsist in literary, dramatic, and musical works ‘unless and until’ the

works are ‘recorded in writing or otherwise’.? This is usually referred to as the requirement that the work be recorded in a material form. The fixation or recording

of creative ideas carries with it many benefits. Perhaps the most obvious legal benefits are evidential. While evidence that has not been recorded in some way is admissible, the law has always preferred evidence that is fixed (written, taped, or filmed) to oral evidence. The reduction of ideas to a material form also increases the

probability that a work may continue to be accessible beyond the death of its author. In many cases, there is no need for any special rules to be made to ensure that a work is recorded. The reason for this is that in the case of artistic works,’ works of

artistic craftsmanship,’ sound recordings, films, and published editions, expression ordinarily takes place in a recorded physical form. That is, it is impossible for someone to create, say, a sound recording or a film in a way in which it is not fixed. This is not the case, however, in relation to literary, dramatic, and musical works which can be expressed in ways in which they are not fixed or recorded: literary works can be spoken, musical works sung, and dramatic works performed. To rem-

edy this, section 3(2) of the 1988 Act states that copyright does not subsist in literary, dramatic or musical works unless and until they are recorded, in writing or otherwise (for example, on film).° Writing is defined to include any form of notation or code ‘regardless of the method by which, or medium in or on which, it is recorded’.®

There is no requirement that broadcasts and cable programmes be fixed or embodied in any particular form. Thus, broadcasts and cable programmes are protected whether or not the Broadcasting Authority makes a permanent version of

2 CDPA s. 3. 3 There is an area of uncertainty in the case of artistic works that are not fixed, such as a display of coloured lights. It could be argued that since fixation is not specifically required by the CDPA for artistic works that such a display could be protected. If so live televising of the display would infringe. The point remains to be decided by the courts. 4 But Komesaroff v. Mickle [1988] RPC 204 (a device consisting of a mixture of sand, liquid, and bubbleproducing substance did not qualify as a work of artistic craftsmanship). 5 CDPA s. 3(2). This clarifies any doubts that may have existed under the 1956 Act that recording on tape

was not sufficient. Green v. Broadcasting Corporation of New Zealand [1989] RPC 469; Northern Micro Computers v. Rosentein [1982] FSR 124 (Sup. Crt. of SA) (recording on floppy disc sufficient). Because the fixation of dramatic work no longer has to be in writing, it is arguable that films created under the 1988 Act embody dramatic works of which the director and scriptwriters are co-authors; Television New Zealand v. Newsmonitor Services [1994] 2 NZLR 91, 100 (High Court of Auckland).

® CDPA s. 178.

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them. Arguably, the ephemeral nature of broadcasts and cable programmes makes them one of the most intangible of all forms of intellectual property. The requirement that literary, dramatic, and musical works be recorded is rarely a

serious impediment to copyright protection. The reason for this is that the fixation requirement will be satisfied even if the recording is carried out by someone other than the creator (with or without their permission),’ whether the recorded form is in

the claimant’s hands, or has subsequently been destroyed.® Given that when someone infringes copyright they will normally have reproduced the work, and that parties unconnected with the creator can carry out the requisite recording, this means that in most cases the work will in fact have been recorded. One question that has arisen in relation to the fixation requirement concerns works that change form (such as databases or works of kinetic art).? While works that

continually change form may give rise to problems in other respects, it seems that as long as a work is recorded it will be protected, even though it may subsequently change form.

3 ORIGINALITY: LITERARY, DRAMATIC, MUSICAL, AND ARTISTIC WORKS Perhaps the most well-known requirement that must be satisfied for copyright protection to arise is that the work be ‘original’. It should be noted that this only applies to literary, dramatic, musical, and artistic works. In contrast, there is no need for

entrepreneurial works (sound recordings, films, broadcasts and cable programmes, and typographical arrangements) to be original for them to qualify for protection. Instead the 1988 Act declares that copyright only subsists to the extent that such works are not copied from previous works. (We look at this in the following section.) In order for a literary, dramatic, musical or artistic work to be protected by copy-

right it must be original.'° The originality requirement, which has been a general statutory requirement since 1911,'! sets a threshold that limits the subject matter

7 CDPA s. 3(3). 8 Lucas v. Williams & Sons [1892] 2 QB 113, 116; Wham-O Manufacturing Co. v. Lincoln Industries [1985] RPC 127, 142-5 (CANZ); Davis (Holdings) v. Wright Health Group [1988] RPC 403, 409. ° In Komesaroff v. Mickle [1988] RPC 204 King J held that a device consisting of a mixture of sand, liquid,

and bubble-producing substance did not qualify as a work of artistic craftsmanship. The device, when moved, produced pretty patterns. King J held that: ‘It must be possible to define the work of artistic craftsmanship on which she bases her action, and thus can be done only by a reference to a static aspect of what has been referred to by counsel as a “work of kinetic art”’.

10 .CDPA s. 1(1). '| Though the requirement was introduced for paintings, drawings, and photographs by the Fine Art Copyright Act 1862.

CRITERIA

FOR PROTECTION

81

protected by copyright law.'? It also functions to limit the duration of protection. It does this by preventing existing works from being the subject of further copyright protection in the absence of some additional contribution. Since this function could be achieved by requiring that the work must not already exist (as is the case with entrepreneurial works), it seems that the originality requirement is intended to do something more. What this is, however, is unclear.'* It is very difficult if not impossible to state with any precision what copyright law means when it demands that works be original.'* This uncertainty has been exacerbated by the fact that as part of the harmonization of copyright law in Europe, a new concept—that of the author’s own intellectual creation—is now used in the UK to

determine the originality of databases and arguably also computer programs and photographs. The meaning that is given to originality in copyright law is somewhat different from the way it is construed in other contexts. For the purposes of copyright law, originality does not mean that the work is inventive, novel or unique.’° Instead, when copyright says that a work must be original, this means that the author must have exercised the requisite labour, skill, or effort in producing the work.'* While the novelty requirement in patent law focuses on the relationship between the invention and the

!2 A contrasting school of thought has argued that originality excludes many works from copyright protection which are the product of valuable investment of time and effort. For example, exact replicas of paintings and unoriginal databases. Ginsburg has argued that in the USA the labour approach had primacy in the early years of copyright protection but has come to be surpassed by a more exacting ‘personality theory’ of originality. She argues that this is dangerous in that it results in denying copyright protection to works devoid of personality which are worthy of encouragement, in particular collections of facts. See J. Ginsburg, ‘Creation and Commercial Value: Copyright Protection of Works of Information’ (1990) 90 Columbia Law Review 1865. Ginsburg’s fears were confirmed by the Supreme Court’s decision in Feist v. Rural Telephone Services Co. Inc., 499 US 340 (1991) which required that for a work to be original it must have a ‘minimum level of creativity’ and not be solely the result of ‘labour’. 13 Tn so far as copyright provides incentives to create certain works, originality may be understood as limiting that incentive to certain kinds of meritorious works. For an example of a situation where the social value of the contribution was treated as influential see the speech of the Earl of Halsbury LC in Walter v. Lane [1900] AC 539, 549. Laddie et al., para. 3.38 analyse the same case in terms of the social benefit from preserving existent works for posterity or making them accessible. 14 §. Ricketson, ‘The Concept of Originality in Anglo-Australian Copyright Law’ (1991) 9(2) Copyright Reporter 1, 9. A plausible argument could be made that the originality requirement operates differently in relation to artistic work from the way it operates in relation to literary work. For example, in Interlego v. Tyco Industries [1989] AC217 Lord Oliver said it would be ‘palpably erroneous’ to apply the test of originality developed in relation to literary compilations in Ladbroke v. William Hill [1964] 1 All ER 465, namely that originality was dependent upon the degree of skill, labour, and judgment involved in preparing the compilation, to art works. Note also the New Zealand High Court decision holding that the US authority Feist v. Rural Telephone Services Co. Inc., 499 US 340 (1991) applied to literary works only and was therefore not a persuasive authority in the context of ‘artistic works’: Artifakts Design Group v. NP Rigg [1993] 1 NZLR 196, 214. 15 As Peterson J said in University of London Press v. University Tutorial Press [1916] 2 Ch 601, “The word original does not in this connection mean that the work must be the expression of original or inventive thought . .. The originality which is required relates to the expression of the thought. But the Act does not require that the expression must be in an original or novel form, but that the work must not be copied from another work—that it should originate from the author.’

'6 Lord Reid in Ladbroke v. William Hill [1964] 1 All ER 465, 469.

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state of the art, the originality examination is more concerned with the relationship between the creator and the work. More specifically, in determining whether a work is original, copyright law focuses on the input—the labour, skill or effort—that the author contributed to the resulting work.'” Before looking in more detail at how originality is determined, it is necessary to make a number of preliminary remarks.

3.1

PRELIMINARY

ISSUES

(i) The first point to note is that in most cases the requisite labour, skill, and effort

that is needed for a work to be original will be exercised in the way the work is expressed: in the way the paint is applied, the words are chosen and ordered, ideas executed, or the clay moulded. However, the originality of a work may arise in the steps preceding the production of the work (in the pre-expressive stage).'® That is, the labour that confers originality on a particular work may arise in the selection of the subject matter or the arrangement of the image that comes to be embodied in the painting. In other cases, such as with respect to literary compilations, the courts will consider the footwork involved in discovering the information,” or the selection or

choice of the materials that are later embodied in the work. This has been particularly important in relation to tables and compilations. (ii) It is important to appreciate that the question of whether a work is original often depends on the particular cultural, social, and political context in which the judgement is made. In part this is because originality turns on the way the labour and the resulting work are perceived by the courts. One of the consequences of this is that what is seen as original may change over time. A good example of this is provided by photography. When invented in the 1840s, photography was seen as a non-creative (and non-original) mechanical process whereby images were produced by exposing chemically sensitive materials to light. In the late nineteenth century, however, photography came to be seen as an artistic activity. As a result, photographs came to be seen as creative and thus potentially original works.”° Similar changes recently occurred in relation to the artistic works of Australian Aboriginals.”! The historical specificity of the originality examination means that we must be careful as to the conclusions we draw from earlier decisions. This can be seen for '7 To use Benjamin Kaplan’s terminology in An Unhurried View of Copyright (1965), the test in copyright is psychological, whereas in patents it is historical. '8 On another reading, three different factors have been taken into account: the relative importance of each depending on the subject matter in question. In certain situations, the courts have considered the quality of the labour. In other situations the courts have focused upon the quantity of labour that has been invested in the creation of the work. Where the labour is expended on a pre-existing work, the courts have paid attention to the effect that the labour has on the underlying work. 19 For example in Kelly v. Morris (1866) 1 Equity Cases 697 the author ‘needed to make time consuming enquiries and to write down the results with painstaking accuracy’. 20 B, Edelman, Ownership of the Image: Elements for a Marxist Theory of Law (1979); J. Gaines, Contested Culture: The Image, The Voice and the Law (1992).

21 See B. Sherman, ‘From the Non-original to the Aboriginal’, in Sherman and Strowell.

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FOR

PROTECTION

83

example, if we look at the 1900 decision of Walter v. Lane.”* In this case it was held that a newspaper report of an oral speech given by Lord of Rosebery, transcribed by a reporter from the talk, was an original work. This was because the reporter exercised considerable labour, skill, and judgement in producing a verbatim transcript of the speech. More specifically, the court said that the report was original since taking down the words of a person who spoke quickly was an art requiring considerable training.” It is possible that changes since 1900, notably the emergence of the tape recorder, may mean that the transcription of a speech will no longer be treated as labour that gives rise to an original work. (iii) The next point to note is that the originality threshold has been set at a very low level. It may come as a surprise for some to learn that the courts have accepted as original such things as railway timetables and exam papers (which were drawn from the stock of knowledge common to mathematicians, produced quickly, and included

questions similar to ones which had been previously asked by other examiners).”4 One of the consequences of the originality standard being set at a low level is that there have been relatively few instances where subject matter has been excluded on the basis that it was non-original. Most of the problems that have arisen have been in relation to tables and compilations, derivative works (that is, works which incorporate material

copied from another source), and industrial designs. Originality may be important, however, in so far as it plays a role in ascertaining whether a substantial part of a work has been taken (which is sometimes used to establish infringement). Originality has also played an important role in deciding whether new classes of works (photography in the nineteenth century and more recently Aboriginal art) ought to be protected by copyright law. There is also a possibility that the growing judicial suspicion about the over-extension of copyright may mean that originality comes to be used as a way of restricting the scope of the subject matter protected by copyright law. (iv) Non-division of the work. One of the most important and at the same time one of the most neglected issues in copyright law concerns the nature of the copyright work: particularly as to the way the boundaries of the work are to be determined. While we discuss this in more detail later,”° it is important to note that, while in an infringement action it is possible to divide a work into protected and non-protected parts, when considering whether a work is original, it is not possible to divide the work into elements. That is, when considering whether a work is original, the work must be 22 Walter v. Lane {1900] AC 539. This was decided under the 1842 Act and there was no specific requirement of originality, it has been treated as being ‘undeniably good law’. See Express Newspapers v. News UK [1990] FSR 359 (Browne-Wilkinson V-C).

23 The court also noted that considerable skili had to be invested in learning shorthand and that judgement was exercised in deciding how to convert spoken words and performance to written sentences, with suitable grammar. On the skills of the journalist see Walter v. Lane [1900] AC 539, 551-2 (Lord Davey); 554 (Lord James of Hereford).

24 University of London Press v. University Tutorial Press [1916] 2 Ch 209. Although widely referred to, Peterson J ’s comment that the work ‘should originate from the author’ offers little assistance when differentiating original and non-original works.

25 See below at pp. 160-2, 165-73.

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examined as a whole. This was made clear in Ladbroke v. William HilP® where the question arose as to whether football pools coupons (which listed matches to be played and offered a variety of bets arranged in sixteen categories) were original compilations. On the basis that the expressive form of the coupons inevitably followed from the prior commercial decisions as to the bets which should be offered, the appellants argued that the coupons were not original. The House of Lords rejected these claims. According to Lord Reid, it was incorrect to artificially divide the inquiry up, on the one hand into the commercial decisions about which bets to offer and, on the other, the form and arrangement of the table. The selection of wagers and their presentation was so interconnected as to be inseparable. Consequently, it was inappropriate to dissect the labour, skill, and judgement. 3.2

DETERMINING

WHETHER

A WORK

IS ORIGINAL

As we explained above, when copyright says that a work must be original, this means that the author must have exercised the requisite labour, skill, or effort in producing the work.” While patent law is concerned with the relationship between the invention and the information in the public domain, the originality examination is more concerned with the relationship between the creator and the work. This means that in determining whether a work is original, copyright law focuses on the input—the labour, skill or effort—that the author contributed to the resulting work. In creating a work an author will normally exercise labour, skill, and effort in a number of different ways. For example, in producing a portrait a painter may exercise ingenuity, time, and effort in the choice of subject matter (who, where, in what pose, against what background); in ensuring that the sitter is relaxed; stretching the canvas and making the frame; developing new techniques of painting; in ensuring that the paints and materials used are environmentally friendly; in the mixing of the colours; in choosing a title for the work; and in explaining the painting to critics and reviewers. While each of these steps may help to make the painting a success, only some of them will be taken into account in deciding whether the resulting work is original. The reason for this is as Lord Oliver said in Interlego ‘only certain kinds of skill, labour and judgement confer originality’.“* Thus, while it is clear that the originality arises through the labour, skill, and effort exercised by the creator (and the impact that this has upon the work), not all types of labour, skill, and effort will give rise to an original work. The difficult task is distinguishing the labour, skill, and effort that will give rise

to an original work from that which will not. In part these difficulties arise because the effort, skill or judgement which is needed to confer originality on a work cannot be defined in precise terms. This is because originality ‘must depend largely on the facts of the case and must in each case be very 26 [1964] 1 All ER 465, 469 (Lord Reid): Football League v. Littlewoods [1959] Ch 637, 656; Bookmakers’ Afternoon v. Gilbert [1994] FSR 723.

27 Ladbroke v. William Hill [1964] 1 All ER 465, 469 (Lord Reid). 28 Interlego v. Tyco Industries [1989] AC 217, 268 (Lord Oliver).

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much a question of degree’.”’ As a result, it is very difficult to explain originality in terms of any overarching principles or rules. Given this, perhaps the best approach is to look at originality in terms of the types of work in question. To this end we will look at the way the courts approach originality in relation to the following types of works: (i)

new works,

(ii)

derivative works,

(iii) tables and compilations, (iv) databases, computer programs, and photographs, and (v)

computer-generated works.

3.2.1 New works

The first situation we wish to consider is where a ‘new’ work is created.*? In particular we wish to consider the situation, for example, where inspired by a particular event a person sits down at their desk and writes a poem or a song. As in these circumstances the work clearly emanates from the author, there are unlikely to be any problems in showing originality.*! The one exception to this is where the labour is trivial or insignificant. While in most cases this principle is uncontroversial, difficult issues arise in relation to artistic works. The reason for this is that while in some contexts the drawing of a straight line or a circle may be regarded as trivial, when painted by a Rothco or a Picasso, it would (or at least should) not be. This was in effect the position

in British Northrop where it was argued that drawings of things such as rivets, screws, studs, a bolt, and a length of wire lacked originality because they were too simple. In rejecting the argument, Megarry J said that he would be ‘slow to exclude drawings from copyright on the mere score of simplicity’ or on the basis that they were of elementary or commonplace objects.** The courts have also been slow to conclude that because a literary work is small it lacks originality.’ 3.2.2 Derivative or copied works

The next type of creation that we wish to consider are the so-called derivative works, that is works which are derived from or based upon pre-existing works (whether or 29 Macmillan v. Cooper (1923) 93 LJPC 113 (Lord Atkinson). 30 While works are never created de novo, we have used the term ‘new works’ as a way of distinguishing derivative works. It should also be noted that these categories are not mutually exclusive; there is no reason why a table could not be a ‘new’ work (or a derivative work).

31 Total Information Processing v. Daman [1992] FSR 171, 179 (mere linking of three computer programs was treated as unprotected by copyright); Merchandising Corp. ofAmerica v. Harpbond [1983] FSR 32 (simple face paint was not an original artistic work). 32 British Northrop v. Texteam Blackburn [1974] RPC 57, 68. See also Karo Trade Mark [1977] RPC 255, 273

‘expect of the case of straight line drawn with a ruler (a case of such barren and naked simplicity which would not be a very promising subject for copyright). 33 In some cases, where the resulting work is regarded as sufficiently creative, the work may be very small (extract of four lines from poem ‘If): Kipling v. Genatson (1917-23) MacG CC 203.

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not they are protected by copyright). Copyright law has long recognized that it is important that authors should be able to draw and build upon other works. However, in order to ensure that copyright works are not protected in perpetuity (which would otherwise be the case), copyright imposes limits on the types of derivative works that will be protected. To this end, authors can copy (or use) pre-existing materials and still get copyright protection in the resulting work so long as they bring about a material change to the raw material. More specifically, the labour, skill, and capital must have imparted to the product ‘some quality or character which the raw material did not possess, and which differentiates the product from the raw material’.** In so doing the law ensures that any copyright that is acquired in a derivative work is distinct from the original work that is incorporated into it.*° The difficult question is deciding where to draw the line between legitimate borrowing from existing sources and illegitimate copying. It is very difficult to define what the something special is that distinguishes original and non-original derivative works. In part this is because it is difficult to describe in positive terms exactly what it is that the originality requirement involves. Given this, perhaps the best way to approach this issue is to focus on those (limited) situations where changes made to the raw material have been held to be non-material and thus non-original. Before looking at the situations where a person exercises labour in the creation of a derivative work yet the resulting work will not be original, it is necessary to make two preliminary comments. It should be noted that copyright subsists in a derivative work even though it may infringe copyright in the existing work.*° This is because any copyright that is acquired in a derivative work will be distinct from and subordinate to the copyright in any prior original work which is incorporated into it. Provided that the original work is still apparent in the new version, both the maker of the new version and any third-party copier will need the licence of the copyright owner of the original. It should also be noted that the requirement that the labour needs to produce a materially different work for it to be original is unnecessary where the same author produces a series of drawings or drafts.” As Nourse LJ explained: What the Copyright Act requires is that the work should be the original work of its author. If, in the course of producing a finished drawing, the author produces one or more

34 MacMillan v. Cooper (1924) 40 TLR 186, 188; (1923) 93 LJPC 113. Described in Interlego as ‘perhaps the

most useful exegesis’ on the issue of originality. 3° If the original work is still apparent in the new version, the licence of the copyright owner of the original will be needed by both the maker of the new version and any third-party copier. : 36 See Wood v. Boosey (1868) LR 3 QB 223, 229; Redwood Music v. Chappell [1982] RPC 109, 120; ZYX Music GmbH v. King [1995] 3 All ER 1, 9-11; cf. Ashmore v. Douglas Home [1987] FSR 553 (Judge Mervyn

Davies denied copyright protection to part of a play which was derived from an existing copyright play on the grounds that the former was ‘infringing material’). 37 Moreover, it has been held that where a drawing was made from a three-dimensional functional design, such a drawing would be original if there was a continuous design process between the creation of the threedimensional functional object and the subsequent creation of the two-dimensional drawing copying the three-dimensional object. Murray Engineering v. Nicholas Cesare (1997, unreported).

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87

preliminary versions, the finished product does not cease to be his original work simply because he adopts it without much variation, or even if he simply copies it from an earlier version. Each drawing, having been made by him, each is his original work.”

With these general points in mind, we now turn to consider four situations where derivative works have been held to be non-original. These are where: (i)

the labour fails to bring about a change in the resulting work,

(ii) the change in the resulting work is a result of a ‘mechanical’ or ‘automatic’ process,

(iii) the change in the resulting work is non-material, or (iv) the labour is of the wrong kind.

(i) Where the labour fails to bring about a change in the resulting work. One situation where a person may exercise a considerable amount of labour yet the resulting work will not be original is where the labour fails to bring about any change in the resulting work. This would be the case, for example, where there is a direct or slavish copy of

another work or where a work is photocopied.*? While the tracing or copying of drawings, especially technical drawings, requires patience, skill, and labour, as Lord Oliver said in Interlego, ‘copying per se, however much skill or labour may be devoted to the process, cannot make a work original’.‘° More specifically, he said a ‘wellexecuted tracing is the result of much labour and skill but remains what it is, a tracing’.*! It is clear that the reason why tracing and photocopying do not produce original works is not that there is no labour. Rather, it is that it is not the right type of labour.

(ii) Where the change is a result of a ‘mechanical’ or ‘automatic’ process. Another situation where the courts have suggested that a change made to a work will be nonmaterial is where the change that occurs in the resulting work is a consequence of a mechanical or automatic process. The defining feature of a mechanical or automatic process being the absence of human input: the element that underlies the originality examination. For example, in one case it was suggested that the making of a chronological list, which is ‘automatic and only requires painstaking accuracy’ would not, of itself, be original. The reason for this is that the making of a chronological list requires

38 LA Gear v. Hi-Tech Sports [1992] FSR 121, 136 (Nourse LJ). See also Biotrading and Financing Oy v.

Biohit [1996] FSR 393, 395 (not sufficient merely to be owner of copyright in earlier drawings if later ones which are relied upon are not significantly different). Cf. Rexnold v. Ancon

[1983]

FSR 662 (summary

judgment refused in similar circumstances). 39 British Northrop v. Texteam (Blackburn) {1974] RPC 57, 68 (a drawing which is simply traced from another drawing is not an original artistic work); Rexnold v. Ancon [1983] FSR 662, 664 (improbable that

copyright would be given to a mere tracing); Davis (Holdings) v. Wright Health Group [1988] RPC 403, 409 (casts made from models are not original) and 412 (tracing not original). 40 Interlego AG v. Tyco Industries. [1989] AC 217, 263. 41 Tbid., 262 (‘no one would reasonably contend that the copy painting or enlargement was an “original” artistic work in which the copier is entitled to claim copyright’).

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no element of ‘taste or selection, judgement or ingenuity’.” In another case, it was held that the routine application of a formula to produce forecast dividends on greyhound races was not sufficiently original.*? Similarly, in another case the photocopying of an image (and enlarging it by 10 per cent) was said to be ‘wholly mechanical” and thus lacking in originality. It is possible to imagine other situations where the process of producing a work may be so routine and formulaic that it is effectively a mechanical process, thus rendering it non-original. That is, there may be other instances where the author is so constrained in terms of the choice that he or she is able to exercise over the resulting product. This may be the case, for example, where the features express some engineering principle,” a computer program needs to achieve a particular function,*® or in the drawing of functional objects. Given the low threshold that needs to be satisfied to show originality, it seems that a creator would only need to exercise a very small degree of control over a work for it to be original. In this context it should be noted that the courts have been reluctant to exclude artistic works (which include technical drawings) on the basis that they are ‘simple’ or ‘commonplace’. One question that remains unanswered in this context is whether the digitization of a work (with no other changes) is sufficient to confer originality on the resulting work. For example, would the digital scanning of a novel or the creation of a digital database from non-digital sources give rise to an original work? Some commentators have suggested that the translation of a work into a digital format (in the case of a literary work, from a ‘typographical character to numerical token’)*”? may give rise to an original work. While there can be no doubt that the process of digitization does produce a product which is different, it is doubtful whether it would constitute a material change such as to confer originality on the resulting work. (tit) Where the change to the resulting work is non-material. In some situations, oviginality has been denied where the labours of a creator fail to bring about a material change in the resulting product. That is, while the efforts of the author may have led to a change in the resulting product, the change (thus the labour) is not regarded as sufficient to confer originality on the resulting work. Conversely, where the change is material, the work will be original. This approach has been used to confer originality 42 Football League v. Littlewoods [1959] Ch 637, 654. In relation to indisputable facts (such as when the sun rises or sets), it was said that there is ‘no room for taste or judgement. There remains the element of choice as

to what information should be given’: all that a table can do is state the facts accurately: Cramp v. Smythson [1944] AC 329, 336 (Viscount Simon).

43 Greyhound Services v. Wilf Gilbert (Staffs) [1994] FSR 723. 44° The Reject Shop v. Robert Manners [1995] FSR 870, 876.

45 British Leyland v. Armstrong [1986] RPC 279, 296 (Oliver LJ). 46 Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275. 47 Laddie et al., para. 20.67 suggest that it was akin to the copyright protection given to the speechwriter in Walter v. Lane [1900] AC 539.

CRITERIA

on new

editions,** compilations,

FOR

PROTECTION

anthologies, translations,”” adaptations

89

of pre-

existing materials,*° as well as arrangements of music,*! and engravings. In all these cases, the labour of the author not only produced a change, it also produced what was taken to be a ‘material change’ in the raw material. This can be seen, for example, in Macmillan v. Cooper where the Privy Council was called upon to decide whether a selection of 20,000 words for a schoolboy version of a 40,000-word translation of Plutarch’s book, the Life of Alexander, was original. As Lord Atkinson explained, copyright could exist in such a selection if such ‘labour, skill, and capital’ had been expended sufficiently ‘to impart to the product some quality or character which the raw material did not possess, and which differentiates the product from the raw material’. An important factor in the finding that the selection was not original and thus not protected by copyright was that the process of selection was motivated by a desire to exclude material which was of an indecent or indelicate character and unfit for schoolchildren.°* Such a process did not require ‘great knowledge, sound judgement, literary skill or taste to be brought to bear upon the translation’.** That is, the reduction did not involve the application of the ‘something special’ that is needed to confer originality on the resulting work. This decision can be usefully contrasted with Macmillan Publishers v. Thomas Reed Publications.*° The case turned on whether the publication of a number of small, local charts that contained an outline of the coastline as well as relevant information (such

as depth soundings, buoys, and geographical features) were original. More specifically, the question arose as to whether the charts were original, given that they were drawn from and based upon Admiralty charts. Unlike the labour which was used in MacMillan v. Cooper, the High Court held that the labour used in producing the simplified charts involved the appropriate level of work and skill for the resulting work to be original. 48 Black v. Murray (1870) 9 MacG CC 341, 355. Lord Kinloch held that to create copyright in a new edition, alterations must be extensive and substantial; additional notes must be not superficial or colourable, but

impart to the book a true and real value over and above that belonging to the text. Although as has been explained in the discussion of Walter v. Lane, there was no requirement of originality under the Literary Property Act 1842, decisions thereunder have often been cited in the context of works created after 1911. Blacklock v. Pearson [1915] 2 Ch 376. 49 Byrne v. Statist Co. [1914] 1 KB 622; Cummins v. Bond {1927] 1 Ch 167.

50 Warwick Films v. Eisinger [1969] 1 Ch 508 (book comprising large extracts from court transcripts was original because of editorial work, addition, and omission of material, etc.). 51 ZYX Music GmbH v. King [1995] 3 All ER 1 (appeal dismissed: on other grounds [1997] All ER 129) (transformation of ballad into disco or dance track was original arrangement). See R. Arnold, Performers’ Rights (1997), 171-4. But note Hadley & Others v. Kemp [1599] EMLR 589 (contributions of performers not relevant when assessing originality).

52 Macmillan v. Cooper (1924) 40 TLR 186, 188; (1923) 93 LJPC 113. 53 However, the appellant had added marginal notes, an introduction and a chronological table. The Privy Council held that these were well chosen, neatly condensed, sufficiently copious and accurate and must have required literary skill, taste, labour, and judgement. 54 MacMillan v. Cooper (1924) 40 TLR 186. 55 [1993] FSR 455. Mummery J explained, ‘On originality I find that this is a case where sufficient work and skill have been done; both in the creation of the simplified form of a work, showing the outline of the coast and geographical features, and in the compilation of selected information, such as depth soundings,

geographical features, buoys and so on’.

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In this context it may be helpful to pause and ask, what is it that distinguishes the non-original reduction in MacMillan v. Cooper from the simplification in Macmillan v. Reed that was held to be original? Some guidance as to the way this question may be answered is offered in MacMillan v. Cooper where the Privy Council distinguished the non-original reduction from a (hypothetical) abridgment, which would have been original had it been carried out. While the reduction of the Life of Alexander from 40,000 to 20,000 words was not original, the Privy Council said that the (hypothetical)

process of abridgment would have required some form of ‘learning, judgement, literary taste and skill’.°° That is, it lacked what the courts saw as the necessary skills to qualify for protection. Quoting from an early edition of Copinger’s Treatise on Copyright, the Privy Council said that ‘the act of abridgment is an exertion of the individuality employed in moulding and transfusing a large work into a small compass . . Independent labour must be apparent, and the reduction of the size and work by copying some of its parts and omitting others’ does not do this.*” In contrast, the Privy Council said that the reduction of the Life of Alexander from 40,000 to 20,000 words was non-original because it lacked the ‘exertion of the individuality employed in moulding and transforming a large work into a small compass.’ (iv) Where the labour is of the wrong kind. Another situation where an author may exercise a considerable amount of labour and the work not be original is where the type of labour used does not correspond to the type of work for which protection is sought. This can be seen in Interlego where the Privy Council was called upon to decide whether there was copyright in drawings for the children’s building blocks known as Legobricks. After Lego’s patents and designs in the bricks expired in 1975, Lego sought to retain its monopoly over the bricks by claiming that copyright existed in drawings produced in 1973. As these drawings were based upon earlier drawings, the question arose as to whether the alterations made in 1973 were sufficient to

produce an original artistic work. The major differences between the drawings concerned the sharpening of the outer edges of the tubes on the brick, changes in tolerances, and increase in the radii on the outer edges of the knobs on the bricks from 0.2 to 0.3 mm. Of the changes made, only the first was shown pictorially, the others by letters and figures.*® While the Privy Council recognized that these changes were technically significant and the result of considerable labour and expertise, they denied that there was copyright in the later drawings.°? The mere fact that the drawing took skill and labour to 56 MacMillan v. Cooper (1923-4) 40 TLR 186, 187.

Se Tbid: 58 Interlego v. Tyco Industries [1989] AC 217. 5° Lord Oliver was happy to find that these drawings were not original. Otherwise, Lego would have been able to maintain a perpetual monopoly by continually revising the picture. This type of behaviour, he noted, had been disapproved of by the House of Lords in Coca-Cola Co. Trade Mark Application [1986] 1 WLR 695. It seems that Lord Oliver overlooked the fact that the pre-1973 works were not protected by copyright and therefore that a competitor was free to copy pre-1973 drawings (or models based on upon pre-1973 drawings).

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produce did not necessarily mean that it was therefore an original drawing. As Lord Oliver explained, ‘[t]here must in addition be some element of material alteration or

embellishment which suffices to make the totality of the work an original work’. While Lord Oliver acknowledged that this could be a relatively small alteration, he added the important rider that in the case of artistic works the change must be visually significant. That is, to confer copyright the skill and labour must be relevant to the work in question. On the facts it was held that as the changes made to the drawings were primarily to the written specifications, this was not an alteration of visual significance.®! As such, the drawings were not original. If this principle is applied in other contexts, it may have important ramifications for forms of appropriation art; that is where artists focus on the meaning rather than the visual appearance of the work.°? 3.2.3 Tables and compilations In this section, we consider the way in which the originality of tables and compilations has been approached. As we explained earlier, as a result of the Database Directive the law in this area has recently undergone a number of changes: notably, the introduction of a new standard of originality for databases. While this topic is discussed below, it is first necessary to look at the way the originality of tables and compilations has been dealt with in the past. Over time the courts have used two different and largely inconsistent approaches when determining whether tables and compilations are original. While the approaches are similar in so far as they focus upon the labour exercised in the creation of the work, they differ in terms of the type of labour that is needed for the work to be original. In some cases, originality arises through the application of the appropriate skill, labour, and effort in the creation of the work (the quality of the labour used in creation of the work)..More controversially, originality can also arise through the application of a sufficient amount of routine labour (the quantity of the labour used in creation of the work). We will deal with each in turn.

(i) Quality of the labour. The originality of tables and compilations may arise through the application of the appropriate skill, labour, and effort in the creation of the work (the quality of the labour used in creation of the work). It seems that the requisite labour may be employed either in the way the information to be included in the compilation is selected, or the way that information is arranged. For example, if we take the case of 60 Interlego v. Tyco Industries [1989] AC 217. This leads to the rather bizarre conclusion that good repro-

ductions are denied copyright but poor ones have sufficient visually significant variation. This was explicitly stated by Lord Oliver [1989] AC 217. For further discussion, see Laddie et al., para. 3.38, p. 217. 61 Interlego v. Tyco Industries [1989] AC 217, 268 (Lord Oliver). Cf. Interlego AG v. Croner Trading 25 IPR 65 (Fed. Crt. Australia). Visually significant variations have been held to include changes of shape but not mere changes of scale: Drayton Controls v. Honeywell Control Systems [1992] FSR 245, 260.

62 See B, Sherman, ‘Appropriating the Postmodern: Copyright and the Challenge of the New’ (1995)

4 Social & Legal Studies 31; P. Anderson, “On the Legal Limits of Art’ (1994) Arts & Entertainment Law

Review 70.

—

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an edited collection, originality may arise as a result of the way the authors to be included in the volume are selected, or through the way the chapters are organized. Given that tables and compilations are similar to derivative works (a list is, after all,

made up from pre-existing materials), the comments made above about the originality of derivative works apply here. Looking at the question negatively, it seems that a table or compilation would not be original where the selection and arrangement is directly or slavishly copied from another work. Another situation where a compilation would lack originality is where the resulting work is a consequence of a mechanical, automatic or formulaic process. The position would be the same where the material to be included in a compilation was selected automatically. The reason for this is that the defining feature of a mechanical or automatic process is the absence of human input: the element that underlies the originality examination. In one case it was suggested that the making of a chronological list which is ‘automatic and only requires painstaking accuracy’ would not, of itself, be original. The reason for this is that the making of a chronological list requires no element of ‘taste or selection, judgement or ingenuity’.® On this basis it seems that where a list is organized alphabetically, it would not give rise to an original work (although originality may arise through the quantity of labour used in creating the compilation). (11) Quantity of the labour. In certain situations the courts have accepted that the mere exercise of a substantial amount of routine labour may give rise to an original work. For example, where a compiler spends a considerable amount of time and effort creating a chronological list of television programmes or an alphabeticaily ordered list of lawyers,” the resulting work will be original. That is, even though in creating the table or compilation the author may not have exercised the appropriate quality of labour, the work may nonetheless still be original if the process of compilation involves a sufficient level of (mundane) labour.

Where there is insufficient labour (and originality does not arise through the exercise of requisite qualitative skill, labour, and effort), the resulting work will not be original.®’ For example, where the process of compilation involves little effort or judgement and the effect is commonplace, the work will not be treated as original. Thus the selection of seven tables at the front of a diary, consisting of things such as days and dates of the year, tables of weights and measures, postal information, was 63 Tn relation to indisputable facts (such as when the sun rises or sets), it was said that there is ‘no room for

taste table 64 65 66

or judgement. There remains the element of choice as to what information should be given’: all that a can do is state the facts accurately: Cramp v. Smythson [1944] AC 329, 336 (Viscount Simon). Football League v. Littlewoods [1959] Ch 637, 654. ; Ladbroke v. William Hill [1964] 1 All ER 465, 478 (Lord Devlin). BBC v. Wireless League Gazette Publishing Co. [1926] Ch. 433; Independent Television Publications v. Time

Out [1984] FSR 64; Waterlow v. Reed [1992] FSR 409; Dun & Bradstreet v. Typesetting Facilities [1992] FSR 320. 67 Exxon Corporation v. Exxon Insurance Consultants International [1982] Ch 119. 68 Cramp v. Smythson [1944] AC 329 (Viscount Simon LC) (‘commonplace information which is ordinar-

ily useful and is .

. commonly found prefixed to diaries’). See also Waylite Diary CC v. First National Bank

[1993] EIPR D-242 (no copyright in diary pages which lacked quality of individuality sufficient to distinguish the work from the merely commonplace).

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held to be non-original. Similarly, in another case a compilation of a local timetable showing a selection of trains to and from a particular town that was made from official railway timetables was held to be non-original.® In these circumstances the difficult question is knowing how much labour needs to be exercised for the resulting work to be original.” The willingness to accept that a substantial amount of routine labour may give rise to an original work is usually explained in terms of the fact that defendants ought not to be able to avail themselves of the labour and expense which a claimant invested in the production of a work.”! Instead of asking whether the work is original and thus protectable, where the courts have focused on the quantity of the labour exercised in the creation of the work they have tended to start from the premiss that any labour or effort that a claimant exercised in the production of work ought to be protected (so long as it reaches the requisite quantitative threshold). This is reflected in the maxim: ‘what is worth copying is prima facie worth protecting’.’”? One issue that has yet to be answered in this context, to which we will return shortly, relates to the impact that the new standard of originality which is now to be applied to databases: namely, of author’s own intellectual creation will have upon these decisions. The position in the UK where the exercise of non-creative labour can give rise to an original work can be contrasted with the position in other jurisdictions such as Germany (where case law suggests that there is a requirement of some minimal degree of creativity) and France (where originality is said to require ‘the imprint of the

author’s personality’ on the work or an intellectual contribution). The UK position is also at odds with the position in the USA where, as the Supreme Court pointed out in the Feist decision,

a work must have at least a minimal

degree of creativity to be

protected.”’ In relation to the question of the originality of a white-page telephone directory, the Supreme Court held that since facts were not created, the names and numbers were not themselves ‘copyrightable’. Moreover, while the collection might have been original had the selection or arrangement involved some minimal creativity, as the directory in question had been selected by area and arranged alphabetically, it did not meet that minimum threshold. It should be noted that routine labour has only been used to confer originality on the resulting work in the UK in a limited number of situations. In particular, it has

69 Leslie v. Young [1894] AC 335. 70 See Cramp v. Smythson [1944] AC 329; Greyhound Racing Association v. Shallis [1923-8] MacG CC 370 370; Total Information Processing Systems v. Daman [1992] FSR 171 ‘(linking of three computer programs was not a compilation). Cf. Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275, 290. 71 Weatherby and Sons v. International Horse Agency and Exchange (1910) 2 Ch 297, 303-5; Waterlow Directories v. Reed Information Services [1992] FSR 409. 72 University of London Press v. University Tutorial Press [1916] 2 Ch 601 (Peterson J). This can be justified on the basis that if aperson copies an existing work, that person has demonstrated that the work incorporated skill or labour since otherwise it would not be worth copying. If the aphorism were taken at face value, it would prevent defendants from asserting that they were entitled to copy the claimant’s work on the basis that it was not original.

73 Feist Publications v. Rural Telephone Service Co., 499 US 340 (1991).

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only been applied to a limited category of works: largely to tables and compilations of things such as maps, guidebooks, street directories, dictionaries, works and selections

of poems.”4 More specifically, the cases which have accepted that originality can arise through the exercise of a sufficient degree of labour have tended to focus on the amount of labour exercised in the selection of materials to be included in tables and compilations: that is, they take place in the pre-expressive rather than the expressive stage.’ 3.2.4 Databases, photographs, and computer programs As we have already noted, the European Council has begun to harmonize copyright law within Europe. The Software and Database Directives require that a computer program or database can only be protected by copyright where it is the “author’s own intellectual creation’.’”° A similar test was also introduced for photographs in the Duration Directive.”” While all three Directives require a similar standard of originality for the respective works, in implementing the Directives the UK Government responded differently. In implementing the Software and Duration Directives the Government did not consider it necessary to amend the Copyright Act in relation to software or photographs.”* As was the case before the Directives, such works are protected if they are ‘original’. By contrast, in implementing the Database Directive, the UK Database Regulations explicitly amended the originality requirement of the 1988 Copyright Act in relation to databases to include the new criterion of the ‘author’s own intellectual creation’.” In particular, section 3A(2) says that “a literary work consisting of a database is original if, and only if, by reason of the selection or arrangement of the contents of the database the database constitutes the author’s own intellectual creation.’ This inconsistent implementation of the EU Copyright Directives has left the current law unclear. Perhaps the most plausible reading of the current situation is that the only change that has taken place in relation to originality is in respect of databases and that the standard for other works remains the same.*° The fact that no changes were

74 Macmillan v. Cooper (1924) 40 TLR 186, 189.

7> Cramp v. Smythson [1944] AC 329, 330. 7© Software Directive, Art. 1(3) (‘a computer program shall be protected if it is original in the sense that it is the author’s own intellectual creation. No other criteria shall be applied to determine its eligibility for protection’: Database Directive, Art. 3(1)).

77 Tt is arguable that this European standard is also required of photographs by Art. 6 of the Duration Directive, which states that photographs which are original in the sense that they are the author’s own intellectual creation shall be protected in accordance with Art. 1. No other criteria shall be applied to determine their eligibility for protection. 78 Cf. Germany which introduced sec. 69(a) into its copyright law explicitly repeats the wording of the Directive. G. Schricker, ‘Farewell to the “Level of Creativity” in German Copyright Law?’ (1995) 26 IC 41. 7 CDPA s. 3A(2), introduced by Databases Regs. 1997, SI 1997/3032, r. 6.

80 This view is buttressed by the existence of transitional provisions which make it clear that databases which are already protected by copyright on 27 Mar. 1996, but which would not reach the standards

required under the Directive, continue to enjoy protection until the end of the copyright term: Databases Regs. 1997, SI 1997/3032, r. 29(1).

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made to the standard of originality for computer programs and photographs seems to suggest that it was thought that the position in the UK prior to the implementation of the Directives was already similar to the position required under the Directives. Conversely, the fact that a new definition of originality was introduced in relation to databases seems to suggest that the test of originality for databases (tables and compilations) used in the UK was not the same as was required under the Database Directive. That is, it seems to suggest that a new standard of originality has been introduced in relation to databases (tables and compilations).*!

The position in the UK under the revised law is similar to the old law in that the originality of the database may arise either through ‘the selection or arrangement of the contents of the database’. The extent to which the new law will differ depends on the way ‘an author’s own intellectual creation’ is interpreted by the courts. At present it is difficult to predict how it will be interpreted. It has been widely assumed that the new EU standard is higher than the prior British standard of originality.** However, a common lawyer might find it difficult to see how the phrase differs from the words used by Peterson J in University of London Press v. University Tutorial Press.** There is some indication of the intended standard in Recital 17 of the Duration Directive. This explains that a photograph will be original ‘if it is the author’s own intellectual creation reflecting his personality’. Whether this will be used in relation to databases and computer programs is yet to be seen. While the courts may use the new standard as a way of rethinking the law in relation to originality, for the most part the new standard will probably not lead to different results. In particular, where the originality derives from the quality of the labour used in either the selection or arrangement of the database (table or compilation), it is still likely to be regarded as an author’s intellectual creation. The one area where the new definition may lead to a change is where originality arises through the mere exercise of routine labour; that is, where the quantity as distinct from the quality of the labour is used in the creation of the database. Where all an author has done is to exert a considerable amount of effort in the creation of a database, it is difficult to see how this, on its own, could be seen as an ‘intellectual creation’, especially one which reflects the author’s personality. As a result it is possible that the previous decisions 81 A government spokesman has confirmed that the legislative intention, motivating the amendment in line with the EC standard, was that it be applied only to databases. Fourth Standing Committee on Delegated Legislation, 3 Dec. 1997, the Minister of State, Dept. of Trade and Industry (Mr Ian McCartney). (‘The criteria apply to databases for the reasons I have given and apply only to databases. There is currently no definition of originality and it has been a matter for interpretation by the courts, just as the new regulations will be.’) 82 See, in the context of programs, G. Dworkin, ‘Copyright Patents or Sui Generis: What Regime Best Suits Computer Programs?’ in H. Hansen (ed.), International Intellectual Property Law and Policy (1996) 165, 168; J. Drexl, What Is Protected in a Computer Program? (1994), 96-7 (emphasizing that the European standard was a direct reaction to the German Inkassoprogram decision, and the standard adopted is consistent with the copyright approach of treating originality as requiring the independent creation of an author, though not mere ‘sweat-of-the-brow).

83 [1916] 2 Ch 601, 608. C. Millard, in H. Jongen and A. Meijboom (eds.), Copyright Software Protection in the EC (1993), 239.

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which accepted that the exertion of a sufficient amount of routine labour could confer originality on tables and compilations may no longer be good law.™ If so, the UK will come closer to the position of other EU countries. It will also lead to a similar position in UK law as Feist produced in the USA. While the only explicit change that was made to UK law of originality was in relation to databases, there is a possibility that the EU Directives will indirectly influence the standard of originality for photographs and computer programs.® As the language of the 1988 Act should be construed as far as possible to be consistent with international obligations,® there is a possibility that the originality of photographs and computer programs in the UK may be read in light of the EU standard of an

author’s own intellectual creation.*” No judicial guidance has been given in the UK as regards the exact circumstances in which photographs will be regarded as original.** While there is little doubt that protection will be granted to more ‘artistic’ photographs (where there may be considerable effort in selection of the material to be photographed and the way the photograph is executed in terms of light, angle, exposure),®’ doubts have been raised about the originality of routine snapshots. If the Duration Directive was to have an impact on UK law in that area, it would be likely to increase the possibility that snapshots were not protected by copyright.”° The position in the United Kingdom is further complicated by the existence of a derogation in Article 6(2) of the Duration Directive. This allows member states to give

protection to non-original photographs. In so far as the traditional standard of originality is lower than the standard in Article 6(1) (and Recital 17) of the Duration

84 As explained below, absent fulfilment of this criterion, the material data may be protected by a sui generis right. 85 The question arises whether a British court would, for the sake of simplicity and convenience, read the changes as justifying wholesale reformulation of the originality requirement in UK law. 86 Von Colson and Kamann, Case 14/83 [1984] ECR 1891. 87 The courts have acknowledged that it is not always appropriate to treat particular statements concerning ‘originality made in one context as being applicable to other contexts. For example, in Interlego v. Tyco Industries [1989] AC 217 the Privy Council declined to apply statements of the House of Lords in Ladbroke v. William Hill [1964] 1 WLR 273 to the effect that a work was original if it was a product of ‘labour, skill or

judgement to the context of derivative artistic works. Unfortunately, the courts have provided little guidance as to when particular elaborations are applicable. 88 In Graves’ Case (1869) LR 4 QB 715 Blackburn J held that a photograph of a painting was an ‘original photograph’ but noted the difficulty involved, explaining, ‘[t]he distinction between an original painting and its copy is well understood, but it is difficult to say what can be meant by an original photograph. All photographs are copies of some object.’ It should be noted that, in contrast with the position in relation to protection of books under the Literary Property Act 1842, photographs, drawings, and paintings were only protected under the Fine Art Copyright Act 1862 if they were ‘original’. Graves’ Case therefore remains relevant.

89 K. Bowrey, ‘Copyright, Photography and Computer Works: The Fiction of an Original Expression’ (1995) 18 University ofNew South Wales Law Journal 278.

90 A. Miller, ‘Copyright Protection for Computer Programs, Databases and Computer-Generated Works: Is Anything New since CONTU?’

(1993) 106 Harvard Law Review 977, 1072 (‘It is increasingly difficult to

consider many photographs as works that truly are affected by the author’s personality or that have even a modicum of creativity’).

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Directive, this allows the UK to maintain its lower standard: that is, to protect ‘non-

original’ photographs (in the European sense). The difficulty with interpreting the current law as if it were intended to maintain the lower standard is that the 1988 Act has not been amended to draw a distinction between photographs which are ‘original’ in the European sense, and those which are ‘non-original’ in the European sense (but ‘original’ in the old UK sense). As things stand, the most obvious way to interpret the originality requirement in the 1988 Act so that it complies with the Duration Directive with respect to photographs is to interpret the word ‘original’ as referring to the European standard. That is, as requiring the photograph to be an author’s own intellectual creation reflecting his or her personality. The position in relation to computer programs, as with photographs, is unclear. If a new standard were introduced in relation to computer programs, any changes which were likely to take place would probably occur in relation to those elements which were dictated by the function the program was to perform or by economic necessity. To impose a test of author’s own intellectual creation upon computer programs may also mean that commonplace routines used by programmers would not be

protected.” 3.2.5 Computer-generated works Prior to the passage of the 1988 Act, there was some uncertainty as to the status of computer-generated works; that is, to works created by translation programs, search engines, and the like. In part, the 1988 Act resolved this uncertainty by providing that a literary, dramatic, musical or artistic work attracts copyright protection even where it has been generated by computer in circumstances where there was no human author.” While these changes were useful in so far as they clarified that creations generated by a computer could be classified as works, they said nothing about how the originality of such works was to be determined. The particular problem that arises with computer-generated works is that it is difficult to see how the existing criteria of originality, which focuses on the relationship between the author and the work,

91 Although the express amendment of the Act as regards databases alone might be interpreted as signifying the maintenance of the existing originality standard for other works, such limited legislative action is better seen as a consequence of the limited powers to expressly alter the statute by statutory instrument under the European Communities Act. In this respect, the decision not to expressly alter the originality requirement in the context of computer programs might be taken as an indication that the concept of ‘originality’ in general is now intended to be rendered consistent with that demanded by the Directives. Such a move would be a bold one, but might chime with recently expressed concerns over the overextension of copyright law. S. Ricketson suggests a requirement of some minimal creativity in “The Concept of Originality in Anglo-Australian Copyright Law’ (1991) 9(2) Copyright Reporter 1, 16. 92 CDPA s. 9(3), 178. Cf. Payen Components South Africa v. Bovic Gaskets (1996) 33 IPR 406, 411 (Supreme

Crt. of South Africa) (distinguishing between ‘computer-generated’ and ‘computer-assisted’ works). Apparently the issue of such works was considered in the USA as early as 1965. See A. Miller, ‘Copyright Protection for Computer Programs, Databases and Computer-Generated Works: Is Anything New since CONTU?’ (1993) 106 Harvard Law Review 977, 1042 ff. (describing the issue as copyright’s next ‘battlefield’ but arguing

that the problem remains conceptual for the moment because there will be identifiable human authors for the foreseeable future).

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can be applied to computer-generated works which, by definition, have no readily

identifiable author.” Given that computer-generated works are protected where there is no human author, the question arises: what is the test for originality that is to be applied to such works? One possible test would be to ask whether the work was produced as a result of the independent acts of the computer. That is, is the work original in the sense that it was ‘not copied’? Alternatively, a court might say that originality exists where the computer has produced a work which is different from previous works (i.e. it is novel). It has also been suggested that the courts ought to ask the hypothetical question: if the same work had been generated by a human author would it have required the exercise of a substantial amount

of skill, labour, and effort? If yes, then the

computer-generated work would be original.”

4 ENTREPRENEURIAL

WORKS:

NOT

COPIED’

Unlike the case with literary, dramatic, musical, and artistic works, there is no

requirement that films, sound recordings, broadcasts, cable programmes, or published editions be original. Instead, the 1988 Act provides that copyright does not subsist in a sound recording, a film or a published edition to the extent that it is itself copied from a previous work of the same kind.” In relation to broadcasts and cable programmes,”° the Act provides that copyright does not subsist to the extent that it infringes copyright in another broadcast or cable programme.” One of the consequences of this is that entrepreneurial works will be protected irrespective of whether or not the author exerted mental skill, labour or effort in the creation of the work. This means that if a video recorder or tape recorder is turned on and left on a table, the resulting film or sound recording would be protected. It has been suggested that the reason why a lower standard is applied to entrepreneurial works than to authorial works relates to the nature of the rights which are granted.”* In relation to authorial works, the scope of the rights is more expansive than with entrepreneurial works. As a result, it is more important that the law monitor the types of authorial works that are protected. Conversely, in the case of entre-

preneurial works where protection is thin, there is less of a need to monitor the subject matter protected. This does not mean, however, that it is not necessary to regulate the types of subject matter protected as entrepreneurial works. In particular,

3 As regards computer-generated computer programs and databases, the EC standard should apply so that presumably no copyright protection is available.

94 Laddie et al., para. 20.63.

95 CDPA ss. 5A(2), 8(2). 96 CDPA s. 14(2), (3). 97 CDPA ss. 6(6), 7(6). 98 Laddie et al., para. 5.40.

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to have allowed such works to be protected with no threshold requirement would have created the undesirable position that rights in entrepreneurial works could have continued in perpetuity. The reason for this is that in the absence of some limitation, every time someone copied an entrepreneurial work they would have obtained a fresh copyright in the ‘new work. This problem is avoided in the 1988 Act by ensuring that entrepreneurial works are only protected to the extent that they are not copied. For the most part these provisions are relatively straightforward. However, three issues remain unsettled. The first is whether a compilation of parts of sound recordings (such as a ‘megamix’) would be protected as a separate sound recording?” On one view, if the megamix is compiled from pre-existing recordings, then nothing is protectable. The reason for this is that each pre-existing element is excluded on the basis that it is copied from another sound recording. However, if such an approach was followed it would lead to the bizarre result that the absence of a notion of originality in respect of entrepreneurial works means the threshold of protection is higher than with respect to authorial works (where collections of materials are protected as database, tables, and compilations).'°° Perhaps the better view is that com-

pilations of sound recordings ought to be protected as a sound recording, on the basis that the compilation is more than the sum of its parts. The second question is whether in the process of digitally remastering an old work, the resulting work would be protected. Where no change is made to the contents of the work, it is difficult to see how the digital version of the work could be protected by copyright, since the recording is copied from existing recording of sounds. Would the position be any different if in the process of remastering an old recording it was cleaned of unnecessary noise and interfering sound? It seems that the way this ques-

tion will be answered depends on the way the phrase ‘to the extent that’ is construed.'°! Another question that has arisen is whether the recent introduction of a provision to the effect that the producer and principal director are the creators of a film means that films are now to be treated as authorial rather than entrepreneurial works (or indeed as some sort of hybrid). In turn this might suggest that to be protected a film must be original.!°? Weighing against this, however, is the fact that the provisions dealing with duration provide that a film may lack a director yet still attract copyright.!°° Given this (and the express language used in the Act), it seems that films will not be subject to the originality requirement. 99 P. Theberge, “Technology, Economy and Copyright Reform in Canada’, in S. Frith (ed.), Music and Copyright (1993), 53 .

100 Tt might be the case that a ‘megamix’ would indirectly create an original musical work or that the process of digitization creates an original literary work. 101 Laddie et al., para. 6.13 (sound recording); para. 5.41 (films). 102 The existing understandings of the originality requirement developed from judicial interpretation of the notion of‘authorship’ in a period when there was no express requirement of originality. See e.g. Walter v. Lane [1900] AC 539.

103 The Act specifically makes provision for circumstances where there is no principal director, author of screenplay, dialogue or music, by limiting the copyright term to fifty years from the year in which the film was made. See CDPA s. 13B(9).

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5 IS THE WORK ‘QUALIFIED? In order for a work to be protected in the UK, it is necessary to show that the work is suitably ‘qualified’.!°* That is, it is necessary to show that the work is sufficiently connected to the UK to qualify for protection under UK law. UK law withholds protection from works that fail to establish a sufficient connection to the UK. In essence the requirement that the work be qualified helps to balance the protection offered to British authors in other jurisdictions with the protection given to foreign authors in the UK. Before looking at the various ways in which a work can be ‘connected to the UK’ (and thus qualify for protection), we will look at some of the different approaches that could have been adopted. In deciding whether to protect works of foreign authors or works published in foreign countries, three approaches have been adopted: universality, reciprocity, and

national treatment. The most generous approach that could be taken is to protect all works, irrespective of where or who created or published them. The so-called principal of universality has been favoured by countries that treat copyright as the emanation of a natural right of a creative individual. France did so until 1964.!° The least generous approach involves the application of the principle of reciprocity. This is the principle that a person from country A should not be given better protection in country B than a person from country B would be given in country A.

Reciprocity is frequently applied to the duration of copyright (and is permitted under the Berne Convention). Reciprocity tends to take one of two forms.’ In an elaborate version of tit-for-tat, the government of country A will only extend protection to works from country B if it can be shown that authors from country A receive equiva-

lent (or reciprocal) protection in country B. This approach is often used, especially outside of multilateral arrangements. Once the government has extended the definition of qualifying works in this way, the courts treat the foreign author as they would a domestic author. A second mechanism of reciprocity involves a determination by the court as to the degree of protection afforded in a foreign country. It has become common when introducing new categories of rights for them to be granted on the basis of reciprocity. The advantages of reciprocity are twofold. First, reciprocity benefits right owners by providing incentives for non-conforming countries to change their laws. Secondly, it saves users in one country (A) from paying royalties to foreign authors from countries that do not pay royalties to the authors of

104 For further details, see Laddie et al., ch. 4. 105 J, Sterling and G. Hart, Copyright Law in Australia and the in the Pacific Region (1981), 230. 106 Material reciprocity means that country A will protect the country B protects the citizens of country A. Formal reciprocity the works of citizens of other member states in some manner,

Rights of Performers, Authors and Composers citizens of country B in the same manner as means that each member state will protect but nothing is implied with regard to the

nature of the protection. See S. Stewart, International Copyright and Neighbouring Rights (1989), 3.20; PB.

Geller and M. Nimmer, International Copyright Law and Practice (2000), International 60, para. 3.

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country A. This could produce considerable savings. The principle of reciprocity is not without its disadvantages. First, it requires either the government or the courts to familiarize themselves with foreign laws. This may require difficult decisions to be made about foreign laws and their equivalence. These issues add to the complexity, expense, and uncertainty of the decision-making process. Reciprocity has also been criticized on the basis that in the international arena principles of national treatment have been found to be the most convenient. While reciprocity may have short-term advantages, in the long term it threatens international developments.'”” The third way of determining protection for foreign authors is via the principle of national treatment. This has been described as a ‘fundamental principle of copyright and neighbouring rights conventions’.!°% National treatment requires that countries treat foreign nationals as they do their own. National treatment is the basic principle used under the relevant international conventions (Berne, the UCC, Rome, and TRIPs).

5.1

CONNECTING

FACTORS

The benefits of British copyright law have been extended to cover a vast array of works created or published in foreign countries by foreign authors.” Given that British law effectively provides universal protection, the task of determining whether a particular work is protected under British copyright law is unnecessarily complex.''? While in some situations this complexity may be avoided through the use of statutory presumptions,!"! in most situations it is a task that needs to be undertaken. There are three connecting factors which enable works to qualify for copyright protection (sections 154-6). These are by reference to (i) authorship, (ii) country of

first publication, and (iii) place of transmission. A work qualifies if it satisfies any of these three factors.!!? Once a work qualifies for copyright protection, British copyright law does not discriminate between it and a work created by or first published in the United Kingdom, with one exception.' 5.1.1 Qualification via authorship

Section 154(1) provides that a work qualifies for copyright protection if at the ‘material time’ the author of the work was a ‘qualifying person’.'" 107 W, Cornish, ‘The Canker of Reciprocity’ (1988) 10 EIPR 99. 108 S. Stewart, International Copyright and Neighbouring Rights (1989), para. 3.17—22. 109 Tn international parlance, these are referred to as the connecting factors (the points d’attachement or the Anknupfungspunkt). 110 [Laddie et al., paras. 4.10, 4.147-51. 111 See Microsoft Corp. v. Electro-wide |1997] FSR 580, 594. 112 Where created before 1 June 1957, a published work could be protected only on the basis of first publication and not by virtue of personal status: CA 1956, Sched. 7, para. 1. 113 Tp the light of the requirements ofthe Duration Directive, the application of the rule of the shorter term to works which have as their country of origin a non-EEA state. CDPA ss. 12-14. 114 This may make determination ofauthorship important. In Century Communications v. Mayfair Entertainment [1993] EMLR 335 the court had to determine whether the author of a film made under restrictive

conditions in China was a Hong Kong company that initiated and organized the making ofthe film, in which

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In order for a work to qualify for protection, it is necessary that the author be connected to a relevant country at the ‘material time’.'!’ For unpublished literary, dramatic, musical, and artistic works, the ‘material time’ is the date when the work was made. Where the work has been published, it is the author’s status at the date of first publication that is decisive; or, if the author died before publication, their status

at the date of death.!!° By contrast, the material time for other types of copyright works does not change; it is the personal status of the ‘author’ of a sound recording or film at the time of its making; the organization broadcasting or cable-casting a transmission, at the date of transmission; and, for typographical format, the publisher at publication that is relevant.'!” Since a work may take a considerable time to make, section 154(4)(a) provides that in the case of an unpublished literary, dramatic,

musical or artistic work the making of which extended over a period of time, the ‘material time’ is ‘a substantial part of that period’. Rather oddly, no such provision exists for films. To qualify under section 154, it is necessary to show that the author was a ‘qualifying person’. There are three ways in which this can be achieved. First, a person will be a ‘qualifying person’ if they can show that they are a British citizen, national, or subject; a person within certain categories of the 1981 British Nationality Act; or a person domiciled or resident in, or a body incorporated in, part of the United Kingdom.!!8 The concepts of ‘domicile’ and ‘residence’ are not defined in the Act. It seems,

however, that ‘domicile’ refers to the country where a person makes their permanent home. In contrast, the concept of ‘residence’ is more flexible, simply demanding some degree of continuity to the country in question. A person can be a resident of more than one country, though a person will not be a resident if he or she is a casual visitor.'!? Secondly, a person will qualify if they can show that they are an individual domiciled or resident in, or a body incorporated under the law of, a country to which the law has been ‘extended’.'”° In this context it should be noted that ‘extension’ refers to the fact that Her Majesty by Order in Council is given the power to extend the 1988 Act to other territories, including the Isle of Man, the Channel Islands, and any colony.'*! Along with the power of ‘application’ (discussed below), ‘extension’ is a technique that it used to protect works that originate from outside of the UK. While no such orders have been made under the 1988 Act, orders made under the equivalent section of the 1956 Copyright Act continue to operate,'’” most notably in Gibraltar, case the film qualified for protection under s. 154, or whether the author was the Chinese national carrying out the detailed making of the film, in which case the film did not qualify for copyright protection.

115 CDPA s. 154(4). 116

[bid.

117 CDPA s. 154(5).

118 CDPA s. 154(1)(a). 119 Laddie et al., para. 4.60-1. 120 CDPA s. 154(1)(b); British Nationality Act 1981, s. 51.

121 CDPA s. 157. 122 They continue to operate because of CDPA, Sched. 1, para. 36.

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Bermuda, and the Falkland Islands.'’? The effect of such orders is not simply to protect subject matters with a relevant connection to those countries in the United Kingdom: protection is also afforded in those countries to works protected in the United Kingdom.’ As the power to extend the 1988 Act permits the extension to be ‘subject to such exceptions and modifications as may be specified’, and each order

needs to be considered individually. Thirdly, a person will be qualifying if they can show that they are a citizen or subject of, and individual domiciled or resident in, or a body incorporated under a

law of a country to which the Act has been ‘applied’.'”? Section 159 empowers Her Majesty by Order in Council to ‘apply’ the copyright sections of the 1988 Act to other countries. This may be done either so as to let authors connected to such countries, works first published in such countries, or broadcasts or cable programmes sent from such countries to qualify for protection in the United Kingdom. Moreover, such ‘applications’ may be subjected to exceptions and modifications as are specified or confined to certain classes of case specified in the Order. The power to make such Orders is restricted to ‘Convention countries’, other member states of the EEC, or to

countries which give adequate protection to the owners of copyright in respect of the class of works to which the Order relates.'”° Where a work has been jointly authored, the work qualifies for copyright protection if any of the joint authors is qualified. However, the non-qualifying author is ignored when considering issues of first ownership'”” and duration.'** Consequently, if one joint author qualifies and another does not, the qualifying owner alone will be first owner.'”? Similarly, copyright in a co-authored literary work expires seventy years after the death of the last qualifying co-author.'*° 5.1.2 Qualification by first publication A work may also qualify for protection if it is first published in the United Kingdom or in another country to which the Act has been ‘extended’ or ‘applied’. (These 123 Bermuda: SI 1962/1642; SI 1985/1985; SI 1987/2200; British Indian Ocean Territory: SI 1984/541; SI 1987/2200; British Virgin Islands: SI 1962/2185; 1985/1988; Cayman Islands: SI 1965/2010; Falkland Island and Dependencies: SI 1963/1037; 1987/2200; Gibraltar. SI 1960/847; 1985/1986; 1987/2200; Hong Kong: SI 1972/1724; 1979/910; 1987/2200; 1990/588; Montserrat: SI 1965/1858; 1985/1987; 1987/2200 St. Helena and

Dependencies: 1963/1038. Many Orders made in respect ofother colonies which have become fully independent territories have been revoked. The Copyright (Status of Former Dependent Territories) Order, ST 1990/1512 lists territories to which the 1956 Act is deemed to have extended immediately before 1 Aug. 1989: Antigua, Dominica, Gambia, Guyana, Jamaica, Kiribati, Lesotho, St Christopher, Nevis, St Lucia, Swaziland, and Tuvalu. Pending revocation, these countries continue to be treated as qualifying, under previous extension orders.

124 Laddie et al., para. 4.82.

125 CDPA s. 154(1)(c).

126 CDPA s. 159-60. Under CDPA s. 160, the Order may limit protection by virtue of first publication in respect of works from a country which does not adequately protect British works.

127 Under CDPA s. 11. 128 Under CDPA s. 12.

129 But the non-qualifying author can, it seems, claim moral rights and therefore should be named on the work and the work should not be subjected to any derogatory treatment without his consent.

130 CDPA s.154(3).

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concepts were discussed above.)'*' A work is published when copies of the work are issued to the public!” or, in the case of literary, dramatic, musical, and artistic works

when the work is made available to the public through an electronic retrieval system.'*? It does not include: performing a literary, dramatic, or musical work; exhibiting an artistic work; issuing specified types of copies of such works;!** playing or publicly showing a sound recording or film; or broadcasting or cable-casting any work.!°° If a work is to qualify for protection by publication, the publication must be authorized by the author.'*° The 1988 Act provides that publication does not include merely colourable publications which are not intended to satisfy the reasonable requirements of the public.!*” The threshold for protection is very low. At a minimum, if a work attracts no interest, the mere fact that a few copies have been made available for sale will suffice.!°* Publication takes place wherever the publisher invites the public to acquire copies!*? and may take the form of gift, hire, and sale.’*° Since publication consists in offering reproductions to the public, it seems that anything that amounts to a reproduction will suffice.'*! To qualify for protection, the work must be first published in the UK or in another country to which the Act has been ‘extended’ or ‘applied’. The fact that publication first occurs in a non-qualifying country will not matter, so long as that work is published within thirty days in the UK or in another country to which the Act has 131 CDPA s. 155(1).

132" CDPA’s.-175. 133 CDPA s. 175(1). There is also a definition of ‘commercial publication’: CDPA s. 175(2). Note also the differences in the concept of publication employed in relation to the ‘publication right’: see Related Rights Regulations, SI 1996/2967, r. 16. 134 CDPA

s. 175(4)(a)-(b). Publication of an artistic work does not include issuing copies of a film

depicting such a work, nor copies of graphic works or photographs representing a sculpture, a work of artistic craftsmanship, or a work of architecture. However, the construction of a building is the equivalent of publishing the architectural work that it embodies: CDPA s. 175(3). 135 CDPA s. 175(4). But an electronic retrieval system may still serve to publish literary, dramatic, musical, or artistic works even if it operates by way of broadcasting or cable-casting: CDPA s. 175(4)(a)(ii), (b) (iv). 136 CDPA s. 175(6) (no account shall be taken of any unauthorized act); s. 178 (defining unauthorized act

where no copyright subsists). Joint authors are not specifically dealt with, but probably all must consent before a publication is authorized.

127 GIIPA SH 1756). 138 Francis Day & Hunter v. Feldman [1914] 2 Ch 728 (placing six copies of music in retail showroom was publication, so that the work attracted UK copyright protection). In contrast, in Bodley Head v. Flegon [1972] 1 WLR 680, Brightman J said he thought it unlikely that underground publication was enough since it intentionally disregarded the requirements of the public. That case concerned whether Solzhenitzyn’s work August 1914 had been first published in France or Russia. It was claimed (by the defendant) that publication

had occurred in Russia illegally by way of “samizdat’. However, the court found no evidence to support the claim. 139 In British Northrop v. Texteam [1974] RPC 57 Megarry J held that a work was issued to the public when reproductions of the work were put on offer to the public. That offer could be sale or gift. The place of first publication is where the offer is made, not where copies are received. 140 British Northrop v. Texteam [1974] RPC 57. 141 Merchant Adventurers v. Grew [1973] RPC 1; British Northrop v. Texteam [1974] RPC 57. Doubted in Laddie et al., para. 4.30-2.

CRITERIA

FOR

PROTECTION

105

been ‘extended’ or ‘applied’.!*” It should also be noted that films that have been released commercially under conditions of restricted distribution may well not have been published, since copies will not have been made available to the public.!* 5.1.3 Qualification by place of transmission: broadcasts and cable programmes A broadcast or cable programme qualifies for protection if it is made or sent from a place in the United Kingdom, a country to which the Act ‘extends’ or ‘applies’. (This overcomes the fact that live, unrecorded broadcasts or cable programmes are not ‘published’.) In the case of satellite broadcasts, the broadcast is made where the signals

are introduced.'“*

6 EXCLUDED

SUBJECT

MATTER

Although a work may be recorded in material form, be original and sufficiently connected to the UK, in some circumstances the courts may nonetheless refuse to

recognize copyright for policy reasons. It appears that copyright protection will not be granted for obscene, blasphemous, or immoral works. This can be seen in Glyn v. Weston Film Feature'*? where Younger J refused to grant an injunction for infringement of copyright in the claimant’s dramatic work, Three Weeks, which he described as a ‘sensual adulterous intrigue’ and condemned on the ground that it advocated ‘free love’. Younger J said, ‘it is clear that copyright cannot subsist in a work of a tendency so grossly immoral as this.’ For some time it had been thought that Glyn (and the other cases where copyright had been denied to obscene, blasphemous, libellous, irreligious or misleading works)'*° were a product of less enlightened times and, as such, would no longer be 142 CDPA s. 155(3). A publication in the UK or any other country is not to be treated as other than first publication by reason only of earlier publication elsewhere if the latter occurred within a stated period of the former. For works published after the 1956 Act took effect, this period is 30 days; for those published before, it is 14 days (CDPA s. 155(3), Sched. 1, para. 35). The decisive date for UCC countries is 27 Sept. 1957. In other cases it is presumptively 1 June 1957. For the second publication to be treated as a relevant first publication by virtue of these rules, it must of course be published in the UK or a country that was at that time treated as a Convention country by an operative Order. If that country is a member of the Berne Convention, it is not relevant to ascertain whether it subscribes to the Rome, Brussels, or Paris Acts of the Convention. For further details, see Copinger and Skone James on Copyright, para. 3-19; Laddie et al., 285-90.

143 Cf. Bodley Head v. Flegon [1972] 1 WLR 680.

44 COPA s, 156(1), 145 [1916] 1 Ch 261. 146 One difficulty with the Glyn decision is that it is by no means clear when a work is immoral. Generally the criminal law restricts circulation of obscene works—works which are likely to deprave and corrupt. Immorality appears to be a wider test. It is certainly difficult to believe that a work which advocated free love would today be denied copyright. In Stephens v. Avery [1988] Ch 449, in the context of breach of confidence, Browne-Wilkinson V-C stated that he thought the Glyn exception should not apply in the absence of public consensus that the work in question was immoral.

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followed.'4” However, in AG v. Guardian (No. 2)\*8 the House of Lords cited Glyn with approval. In that case Peter Wright, a former security services agent, had written a book (called Spycatcher) about the various operations of the service. Importantly, in writing the book Wright breached the duty of confidence he owed to the Crown. The House of Lords held that Wright would not be able to bring a copyright infringement action because of the ‘disgraceful circumstances’ in which the book was written.'”? As well as citing Glyn with approval, the Lords extended the scope of the immorality exclusion beyond the content of the work to include the circumstances in which the work was created. While the House of Lords affirmed the continued existence of the public policy exclusion, there is still some doubt as to the exact effect of immorality. It is unclear whether it means that there is no copyright in the work at all,'°° or that equity will not enforce the copyright.!°’ The way this question is answered might be important given that if there is no copyright, presumably all contracts that purported to deal with the copyright would be void. The effect of the public policy exclusions is somewhat paradoxical. As the denial of copyright to obscene works effectively places them in the public domain, this may increase the speed and breadth of circulation. If dissemination is deemed to be undesirable, the denial of copyright seems to be counterproductive. (It may also stimulate public interest in the work.) Presumably, other reasons have motivated the

courts. The approach taken by the courts is consistent with the view that the primary concern of copyright is to encourage creation rather than to control dissemination. Denying copyright will (supposedly) remove the incentive to produce obscene works. As we have seen, a derivative work that infringes copyright in the work on which it is based can be original. In such circumstances the question arises as to whether an original but infringing work should be denied protection on grounds of public policy. With one or two exceptions,'* the courts have generally been willing to enforce

‘47 Tn Chaplin v. Frewin (1966) 1 Ch 71 the Court of Appeal said that it thought the book in question was worthless from a literary point of view as well as being blasphemous but nowhere suggested that the work should for that reason be deprived of copyright. It thus appeared that the doctrine in Glyn could no longer be viewed as sound law.

148 [1990] 1 AC 109. 149 At the same time they appeared to take the view that the Crown had copyright in Wright’s book or that Wright held copyright in the book on trust for the Crown. This is a little difficult to square with the proposition that there was no copyright in the work.

150 In Glyn, Younger J said there was no copyright in the work. 151 In Spycatcher the House of Lords simply stated that Wright would not be allowed to enforce his copyright. The assertions that Wright held copyright on trust or that copyright rested in the Crown suggests that the House of Lords may have interpreted Glyn as a case where the remedy of an injunction was withheld rather than copyright denied.

152 e.g. Ashmore v. Douglas Home [1987] FSR 553. (Judge Mervyn Davies denied copyright protection to part of a play which was derived from an existing copyright play on the grounds that the former was ‘infringing material’.)

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107

copyright in derivative works even though they infringe.'®’ This has been explained on the basis that if protection were denied to such works it would lead to a substantial injustice. As Goff J said: It is understandable that the owner of copyright should be entitled to restrain publication of an infringing work; but the idea that he should be entitled to reap the benefit of another’s original work, by exploiting it, however extensive such work might be, however innocently it

might have been made, offends against justice and commonsense.'!™ '53 See Wood v. Boosey (1868) LR 3 QB 223, 229; Chappell v. Redwood Music [1982] RPC 109, 120; ZYX Music GmbH v. King [1995] 3 All ER 1, 9-11.

154 Chappell v. Redwood Music [1982] RPC 109, 120.

5 AUTHORSHIP AND OWNERSHIP

FIRST

1 INTRODUCTION A considerable amount has been written about authorship and the role it plays in copyright law. It has been become clear from these discussions that the concept of authorship which operates in copyright law is not the same as is used in many other fields.’ One explanation for this relates to the particular role that the author plays in copyright law. More specifically it is because in copyright law, the author acts as a focal point around which many of the rules and concepts are organized. For example, as we

have just seen, the status of the author helps to determine whether a work qualifies for protection. Where relevant, the labour that an author expends in creating a work will also influence whether the resulting work is original. In other situations, the duration of many types of works are determined by reference to the lifespan of the author. Similarly, the moral rights that are recognized in the UK attach to the author of the work in question. In this chapter we explore two closely related themes. First, we look at the concepts of authorship, as it is understood in copyright law. In turn, we look at one of the most important consequences that flow from being named as author of a work: namely, first ownership of copyright and the various exceptions to this general rule.

2 AUTHORSHIP The author of a work is defined in the 1988 Act as the person who creates the work.” Special provisions deal with the situation where more than one person is involved in the creation of a work.* While to describe the creator of a painting or a sculpture as an ‘author’ may jar, few problems arise in ascertaining who is the author of most literary, ! Sometimes it is more expansive, including those whose effort might not reach the creative levels of literary authorship. See e.g. Walter v. Lane [1900] AC 539.

4 GDPAS; 9(1). 3 See below at pp. 115-16.

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OWNERSHIP

109

dramatic, musical, and artistic works.* This is because in relation to the traditional categories of literary, dramatic, musical, and artistic works there is a general consensus as to who of the various people involved in the production of a work is to be treated as the creator or author of the work. More problems arise, however, in relation to entrepreneurial works and computergenerated works. In part, this is because the concept of authorship does not sit comfortably with the way we tend to think about such works. That is, we do not normally think of a sound recording, a typographical arrangement, a broadcast, or a cable programme as having an author, even in the broad sense in which it is used in copyright law. In these circumstances, it is important to appreciate that the ‘author’ is an artificial construct, a legal fiction, which is used to allocate rights. This can be seen in the fact that in relation to sound recordings, broadcasts, cable programmes, and typographical arrangements, the ‘author’ is (effectively) defined as the person who made the work possible (as distinct from the creator). In the case of a literary, dra-

matic, musical, or artistic work that is computer-generated (which by definition has no author) the ‘author’ is ‘the person by whom the arrangements necessary for the creation of the work are undertaken’.° In its dealings with entrepreneurial works, British copyright law has tended to concentrate on the person who made the arrangements necessary for the making of the work (the entrepreneur). In contrast, civil law systems have tended to focus on the

persons who made creative contributions to the work. This difference has long been seen as an important point of contrast between the two systems.° As a result of attempts to harmonize copyright law in Europe, this difference is slowly being undermined. In part, this is because one of the consequences of the process of harmonization is that civil law conceptions of authorship have been introduced into British law. A prelude to this occurred with moral rights, where the director was recognized as the author of a film. More recently, the notion of the principal director as joint author of a film has also been introduced into UK law.’ One of the consequences of these changes is that films now occupy a hybrid position in between authorial and entrepreneurial works. One of the key differences between copyright and most other forms of intellectual property is that copyright protection arises automatically, without the need for formality or registration. While this may be advantageous to authors, it generates some unexpected problems. In particular, while with patents, registered designs, and trade marks the identity of the creator of the intellectual property and, in turn, the nature of

4 For consideration of the question of whether an amanuensis is an author, see Donoghue v. Allied Newspapers [1938] Ch 106. But note that a spiritual medium who transcribed messages from the spiritual world was author of the work: Cummins v. Bond [1927] 1 Ch 167 (Eve J held that the medium ‘had exercised

sufficient skill, labour and effort to justify being treated as author’). > CDPA s. 9(4), 178.

6 A. Strowel, Copyright et Droit d’Auteur: Convergences et Divergences (1993) 320-89. 7 CDPA s. 9.

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the property are clarified by the process of registration, with copyright this has to be achieved by other means.° The task of determining who is the author of a work is made easier because the 1988 Act sets out a series of statutory presumptions as to who is the author of a work. Section 104 provides that the name that appears on a literary, dramatic, musical, and artistic work as published or on the work when it is made shall be presumed to be the author. Section 105 establishes similar presumptions with respect to sound recordings, films, and computer programs.’ The upshot of these presumptions, which only operate in civil matters, is that the burden of proof is placed on the person claiming that someone other than the ‘named’ author is the true creator of the work in question.

2.1

AUTHORSHIP

ARTISTIC

OF LITERARY,

DRAMATIC,

MUSICAL,

AND

WORKS

The author of literary, dramatic, musical or artistic work is the person who creates it.!°

No further guidance is given in the 1988 Act as to what this means. The only exception to this is to be found in section 3(2) which indicates that the author need not neces-

sarily be the person who fixes or records the work (although this will usually be the case).'' The lack of statutory guidance as to the way the author is to be construed in this context does not matter that much given that there are few problems in identifying who is the author of a literary, dramatic, musical or artistic work. Having said that, problems have occasionally arisen in determining whether a person involved in the production of a literary, dramatic, musical, and artistic work is to be regarded as an author (or creator). The way this question is answered is similar to the way the originality of a work is determined. Basically, in order for someone to be classified as an author, it is necessary for them to be able to show that the labour, skill, and effort that they contributed to the work is of the type that is protected by copyright: that is, that it would be sufficient to confer originality on the relevant work.'* The upshot of this is that it is unlikely that a stenographer, an amanuensis, or a person who merely photocopies or traces a work would ever be considered as an author.!? This is because the labour expended in relation to the work fails to bring about a (material) change in the resulting work. However, if the person exercised a degree of creative labour in producing the work, even if only a very small amount, it is more likely that they will be treated as an author. This can be

8 See Sherman and Bently, 182-5.

° CDPA s. 105.

10 CDPA s. 9(1). 1 @DPA:s. 3(2): 12 As the type of labour that confers originality is the same as that which enables someone to be classified, in copyright law terms, as an author, reference should be made to the earlier discussions on this topic. 13 Nor can the contribution consist merely in the (recording) of a dictation—according to Donoghue v. Allied Newspapers [1938] 1 Ch 106.

AUTHORSHIP

AND

FIRST

OWNERSHIP

ahhE

seen, for example, in Cummins v. Bond’ where it was held that a spiritualist who produced ‘automatic writing’ dictated to her from beyond the grave at a seance was the author of the resulting work. As the spiritualist exercised great speed in writing down the messages and used great skill in translating the spiritual communication given in an ‘unknown tongue’ into ‘archaic English’ it was held that she had exercised sufficient skill, labour, and effort to justify her being treated as author. Similarly, in Walter v. Lane, the House of Lords held that a reporter who took a shorthand report of a speech had exercised sufficient skill to be treated as author of the resulting report.’ As we saw in relation to the originality requirement, the mere fact that a person expended labour in the creation of a work will not necessarily mean that the resulting work is original (or that the person is an author) if it is the wrong type of labour. This means that although a person may play an important role in the production process, they may still not be treated as an author. In the case of a book, for example, while the copy-editor, the jacket designer, and the typesetter all play an important role in giving shape to the final product, they will not be treated as authors of the resulting literary work. (Although it is possible to imagine situations where the efforts of a copy-editor may be such that they might be treated as a joint author.) Similarly, while copyright law has few problems in categorizing the person who wrote a play as the author of the play, in one case it was held that a person who had suggested the title, the leading characters, a few catchwords, and the scenic effects for the play had not contributed sufficiently to the play to justify them being treated as a joint author.’® Where the contribution made by someone

is at an abstract level, such as the idea

for a play or a book or a structure of a computer program, they are unlikely to be treated as an author of the resulting work. The more specific the contribution, however, the more likely it is that the person in question will be treated as an author. Consequently, in one case it was held that a person who developed an idea for a house design that he had explained in detail (both verbally and through sketches) to a technical draftsman was joint author of the plans that the draftsmen subsequently produced. Similarly, a political figure who dictated his memoirs to a friend, read every word, and altered parts of the manuscript was held to be joint author of the resulting book.'” 2.1.1 Computer-generated works In the case of literary dramatic, musical or artistic works that have been computergenerated, the creator is ‘the person by whom the arrangement necessary for the creation of the work are undertaken’. While the meaning of this provision has yet to

=

4 [1927] 1 Ch 167. See also Leah v. Two Worlds Publishing [1951] 1 Ch 393 Vaisey J.

> [1900] AC 539. Tate v. Thomas [1921] 1 Ch 503.

Heptulla v. Orient Longman [1989] FSR 598 (Indian High Court).

=e NO

1b.

COPYRIGHT

be tested, it seems that it might include the person who operates the computer, as well perhaps as the person who provides or has programmed the computer.'® 2.1.2 Unknown authorship In certain situations, it may not be possible to ascertain who is the author of a literary, dramatic, musical or artistic work. This may be because the name of the author is not attached to the work and it is not possible to ascertain authorship by other means. In other cases, an author may wish that their works be published anonymously, under a false name or a pseudonym. As the author acts as the focal point around which many of the rules of copyright are organized, this creates a number of potential problems. To remedy this, the 1988 Act includes the notion of ‘unknown authorship’. A work is a

work of unknown authorship if the identity of the author is unknown and it is not possible for a person to ascertain his or her identity by reasonable inquiry.'? While in this situation the author remains the first copyright owner, since it is impossible to know when the author of such a work died, the duration of copyright is limited to fifty years from the date when the work was first made available to the public.

2.2

ENTREPRENEURIAL

WORKS:

STATUTORY

AUTHORS

As we mentioned earlier, authorship does not sit comfortably with the way we tend to think about entrepreneurial works. Any potential difficulties in having to identify who is the author of, say, a cable programme or a sound recording are resolved by section 9(2) which defines who is the author of each of the different entrepreneurial works. 2.2.1 Sound recordings: the producer

Section 9(2)(aa) provides that the author of a sound recording is the ‘producer’.”° In turn, the ‘producer’ is defined as the ‘person by whom the arrangements necessary for the making of the sound recording are undertaken’.”! In most cases, the ‘producer’ of a sound recording will be the record company. This may change, however, where

'8 In Express Newspapers v. Liverpool Daily Post [1985] FSR 306 Whitford J held that the author of computer-generated bingo sheets was the programmer of the computer. It is not clear whether this would be the position under the 1988 Act. G. Dworkin and R. Taylor, Blackstone’s Guide to the Copyright Designs and Patents Act (1989), 186, describes the provision as ambiguous, but argue it will lead to the ‘producer’ being treated as co-owner. W. Cornish, Intellectual Property (1996), 456 says that the use of this phrase is ‘less than happy’ and doubts that joint ownership by the programmer and user is plausible because of the absence of collaboration.

19 CDPA s. 9(4)(5). 20 CDPA s. 9(2)(aa). This section, which took effect from 1 Dec. 1996, was introduced by the Copyright and Related Rights Regulations (SI 1996/2976). This replaced s. 9(a) which stated that ‘in the case of a sound

recording or film, the person by whom the arrangements necessary for the making of the recording or film are undertaken.’ 21 For works made between 1 June 1957 and 1 Aug. 1989, ‘the person who owns the first record (disc, tape

or roll) embodying the recording at the time the recording is made’ (the maker) is the owner. CA 1956 s. 12(8). In relation to pre-1957 works, ‘the owner of the original plate upon which the sound recording were recorded is deemed to be the author,’ 1911 CA ss. 5(1), 19(1).

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113

a sound recording is produced cooperatively, or where non-traditional modes of distribution (such as the Internet) are used. The question of what is meant by ‘the

producer’ is discussed in more detail in the next section. 2.2.2 Films: the producer and the principal director When the 1988 Act was enacted,” for the purposes of determining authorship, films were treated in a similar fashion to sound recordings: the author was defined as ‘the person by whom the arrangements necessary for the making of the film are undertaken’. As had been the case under the 1956 Copyright Act, films were treated as entrepreneurial works. In order to bring UK law into line with the EU Duration Directive, the 1988 Act was amended. The upshot of this is that the authors of a film made on or after 1 July 1994 are the producer and the principal director of the film. The principal director and producer are treated as joint authors, except where they are the same person.” The recognition of the principal director as author of the film marks an important change in the way films are treated by British copyright law from films being treated as a type of entrepreneurial work, to films being treated as an authorial work. The ‘principal director’ is not defined in the 1988 Act. Some guidance as to what is meant by this term is provided by section 105(5) which states that where a film bears a statement that a particular person was the director (or principal director) of the film, this shall be presumed to be correct until the contrary is proved.” Section 105(6) adds that where a person is named as the director of a film, this shall be presumed to mean that he or she is the principal director. The ‘producer’ of a film is defined as ‘the person by whom the arrangements necessary for the making of the film are undertaken’. This is the same definition as is used to describe the producer of a sound recording. The question of whether a person is a ‘producer’ of a film or a sound recording is a question of fact.*° For the most part, there will be few problems in determining who is the producer of a film or a sound recording. Most questions regarding the allocation of ownership of copyright will be

22 CDPA s. 9(2)(ab) the status of the authorship of a film will differ depending on when the date of the film was made. Prior to the 1956 Act, films were not recognized as a distinct category of work, but the elements (photographs, sound recording, and dramatic works) of the film were protected instead (in much the same way as multimedia works are now). This position changed under the 1956 Act and under the 1988

Act, prior to the amendments in 1994, were the same. That is, the author of the film is ‘the person by whom the arrangements necessary for the making of the film are undertaken’. However, films begun before 1 July

1994, but completed thereafter are treated as made when completed: Related Rights Regs., r. 25(2). Furthermore, it is not an infringement of any right which the principal director has by virtue of these Regulations to do anything after commencement in pursuance of arrangements for the exploitation of a film made before 19 Noy. 1992: Related Right Regs., r. 36(2).

23 CDPA ss. 9(2)(ab) and 10(1A). 24 CDPA s. 105(5). 25 CDPA s. 178. However, it is unclear whether the term ‘principal director’ will be treated as narrower than the term ‘director’ when used in relation to moral rights. 26 Beggars Banquet Records v. Carlton TV [1993] EMLR 349, 361; A & M Records v. Video Collection [1995] EMLR 25, 29.

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dealt with contractually. Problems may arise, however, because the production of sound recordings and films frequently involves the input of a range of different people: many of whom may lay claim to having helped to organize and facilitate the making of the sound recording or the film. Although the term ‘producer’ is used to define who is the creator, it should be noted that the courts have emphasized that

there is a distinction between someone who ‘makes’ a recording and someone who ‘makes the arrangements for the production of a recording’: it is the latter rather than the person who actually records or makes the sound recording or film (the person who operates the recording system) who is the author.”’ The notion of the ‘producer’ presupposes that at the core of the production process there is a person (or more often a company) that coordinates, controls, and organizes the production of the work.’® It seems that to be a ‘producer’ a person must exercise some degree of direct (organizational) control over the process of production.” If a person operates at the periphery of the process, such as the person who merely commissions the making of the recording or merely provides the finance for a film or a sound recording, he or she will not be regarded as a producer. If this were not the case, banks and other lending institutors would qualify as authors. However, provision of finance may be one of the organizational matters that, in combination with others,

amounts to the ‘necessary arrangement’.*” 2.2.3

Broadcasts

In the case of sound and television broadcasts, the author is the person who makes the broadcast.*! Where a person receives and immediately retransmits a broadcast, the author is the maker of the original broadcast rather than the person who relays it. 2.2.4 Cable programmes In the case of cable programmes, the author is the person who provides the programme service in which the programme is included.” 2.2.5 Typographical arrangements

The author of a typographical arrangement of a published edition of a work is the publisher.*? 27 Adventure Films v. Tully [1993] EMLR 376; A & M Records v. Video Collection [1995] EMLR 25.

28 See also Century Communications v. Mayfair Entertainment [1993] EMLR 335 (film made under restrictive conditions in China was produced by organizer outside of China). 29 Adventure Films v. Tully [1993] EMLR 376. 3° Ibid. Beggars Banquet Records v. Carlton TV [1993] EMLR 349 (arguable claim that person who provided finance and arranged access to venue where event was filmed was a person who made arrangements); Century Communications v. Mayfair Entertainment [1993] EMLR 335 (person had undertaken the arrangements necessary for the production of the film when it initiated the making of the film, organized the activity necessary for making it and paid for it). 31 CDPA s. 9(2)(b). Under the 1956 Act the author of a broadcast was either the British Broadcasting

Corporation, the Independent Broadcasting Authority, or the broadcasting organizations of countries to which the Act has been applied, each in respect of its own broadcasts. 32 CDPA s. 9(2)(c).

33 CDPA s. 9(2)(d).

AUTHORSHIP

2.3

JOINT

AND

FIRST OWNERSHIP

115

AUTHORSHIP

Collaborative research and creation is often a fruitful and productive way for authors to work. Copyright recognizes this mode of creation through the notion of joint authorship. A number of important factors, such as the way the work can be exploited, flow from a work being jointly authored.*4 While joint authorship is normally associated with literary, dramatic, musical, and artistic works, it is possible for all works to be jointly authored. As we saw earlier, the 1988 Act specifically provides that films are treated as works of joint authorship between the principal director and the producer, unless they are the same person. The 1988 Act also extends the concept of joint authorship to a broadcast ‘where more than one person is taken as making the broadcast’, namely, those ‘providing’, or taking ‘responsibility’ for the contents of the programme and those making the ‘arrangements necessary for its transmission’.°° No special definition of joint authorship is applied to sound recordings, cable programmes, or published editions. A work is a work of joint authorship if it is ‘a work produced by the collaboration of two or more authors in which the contribution of each author is not distinct from that of the other author or authors.’ A work is a work of joint authorship if it satisfies three conditions. (i) First, it is necessary to show that each of the authors contributed to the making of the work. The test for whether a person has contributed to the creation of a work is the same test as is used to determine whether someone is an author of a work: in the case of authorial works, that is, whether the labour they expended in producing the work was sufficient to confer originality on the resulting work.*” While to be a joint author it is necessary for an author to have contributed to the work, joint authorship does not require that the respective contributions be in equal proportions. (ii) The second requirement that must be satisfied for a work to be one of joint authorship is that the work must have been produced through a process of collaboration between the authors. This means that when setting out to create a work, there must have been some common design, cooperation or plan that united the authors (even if only in a very loose sense).** So long as the authors have a shared plan of some sort, there is no need for them to be in close proximity for them to collaborate. 34 A joint owner (or other co-owner of copyright) can sue an infringer independently and can also bring an action against another co-owner).

35 CDPA ss. 9(2)(ab) and 10(1A). 36 CDPA s. 10(2), cross-referenced to s. 6(3). 37 In one case, a classically trained musician who acted as orchestral arranger for a rock band was held to be joint author of a number of arrangements which included orchestral passages linking the verses and choruses; with respect to one song, where the contribution comprised merely a piano accompaniment, the court held it was ‘only just’ sufficient to qualify. Godfrey v. Lees [1995] EMLR 307, 325-8. See also Fylde Microsystems v.,Key Radio Systems [1998] FSR 449 (suggestions not sufficient); Robin Ray v. Classic FM [1998] FSR 622. 38 Levy v, Rutley (1871) LR 6; CP 583; Cala Homes (South) v. Alfred McAlpine Homes East [1995] FSR 818, 835.

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Indeed, it is possible for the collaboration to take place over long distances (a practice made much easier because of e-mail).°? The upshot of the second requirement is that although two people may work on the same project, unless there is a shared goal they will not be classified as joint authors. This means, for example, that where one person writes a poem and another person translates it into another language, the author of the original poem would not be a joint author of the translation. Similarly, where a musician arranges a pre-existing musical work, the author of the original musical piece would not be able to claim joint authorship over the subsequent work: instead, there would be separate copyrights in the two pieces.” (iii) Thirdly, for a work to be jointly authored the respective contributions must not be distinct or separate from each other. In more positive terms, this means that the contributions must merge to form an integrated whole (rather than a series of distinct works). For example, if the contributions of two authors merged in such a way that no one author is able to point to a substantial part of the work and say ‘that is mine’, the authors would be joint authors. If, however, one author wrote the first four chapters of a book and the other author wrote the remaining six chapters, instead of the resulting book being a joint work, the respective authors would have copyright in the particular chapters they wrote.*!

3

FIRST

OWNERSHIP

Authorship and ownership have long been closely intertwined in copyright law. Indeed one of the notable features of the 1710 Statute of Anne was that it recognized authors as first owners of the literary property they created. This basic formula is repeated in the 1988 Act which declares that the author of a work is the first owner of copyright.” The rule that copyright initially vests in the author is, however, subject to a number of exceptions. The first and most important concerns works made by employees.*’ Exceptions also exist in relation to Crown copyright, parliamentary copyright, and to works created by officers of international organizations.** Judicially created exceptions also exist where a work is created in breach of a fiduciary duty or in breach of confidence. Before looking at these in more detail, it is important to note that although the author is usually the first owner, it is possible for an author to assign his or her copyright to third parties. This means that the question of who is the copyright owner 39 Cala Homes (South) v. Alfred McAlpine Homes East [1995] FSR 818, 835.

40 Chappell v. Redwood Music [1981] RPC 337.

41 42 43 44

CDPA CDPA CDPA CDPA

s. s. s. s.

10(1). 11(1). 11(2). 11(3).

AUTHORSHIP

AND

FIRST

OWNERSHIP

117

at any particular point of time will depend upon what has happened to the copyright since it was first created. Since valid agreements can be made in relation to the transfer of future copyright, it may be that when copyright arises, the first owner of copyright under the statutory scheme is immediately divested of their rights in favour of an assignee.

3.1

WORKS

CREATED

BY EMPLOYEES

Section 11(2) of the 1988 Act provides that in the absence of an agreement to the contrary, where a literary, dramatic, musical or artistic work or a film is made in the course of employment, the employer is the first owner of any copyright in the work. While employees retain moral rights in the works they create, these are subject to a number of limitations.*” Critics have suggested that by granting first ownership of works made by employees to employers, British law fails to provide creators with sufficient additional incentives to create. It is also said that British law also fails to acknowledge the natural rights which employee-authors have in their creations. In so doing, it is said that British law fails to follow the underlying rationales for copyright. In response to arguments of this sort, it is suggested that while employers may not create works, they provide the facilities and materials that enable the act of creation to take place. In so doing, they make an important contribution to the production of new works. It is argued that

granting first ownership to employers encourages employers to invest in the infrastructure that supports creators. As employers are often in a better position than employees to exploit the copyright in a work, it is also suggested that it makes more sense to give copyright to employers than to employees. Another argument in favour of giving ownership to employees is that in the absence of a provision that formally granted first ownership to employers, employers would pressurize employees to assign

their copyright to them. As section 11(2) achieves what would otherwise happen in practice, it thus serves to reduce transaction costs. In response to the argument that in

granting first ownership to employers, employees are not properly rewarded for their creative efforts, it is suggested that employees are rewarded through other means, such as pay, continued employment, and promotion.“° However problematic the arguments in favour of granting first ownership of employee works to employers may be, they have dominated policy changes that have been made in this area. In particular, while under the Copyright Act 1956 employee journalists presumptively shared copyright with the newspapers, this ‘anomaly’ was removed in the 1988 Act.” As a result, under the current law copyright in all works 45 CDPA s. 79(3) and s. 82.

46 Whether a scheme, such as that which exists under the Patents Act, providing for extra reward for particularly successful works should be implemented was considered by the Whitford Committee. 47 More specifically, under the previous law, copyright in a work made by an author in the course of

employment by the daily or periodical press presumptively vested in the employer for purposes of its publication in the newspaper or periodical. CA 1956 s. 4(2).

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made in the course of employment belong to the employer (unless there is an agreement to the contrary). For an employer to be first owner of copyright it is necessary to show that (i) the literary, dramatic, musical, artistic work or film was made by an employee; (ii) the work was made in the course of employment, and (iii) there is no agreement to

the contrary.** We will deal with each of these in turn. 3.1.1 Who is an employee? An employee is defined in the 1988 Act as a person who is employed under a contract of service or apprenticeship.” Given the various forms that an employment relationship can take, it is not surprising that the courts have used a number of different tests to determine whether a person is an employee. Traditionally, the question of whether someone is an employee has been determined by examining the relationship between the parties and the control or power that one party is able to exercise over the other. The more control one party is able to wield, the more likely it is that the parties are in an employment relationship. The socalled ‘control test’ is a useful way of determining whether a person is an employee where the parties are in a master—servant type relationship. However, it provides little help in relation to those professions where a person has a considerable amount of

freedom, but nonetheless is ordinarily regarded as an employee. In these circumstances the courts have stressed that the question of whether someone is an employee depends on whether the work they perform is as an integral part of the business. Thus even where a person is not under a great degree of control, they may still be an employee.” In determining whether someone is an employee, it is now usual for the courts to look at the nature of the relationship and what it is that the person does in his or her day-to-day activities.°' Apart from the descriptions used (such as ‘independent contractor’), other factors which suggest that someone is not an employee includes the fact that they have a great deal of responsibility, provide their own equipment, hire their own

helpers, take financial risks, have other commitments,

and have the

opportunity of profiting from the tasks they perform.*” The courts will also look at the way financial arrangements between the parties are organized as a way of determining whether someone is an employee. Factors which indicate that someone is an employee include the fact that they are paid wages; that income tax deductions are made on the ‘pay-as-you-earn’ basis; and that both parties contribute to pension schemes and make national insurance payments. 48 While the 1988 Act introduced changes on point, effective from 1 Aug. 1989, the initial ownership of copyright continues generally to be determined by the law in effect when the materials in question were made. CDPA, Sched. 1, para. 11.

49 CDPA s. 178. 50 See Stephenson Jordan v. McDonald & Evans (1952) 69 RPC 10, 22 (Denning LJ).

> In Lee Ting Sang v. Chung Chi Keung [1990] 2 AC 374, the Privy Council approved of the ‘indicia’ for Social Security [1969] 2 QB 173. approach in Market Investigations v. Minister

52 Robin Ray v. Classic FM [1998] FSR 622.

AUTHORSHIP

AND

FIRST

OWNERSHIP

119

3.1.2 Was the work made in the course of employment? In order for an employer to be first owner of copyright, it is also necessary to show that the work was made in ‘the course of the employment’. The question of whether a work has been made in the course of employment will depend on the particular circumstances of the case in hand. An important factor which has influenced the courts when determining if a work has been made in the course of employment is whether the making of the work falls within the types of activities that an employer could reasonably expect or demand from an employer. In turn, this depends on the scope of the employee’s duties. This can be seen, for example, in Stevenson Jordan v. MacDonald,” where the question

arose as to whether an accountant or his employer (a firm of management consultants) owned copyright in a series of public lectures the accountant had given about the budgetary control of businesses. Morris LJ noted that the employer had paid the expenses of the lecturers, that the employee-accountant could have prepared the lectures in the company’s time, used its library, had the lectures typed up by company secretaries, and that the lectures were a useful accessory to his contracted work.” Nonetheless, Morris LJ found that since it was not shown that the accountant could have been ordered to write and deliver the lectures, they did not form part of his

contract of employment. As such, the copyright belonged to the employee rather than to the employer. Similar reasoning was also applied in Noah v. Shuba.°? This was a copyright infringement action in relation to a book called A Guide to Hygienic Skin Piercing, written by the claimant, Dr Noah. During the proceedings it was argued that when Dr Noah wrote the guide he was employed as a consultant epidemiologist at the Public Health Laboratory Service. As such, the copyright vested in his employer.°® While there was no doubt that Dr Noah was an employee of the Public Health Laboratory, it was less clear as to whether the guide had been written in the course of his employment. Dr Noah discussed his work with colleagues, made use of the services of the Public Health Laboratory Service library and had the manuscript typed up by his secretary. In addition, the guide was published by the Public Health Laboratory Service at its own expense. Nonetheless Mummery J held that the guide had not been written in the course of Noah’s employment. An important factor that influenced this decision was that Dr Noah had written the draft at home in the evenings and at weekends. It should be pointed out that the mere fact that a work is made at home or that the employee makes use of their personal resources does not necessarily mean that it will fall outside the scope of the employee’s duties. Ultimately, the question of whether a 53. Stephenson Jordan v. McDonald & Evans (1952) 69 RPC 10. However, a journalist who wrote a confiden-

tial memorandum to colleagues about a possible article was acting in the course of her employment: Beloff v. Pressdram [1973] 1 All ER 241.

54 In Byrne v. Statist [1914] 1 KB 622, a journalist made a translation to be used in the newspaper in his own time: this was not in the course of his employment. 55 [1991] FSR 15. 56 Noah v. Shuba [1991] FSR 14.

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COPYRIGHT

work is made within the course of the scope of employment depends upon the contract of employment. This can be seen in Missing Link Software v. Magee,*’ where the question arose as to whether copyright in software written by an employee outside of work time and on his own equipment was made in the course of his employment and thus owned by his employer. The claimant company argued that since they had employed the defendant to write programs of the kind in dispute, similar programs, even if written in his spare time, were created in the course of his employment. The court held that although the employee had written the software in his own time and on his own equipment, nonetheless it was not unarguable that as it fell within the scope of the tasks he was employed to carry out, the computer programs were created within the course of his employment. 3.1.3 Agreements to the contrary

Finally, it should be noted that the copyright in works made in the course of employment will not be treated as belonging to the employer where there is an agreement to the contrary. Such an agreement may be written or oral, express or implied.*® In some cases, such agreements have been implied from custom. For example, in

Noah v. Shuba MummeryJ said that if the skin piercing guide had been written in the course of Dr Noah’s employment, nonetheless he would have implied a term into Dr Noah’s contract that the copyright remained with the employee.*® The reason for this was the longstanding practice of the Public Health Laboratory Service of allowing its employees to act as if they owned copyright in their works: they allowed employees to assign copyright to publishers, claim royalties, and with respect to the case itself, did not assert that they owned copyright. This decision has important ramifications where employers allow employees to act as if they own copyright (whereas in fact they may not).

3.2

CROWN

COPYRIGHT

Another exception to the general rule that the author is the first owner relates to works governed by Crown copyright. Where a work is made by an officer or servant of the Crown in the course of his or her duties,®° copyright in the work belongs to the Crown and not to the author of the work.°!

°7 [1989] FSR 361.

°8 As we will see there is a general formality is unnecessary with respect can be oral or implied. But to refer agreement that copyright was to vest 59 Noah v. Shuba [1991] FSR 14.

requirement that to the agreement to a relationship in the employee:

assignments of copyright be in writing. However, such reversing the presumption of initial ownership, which as not being one of employment was not an implied Robin Ray v. Classic FM [1998] FSR 622.

60 CDPA ss. 163, 164. 61 CDPA s. 163. It lasts for 125 years from when the work is made or 50 years from its commercial publication. Crown copyright also exists in all Acts of Parliament and Measures of the General Synod of the Church of England.

AUTHORSHIP

3.3

PARLIAMENTARY

AND

FIRST OWNERSHIP

121

COPYRIGHT

Where a work is made under the direction or control of the House of Commons or the House of Lords, the respective House owns copyright therein.® Such parliamentary copyright lasts for fifty years from the year in which the work was made. All Bills introduced into Parliament attract parliamentary copyright, but this ceases on Royal Assent, withdrawal or rejection of the Bill.

3.4

INTERNATIONAL

ORGANIZATIONS

Where a literary, dramatic, musical or artistic work is made by an officer or employee of an ‘international organization’,™ the organization is the first owner of the resulting copyright.®

3.5

COMMISSIONED

WORKS

AND

EQUITABLE

ASSIGNMENT

Another exception to the general rule that the author is first owner arises, in limited circumstances, where a person commissions someone to make a work. Under the

Copyright Act 1988, copyright in a commissioned work belongs to the author of the commissioned work.® However, in certain circumstances the courts may infer that an

independent contractor is subject to an implied obligation to assign the copyright to the commissioner. This may give rise to a trust with respect to the copyright in the commissioned work, and render the commissioner the equitable owner.

Implied agreements to assign have been found where a choreographer undertook

to arrange certain dances for the Russian ballet;°’ a design of a trade mark was produced;® a person upgraded a previous version of a computer program; and a person arranged for the making of a sound recording.”” In Warner v. Gestetner,”! Warner was commissioned to draw cats which Gestetner was to use in promoting products at a trade fair. When Gestetner used the cats in their promotional literature, Warner claimed that his copyright had been infringed. Whitford J held that it was an 62 CDPA s. 164. The Government of Wales Act 1998, Sched. 12, has added to this list: ‘any sound recording,

film, live broadcast or live cable programme of the National Assembly for Wales which is made by or under the direction or control of the Assembly.’

63 CDPA ss. 165-7. 64 This means an organization the members of which include one or more states. CDPA s. 178.

65 CDPA s. 168. 66 Under the 1956 Act, a party commissioning a photograph, portrait, or engraving for value presump-

tively acquired copyright in that work: CA 1956 s. 4(3), Sched. 8, para. 1(a). 67 Massine v. De Basil [1936-45] MacG CC 223.

68 Auvi Trade Mark [1995] FSR 288. 69 Flanders v. Richardson [1993] FSR 497, 516-19, Ferris J held that where a computer program was improved in circumstances where there was an acceptance or understanding that the plaintiff owned all the rights in the program, the court would hold ? to be the copyright owner. (Ferris J relied on Massine v. De Basil [1936-45] MacG CC 223.)

70 A & M Records v. Video Collection [1995] EMLR 25. 71 Warner v. Gestetner & Newell & Sorrell Design [1988] EIPR D-89.

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COPYRIGHT

implied term of their oral agreement that Gestetner was equitable or beneficial owner of the copyright and, as such, that Gestetner had not infringed. As these decisions amount to judicial variations of a clear legislative scheme,” the better view is that they should be treated as relating largely to their specific facts.”°

3.6

BREACH

OF CONFIDENCE

It also seems that copyright in works that are created in breach of a fiduciary duty or in breach of confidence will be held on constructive trust for the person to whom the duty was owed.”4 72 The decision can be criticized on the grounds that it undermines the clear rules as to first ownership in the statutory scheme and places unnecessary discretion with the judges. 73 e.g. Saphena Computing v. Allied Collection Agencies [1995] FSR 616, distinguishing Warner v. Gestetner [1988] EIPR D-89. 74 AG v. Guardian (No. 2) [1990] AC 109, 263, 276. But in A-G v. George Blake [1996] FSR 727 Scott V-C

held that he was precluded by existing authorities from finding a constructive trust. In so far as the constructive trust analysis is adopted there is no obvious reason why the analysis should be restricted to cases of breach of duties owed to the Crown. See below at pp. 974-5.

6 NATURE

OF THE

RIGHTS

1 INTRODUCTION This chapter is concerned with the rights that the law confers on the copyright owner. The scope of these rights is important in so far as it determines the types of activities which, unless done with the copyright owner’s consent, amount to an infringement of the owner’s copyright. One of the most consistent themes in the history of copyright law is that the types of activities that have fallen within the copyright owner’s control have steadily expanded. For example, the 1710 Statute of Anne conferred on authors and proprietors of books the limited right to ‘print and reprint’ those books. In the early nineteenth century, the copyright owner’s monopoly as regards musical and dramatic works was extended to cover not only the reprinting of the work, but also the public representation of the work. In 1911, the reproduction right was expanded from the right to print and reprint to the right to ‘copy’, which included copying in different dimensions. The same reforms conferred the right to ‘adapt’ a work, that is, a right to prevent translation and conversion into dramatic forms of literary works and arrangements of musical works. With the advent of broadcasting, the copyright owner’s right was interpreted as covering broadcasting, and in 1956 a specific broadcasting right was added to the copyright owner’s rights. Since then, further rights to distribute, rent, and lend copies have also been added. While the copyright owner is able to control the use that can be made of the work in many circumstances, there are many activities that do not fall within the owner’s control. If we take the case of the rights in a book, for example, the copyright owner is not able, at least yet, to control reading, browsing or resale of the book. For the most part, the rights have developed in a piecemeal way in response to external pressures: notably to technological change. As well as producing a complicated and illogical system of rights, the cumulative and reactionary way in which the rights have developed has also led to a degree of overlap between the rights.’ While the expansion of the rights granted to the copyright owner is set to continue with the implementation of the Information Society Directive, there have been growing signs that members of the judiciary are becoming suspicious about the overexpansion of ! e.g. between the right of reproduction and the right of adaptation.

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COPYRIGHT

copyright and the dangers that this poses for users and consumers of copyright.’ What effect this will have upon copyright infringement is yet to be seen, though it may mean that the tendency to interpret the rights in favour of copyright owners may

decline.’ The primary rights that are currently granted to copyright owners are set out in sections 16-21 of the 1988 Act. Anyone who carries out any of these activities, or authorizes someone else to carry out these activities is liable for primary infringement. This will not be the case, however, if the defendant has the permission of the copyright owner or can show that the activity falls within one of the defences available to them. While the nature of the rights which are granted varies according to the type of work in question, these include the exclusive right to: (1) copy the work (reproduction right); (2) issue copies of the work to the public (distribution right);

(3) rent or lend the work to the public (rental or lending right); (4) perform, show, or play the work in public (public performance right); (5) broadcast the work (broadcasting right); (6) include it in a cable-programme service (cable right); (7) make an adaptation of the work, or do any of the above acts in relation to an

adaptation (right of adaptation); (8) the right to authorize others to carry out any of these activities.

It should be noted that the particular rights that are granted to copyright owners vary depending on the type of work which is protected.‘ In particular, while the right of reproduction and the right to issue copies of the work to the public exist in relation to all types of works, the other rights only apply to certain types of subject matter. For example, the performing right applies to all works except artistic works and typographical arrangements; the broadcasting right applies to all works except typographical arrangements; and the right to make an adaptation of a work only applies to literary, dramatic or musical works. Care must be taken to check which rights a copyright owner is given by the 1988 Act. One of the key features of the restricted activities found in sections 16-21 is that they are based on a notion of strict liability. This means that the state of mind of the defendant is not relevant when determining whether an infringement has taken place. 2 H. Laddie, ‘Copyright: Over-Strength, Over-Regulated, Over-Rated?’ [1996] 5 EIPR 253; A. Mason, ‘Developments in the law of copyright and public access to information’ [1997] EIPR 636. > On previous tendencies to interpret rights broadly in favour of authors see: e.g. Gambart v. Ball (1863) 14 CB (NS) 306; Harms v. Martans [1927] 1 Ch 526, 534 (Lord Hanworth MR); Messager v. BBC [1927] 2 KB 543, 548-9.

4 The rights are, as we will see, ultimately divisible according to convenience. Thus terms such as ‘mechanical rights’ and ‘synchronization rights’ have no place in CDPA s. 16. The mechanical copyright refers to a musical copyright owner’s right to make a sound recording and is simply an example of the reproduction right. The synchronization right refers to the right to incorporate a record into a film soundtrack,

NATURE

OF THE

RIGHTS

125

Table 6.1 Rights

Works Literary,

To copy

Toissue copiesof

Torentor lendthe

To perform orshowthe

‘To broadcast To make an andinclude adaptation

the

the work

work

work in

in a cable

work

to the

(s.18A)

public

programme

(s. 19)

(s. 20)

(s. 17) public (s. 18) x

x

x

De

8

x (but not

x

x

(s. 21)

ve

dramatic,

and musical Artistic

x

building/ applied art) Film

x

x

x

x

x

Sound

x

x

x

x

x

Cable programmes and broadcasts

x

es:

x

x

Typographical

x

recordings

As such, it does not matter if a defendant knew that the work was protected by copyright or that the claimant owned the work. Nor does it matter that the defendant incorrectly believed that they had permission to copy the work. All that matters, at least in relation to primary infringement, is that the defendant copied the claimant’s work. It should be noted that while the defendant’s innocence is not a relevant factor in determining whether they have infringed copyright, it may be relevant when damages are being determined.” In addition to the primary rights set out in sections 16-21, the 1988 Act also provides copyright owners with the ability to protect against secondary infringements (sections 22-6). A defendant may be liable for secondary infringement if, in the > CDPA s. 97(1). See below at pp. 1023-4.

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COPYRIGHT

commercial exploitation of copies or articles specifically adapted to make copies, the defendant knew or had reason to believe that the copies were or would be infringements when made.° We deal with secondary infringement in Chapter 8.’ Before looking at the rights in more detail, it should be noted that by 22 December 2002 British law will have to be amended to give effect to the Information Society Directive.* One of the key aims of the Directive is to reform national laws so that they reach standards required by the WIPO Copyright Treaty of 1996. In particular, the Directive will require member states to clarify the scope and definition of certain rights (such as the reproduction right). The Directive will also require a new ‘makingavailable’ right to be introduced.

2 THE

RIGHT

TO COPY

THE

WORK:

THE

RIGHT

OF REPRODUCTION The first and most well-known right given to copyright owners is the right to copy the work (section 17). The right to copy the work is the oldest of the rights granted to owners of copyright. While the right applies to all works, the scope of the right varies depending on the type of subject matter in question. Having said that, one factor that is common to all works is that infringement takes place whether the copy is permanent, transient, temporary or incidental to some other use of the work.? This means a person will infringe (absent a defence) when they reproduce a copyright work on a computer screen, or store it in computer memory, as much as when they copy the work from disk to disk.

2.1

LITERARY,

DRAMATIC,

MUSICAL,

AND

ARTISTIC

WORKS

When the 1710 Statute of Anne first granted copyright to books, the right was limited to the right to print and reprint copies of those books. Within a relatively short period of time, it became clear that if the rights of the copyright owner were limited to situations where the work was copied identically, it would undermine

the value

of the property. It would, for example, fail to protect an owner against someone making minor changes to the work (thus rendering the ‘copied’ work non-identical). In order to protect against such uses, the scope of copyright protection was expanded to include non-identical or ‘colourable’ copying. Even so, the emergence of new practices of replication, use, and distribution of works (which were often but not

6 CDPA ss. 22-4, 27. See Laddie et al., ch. 10.

7 See below at pp. 185-91. 8 Information Society Directive. ° CDPA s. 17(6). See Information Society Directive, Arts. 2 and 5 (certain temporary acts are to be deemed

to be non-infringing).

NATURE

OF THE

RIGHTS

427

always linked to new technologies) has repeatedly given rise to doubts about what amounts to a reproduction. Some of these doubts were resolved in a straightforward manner. For example, photographic reproduction was readily treated as equivalent to reprinting.'° On other occasions, however, it has been more difficult to accommodate

the new uses within the existing conceptions of reproduction. For example, at the turn of the century it was held that a phonographic record was not a copy of sheet music for the purposes of the Literary Property Act 1842.'! Similarly, the courts have held that the making of tableaux vivants (which is the practice of performers dressing up as characters from paintings so as to produce a ‘live version’ of the painting), did not amount to an infringement of the copyright in the painting.'” The 1988 Act attempts to minimize these kind of difficulties by using a technologically neutral concept of reproduction. This is reflected in the fact that in relation to literary, dramatic, musical, and artistic works, copying means ‘reproducing the work in any material form’.'’ This means that as well as protecting owners against identical copying of the work (such as where a book is reprinted), a defendant may still infringe where they make a non-identical copy of a literary, dramatic, musical or artistic work. In these instances the question arises: how different from the ‘original’ work can a copy be and still infringe? The 1988 Act provides some guidance in this matter. It states, for example, that reproduction includes storing the work in any medium by electronic means. This means that the storing of a work on a computer amounts to a reproduction in material form. In relation to artistic works, the 1988 Act indicates that a person will reproduce a work if there is a change of dimensions. This means that a photograph of a sculpture, and the making of a car exhaust pipe from a design drawing will be reproductions." Beyond the specific examples listed in the 1988 Act, the question of how different a copied work can be from the ‘original’ work and still infringe is a question decided by the courts on the particular facts of the case. It is clear that a photocopy of a book,’° an engraving of a painting, a painting of a photograph, and a sound recording of a song are (potentially) reproductions.'* Beyond this, it is impossible to predict in advance the exact point at which the translation of a work from one format into another will be treated as a ‘reproduction’. It seems highly likely that the

10 e.9. Gambart v. Ball (1863) 14 CB (NS) 306; Boosey v. Whight [1900] 1 Ch 122, 123.

11 Newmark v. The National Phonograph Company Ltd. (1907) 23 TLR 439. 12 Hanfstaengl v. Empire Palace [1894] 2 Ch 1; but after 1911 see Bradbury Agnew v. Day (1916) 32 TLR 349.

15 CDPA s. 17(2). 14 CDPA s. 17(3). 15 Norowzian v. Arks [1998] FSR 394, 398 (‘copying of a book is not restricted to simply photocopying the pages from the book but extends to writing the work, retyping it any form whatsoever, dictating it into a tape machine or any. other means of reproducing tlie work in a material form’). 16 Bauman v. Fussell [1978] RPC 485. However, it has been held that where someone follows the instructions on a knitting pattern so as to make up a jumper was not a reproduction. This was because the pattern

and jumper were not objectively similar. See below at pp. 181-4.

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conversion of a work into digital form—from symbols perceptible and understandable to the senses into series of ones and noughts—will be treated as a reproduction.”

2.2

SOUND

RECORDINGS

AND

FILMS

The definition of ‘reproduction’ used in relation to films and sound recordings is narrower than in relation to literary, dramatic, musical, and artistic works. As we saw

earlier, entrepreneurial works (which are seen more as the products of investment rather than creativity) are given a ‘thinner’ protection than is given to authorial works.'® This is reflected in the fact that the scope of the reproduction right is inextricably linked to the way the particular work is defined.’? In relation to sound recordings, the subject matter is defined as the ‘recording of sounds from which the sounds may be reproduced’.*? Consequently, what is protected in relation to sound recordings is not the content per se—the song, storyline, plot or language—or the music or lyrics (which are protected, if at all, as authorial works). Instead, copyright protects the recording of these sounds.*! Similarly because a film is defined as a recording on a medium from which a moving image may be produced, the courts have held that film copyright protects the recording of the image (rather than the image itself).” One of the consequences of reproduction being defined very narrowly is that copyright in a sound recording of a speech is not infringed where a person transcribes the speech. Similarly, copyright in a film is not infringed when somebody writes a description of the film, or stages a play replicating events in the film. Moreover, there is no reproduction where a person re-records contents of a similar nature or style to those embodied on the claimant’s (film or sound) recording.” Likewise, the reshooting of a film sequence (in which not a single frame of the copyright film had been included) was held not to be a copy for the purpose of the 1988 Act.”4 This is the case even if the second film closely resembles and imitates the claimant’s copyright film, or reproduces the essential features of that film.” Similarly, copyright in a sound recording is not infringed where a person remakes (or ‘covers’) the same song or records the same song performed in a similar style (a.k.a. ‘sound-alikes’).”° However, it should be noted 17 Autospin (Oil Seals) v. Beehive Spinning (A Firm) [1995] RPC 683, 698. (If a literary work precisely

defines the shape of an article, copyright may be infringed by making the article or copying it.) 18 It is important to remember that the narrow protection given to entrepreneurial works is balanced by the fact that protection arises irrespective of whether or not the work is original. 19 This is not the case with photographs, where the copyright extends to the content or arrangement, not just the ‘recording’: Creation Records v. News Group Newspapers [1997] EMLR 444, 450.

20 CDPA s. 5A(1)(a). *1 Tn the case of broadcasts and cable programmes the definitions refer to the transmission or sending of visual images, sounds or other information; CDPA ss. 6(1), 7(1).

22 CDPA s. 5B(1). 23 Norowzian v. Arks (No. 1) [1988] FSR 394.

24 Tbid., 400. 5 Thid., 398. 26 Tbid., 394; CBS Records v. Telemark (1988) 79 ALR 604; CBS Records (1987) 9 IPR 440.

NATURE

OF THE

RIGHTS

129

that while an entrepreneurial copyright will not be infringed where a new recording of identical or similar sounds or images is made, this might infringe copyright in an underlying work such as the music, lyrics, or screenplay,”” or violate some other

intellectual property right.” Having observed that the reproduction right in relation to films and sound recording is confined to the reproduction of the recording, it should be noted that the recording will be treated as having being reproduced even though the recording medium has changed (as long as the particular sounds or images embodied on the claimant’s recording are replicated). For example, a reproduction occurs where a person makes a tape recording of a CD, records a film on a digital camcorder, or uploads or downloads a sound recording from the Internet. Even though the Act does not specify that copying of a film or sound recording includes storing it by electronic means, the better view is that it does.”

2.3

BROADCASTS

AND

CABLE

PROGRAMMES

The 1988 Act provides little guidance as to what it means to copy a broadcast or a cable programme. However, it is clear that the making of an audiotape of a radio broadcast or a videotape of any image forming part of a television broadcast would amount to a reproduction of the broadcast (as well as the contents of the broadcast, be they sound recordings, films or other works). In contrast with some jurisdictions,

UK law does not differentiate between the first fixation and other reproductions of broadcasts.°*° Following the logic of entrepreneurial copyright it seems that the reproduction of a broadcast or a cable programme only protects the information, sound, and images sent through particular signals. Thus, a person would not infringe if they summarized a broadcast, or described its contents. Similarly, the right to copy the broadcast would not be infringed if someone broadcast exactly the same sound recordings in the same order as was used by another broadcaster.

2.4

TYPOGRAPHICAL

ARRANGEMENTS

The scope of the reproduction right in relation to typographical arrangements is very narrow. This is because copying of a typographical arrangement means making a

facsimile copy of the arrangement.’' Although ‘facsimile’ is defined to include enlargements and reductions,” it seems to be confined to reproduction by way of reprography, photocopies, digital scanning, faxing, and little more. Retyping a work in 27 Norowzian v. Arks [1998] FSR 394. 28 e.g. by passing the recording off as the recording of the claimant. Cf. Sim v. Heinz [1959] 1 WLR 313; [1959] RPC 75 (CA).

29 Copinger, paras. 7-95 and 98. 30 Cf. Rental Rights Directive, Art. 6 (fixation), Art. 7 (reproduction of fixations). 31 CDPA s. 17(5).

32 CDPA s. 178.

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a different font is a sure way of avoiding infringement of copyright in the typographical arrangement.

3 ISSUING

COPIES THE

OF THE

WORK

DISTRIBUTION

TO THE

PUBLIC:

RIGHT

The owner of copyright in all categories of work is given the right to issue copies of the work to the public (section 18). This is commonly known as the ‘distribution

right’.’’ Section 18 explains that issuing copies of a work to the public means:*4 (a) the act of putting into circulation in the EEA copies not previously put into circulation in the EEA by or with the consent of the copyright owner; or (b) the act of putting into circulation outside the EEA copies not previously put into circulation in the EEA or elsewhere. The distribution right is given in respect of the issuing of each and every copy (including the original).*° As such it needs to be distinguished from a right to make the works available to the public for the first time (that is a ‘publication’ or ‘divulgation’ right of the kind previously recognized in UK law). Essentially the distribution right is a right to put tangible copies (which have not previously been put into circulation) into commercial circulation.*° Once copies are in circulation (at least where the first circulation was consensual), the right no longer operates. As the right of distribution does not include ‘any subsequent distribution’,*” copyright owners cannot control resale.** It is important to note that the distribution right incorporates certain geographical distinctions. In particular, the distribution right was drafted to recognize the principle of Community-wide exhaustion. That is, once tangible copies have been placed on the market in the FEA, a copyright owner cannot utilize national rights to prevent further circulation within the EEA. The corollary of Community-wide exhaustion was that there was no ‘international exhaustion’. This means that the distribution right can be

°° The 1988 Act has been amended twice in this regard: Software Directive and the Rental Rights Direct-

ive, Art. 9. See also Information Society Directive, Art. 4 (implementing Art. 6 of the WIPO Copyright Treaty).

:

34 CDPA s. 18(1).

35 CDPA s. 18(4). 36 The Rental Rights Directive, Art. 9(2) and the Software Directive, Art. 4(c) refer to exhaustion on ‘first

sale’, whereas CDPA s. 18 refers to ‘putting into circulation’. Information Society Directive, Art. 4(2) refers to ‘first sale or other transfer of ownership in the Community’. The question of whether CDPA s. 18 covers intangible copies is of importance as regards uses on the Internet: see e.g. Godfrey v. Demon Internet [1999] EMLR 542.

37 CDPA s. 18(3)(a). 38 This corresponds with the idea of exhaustion of rights. Note, however, proposals for a resale royalty

right: see Ch. 12. 39 Information Society Directive, Art. 4(2).

NATURE

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131

used to prevent importation of copies of the work into the EEA. Community exhaustion is maintained because the act of issuing is deemed not to include ‘any subsequent distribution, sale, hiring or loan of copies previously put into circulation ... or any subsequent importation of such copies into the UK or another EEA State’.*° Consequently, if a copy is put on the market in the Netherlands and then imported into and sold in the UK, the importation and sale in the UK does not infringe the issuing right. This might even be the case if the copy placed on the market in the Netherlands is an infringing copy. (However, in these circumstances the importation may constitute a secondary infringement.) In contrast, since there is no international exhaustion, the issuing right may be invoked to prevent the parallel importation into the UK of copies marketed outside the EEA by or with the consent of the relevant copyright owner."! There are number of aspects of the scope and nature of the distribution right that are uncertain. It is unclear when in the chain of distribution a copy is issued to the public.** On one view, a copy will be issued to the public (and thus require the copyright owner’s authority) when it is first sold from a manufacturer to a wholesaler. Thereafter, further sales will not require authorization. On another view, a copy will be issued to the public when a copy reaches the hands of a member of the public.

Under this approach, the relevant act would occur when the retailer sold a copy of the work to a consumer. The wording of section 18 is ambiguous and can support either interpretation. Another point of uncertainty arises with regard to the subsequent circulation of legitimate copies put on the market in breach of the issuing right. This can be seen if we take a situation where copies of a book are sold to a book club at reduced rates on the condition that they are only to be sold to members of the club. If in breach of the agreement, the books are sold to a retailer, the question arises as to whether the

copyright owner can prevent sales by that retailer? The way this question is answered depends on when the issuing was deemed to have occurred, if at all. If the books were put into circulation when the books were sold to the book club, no remedy is available. However, if the issuing occurred when the book club sold the books, the liability

of the retailer depends upon whether the issuing right also applies to sale to the public. This would be on the ground that at that stage the books would not have been put into circulation in the EEA “by or with the consent of the copyright owner’.

40 CDPA s. 18(3). 41 Issuing implicitly includes such ‘importation’ as a result of the proviso to s. 18(3)(b), which having excluded importation into the UK or another EEA state from the concept of issuing, provides that the exclusion does not apply so far as the issuing concerned is issuing in the EEA ofcopies not previously put into circulation in the EEA by or with the consent of the copyright owner. Such liability for parallel importation, in contrast with importation as an act of secondary infringement, is not dependent on knowledge. This would apply, a fortiori, if the copies being imported from outside the EEA were infringing. 42 J. Phillips and L. Bently, ‘Copyright Issues: The Mysteries of Section 18’ [1999] EIPR 132.

12,

COPYRIGHT

4 RENTAL

AND

LENDING

RIGHTS

While subsequent distribution of copies of the work is not generally within the copyright owner’s control, the owner of copyright does have the right to control the rental and lending of the work. When the 1988 Act was first enacted, it provided a limited right to control the rental of copies of sound recordings, films, and computer programs.*? No such right was given in relation to literary, dramatic, musical or artistic works. However, as a result of amendments implementing the Rental Rights Directive,“* copyright in literary, dramatic or musical works, as well as artistic works (other than works of architecture or applied art)* are granted an exclusive right to rent and lend copies of such works to the public (section 18A). The rental right is not exhausted by the first sale of copies of the work.** Rental and lending both involve the making of the original or a copy of a work available for use on terms that it will or may be returned.” The distinction between rental and lending is that the act of rental involves a commercial advantage, whereas lending does not. More specifically, rental is defined as making the work available ‘for direct or indirect economic or commercial advantage’. In contrast, lending occurs

where there is no such advantage.** It has been suggested that rental not only includes rentals of the sort familiarly operated by video rental stores, but also where videos were lent to hotel guests. It has also been suggested that an organization will indirectly derive a ‘commercial advantage’ through sponsorship (for example with a commercially sponsored library such as Wellcome Institute’s library) and hence be involved in rental, not lending.”

Lending means ‘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.’°° The right does not cover loans between private individuals. This is because lending is only prohibited when it is made ‘through an establishment which is accessible to the public’. Lending does not become a rental, at least as regards loans between 43 Prior to that there was no rental right: see CBS v, Ames [1981] RPC 407, 428. 44 See G. Reinbothe and S. von Lewinski, The EC Directive on Rental and Lending Rights and on Piracy (1993).

4° Rental Dir. Art. 2(3). Apparently these were excluded because it was thought that the rental right would then cover rental of housing, cars, etc. 46 Metronome Music v. Music Point Hokamp GmbH, Case C-200/96

[1998] ECR I-1953; Foreningen Af

Danske Videogramdistributorer v. Laserdisken, Case C-61/97 [1999] 1 CMLR 1297. 47 CDPA ss. 18A(2), 18A(6), 182C(2) (performers). Contrast the terms of Rental Directive, Art. 1 ‘making available for use, for a limited period of time’. Note that it only applies to material copies. 48 Recital 16 of the Software Directive defined ‘rental’ as the making available of a computer program for

use, for a limited time, and for ‘profit-making purposes’. During formulation of the Rental Rights Directive this formula, along with others defining rental as making available ‘against payment’ were rejected. See Reinbothe and Von Lewinski, 40; cf. J. Griffiths, ‘Copyright and Public Lending in the United Kingdom’ [1997] EIPR 499.

90 CDPA s. 18A(2)(b).

NATURE

OF THE

RIGHTS

133

establishments accessible to the public, where payment does not go beyond what is necessary to cover the operating costs of the establishment.”! The Rental Rights Directive and the 1988 Act both contain a number of limitations to the rental and lending rights.°? Neither covers the making available of a copy for public performance, playing or showing in public or inclusion in a cable-programme service. As Recital 13 explains, where a cinema owner rents a film from a film distribu-

tor that is to be shown to the public, this falls outside the scope of the rental right.*’ The exclusion also seems to cover a variety of other commercial practices, such as the rental of jukeboxes and possibly also the rental of sheet music. In a similar vein, neither rental nor lending covers situations where a work is made available for the purposes of exhibition in public. As a result, the owner of a painting does not need to seek permission from the copyright owner before lending the work to an art gallery for public display. Moreover, the rental and lending rights do not cover situations where a work is made available for on-the-spot reference. It has been suggested that this will exempt situations where magazines are made available in waiting rooms.™ Finally, lending does not cover the making available of a work between establishments that are accessible to the public. This means that ‘inter-library loans’ are permissible.” Special exemptions apply to the lending of works by educational establishments,” and for the lending of books by public libraries (if the book is eligible to fall within the Public Lending Right Scheme).”’ In addition, copyright in any work is not infringed by the lending of copies of the work by a ‘prescribed’ library or archive that is not conducted for profit.

5 THE RIGHT TO ‘PERFORM, SHOW, OR PLAY THE WORK IN PUBLIC’ The fourth right conferred on a copyright owner is the right to perform the work in public (section 19). This right, which is usually known as the ‘performing right’, was first introduced by statute to protect owners of copyright in dramatic works in 1833.°? This was because as the primary way dramatic works are exploited is by way of performance, if the protection given to dramatic works was limited to the 51 CDPA s. 18A(5). Reflecting the Rental Rights Directive, Recital 14. 52 Tbid., Recital 13. 53 But this act was long ago held to amount to authorization of infringement: Falcon v. Famous Players Film Co. [1926] 2 KB 474.

54 See Griffiths [1997] EIPR 499, 500. 55 CDPA s. 18A(4). °° CDPA s. 36A. 57 CDPA s. 40A; Rental Rights Directive, Art. 5. This was the most hotly contested issue during the passage of the Directive. See Ch. 13.

°8 CDPA s. 40A(2).

59 See Russell v. Smith (1848) 12 QB 217, 236.

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COPYRIGHT

reproduction right, this would have been inadequate. In order to be consistent, the performing right was also extended to musical works and literary works in general. Today, section 19(1) of the 1988 Act provides that performance of a work in public is an act restricted by the copyright in a literary, dramatic or musical work; and section 19(3) states that the playing or showing of the work in public is an act restricted by the copyright in a sound recording, film, broadcast or cable programme. There is no performing right for artistic works (and hence no right to authorize the public exhibition of the work), or for typographical arrangements. ‘Performance’ is defined to include the delivery of lectures, addresses, speeches, and sermons; as well as ‘any mode of visual or acoustic presentation of a work, such as by means of a sound recording, film, broadcast, or cable-cast’.®! It has been held that a

performance of a musical work or sound recording takes place where it can be heard. Presumably a performance of a film takes place where it can be seen. Where the performance is live, it should be fairly obvious who is responsible for the performance. Where more artificial means of delivery are employed (for example where copyright-protected music embodied in a sound recording is played by way of a radio in a restaurant), the person who infringes is not the broadcaster, or the person who supplied the radio apparatus. Rather it is the person who operates the radio.™ It seems that it is a publican, rather than a customer, who operates a jukebox and is liable if the public performance is not authorized. In order to infringe, the performance must be carried on ‘in public’. There are many situations where it is clear that a performance is in public: a performance at the Brixton Academy, the Royal Albert Hall, a West End theatre or cinema, or in a public house would normally all be to the public. Beyond these examples, however, what is meant by ‘in public’ is less clear.® Over time, three different conceptions of the ‘public’ have been used in the case law. In some cases the concept of the public is understood according to the character of the audience.® In this context a distinction is drawn between a section of the general public (which have no other unifying theme other than the desire to see the performance), and a group of people who share a private or domestic link. For example, the residents of a hospital or a nursing home are bound together by a link that distinguishes them from the general public, namely, that they reside at a particular 6° But see moral right of attribution. In Hanfstaegl v. Empire Palace [1894] 2 Ch 1 it was held that copyright was not infringed by performing an artistic work in the form of a tableaux vivant. This may, however, be a reproduction: Bradbury Agnew v. Day (1916) 32 TLR 349. 61 CDPA s. 19.

62 PRS v. Camelo [1936] 3 All ER 557 (the playing of a radio in the defendant’s lounge infringed the performing right in the songs played on the radio because the radio could be heard in the neighbouring restaurant).

63 CDPA s. 19(4). Cf. PRS v. Hammond’s Bradford Brewery Co. [1934] 1 Ch 121, 139. 64 PRS v. Hammond’s Bradford Brewery Co. [1934] 1 Ch 121 (CA) (a person performs composition when he or she causes it to be heard); Messager v. BBC [1927] 2 KB 543, 548.

a musical

6 Jennings v. Stephens [1936] 1 Ch 469, 476, 481 (the words are probably incapable of precise definition); Harms v. Martans [1927] 1 Ch 526, 530. 66 Jennings v. Stephens [1936] 1 Ch 469, 476, 479; PRS v. Harlequin [1979] 2 All ER 828, 833.

NATURE

OF THE

RIGHTS

135

location. Consequently, in Duck v. Bates,’ the Court of Appeal held that copyright in the play Our Boys was not infringed when an amateur dramatic club performed it at Guy’s Hospital for the entertainment of the nurses. This was because it was held to be a domestic performance, not a performance to which the public or any portion of the public was invited. Using a test of this sort, a performance in a shop, before members of a club,® or in a hotel lounge® would be a performance to a ‘section of the general public’ (so long as anyone could enter the shop, join the club, or enter the hotel lounge). However, it is unlikely that a performance at a dinner party,”° to students at a boarding school,’! or to workers at their place of employment would be treated as a performance to a ‘section of the general public’. In these cases, the audience is linked by personal connection, residence, or employment. Another test that has occasionally been employed to determine whether a performance is in public effectively ignores the public or private nature of the performance and focuses, instead, on whether the performance is motivated by financial consider-

ations.” If the performance is run for profit, it is likely to be ‘in public’. The rationale for this is that otherwise the performer or organizer of the performance could be unjustly enriched by the performance (at the expense of the person who owned

copyright in the works that were performed).”? Thus in Harms v. Martans the Court of Appeal held that performance of the musical work “That Certain Feeling’ at the Embassy Club to an audience of 150 members and fifty guests was a performance in public. Lord Hanworth MR suggested that the critical considerations were whether the defendants’ activities were for profit;’* who was admitted; and where the performance took place. Since the members paid a substantial subscription and an entrance fee, were the sorts of people who would pay to go to a public theatre to hear a performance, and the club paid the orchestra to perform, the performance was ‘in public’. A third test has focused upon the copyright owner’s monopoly. Under this approach, a performance is ‘in public’ if it is made to or before ‘the copyright owner’s public’. This test, which first emerged in the 1930s in the judgments of Lord Greene MR, later came to be quite widely adopted. In Jennings v. Stephens’? the performance of a play The Rest Cure by the members of a Woman’s Institute without charge and without guests was held to be a performance in public. Greene LJ said

67 (1884) 13 QBD 843. 68 Harms v. Martans [1927] 1 Ch 526, 537 (emphasizing that there was an invitation to the general public to become members ofthe club). 69 PRS v. Hawthorns Hotel (Bournemouth) {1933} Ch 855.

70 Jennings v. Stephens [1936] 1 Ch 469, 481.

71 Tbid., 483. 72 Harms v. Martans [1927] 1 Ch 526, 532-3.

73 Some statutory support for this approach can be found in the defence provided by CDPA s. 72 as regards the free public showing of a broadcast oi cable programme. 74 A factor treated as of minimal significance in Ernest Turner Electrical Instruments v. PRS [1943] 1 Ch 167, 173. 73 [1936] 1 Ch 469.

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COPYRIGHT

[T]he expression ‘in public’ must be considered in relation to the owner of the copyright. If the audience considered in relation to the owner of the copyright may properly be described as the owner’s ‘public’ or part of his ‘public’, then in performing the work before that audience he would in my opinion be exercising the statutory right conferred upon

him.”° This test has been used to hold that the playing of the BBC’s music broadcasts to 600 workers in a factory infringed the performing right. The factory owner claimed that the audience was not a ‘section of the public —a reasonable view given that the common bond was work, not a desire to listen to music. However, Lord Greene MR

held the performances were ‘in public’, because to hold otherwise would have meant that the value of the monopoly given by the statute would have been substantially ‘whittled down’.”” This test seems difficult to justify, since it is surely the case that most copyright owners would want to extend their monopoly as widely as possible and would therefore claim that all performances were before their ‘public’.”® The relationship between the three tests has yet to be resolved. Indeed, the courts

have rarely acknowledged that the tests applied vary or are incompatible. While doubts have been raised over the test of the ‘copyright-owner’s public’,”? it seems that this is an area that warrants closer attention. With regard to the infringement of the performing right, it is important to bear in mind that there are a number of related acts of secondary infringement. These are considered in Chapter 8.

6 THE

RIGHT

TO BROADCAST

THE

WORK

The next right granted to copyright owners in all works other than typographical arrangements is the right to broadcast work. The origins of this right can be traced to the fact that soon after the emergence of radio broadcasting in the 1920s, it was successfully argued that the BBC had infringed the ‘performing right’ when it broadcast a private performance that was capable of being received on wireless receivers.®° Later, a specific “broadcasting right’ was conferred on copyright owners by the 1956 Act. This was retained in section 16(1)(d) and section 20 of the CDPA (as amended by

the Cable and Satellite Directive).*! The exclusive right to broadcast a work or to include it in a cable programme arises with respect to literary, dramatic, musical, and 76 [1936] 1 Ch 469, 485. 77 Ernest Turner Electrical Instruments v. PRS [1943] 1 Ch 167 (Lord Greene MR). 78 See PRS v. Harlequin Record Shops [1979] 2 All ER 828, 834.

79 Tbid., 833-4. 80 Messager v. BBC [1927] 2 KB 543, 548-9. 81 Broadcasters are given immunity from liability for public performances that result from the broadcasts by CDPA s. 19(4).

NATURE OF THE RIGHTS

137

artistic works, sound recordings,” films, broadcasts, and cable programmes.” The only category of work not covered is typographical arrangements. The person who makes a broadcast is either the person transmitting an item, such as a programme, where that person has responsibility for its contents, or the person providing the item for transmission who ‘makes with the person transmitting it the arrangements necessary for its transmission’. In turn, a ‘broadcast’ is defined as a transmission by wireless telegraphy of visual images, sounds, or other information which is capable of lawful reception by the public or which is made for presentation to the public.*° As we have already observed, this covers digital, analogue, terrestrial,

and satellite transmissions. The definition of broadcast covers the forms of satellite broadcasting which may be directly received by individuals or may be received by

subscribers who obtain a decoder.*® In formulating the scope of the broadcast right, the question arose as to where a broadcast takes place. (This is important because it may determine whether a party has infringed.) The problem arose from the fact that when a signal is sent or uplinked to a satellite (from place A) and is then beamed back to earth over a large reception area or ‘footprint’ (places A, B, and C), two alternative answers present themselves. On the one hand, it could be argued that the broadcast occurs from the place where the signal was sent (the emission or introduction theory). Alternatively, it was suggested that the broadcast occurs in the places where it is received (the reception or communication theory). In the face of conflicting national decisions, it became clear that it was necessary to harmonize the law in this area. Two contrary concerns dominated the decision as to the choice of the place of broadcast. On the one hand, the

simplest answer and the one that facilitated satellite broadcasting was that the country of broadcast was the country of uplink. However, it was feared that this would lead to satellite uplink facilities migrating to countries where copyright protection was weak, and that copyright owners would thus be best protected if consent was required in all countries where the signal could be received. In the end a compromise was reached. The country of introduction is treated as the relevant place only where the standard of copyright protection is satisfactory. Accordingly, section 6 of the 1988 Act defines the place of broadcasting as the place where the broadcaster introduces programmecarrying signals into an uninterrupted chain of communication, including any satellite relay.®” 82 In the case of sound recordings, when exercised by a collecting society, the right consists only of an entitlement to equitabie remuneration.

$3" CDPA s/20. 84 CDPA s. 6(3).

85 CDPA s. 6(1). The definition of broadcast is the same for infringement as that used to define broadcasts as works capable of being protected by copyright. 86 That is, any encrypted broadcast, whether terrestrial or by satellite relay, is ‘lawfully’ received if decoding equipment has been made available through the person transmitting it in encrypted form: CDPA s. 6(2). 87 CDPA s. 6(4). These provisions reflect recent amendments in the Rental Regs., to give effect to the Cable and Satellite Directive, chs. I and II. CDPA s. 6 is subject to the safeguard rules in CDPA s. 6A, which operates in cases of transmissions from places outside the EEA.

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7 THE

RIGHT

TO INCLUDE

CABLE-PROGRAMME

THE

WORK

IN A

SERVICE

The copyright owner also has the right to include the work in a cable-programme service.** A cable-programme service is a service which exists wholly or mainly in sending visual images, sounds, or other information by means of a telecommunication system, otherwise than by wireless telegraphy, for reception either (a) at two or more places (not necessarily simultaneously) or (b) for presentation to members of

the public. The essential distinction between a broadcast and a cable-programme service is that the former is by wireless telecommunication, whereas the latter is by cable. In addition to familiar cable-television services, a cable-programme service might include a non-interactive online database service.” A number of exceptions exist to the definition of cable-programme services. The most significant of these, the so-called ‘interactivity exception’, provides that cableprogramme services does not include a service of which it is an essential feature that information may be sent from each place of reception by the receiver for reception either by the provider or other recipients. This excludes interactive systems such as teleshopping. While it might have been assumed that the interactivity exclusion would have excluded most Internet activities,”! in the Shetland Times case it was held that it was arguable that a newspaper website which was linked to another website, had thereby included items (the headline of the article) in a cable-programme service. The Court of Session held that a website involved a ‘sending’ of visual images, sounds, or

other information by means of a telecommunication system. More surprisingly, Lord Hamilton also accepted that it was arguable that the interactivity exclusion would only apply to those sites where receivers could add material or otherwise modify information.” While readers were able to comment on the news service, the primary

function of the site was to distribute information. As such, the service fell outside the interactivity exception. In any case, even though users could comment on the site, that part was ‘severable’ from the rest of the service, in which ‘interactivity’ was not an ‘essential component’. While the decision in Shetland Times is potentially significant, it should be noted that it was an interim decision. It is doubtful whether the evidence given in this case sufficiently elucidated all the interactive aspects of an Internet transmission: as such, it may well be that the case is not followed. Other services which fall outside of the definition of cable-programme service relate to internal business services (such as ‘intranets’),”? individual domestic services,

88 CDPA s. 7.

S2aEDPAis.:7(1): °° Dun & Bradstreet v. Typesetting Facilities [1992] FSR 320.

°1 CDPA s. 7(2).

92 Shetland Times v. Dr Jonathan Wills [1997] FSR 604. °3 That is systems of electronic communication linking terminals within a single business or location.

NATURE OF THE RIGHTS

139

services on single-occupier premises otherwise than by way of a business amenity, and services for those running broadcasting or cabling services or programmes for them.” There is also no copyright in a cable programme that consists of reception and

immediate retransmission of a broadcast.?° Retransmissions of broadcasts by cable also infringe copyright. However, special provision is made for retransmissions of broadcasts from another EEA member

state.*° This provides that, aside from rights of broadcasting organizations with regard to their own transmissions, only collecting societies may exercise rights to authorize cable retransmissions of broadcast works. Where such arrangements have not been made, the licensing body is treated as mandated to exercise the right.””

8 THE

RIGHT

TO MAKE THE

AN ADAPTATION

OF

WORK

The copyright owner of literary, dramatic or musical work is given the exclusive right to make an adaptation of the work.”* The owner of copyright in artistic works, sound recordings, and films is not given an adaptation right. The adaptation right is restrictively defined and is not to be confused with a general right to control all derivative works, such as that recognized by copyright law in the USA.” The adaptation right includes the right to do any of the other restricted acts in relation to an adaptation, including the right to make an ‘adaptation of an adaptation’.’”° Consequently it is not only a restricted act to make an adaptation, but also to reproduce an adaptation in any material form, issue copies of it to the public, perform it in public or broadcast it, or include it in a cable-programme service. As it is not possible to draw a clear line between an adaptation and a reproduction, in many cases the same act might be both a reproduction and an adaptation.'®!

8.1

MEANING

OF ADAPTATION

Adaptation is defined differently for literary works, dramatic works, computer programs, databases, and musical works. We must deal with each in turn. In relation

to literary or dramatic works, adaptation means a translation (such as a translation

94 95 96 97

CDPA CDPA CDPA CDPA

s. s. s. s.

7(2). 7(6)(a). 144A. 144A(3).

98 Implementing, for the most part, Berne Arts. 8 and 11(2) (translation); Art. 12 (adaptations, arrangements, and other alterations); Art. 11 ter(2) (communication of translation).

99 And in this respect seems narrower than Berne Art. 12. 100 CDPA s. 21(2). 101 CDPA s. 21(6).

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into French), or a dramatization of a non-dramatic work (such as where a novel is

turned into a screenplay or ballet or, after Norowzian v. Arks,'” a film). The adaptation right in a literary or dramatic work will also be infringed where the story or action is conveyed wholly or mainly be means of pictures (such as a comic strip). As regards dramatic works, adaptation means a version of a dramatic work that is converted into a non-dramatic work (such as the conversion of a film into a novel). In relation to

musical works, an adaptation is defined as an arrangement or transcription of the

work.!% Although an adaptation is only made when it is recorded in writing or otherwise, the public performance or broadcasting of an adaptation will infringe even if at that stage the adaptation has not been recorded in writing or otherwise. Consequently an amateur dramatic group whose public performance is based on a novel, will almost certainly infringe the adaptation right. This is because in so doing the group will have adapted the novel by converting it into a dramatic work. Equally, the broadcast of someone translating a text from a foreign language into English will infringe, even though the translator has not made a written version of the translation. The adaptation right also applies to computer programs and databases. In relation to computer programs, an adaptation means an arrangement or altered version of the program or a translation of the program.'™ In these circumstances, translation includes the conversion into or out of a computer language into a different computer language or code.'® In relation to databases, adaptation means an arrangement or altered version of the database or a translation of it.!°°

9 AUTHORIZATION As well as being given the right to carry out the restricted activities, the copyright owner is also given the right to authorize others to do any of the restricted acts.!” When this right was introduced in the Copyright Act 1911, it was said to be superfluous and tautologous: the exclusive right to do an act implicitly carried with it the right of authorization.!°* However, it soon became clear that the term ‘authorize’ extended

the copyright owner’s rights to cover the acts of persons in some way associated or affiliated with an infringement. It was said that ‘authorize’ meant, to sanction, countenance or approve,” or alternatively, to grant or purport to grant to a third person

92 [2000] FSR 363. 03 Francis Day v. Bron [1963] 1 Ch 587, 611 (adaptation and translation must be deliberate).

104 CDPA s. 21(3)(ab). 05 CDPA s. 21(4); Software Directive, Art. 4(b). 06 CDPA s. 21(3)(ac); Database Directive, Art. 5(b).

107 CDPA s. 16(2). °8 Falcon v. Famous Players [1926] 2 KB 474, 495-6; PRS v. Ciryl Theatrical Syndicate [1924] 1 KB1, 12. 109 Falcon v. Famous Players [1926] 2 KB 474, 491.

NATURE

OF THE

RIGHTS

141

the right to do an act.'!° The latter formulation has now received the approval of the House of Lords. In order to amount to authorization, the person to whom ‘authority has illegitimately been granted must in fact commit an infringing act.!'' However, the person giving the authorization (in contrast with the person to whom authority is given) need not be located in the UK.!”

The concept of authorization has been applied in two distinct ways. First, it has been used to expand the network of potential liability beyond vicarious liability. This has typically occurred in relation to the performance of copyright works.'!? Given that performers often do not have a lot of money, copyright owners have attempted to sue the parties who hired the performers. While the principle of vicarious liability made this relatively straightforward where the performer was an employee,'" copyright owners argued, for example, that where a person hired a band (which infringed copyright), the hirer was liable for ‘authorizing’ the infringing performance. These attempts proved to be relatively successful where the hirer was aware of the songs which the band would perform, or did nothing to control the repertoire performed. In both cases the hirer was deemed to have authorized the infringements.''? However,

where a warning was given to the performers and the infringements were by way of spontaneous encores of which the hirer had no prior knowledge, the mere hiring of the band was held not to be an authorization.''® In one case, an attempt to make a

managing director liable for authorizing the infringing performance of a band was unsuccessful where the director had taken no interest in the content of the performance and was out of the country when it took place.'!” The concept of authorization has also been applied where a person manufactures or supplies merchandise that enables or facilitates infringement (usually by copying). In these circumstances copyright owners have argued that where a person makes facilities available in the knowledge that they will probably be used to infringe, this is equivalent to ‘authorizing’ infringement. Thus it has been asserted that a person who supplies films to a cinema, who sells blank tapes to the public when renting out records,''® makes photocopying equipment available in a library,'!? or 110 Tbid. 111 Nelson y. Rye and Cocteau Records [1996] FSR 313, 337. 12 CDPA s. 16(2), in contrast with s. 16(1) is not explicitly confined to ‘acts’ of authorization within the UK. ABKCO Music & Records Inc. v. Music Collection International [1995] RPC 657. 113 But note also e.g. Pensher Security Door Co. v. Sunderland CC [2000] RPC 249, 278-9 (door designs).

114° PRS v, Mitchell & Booker (Palais de Danse) [1924] 1 KB 762 (applying a ‘control’ test). 115 PRS y. Bradford Corporation (1921) [1917-23] MacG CC 309, 312-13, 314. If the hirer specified particular songs were to be performed, and those performances infringed copyright, the case would be even stronger: see Standen Engineering v. Spalding & Sons [1984] FSR 554; Pensher Security Door v. Sunderland CC [2000] RPC 249, 278-9 (commissioner specifying infringing design). 116 PRS v. Bradford Corporation [1917-23] MacG CC 309, 314. 117 PRS ¥. Ciryl Theatrical Syndicate [1924] 1 KB 1. 118 CBS Inc v. Ames Records and Tapes [1981] 2 All ER 812 (a record library which lent out records and sold cheap blank tapes did not infringe). 119 Moorhouse v. UNSW [1976] RPC 151, 159 (High Court of Australia) (university authorized infringe-

ment of copyright by providing a self-service photocopying machine without adequate warning about copyright).

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manufactures tape-to-tape machines should be treated as having authorized the resulting infringements. Similar arguments are currently being used in relation to the activities of Internet Service Providers and others who make space available on the Internet which carry infringing works. Questions of this nature arose in CBS Songs v. Amstrad,!”° where the House of Lords

defined the term ‘authorize’ restrictively. Amstrad manufactured and marketed a double-speed twin-tape recorder, which was sold by Dixons. The advertisement which Lord Templeman described as ‘hypocritical and disingenuous’ boasted that the model ‘now features hi-speed dubbing enabling you to make duplicate recordings from one cassette to another, record direct from any source and then make a copy and you can even make a copy of your favourite cassette.’ An asterisk drew attention to a footnote warning that the recording and playback of certain material was only possible with permission. It also referred the user to the relevant legislation. The British Phonogram Industry (BPI), which represents various owners of copyright in musical and literary works and in sound recordings, claimed that Amstrad had authorized infringement of copyright in BPI’s sound recordings.'”! The House of Lords held that neither the sale of the equipment nor the advertisement thereof amounted to an authorization. Lord Templeman said that an authorization means a grant or purported grant, express or implied, of the right to do the act complained of.'?? On the basis that there was no such authorization, the House of Lords held that while the machinery enabled a person to copy lawfully or unlawfully, this did not constitute an authorization.'?* Lord Templeman said that it was crucial that the footnote had warned that certain types of copying required permission and that Amstrad did not have the authority to grant that permission. In short the Lords held that there was no authorization because it was up to the operator whether to infringe or not: Amstrad in no way purported to possess the authority to give permission to copy records. With each new wave of technological advance in equipment for recording and copying (such as MP3 and Napster software), as well as the provision of facilities supplying copyright material, the question arises as to whether the manufacturer or supplier authorizes infringement. In deciding when such activities amount to authorization, it is critical to recall the emphasis in Amstrad placed on the fact that the device could be used for both legitimate and illegitimate purposes and that the manufacturer was unable to control the user’s decisions. It is fair to say that a manufacturer will be able to avoid liability for authorization in any case where (a) it is possible to envision a legitimate use of the copying facility and (b) the advertisement of the product makes it clear that the user will need to obtain permission for some copying activities.

120 [1988] 2 All ER 484, 121 Their Lordships also considered and rejected a number of related claims as to joint tortfeasance. See

below at pp. 986-8. 122 [1988] 2 All ER 484, 493.

123 Tbid., 492.

NATURE

10

OF THE

RIGHTS

143

REFORMS

As we observed, a number of modifications of the copyright owner’s rights have been held to be appropriate in the light of changes brought about by new forms of digital distribution of works, notably digital broadcasting and the Internet. As mentioned in Chapter 2, a number of these reforms will be required if the UK and the EC are to ratify the WIPO Copyright Treaty and WIPO Performers and Phonograms Treaty. With a view to implementing those treaties the EC issued a proposal for a Directive on the Information Society and on 22 May 2001 the Council Parliament adopted the Directive.'** The main matters contained in the Information Society Directive concern the harmonization of the rights of the copyright owner and defences that can be made available. We deal with the provisions on technological measures and rights management information in Chapter 8 and those on defences in Chapter 9. Here we outline the main proposals relating to the rights of copyright owners. These concern the reproduction right, the right of communication to the public, and the distribution right. 10.1

REPRODUCTION

RIGHT

The Directive will clarify what falls within the reproduction right. In so doing it has been decided that a broad definition is needed.’ Consequently, Article 2 of the Directive requires member states to provide the owners of copyright and related rights with an exclusive right to authorize or prohibit direct or indirect, temporary or permanent reproduction by any means and in any form, in whole or in part.’”° Thus, the reproduction right is expansively defined as regards duration, manner, and scope. However, member states must exempt from the reproduction right a very limited category of temporary acts that are deemed to be non-infringing under Article 5(1).!?? More specifically, ‘temporary acts of reproduction . . . which are transient and incidental and an integral and essential part of a technological process, whose sole purpose is to enable (a) a transmission in a network between third parties by an intermediary or (b) a lawful use of a work or other subject matter to be made, and which have no independent economic significance, shall be exempted from the right set out in Article 2.’ This might cover, for example, reproductions in the internal memory of a user’s personal computer, as well as browsing and caching.'”8 124 Common Position adopted by the Council on 28 Sept. 2000. Note also Communication from the Commission to the European Parliament concerning the common position of the Council, 20 Oct. 2000 SEC(2000) 1734 final.

125 Information Society Directive, Recital 21. 126 This is the same as Database Directive, Art. 5; Agreed Statement of WCT. 127 Although this is in the provision on exceptions, and as such is also subject to the three-step test discussed in Ch. 9, it is more conveniently dealt with here. 128 Information Society Directive, Recital 33.

144

10.2

COPYRIGHT

COMMUNICATION

RIGHT

Echoing Article 8 of the WIPO Copyright Treaty, the Directive also requires that the authors shall enjoy ‘the exclusive right to authorize or prohibit any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them.’ Unlike existing broadcasts or cable transmissions, this right encompasses communications to individuals, rather than to ‘the public’. A recital explains that the right will cover interactive on-demand transmissions.'”” The new right will also cover the situation where a person places a work on websites that can then be copied by large numbers of private users. In addition, Article 3(2) requires member states to provide an equivalent ‘making-available right’ to the owners of related rights (a ‘communication right’ having already been harmonized in Article 8(2) of the Rental Rights Directive). However, for such related rights, the Directive treats the making-available right as being distinct from (rather than a subunit of) the communication right.

10.3

LIABILITY

OF INTERNET

SERVICE

PROVIDERS

As we noted when considering ‘authorization’, one issue that has caused particular concern is the position of those who provide services and facilities that facilitate infringement on the Internet.’*? These people, who effectively provide the hardware and infrastructure for the new information society, include multinational enterprises who provide the cables for communication, who provide access to the web through local ‘servers’, who run bulletin boards and websites where others can post informa-

tion, and who provide temporary access to the net at Internet cafes. At one stage, it became fashionable to suggest that the difficulties with rights-holders policing their own rights were so great that some of these service providers should incur liability where infringing material was found on sites which they controlled. The argument ran that these persons were in the best position to supervise and inspect their cyberpremises, and like the owner of a place of entertainment, should be liable for infringements which occurred on their ‘premises’.!*! Articles 12-15 of the EC Directive on Electronic Commerce require member states, by 17 January 2002 to confer an immunity on such providers except in certain limited situations.'*” First, where a provider operates as a mere conduit, that person cannot be made liable for information transmitted on the network. Second, no liability is to be imposed on a provider who is involved in ‘caching’, that is the automatic, intermediate, and temporary storage of information, as long as the provider complies with a 129 Info. Soc. Dir. Recital 25. '30 WCT Art. 8. Note also the ‘Agreed Statement’ annexed to the Treaty stating that the mere provision of physical facilities for enabling or making a communication does not in itself amount to a communication. 131 Information Society Directive, Recital 59. 132 Electronic Commerce Directive.

NATURE

OF THE

RIGHTS

145

series of conditions. Third, a provider shall not be liable for ‘hosting’, that is storage of information at the request of a recipient, unless that person has actual knowledge that the activity is illegal or is aware of facts or circumstances from which illegal activity is apparent. Where a provider acquires such knowledge or awareness, they can avoid liability by acting expeditiously to remove or disable access to the information. However, Article 8 of the Information Society Directive imposes an important limitation on those immunities. This requires member states to 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. The idea appears to be that the immunities given by the Electronic Commerce Directive prevent liability, but if the intermediary is informed of the illegal acts, thereafter it seems they must take action to stop them continuing or face injunctive relief.

7 DURATION

OF COPYRIGHT

1 INTRODUCTION The question of the appropriate period of protection that ought to be granted to copyright works has long captured the attention of policy makers, legislatures, judges, and commentators. For example, the central question of the literary property debate of the eighteenth century was whether common law literary property protection should be perpetual.’ Similar debates have arisen at many other times during the history of copyright law. While these debates have always been shaped by the particular circumstances under discussion, they are similar in that they have attempted to mediate between the private interests of owners and the interests of the public in ensuring access to creative works.” That is, they have attempted to coordinate and balance the various interests that coexist in copyright law. Another common feature of these debates is that whenever the question of duration has arisen, the length of protection has always increased rather than decreased. For example, literary works were initially protected for fourteen years under the 1710 Statute of Anne. After great debate, the 1842 Literary Copyright Act extended the term of copyright in books to forty-two years, or the author’s life plus seven years.* In 1911, this was extended to a life plus fifty-year term. As a result of the EU Duration Directive, the term of protection was recently increased to the life of the author plus seventy years.4 Before looking at duration in more detail, it is important to note a number of things. The first is that the period of protection changes depending on the type of work in question. This is a reflection of the fact that different interests and policy ' That is the debates preceding and surrounding Millar v. Taylor and Donaldson v. Beckett (1774) 2 Brown’s Prerogative Cases; Cobbett’s Parliamentary History xvii, 954. See e.g. A. Birrell, Seven Lectures on Copyright (1898); B. Kaplan, An Unhurried View of Copyright, 1-25 (1967); L.-R. Patterson, Copyright in Historical Perspective (1968); M. Rose, Authors and Owners (1993); D. Saunders, Authorship and Copyright (1992) b) Sherman and Bently, ch. 1. 2 For an overview of policy considerations, see S. Ricketson, ‘The Copyright Term’ (1992) 23 IIC 753. > C. Seville, Literary Copyright Reform in Early Victorian England (1999). 4 Duration Directive. See W. Chernaik and P. Parrinder (eds.), Textual Monopolies (1997); N. Dawson,

‘Copyright in the European Union: Plundering the Public Domain’ (1994) NILQ 193; S. Lewinski, ‘EC Proposal for Council Directive Harmonizing the Term of Protection of Copyright’ (1992) 23 IIC 785; A. Silvestro, “Towards EC Harmonization of the Term of Protection of Copyright and so-called Related Rights? [1993] Ent LR 73.

DURATION

OF COPYRIGHT

147

issues arise with different categories of works. The way in which the term of protection is calculated also differs depending on the type of work in question. In relation to most literary, dramatic, musical, and artistic works, copyright subsists throughout the life of the author, and for a fixed term (currently seventy years) that is calculated from when the author dies (post mortem). In the case of entrepreneurial works and certain types of authorial works (such as those of unknown authorship), the protection is a fixed term which is calculated either from when the work is made or published. The term is calculated from the end of the year in which a particular event occurs.° Harmonization of copyright laws in Europe has had an important impact upon the duration of copyright in the UK. When the 1988 Act was first enacted, the length of protection for literary, dramatic, musical, and artistic works was for the life of the

author plus fifty years. In relation to sound recordings, films, broadcasts, and cable programmes, the period of protection lasted for fifty years from the making of the work. The duration for typographical arrangements was limited to twenty-five years from the year in which the edition was first published. As a result of the EU Duration Directive the length of protection for literary, dramatic, musical, and artistic works in the UK was increased as of 1 January 1996

from the life of the author plus fifty years, to the life of the author plus seventy years.° The scope of protection offered to films also changed as a result of the Directive. Under the 1988 Act (as enacted), where films were treated as entrepreneurial works,

films were given a fixed term of protection. As a result of the move towards harmonization of copyright in Europe, films are now treated more as authorial works.’ This is reflected in the fact that the period of protection offered to films now depends on the life of the ‘author’ of the film. No changes were needed to be made to sound recordings, broadcasts,* cable programmes and typographical arrangements. In implementing the Duration Directive, member states were required to apply the new terms to all works and subject matter that were protected in at least one member state on | July 1995. As it turned out this meant that not only was the copyright in many works extended but also that the copyright in some works which had previously expired had to be revived.’ For example, the UK copyright in a work by a British author who died in 1935 and which had been first published in the UK, would have

lapsed on 1 January 1986; but would have been revived from 1 January 1996, since the > CDPA s. 12(2). The Duration Directive expresses this as calculating matters ‘from the first day of January

of the year following the event which gives rise to them.’ Duration Directive, Art. 8. © Duration of Copyright and Rights in Performances Regulations 1995 (SI 1995/3297). The length of protection is greater than that which is required in the WIPO Copyright Treaty, Art. 1(4) and the TRIPs Agreement: Art. 9 TRIPs.

7 In fact the position is more complicated. Art. 3(3) of the Directive also provides that the rights of the producer of first fixation of a film are to last fifty years after fixation or after the fixation was lawfully published. These are distinct from the rights of the owner of copyright in a cinematographic or audiovisual work. 8 Duration Directive, Art. 3(4). 9 Duration of Copyright and Rights in Performances Regulations 1995 (SI 1995/3297), especially r. 17.

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COPYRIGHT

work would have been protected in Germany on 1 July 1995. The Directive also obliged member states when implementing the reforms ‘to adopt the necessary provisions to protect in particular acquired rights of third parties.’!° Acts done pursuant to arrangements made before 1 July 1995 at a time when copyright did not subsist in the work are treated as not infringing any revived copyright in a work.!! In all cases, the revived copyright is treated as ‘licensed by the copyright owner, subject only to the payment of such reasonable royalty or other remuneration as may be agreed or determined in default of agreement by the Copyright Tribunal.’!” As well as extending the period of protection given to many works, as of 1 January 1996 the Duration Directive also changed the way duration is calculated for works originating from outside the EEA. Prior to the introduction of the Directive, British

law provided the same level of protection to works published in the UK as those published elsewhere. This principle changed, however, under the Duration Directive which only requires that the extended period of protection be offered to works originating from within the EEA. The period of protection given to works of nonEEA origin, that is to works not originating in the EEA or without an EEA author, is the same as what the work would receive in the country of origin.!> That is, the Duration Directive is based on a notion of ‘comparison of terms’ rather than national treatment.'* This means that a work which is first published in Australia!® and the author is not a national of an EEA state, the work is only protected in Europe for only fifty years after the death of the author (because that is the duration of Australian copyright law).!°

10 Duration Directive, Art. 10. See also Recitals 26 and 27. For discussion by the ECJ of the Italian transitional provisions see Butterfly Music Srl v. Carosello Edizioni Musicali e Discografiche Srl C-60/98 (29 June 1999) (holding that the Italian legislation satisfied the criterion of legality imposed by the Directive, and did not defeat the intention of the Directive. The ECJ approved the fact that the Italian provisions permitted those who had reproduced and marketed phonograms during the period when copyright had expired to continue distribution for 3 months after the copyright revived, the Court saying ‘a provision of that kind, which must necessarily be transitional in order not to prevent the application of the new term of protection of copyright and related rights on the date laid down by the Directive, that being the Directive’s principal objective’: para. 28. See J. Phillips, ‘The Butterfly that Stamped’ [1999] Ent LR 189; B. Lindner, ‘Revival of Rights v. Protection of Acquired Rights’ [2000] EIPR 133; L. Ubertazzi, ‘The “Butterfly” Case or EC Term of Protection Directive and Transitional Law’ [2000] 31 IIC 142.

| Duration of Copyright and Rights in Performances Regulations 1995 (SI 1995/3297).

l2Sbids 17231124. 13 On what is a country of origin see CDPA s. 15A. In relation to sound recordings, broadcasts, and cable programmes, the Act refers to the author of a work being ‘a national of an EEA state’; CDPA s. 13A(A), s. 14(3).

14 Duration Directive, Recital 22, Art. 7.

1S -GDPAs:15A(2). 16 CDPA s. 12 (6).

DURATION

2 LITERARY,

OF COPYRIGHT

DRAMATIC,

ARTISTIC

MUSICAL,

149

AND

WORKS

Subject to the exceptions listed below, copyright in a literary, dramatic, musical, or artistic work expires seventy years from the year in which the author of the work dies.'’ Thus, where an author of a book died in 1990, the copyright in the book would expire in 2060. If a literary, dramatic, musical, or artistic work is jointly authored, the

seventy-year post-mortem term of copyright is calculated from the year in which the longest surviving author dies.'® In discussions about copyright duration, the question is often asked: why not have fixed terms for all works? A number of justifications have been given as to why the ‘life-plus’ term should be used to calculate the duration of authorial works. It has been suggested, admittedly without any real evidence, that since authors will be providing for their next of kin, the life-plus protection provides authors with incentives to create up until their death. Another explanation given as to why the life-plus formula is used is that it overcomes the problems that often arise in determining when a work was made or published. While the date of an author’s death is easily ascertained from public records, it is often difficult to determine when something was created. A final reason for using the life-plus formula is that it avoids the complications that would otherwise arise in calculating duration when an author makes revisions to a work during their lifetime. Under the life-plus test, all works fall into the

public domain on the same date.

2.1

EXCEPTIONS.

TOcLHE

TERM

OF LIFE; PLUS;SEVENTY.

The general rule that the duration of literary, dramatic, musical, and artistic works is life plus seventy years is subject to the following exceptions: computer-generated works; Crown copyright; parliamentary copyright and international organizations; artistic works used in designs; works of unknown authorship; unpublished works not in the public domain.” 2.1.1 Computer-generated works Where a literary, dramatic, musical or artistic work is computer-generated, the duration of protection lasts for fifty years from the end of the year when the work

was made.””

17 -GDPAS, 12(2): 18 CDPA ss. 3(1), 12(4). 19 Prior, perpetual copyrights under past law end in 2040. However, in the case of J. M. Barrie’s Peter Pan continue to be partly admitted: CDPA, Sched. 1, para. 13, and Sched. 6, respectively.

28 -EDPAisi12 (7)

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COPYRIGHT

2.1.2 Crown copyright Crown copyright in a literary, dramatic, musical or artistic work lasts for 125 years from the year in which the work was made. If the work is published commercially within seventy-five years from the year it was made, then copyright lasts for fifty years from the date it was commercially published.7! 2.1.3 Parliamentary copyright and international organizations Parliamentary copyright lasts for fifty years from the year in which the work was made.” Where an international organization is the first owner, copyright also lasts for fifty years from when the work was made. 2.1.4 Artistic works used in designs Copyright in artistic works which have been used in designs of industrially produced articles lasts for twenty-five years from the year in which such articles are first legitimately marketed. 2.1.5 Works of unknown authorship

As we saw earlier, in certain situations it may not be possible to identify the author of a particular work. Given that with works of unknown authorship, there is no identifi-

able author whose death can help set the duration of protection, copyright law is forced to use other trigger points to calculate duration. In these circumstance, the 1988 Act provides that copyright in a literary, dramatic, musical, or artistic work of unknown authorship lasts for seventy years calculated either from the year of creation or, if during that period the work is made available to the public, from the year it was made available.” If the author’s name is disclosed before the seventy-year term lapses and before the author’s death, this disclosure will have the effect of extending the term of copyright to the author’s life plus seventy years.”4 2.1.6 Unpublished works not in the public domain

Section 17 of the 1911 Copyright Act conferred protection on unpublished literary, dramatic, and musical works and engravings for fifty years from the date of publication. This meant that so long as the works remained unpublished the copyright term was unlimited. The 1988 Act removed this possibility by specifying that copyright in works which were unpublished at the author’s death and remained so until 1 August

21 CDPA ss. 163(3), 164, 165(3), 166(5). International organizations initially acquiring copyright in a work may enjoy it for 50 years from making or longer if specified by order: CDPA s. 168(3).

22 CDPA s. 165(3) 23 CDPA s. 12(3). The requisite ‘making available to the public’ includes the following acts if authorized:

publishing, performing in public, broadcasting, and cable-casting in the case of literary, dramatic, and musical works; and exhibition in public and inclusion in a film shown in public, a broadcast, or cable programme in the case of artistic works: CDPA s. 12(5). 24 CDPA s. 12(4). Before 1996, absent identification of an author, an anonymous or pseudonymous work

obtained a term of 50 years from the year of first publication.

DURATION

OF COPYRIGHT

151

1989, was to last for a fixed period of fifty years from 1 January 1990, that is, until 31

December 2039.”°

3 FILMS Under the 1956 and 1988 Acts (as enacted), when films were treated as types of entrepreneurial works, protection was limited to fifty years, normally calculated from the year of release.” As a result of the Duration Directive, however, the term

of copyright in films now runs for a period of seventy years from the year of the latest death among four categories of persons: the principal director, the author of the screenplay, the author of the dialogue, or the composer of music specially created for and used in the film.”” Where the identity of these four individuals is unknown, the term of protection is seventy years from the year in which the film was made.”* Alternatively, if during that period the film is made available to the public, copyright expires seventy years from the end of the year in which the film was first made available.” Foreseeing potential problems in identifying when such copyright expires, the Duration Regulations also introduced a new exception to allow a film to be copied at a time when it is reasonable to assume that copyright has expired.*°

4 ENTREPRENEURIAL

WORKS

As entrepreneurial works have no readily identifiable author, the period of protection is calculated using different trigger points.*!

25 CDPA, Sched. 1, para. 12(4). A work published after the author’s death, but before 1 Aug. 1989, obtained a term of 50 years from publication: CDPA, Sched. 1, para. 12(2). Under the 1956 Act, a work unpublished at the author’s death continued in copyright until 50 years after first publication: CA 1956, ss. 2(3), 3(4). In some cases, certain acts, such as performance in public, had the same effect as publication. For some works unpublished on 1 Aug. 1989, the relevant copyright will have been extended by the recent increase in the term of copyright. For example, if an author died in 1988 leaving unpublished manuscripts (which remained unpublished in 1990), the effect of the changes made in 1990 was that copyright lasted until 31 Dec. 2039. However, as a result of the increase in the duration of copyright to life plus 70 years copyright will be extended to 31 Dec. 2058. 26 CDPA s. 13 (as enacted). 27 CDPA s. 13B(2). Each category may include more than one member, but unidentified members do not count: CDPA s. 13B(3), (10). 28 CDPA s. 13B (4)(a), (10 29 CDPA s. 13B(4)(b), am The requisite ‘making available to the public’ includes the following acts if

authorized: showing in public or broadcasting or cable-casting to the public: CDPA s. 13B(6).

30 CDPA s. 66A. 31 For transitional provisions see CDPA, Sched. 1, paras. 12(2)(d)—(e), (5), (6).

152

4.1

COPYRIGHT

SOUND

RECORDINGS

For sound recordings, copyright expires fifty years from the end of the year in which it is made. If during that period the sound recording was released, copyright expires fifty years from the year of its release.** Where the author of a sound recording is not a national of an EEA state, the duration of copyright is that to which the sound recording is entitled in the country of origin. This is subject to the proviso that the period of protection does not exceed the protection available for EEA works (viz. fifty years).*°

4.2

BROADCASTS

AND

CABLE

PROGRAMMES

The duration of broadcasts and cable programmes is fifty years from when the broadcast was first made or the programme was first included in a cable programme service in an EEA country.** Where the author of a broadcast or cable programme is not a national of an EEA state, the duration of copyright is that to which the broadcast or cable programme is entitled in the country of which the author is a national (provided that the period of protection does not exceed fifty years).*°

4.33

TYPOGRAPHICAL

ARRANGEMENTS

For typographical arrangements of published editions, copyright expires twenty-five years from the year of first publication.** This right should be distinguished from the publication right conferred on the publisher of a previously unpublished work in which copyright has expired, which also lasts for twenty-five years from publication.3

5 MORAL

RIGHTS

In the UK, moral rights of integrity and attribution subsist as long as copyright subsists.** The right to object to false attribution is less extensive, only lasting for twenty years after the author’s death. In other countries moral rights are capable of operating in perpetuity. The Duration Directive made no attempt to harmonize the duration of moral rights and was expressed to be without prejudice to them. °2 CDPA s. 13A(2). The requisite ‘release’ includes the following acts if authorized: publication, playing in

public, or broadcasting or cable-casting to the public: CDPA s. 13A(3). Note that an original collection of recordings would constitute a database and therefore be protected as a literary work. 33 CDPA s. 13A(4). See, however, s. 13A(5), which ensures that the UK complies with its international obligations under the Rome Convention.

34 CDPA s. 14.

35 CDPA s. 14(2).

26. CDPAvs 15; >? Related Rights Reg. 16(6). See below at pp. 153-4.

38 See Ch. 10. 3? Duration Directive, Art. 9. The extension might therefore be ultra vires.

DURATION

6 PUBLICATION

OF COPYRIGHT

RIGHT

COPYRIGHT

IN WORKS HAS

153

IN WHICH

LAPSED

In order to give effect to Article 4 of the Duration Directive, a new property right equivalent to copyright, called a ‘publication right’ was introduced in the UK.*° The right is granted without formality to any person who after the expiry of copyright protection, publishes for the first time a previously unpublished literary, dramatic, musical or artistic work or film. This new right lasts for twenty-five years from the end of the year in which the work was first published. In order to have the right, a publisher must publish a public-domain literary, dramatic, musical, or artistic work or a film for the first time.*’ The right is only acquired where the work is previously unpublished. It should be noted that publication in this context has a special meaning.*” When determining whether the work is previously unpublished, no account is to be taken of any unauthorized act done at a time when there is no copyright in the work. An unauthorized act means 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. The publication right that vests in the publisher is only available ‘after the expiry’ of copyright protection.*? This means that the publication right is unlikely to be of great significance in the UK for some time. This is because of the dual effect of the changes made as regards unpublished works in the 1988 Act and the other changes made to the copyright term introduced to give effect to the Duration Directive. The effect of these transitional provisions is that the publication right is currently restricted to unpublished artistic works other than engravings. Another consequence of limiting the availability of the publication right to cases where copyright has expired is that it may exclude works in which copyright has never subsisted. Since the majority of existing unpublished works received statutory copyright protection in 1911, it will normally be possible to resolve the question of whether a work ever enjoyed copyright protection without too much difficulty (although problems exist in relation to artistic works). It seems that no statutory copyright existed in unpublished paintings, drawings, and photographs created before 1862 by an artist who died before 1855, nor in unpublished sculptures created prior to 1 July 1862.” 40 Related Rights Reg. 16. 41 The publication right does not arise from the publication of a work in which Crown copyright or parliamentary copyright subsisted: Related Rights Reg. 16(5). 42 Tt includes any communication to the public and, in particular, includes the issue of copies to the public; making the work available by means of an electronic retrieval system; the rental or lending of copies of the work to the public; the performance, exhibition or showing of the work in public; or broadcasting the work or including it in a cable-programme service: Related Rights Reg. 16. 43 Ibid. 44 For an elaboration of the reasoning that leads to this conclusion, see Copinger, paras. 17-30-32. 45 For background, see Sterling and Carpenter, para. 2A.01.

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While the publication right may supplement existing rights given to publishers in their typographical arrangement of published editions, it differs from these rights in three regards. First, the publication right is only available for the first publication of a previously unpublished work. Second, while the new publication right may apply where the publication relates to an artistic work, the typographical arrangement right is not relevant in such circumstances. This is because the right in typographical arrangement is confined to ‘a published edition of the whole or any part of one or more literary, dramatic or musical works.” Third, the publication right is much more extensive than the right to prevent facsimile copying of a typographical arrangement. A work qualifies for a publication right*’ only if the first publication occurs in the European Economic Area and the publisher of the work at the time of first publication is a national of an EEA state.*® Publication has a more extended meaning than that discussed in relation to copyright. Where two or more people jointly publish a work, it is sufficient if any of them is a national of an EEA state. No provision is made for the extension of the publication right so as to recognize equivalent rights for foreign publishers, where the country of publication provides reciprocal rights to publishers in the EEA.*? 46 CDPA s. 8(1). 47 For general analysis of concepts relevant to protecting foreign claims, see above at pp. 100-5. 48 Related Rights Reg. 16(4).

49 Ibid.

8 INFRINGEMENT

1 INTRODUCTION The aim of this chapter is to explore copyright infringement. As we will see, infringement builds upon a number of topics we have discussed in earlier chapters: notably, the subject matter of copyright (Chapter 3) and originality (Chapter 4). Infringement also highlights many of the uncertainties that exist in copyright law, particularly in

relation to the nature and scope of the copyright work. As we saw in Chapter 6, the copyright owner is able to restrict the use that is made of the copyright work in a number of different situations. In reflection of the core nature of these rights, any transgression of these rights is known as primary infringement. In an attempt to inhibit the negative impact that illegal acts have upon copyright owners, copyright law recognizes that it is not enough merely to provide remedies against those who copy or perform the copyright work. Instead, copyright law recognizes that it is also necessary to provide owners with protection against those who aid and abet the primary infringer. Such incidental infringement is known as secondary infringement. There are two important differences between primary and secondary infringement. The first relates to the scope of protection. Primary infringement is concerned with people who are directly involved in the reproduction, performance (etc.) of the copyright work. In contrast, secondary infringement is concerned with people in a commercial context who either deal with infringing copies, facilitate such copying or facilitate public performance. The second difference between the two forms of infringement relates to the mental element that the defendant must exhibit in order to infringe. As we explain below, the state of mind of the defendant is not formally taken into account when deciding whether an act of primary infringement has occurred. In the case of secondary infringement, however, liability is dependent on the defendant knowing or having reason to believe that the activities in question are wrongful.’

1 CDPA ss. 22-4, s. 27.

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2 PRIMARY

INFRINGEMENT

In an action for primary infringement, the obligation falls upon the claimant to show on the balance of probabilities that:

(i)

the defendant carried out one of the activities which falls within the copyright owner’s control;

(ii) the defendant’s work was derived from the copyright work (‘causal connection’) and;

(ili) the restricted act was carried out in relation to the work or a substantial part thereof.’ Before looking at each of these in more detail, it is necessary to make some preliminary points about primary infringement. 2.1

CIRCUMSTANCES

IN WHICH

THE

INFRINGEMENT

TOOK

PLACE

In many instances, the key issue in deciding whether infringement has occurred is whether a restricted act was carried out in relation to the work or a substantial part thereof. This requires the court to compare the claimant’s work with the work used by the defendant to ascertain whether they are the same or are substantially similar. In many cases the courts also take into account the circumstances in which the alleged infringement takes place. While these factors will not of themselves be sufficient to prove infringement, they may influence a court when considering whether a work has been infringed. This is especially so in more difficult cases. One factor that has influenced the courts when deciding whether an infringement has taken place is the intention of the defendant. Despite the fact that intention is not relevant when deciding whether the restricted act took place,’ if a defendant intentionally misappropriated the claimant’s labour, the courts are more likely to find infringement.* The case law also suggests that where the works are in competition or are substitutes for each other (such as with an abridgement of a book), it is more likely

that the use will be an infringement.° This is because where a defendant’s work competes with the claimant’s, it deprives the claimant of some of the profits they could have expected when creating the work. The courts have taken a more liberal approach where the person alleged to have infringed copyright in a work is also the creator of the work. This would be the case, for example, where the author is an employee or has assigned copyright to a third 2 CDPA s. 16(3). 3 Intention may be critical in establishing a defence of incidental taking (CDPA s. 31), and may be relevant when assessing additional damages (CDPA s. 97(2) ).

4 Jarrold v. Houston (1857) 3 K & J 708, 716. > Bradbury v. Hotten (1872) LR 8 Ex. 1; Ravenscroft v. Herbert [1980] RPC 193, cf. Cambridge University Press v. University Tutorial Press (1928) 45 RPC 335.

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party. One reason why the courts may favour the creator in these situations is because it may be difficult to determine whether the work was copied or independently produced. It is also based on the belief that copyright law should not be used to restrict authors from continuing to work in an area in which they may have previously worked.°

2.2 “A ROUGH PRACTICAL TEST’ In determining whether a work has been infringed, the courts have occasionally relied on the rough practical test that ‘what is worth copying is prima facie worth protecting’.’ As Laddie J said in Autospin, this has led courts, sometimes with almost evan-

gelical fervour, to apply the commandment ‘thou shalt not steal’. Where the test is adopted, the courts relinquish the task of asking whether the work has been infringed according to the rules of copyright law and focus instead on the mere fact that the work has been copied. In so doing, all that a claimant has to show to establish infringement is that their work has been copied.® The test, which places claimants in a very strong position, has recently fallen from favour. In particular, the courts have criticized the doctrine on the basis that it ‘goes too far” and that it ‘proves too much’.!° More specifically, it has been pointed out that the 1988 Act clearly states that in order for a defendant to infringe, they must take a substantial part of the work, not any part (which is what is protected where the rough practical test is applied). As a result, at worst the test should be used with caution. At best, it should not be used at all. Instead the real issue should be whether the infringement was carried out in relation to the work or a substantial part thereof." With these general points in mind, we can now turn to consider the three questions that need to be asked when considering primary infringement.

3, RESTRICTED

ACTIVITIES

The first question that needs to be asked in considering whether copyright in a work has been infringed is whether the defendant carried out one of the activities that falls within the copyright owner’s control. This topic was discussed in Chapter 6. © See CDPA s. 64. 7 University of London Press v. University Tutorial Press [1916] 2 Ch 601, 610. In Ladbroke (Football) v. William Hill (Football) [1964] 1 WLR 273 the House of Lords misread Peterson J’s dictum (a case on

originality of mathematics exams) and treated it as if it was concerned with substantial taking. 8 [bcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275, 289. ° Hyperion Records v. Warner Music (1991, unreported), Judge Laddie QC. Under the test any copying appears to be deemed to be a substantial taking. This gives no weight to the word ‘substantial’. 10 Cantor Fitzgerald International v. Tradition (UK) [2000] RPC 95, 131. But the House of Lords have held

in Designers Guild v. Williams [2001] FSR 113, 116-17, 125, 134 that ifaclaimant proves copying by way of similarities between the two works, it will rarely be necessary to ask in addition whether the copying was of a substantial part of the claimant’s work. 11 Cantor Fitzgerald International v. Tradition (UK) [2000] RPC 95, 131.

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4 A ‘CAUSAL CONNECTION’ The second factor that needs to be shown in order to prove infringement is that the defendant’s work was derived from the claimant’s work.” That is, it is necessary to show that there is a causal link between the work used by the defendant and the copyright work. This means that unlike the case with patents, copyright law does not protect against independent creation. It is important to note that it is not necessary for the defendant’s work to be derived directly from the original of the work;! it is possible for a defendant to infringe where they base their work on a copy of the work. It is also important to note that it does not matter if the intermediate reproduction is itself a legitimate or a pirated copy.'* This means, for example, that where a person copies a three-dimensional object (such as an exhaust pipe), they may infringe the copyright in the drawings on which the three-dimensional object was based, even though they have never seen the drawings.!° In order to overcome some of the difficulties that claimants have in proving that the defendant’s work was derived from the copyright work, the courts have been willing to infer derivation from the circumstances of the case in hand. Thus, where the works are similar and a claimant is able to show that the defendant had access and opportunity to copy the copyright work, the courts are more likely to accept that there is a causal connection between the two works. In most cases, the process of copying will be a conscious act. In some cases, however, the courts have been willing to accept that the process of derivation may occur at a subconscious level.'° While a defendant may honestly not recall having seen or heard the copyright work, the courts seem open to the argument that the defendant subconsciously copied from the copyright work. This is particularly the case in relation to songs where catchy, even annoying, tunes embed themselves in the subconscious. The acceptance of subconscious copying provides the courts with a way of dealing with a defendant who falsely claims that they cannot remember having any contact with the work.!” One factor that has been useful in proving derivation is the fact that the infringing work contains the same mistakes that occur in the original work. In these 12 See Autospin (Oil Seals) v. Beehive Spinning [1995] RPC 683 (failure to show a causal chain). As we saw

at pp. 124-5 above the knowledge of the defendant is not important in determining whether an act of primary infringement has taken place. 13 CDPA s. 16(3)(b). 14 Plix Products v. Frank M. Winstone [1986] FSR 608.

15 Ex p. Beal (1868) LR 3 QB 387 (photographs of an engraving made from the claimant’s copyright painting infringed copyright in the painting). British Leyland v. Armstong [1986] AC 577 (production of replacement exhaust pipes for claimant’s cars indirectly copied the claimant’s original drawings). 16 Francis Day v. Bron [1963] Ch 587. To establish subconscious copying it must be shown that the composer of the offending work was familiar with the work alleged to have been copied. In this case there was not sufficient material from which such an inference could be drawn. 17 Elanco Products v. Mandops [1980] RPC 213, 227 (CA).

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circumstances it is assumed that the reason why the same mistakes appear in the two works is that they are copies of each other. In order to assist in the task of proving derivation, copyright owners sometimes place incorrect or false information in their works. For example, the creators of a telephone directory may include a number of false names and addresses in the directory. Similarly, computer programs may contain lines of meaningless code. Where this incorrect or meaningless information appears in a defendant’s work, it is very difficult for them to argue that they created the work independently of the copyright work.'® Where a claimant has shown on the balance of probabilities that the defendant’s work is derived from the copyright work, the onus then shifts onto the defendant to prove otherwise. To demonstrate that they independently created the work, a defendant may claim that the similarities between the two works can be explained by factors other than copying. For example, a defendant may attempt to show that the similarities are attributable to the fact that the two works were inspired by the same source,

that both works were constrained by the functions they perform or, less plausibly, to chance.’®

5 THE

WORK

OR A SUBSTANTIAL

PART

THEREOF?

The third and final question that needs to be asked in an infringement action is whether the restricted act has been carried out in relation to the work or a substantial part thereof. This is the most difficult aspect of copyright infringement. In order to answer this question it is necessary to ask two subsidiary questions: (1) what is the work for the purposes of infringement; and (2) is the defendant’s ‘work’ the same as or substantially similar to the copyright work? We will deal with each of these questions in turn. 5.1

WHAT

IS THE

WORK

FOR

THE

PURPOSES

OF INFRINGEMENT?

Logically, the first task that arises when determining whether the defendant’s work is the same as or substantially similar to the copyright work is that the limits of the work need to be ascertained. To determine what the work is, it is necessary (1) to determine the parameters of the work, (ii) to consider the depth of protection, and (iii) to dissect

the work to distinguish the protected parts from the non-protected parts. We will deal with each of these in turn.” 18 Waterlow Directories v. Reed Information [1992] FSR 207; Waterlow Publishers v. Rose [1995] FSR 409.

19 Catnic Components v. Hill and Smith [1982] RPC 183, 222. 20 The task of identifying the work is made easier because the claimants will specify in their statement of claims the parts of the work that they believe have been infringed. While not definitive, this provides a useful starting point for demarcating the scope of the work.

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5.1.1 What are the parameters of the work? In many situations the parameters of the work will not be in dispute. This would be the case, for example, where a person photocopies all of a book, or they copy all of a computer program. Where a work is divisible into smaller elements the question may arise as to whether the ‘parts’ should be treated as separate and distinct works. If we take the case of a book, for example, while it is clear that the book as a whole is a copyright work, what of the chapters, pages, paragraphs, sentences or words that are included in the book? The decision as to the appropriate size of the work has important ramifications for claims that are currently being made by copyright owners that paragraphs and sentences in a digital work ought to be treated as discrete copyright works. The decision as to the size of the copyright work may have an important bearing on the outcome of an infringement action. The reason for this is that the question of whether something is substantial depends on what it is being judged against. In this case, that something is the copyright work. The question of how the parameters of the work are to be determined was considered by Judge Laddie QC in Hyperion Records v. Warner Music." This was an application for summary judgment brought by Hyperion Records who owned copyright in a sound recording of the medieval chant, O Euchari. The chant, which was 5 minutes 18 seconds long, appeared on the album ‘A Feather on the Breath of God’. Hyperion Records alleged that their copyright had been infringed when the electronic-pop band, The Beloved copied (or sampled) eight notes from O Euchari” and incorporated them into their record Happiness.

While it was clear that the song O Euchari was a work, Hyperion Records argued that the eight notes sampled by The Beloved also formed a distinct copyright work in their own right.” If this was accepted, it would clearly have been an infringement as 100 per cent of the ‘work’ would have been taken. Judge Laddie QC rejected the argument saying that ‘I do not accept that all copyright works can be considered as a package of copyright works, consisting of the copyright in the whole and an infinite number of subdivisions of it.’ He added that ‘if the copyright owner is entitled to redefine his copyright work so as to match the size of the alleged infringement, there would never be a requirement for substantiality.’ More specifically, Judge Laddie did not accept that it was legitimate ‘to arbitrarily cut out of a large work that portion which has been allegedly copied and then to call that the copyright work’.4 While Judge Laddie held that the eight notes sampled by The Beloved could not be treated as

21 Hyperion Records v. Warner Music (1991, unreported).

22 Referred to in the judgment as the ‘oohey, oohey part’. 23 They also argued that the whole track was the work and that the defendant had reproduced a substantial part thereof. 24 Tt is not always in the copyright owner’s interests to define the work in this way. Where a defendant has taken small helpings from a number of separate publications there may be benefits from asserting that the separate publications were in fact one. Cf. PCR v. Dow Jones Telerate [1998] FSR 170 (claimant unsuccessfully

argued that the defendant’s three articles should be taken together for the purpose of determining whether a substantial part).

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a separate work, this did not mean that in other circumstances a recording of eight notes could not be a copyright sound recording: it is possible that it could. The reason for this was that a particular aspect of a larger work might be treated as a separate work if it has a discrete, natural or non-artificial shape. Thus, a day’s footage on a film that is ‘a discrete product of the film-maker’s art’ may be treated as a distinct work. Presumably the results of a recording session, as distinct from the final product, would

also attract separate copyright protection. The question of how the size of copyright work is to be determined was considered by the Court of Appeal in Newspaper Licensing Agency (NLA) v. Marks & Spencer.” This action arose from the fact that in order to keep its staff informed about changes that affected the store (such as shifts in consumer fashion), Marks & Spencer photocopied newspaper articles on relevant topics and then distributed them to their staff. NLA, who owned the copyright in the typographical arrangements in a number of the newspapers from which articles were copied, brought an action against Marks & Spencers claiming that their typographical copyright had been infringed by the cutting service operated by Marks & Spencer. In response Marks & Spencer claimed that the articles did not constitute a substantial part of the typographical work and as such that they were entitled to copy the articles. As a result the Court of Appeal was called upon to consider whether the NLA had copyright in each of the individual articles in the newspapers or only in each newspaper as a whole. As the court pointed out, if copyright was recognized in each article, there would have been no question as to whether the copies formed a substantial part of the copyright work: that question only arose if the copyright was in the newspaper as a whole. Reversing the first instance decision of Lightman J (who held that a separate typographical copyright attached to each article because each article was itself a literary work),*° the Court of Appeal (Chadwick LJ dissenting) held that it was the arrangement of the newspaper as a whole that was the subject matter of the right. According to Peter Gibson LJ ‘what is important for this form of copyright is the edition which the publisher has published, that is, the entire edition whether or not it consists of a

single literary, dramatic or musical work, or part of such a work or several such

works’.”” Both Gibson and Mance LJ went on to consider the problem posed by the fact that 25 Newspaper Licensing Agency v. Marks & Spencer [2000] 4 All ER 239 (CA). 26 As Lightman J explained, the reason for this was that in ‘the case of anewspaper made up of anumber of different articles, each separate article is in my view a literary work and the typographical arrangement of each separate article is accordingly a copyright work’: Newspaper Licensing Agency v. Marks & Spencer [1999] EMLR 369, 377. See also Machinery Market v. Sheen Publishing [1983] FSR 431. 27 Newspaper Licensing Agency v. Marks & Spencer [2000] 4 All ER 239, 245 (CA). See also Mance LJ at 263. Following Nationwide News v. Copyright Agency Limited (1996) 136 ALR 273 (Federal Court of Australia held that separate published edition copyright did not subsist in each of the articles published in the newspapers in

question. Instead, the published edition copyright was limited to the work as a whole). At first instance, Lightman J distinguished the Australian decision on the basis that the statutory language of the Australian law was different from the equivalent UK provisions.

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many modern newspapers come in several parts. In particular, they asked whether each part was a separate published edition. In answering this question both judges referred to the Australian Federal Court decision of Nationwide News v. Copyright Agency Limited where it was held that a colour supplement to a weekend newspaper was a separate ‘work’ for the purposes of published edition copyright.”* While the colour supplement was sold as a part of the paper, the court held that it was not merely a section of the newspaper. Instead, it was presented as a separate item,

complete in itself. The reason for this was that it was printed on different quality paper, produced in colour, and separately bound. Peter Gibson LJ disagreed with the approach taken by the Federal Court on this issue. Peter Gibson LJ said that where the parts are published at the same time and presented to the public as a single newspaper, there is one edition and one typographical copyright. This was the case even ‘if the parts are in a different format on different paper or in a different colour, together they appear to me to constitute a single published edition’.” The edition is the commercial product that the publisher creates, publishes, and sells. Mance LJ disagreed with Peter Gibson LJ, saying that he was inclined to follow the decision of the Federal Court of Australia.*° Despite these recent decisions, the way the scope of the work is to be determined remains unclear. The NLA decision does not provide any real guidance as to how and when the size of a copyright work is to be determined (other than implying that the size of the work is determined by the form it takes as a commercial product). While Judge Laddie’s approach in Hyperion Records is more helpful in so far as it provides guidance as to how and when a larger work may be divided into a series of smaller copyright works, many issues remain unclear. For example, while a full day’s shooting of a film may be a discrete work, what of half a day’s filming? Similarly, while it is clear that a book is a discrete copyright work, what of the chapters, pages, paragraphs, sentences, and words—all of which can be seen as natural and discrete entities? While

it is highly unlikely that the smaller parts of a book would be treated as discrete copyright works, it is difficult to predict where the line is likely to be drawn merely on the basis of whether the part is a discrete entity. It seems sensible that where questions about the scope of the work arise that they should be guided by considerations about the consequence of recognizing small units as discrete copyright works.?! 5.1.2 What is protected beyond the surface of the work?

As we explained in Chapter 6, the protection given to entrepreneurial works is limited to the surface of the work. One of the consequences of this is that the only question that arises in relation to entrepreneurial works is whether a substantial part of a work has been taken. In relation to authorial works, however, the protection extends beyond the 28 Nationwide News v. Copyright Agency (1995) 136 ALR 273, 291. 2° Newspaper Licensing Agency v. Marks & Spencer [2000] 4 All ER 239, 247 (CA).

3° Ibid., 263. 31 In relation to typographical arrangements, the presentation and layout of the edition, as opposed to the particular words and images published in the edition, are protected.

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surface of the work to include other aspects of the work. For example, a novel (which is protected as a literary work) may include the printed words on the page (the surface of the work), as well as the story line, plot, and characters that form part of the novel. In some cases, the non-literal elements of the work may take the form of more abstract or general ways of describing the literal aspects of a work. As Learned Hand said in the well-known American decision of Nichols v. Universal Pictures Corporation, ‘{u]pon any work, and especially a play, a great number of patterns of increasing generality will fit equally well, as more and more of the incident is left out.’>* Thus, at its most specific, a play may consist of the words of the script. At a more abstract level, it may consist of the plot or story line. The play may also be described very generally as a tragedy or a comedy. (It should be noted that the very general aspects of the work would not be protected on the basis that they are ‘ideas’.) While thinking about a copyright work as if it consisted of a series of levels of abstraction may be useful in certain instances, in other situations the non-literal elements of a work cannot be

described in these terms. In these cases the non-literal elements are better seen as aspects of a work that are not visible on looking at the surface of the work: this is particularly the case in relation to computer programs.*’ Given this, perhaps the best way to understand the scope of protection potentially available beyond the surface of the work is to provide some examples. In relation to literary and dramatic works, as well as the words on the page (the literal aspect of the work), the non-literal elements of a novel or play may include the plot,** the story line,*° as well as the incidents and themes.*° While the issue has not really been addressed in the UK, it is less likely that the characters of a novel or play will be protected.” As we explain below, the non-literal elements of a literary work do not include the general ideas that may have informed or underpinned a work. In relation to computer programs copyright protection potentially extends beyond the object and source code of the program to include non-literal elements such as the structure

or architecture

of the program,’ ® as well as the sequence

of operations,

functions, and interfaces that are used in the program.

32 Nichols v. Universal Pictures Corporation (1930) 45 F (2d) 119, 121.

33 Most literary copyright works involve both literal matter (the exact words of a novel or computer program) and varying levels of abstraction (plot, more or less detailed of a novel, general structures of a computer program). Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275, 302. 34 Harman Pictures v. Osborne [1967]

1 WLR 723; Rees v. Melville [1914] MacG CC 168. In relation to

literary works, the taking ofa plot of anovel or play can certainly infringe—if the plot is a substantial part of the copyright work. [bcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275, 291. 35 Corelli v. Gray (1913) 29 TLR 570; Autospin (Oil Seals) v. Beehive Spinning [1995] RPC 683, 697; Kelly v. Cinema Houses [1914] MacG CC 168. 36 Corelli v. Gray (1913) 29 TLR 570; Rees v. Melville [1911-16] MacG CC 168 37 Designers Guild v. Williams [2001] FSR 113 (HL). Cf. Norowzian v. Arks [2000] FSR 67, 74, 76 (rhythm

and pace, theme, and editing style were not subject of copyright). 38 ‘Architecture’ may also be used to describe what Jacob J in Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275, 292 called program structure. Cantor Fitzgerald International v. Tradition (UK) [2000] RPC 95, 133-4. See generally, M. Shaw and D. Garlan, Software Architecture: Perspectives on an

Emerging Discipline (1996).

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COPYRIGHT

The position in relation to musical works is less clear. In part this is because the idea of a ‘literal’ (or non-literal) part of a work does not sit comfortably with musical

works. Given that a musical work will be infringed where it is aurally similar to the copyright work, it is difficult to imagine many non-literal elements that would be protected. It may, however, include the melody, phrasing or rhythm. As with musical works, the non-literal protection available for artistic works is unclear. While it is highly unlikely that the style used by an artist could be protected (style being the equivalent of an idea), it has been suggested that ‘if the “feeling and character” of the claimant’s work has been taken this will be a relevant, but not conclusive, consideration’.»’ The question of the scope of protection available for artistic works was considered in Krisarts SA v. Briarfine.*° The defendants commissioned a Mrs Gardner to paint scenes and views such as the Houses of Parliament with Westminster Bridge in the foreground, the Tower of London, Windsor Castle, and so on. In so doing they showed Mrs Gardner picture postcards of the scenes they wanted her to paint. The defendants also gave Mrs Gardner prints taken from M. Legendre’s paintings. While there was no accusation of slavish copying, many of the paintings

were taken from the same view and the same angle as M. Legendre’s paintings. As such, the question arose as to whether there was any copyright in the view or angle that a painter adopts. While Whitford J stressed that other painters should not be restricted from painting the same scenes, he did accept that there could be certain elements of the scenes that were ‘distinctive’ enough to warrant being protected.*! As he said: When one is considering a view of a very well-known subject like the Houses of Parliament with Westminster Bridge and part of the Embankment in the foreground, the features in which copyright is going to subsist are very often the choice of viewpoint, the exact balance of foreground features or features in the middle ground and features in the far ground, the figures which are introduced, possibly in the case of a river scene the craft on the river and so forth. It is in choices of this character that the person producing the artistic work makes his

original contribution.”

As we explain below, the only aspects of a work that are protected are those that are relevant to the type of work in question. In relation to artistic works, this has meant that copyright law has been primarily concerned with the visual aspects of artistic works. The preoccupation with the visual elements of artistic works may have important ramifications for works such as Australian Aboriginal art where the story or Dreaming depicted in the painting may be more important than the visual images represented on the canvas. Similar problems may also arise with appropriation art,

3° Copinger, para. 7-82 citing Bauman v. Fussell [1978] RPC 485; Brooks v. Religious Tract Society (1897) 45 WR 476.

40 [1977] FSR 557. 41 While Whitford

J was

sympathetic to such a finding. 42 [1977] FSR 557, 562.

not willing to reach

a final decision

on copyright

infringement,

he was

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where the artist may be more concerned with the non-visual elements of an artistic work (such as the meaning they are trying to portray) than the visual aspects of the work. It is important to note that most of the decisions dealing with artistic works in the UK have been in relation to utilitarian works created by engineers rather than artists. If we are to take Laddie J seriously that there is no compelling reason why we should pretend that the works covered by copyright form a coherent whole,* there is a possibility that utilitarian artistic works (such as engineering drawings) may be treated differently from other artistic works. If this were the case, there is a possibility

that the non-literal (or visual) aspects of certain artistic works may be protected. 5.1.3 Dissecting the work Once the parameters and scope of the work have been clarified, the next task is to determine the elements of the work that are protected. More specifically, it is necessary to isolate or dissect the protected parts of the work from those parts that are not protected.** The reason for this is that when deciding if a copyright work has been infringed, copyright law is only concerned with the private, protected parts of the work: the fate of the public, non-protected elements is irrelevant. The difficult question is knowing how the line is to be drawn between the protected and non-protected parts of the work. That is, the difficult task is distinguishing between those parts of a work which are public and thus can be used without fear of infringement, and those parts of the work which are private and subject to copyright protection. Given the diverse nature of the subject matter protected by copyright, it is not surprising that the aspects of the work that are potentially protected vary considerably between the different categories of works. Three principles are used to divide a work into a private realm that is protected by copyright law and a public realm that is free to be used by all. The first flows from the fact that protection is only granted over the parts of a work that are relevant to the type of work in question. The second is that copyright law only provides protection over those parts of the work that ensure that the work is original. The third is that copyright does not protect the ‘ideas’ that lie behind or inform a work. (i) Relevance. The only elements of a work that are protected are those which are relevant to the type of work in question.*” This means that the way a work is classified may influence the aspects of a creation that are protected. For the most part, there are few problems in ascertaining which aspects of a particular creation are relevant to the type of work in question. Thus in the case ofa novel, it is clear that the printed words will be protected as a literary work, whereas the painting reproduced on the cover of the novel would be protected as an artistic work. 43 Autospin v. Beehive Spinning [1995] RPC 683, 700. 44 Ladbroke (Football) v. William Hill (Football) [1964] 1 WLR 273, 293 (Lord Pearce); Warwick Film v. Eisenger [1969] 1 Ch 508; Designers Guild v. Williams [2000] FSR 121, 131. See also Designers Guild v. Williams

[2001] FSR 113 (HL). 45 Cantor Fitzgerald International v. Tradition (UK) [2000] RPC 95, 131 (copyright law protects the relevant skill and labour expended by the author on the creation of the work).

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One area where the need to identify the relevant parts of a work has been important is in relation to design and engineering drawings. In these situations, where a drawing consists of both graphic and written information, the courts have to decide which aspects of the drawings are protected as an artistic work and which are protected as a literary work.*® While there is no reason why two or more types of copyright cannot co-exist in a single physical object such as a design drawing,’ it is important that those aspects of the design which are protected as artistic works are distinguished from those which are protected as literary works. The reason for this is that the particular copyright category into which an author’s work fits may be important for the duration and scope of the rights.** In some cases, it may also have a bearing on whether copyright exists at all. The scope of protection in design drawings was considered in Interlego v. Tyco.*? In this decision the Privy Council made it clear that the only aspects of an artistic work which are protected are those that are ‘visually significant’.5° Conversely, anything which was ‘appreciated simply with the eye’ is excluded from the scope of literary copyright.”! As artistic copyright only protects the visual aspects of a work,” this means that in relation to engineering drawings the protection does not extend to include any information (such as measurements or dimensions) communicated by or

depicted in the artistic work.*? The impact that these principles have upon the scope of protection for utilitarian drawings can be seen in Electronic Techniques v. Critchley** where Laddie J was called upon to consider whether the literary copyright in the claimant’s circuit diagrams had been infringed. The circuit diagrams were made up of a number of components (such as resistors and transformers), information about the values of the components (such

as the ability of the resistor to resist the flow of electricity), and a series of lines which showed the way the components were linked together. Laddie J said that as the interlinking lines of the circuit diagrams were appreciated

46 McCrum v. Eisner [1918] 87 Ch D 99.

47 Electronic Techniques (Anglia) v. Critchley Components [1997] FSR 401 (Laddie J arguing that the same work should only give rise to one category of copyright); cf. Sandman v. Panasonic UK [1998] FSR 651 Pumfrey J questioning Laddie J (calligraphic work in which the calligraphy is part of the work). See also Mackie Design v. Behrinnger [1999] RPC 717. 48 Electronic Techniques (Anglia) v. Critchley Components [1997] FSR 401, 412. 49 [1988] RPC 34.

5° Sandman v. Panasonic UK [1998] FSR 651, 662. >! The courts have tended to define the elements of literary copyright in the negative. An exception is MacMillan v. Cooper (1924) 40 TLR 186.

>? Interlego v. Tyco [1988] RPC 34 (PC); Electronic Techniques (Anglia) v. Critchley Components [1997] FSR 401; Cantor Fitzgerald International v. Tradition (UK) [2000] RPC 95, 131.

93 Catnic Components v. Hill & Smith [1982] RPC 183, 222-3, approved in Interlego v. Tyco [1988] RPC 34 (RE) 54 [1997] FSR 401. °° The author of a circuit diagram has the choice of using either pictures or words to record and

communicate its design: the former by graphic means (artistic work), the later by literary means (literary work).

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simply by the eye, they were irrelevant as far as literary copyright was concerned.*° That is, the literary work in the circuit diagrams did not include the graphics that connected the individual parts together. Instead, they were protected as artistic works. The result of this was that qua literary work, the claimant’s circuit diagrams were no more than a list of five or six components. Laddie J concluded by saying that the limited nature of the literary work provided the defendant with a significant defence that the circuit diagrams were too insubstantial to qualify as original works. (ii) Originality. Another factor that separates the public and the private elements of a copyright work is the requirement of originality (discussed in Chapter 4). This is because a person will only infringe if they appropriate a part of the work upon which a substantial amount of the author’s original skill and labour was expended.*” This means that the copying of an unoriginal part of the work is not an infringement.** A person will only infringe if they make use of that part of the work that ensures that the work is original.°” This can be seen if we consider the situation where a person compiled a list of the names of Arsenal supporters living in Australia. If the originality of the compilation lay in the way the information was arranged, third parties would not be able to make use of the way the names were organized. They would, however, be able to make use of the information (if, for example, they scrambled the list). Alternatively, if the originality of the compilation stemmed from the selection of the material (but not its arrangement), third parties would not be able to make use of the information (although they would not be prevented from independently compiling the list themselves).

The correspondence between originality and what needs to be taken for a person to infringe can also be seen in Kenrick v. Lawrence. This case concerned the copyright protection available for a rudimentary drawing of a hand pointing to a square on a ballot paper to be used by illiterate voters. In considering this issue, the court said that ‘the degree and kind of protection given must vary greatly with the character of the drawing, and that with such a drawing as we are dealing with the copyright must be confined to that which is special to the individual drawing over and above the idea— in other words, the copyright [in the case at hand] is ... extremely limited character’.°' As such, while the court held that the drawing was protected by copyright, it also said that as the level of skill, labour, and effort that was used in creating the work was minimal (it was a simple, functional work), nothing short of an exact literal

°6 Following Jacob J in Anacon v. Environmental Research Technology [1994] FSR 659. 57 Cantor Fitzgerald International v. Tradition (UK) [2000] RPC 95, 131; Autospin (Oil Seals) v. Beehive

Spinning [1995] RPC 683, 697; Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275. 58 Ladbroke (Football) v. William Hill (Football) [1964] 1 WLR 273, 293 (Lord Pearce). See also Warwick Films v. Eisenger [1969] 1 Ch 508; Designers Guild v. Russell Williams [2000] FSR 121, 131. See also Designers Guild v. Williams [2001] FSR 113, 122 (HL).

59 On the relationship between unoriginal works and the context in which they are taken see Biotrading & Financingv. Biohit [1998] FSR 109, 122.

60 (1890) 25 QBD 99. 61 Kenrick v. Lawrence (1890) 25 QBD 99, 104.

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reproduction of the drawing would constitute an infringement. The upshot of this is that where the originality is thin, the scope of protection will be correspondingly thin. It also means that all that the functional nature of a work means is that the protection may be more limited and not, as in some other jurisdictions, that the work lacks

originality. (iit) Non-protection of ideas. Another factor which enables the public and the private elements of a work to be distinguished derives from the long-established principle that copyright protection is not granted to the ideas which are embodied in or which may have inspired the work.” In more positive terms this means that third parties are able to make whatever use they wish of the ideas that are contained in a copyright work. Thus it is not an infringement for someone to take the ideas or concepts behind a painting, a book, or a computer program and incorporate them into their own work. In this context it is important to note that ‘idea’ is a shorthand expression that covers an array of different things such as the ideas which prompted the work (to explore the impact of copyright law on artists); the subject matter of the work (a book on intellectual property law); or the general style in which the work is created (a cubist painting). The exclusion of ‘ideas’ from the scope of protection is an important judicial technique that is used to reconcile the divergent interests of copyright owners against the interests of users, creators, and the public more generally.® As is often pointed out, copyright works can be described on a number of different levels of abstraction. If protection was granted over the more general aspects of the work, such as the subject matter of a book or the style in which a work was painted, it would stifle the ability of others working in the same field. For example, if the first person to write a book on copyright and line-dancing was given copyright protection over the subject matter it would hinder the ability of others working in the same area. In order to ensure that copyright law does not unduly impinge upon the process of creation, it was decided over two centuries ago that copyright protection needs to have acceptable limits.©’ In addition to limits on the duration of protection, it was also decided that the more general or abstract aspects of the work ought to be excluded from the scope of protection.® 62 For a warning about the use of this aphorism see Jacob J in Ibcos Computers v. Barclays Mercantile Finance [1994] FSR 275 Designers Guild v. Williams [2001] FSR 113, 120-2. The non-protection of ideas has been recognized in international treaties: see TRIPs Art. 9(2); WCT Art. 2; Software Directive, Art. 1(2). 63 Kenrick v. Lawrence (1890) 25 QBD 99, 102 (‘mere choice of subject matter can rarely if ever confer

upon the author of a drawing an exclusive right to represent the subject’). 64 Norowzian v. Arks [2000] FSR 67, 74, 76 (no copyright in film-editing style). © See W. Landes and R. Posner, ‘An Economic Analysis of Copyright’ (1989), 12 Journal of Legal Studies 325; A. Yen, ‘Restoring the Natural Law: Copyright as Labour and Possession’ (1990), 51 Ohio State Law Journal 517. J. Litman, “The Public Domain’ (1990), Emory Law Journal 965. 66 Nichols v. Universal Pictures Corporation (1930) 45 F (2d) 119, 121. 67 See Millar v. Taylor (1769) Donaldson v. Beckett (1774) 2 Bro PC 129, Cobbett’s Parliamentary History xvii, 954.

68 As Learned Hand said ‘there is a point in the series of abstractions where they are no longer protected.’ Nichols v. Universal Pictures Corporation (1930) 45 F (2d) 119, 121.

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Sometimes, the principle that copyright law does not protect ideas is misleadingly referred to as the idea—expression dichotomy. This is usually taken to mean that what is protected is not an idea but its expression. In so far as the dichotomy implies that ideas are not protected while the mode of expression used by the author is, the dichotomy is not inaccurate. It is unhelpful, however, in that it wrongly suggests that copyright protection is limited to the form or expression used by the author and that copyright does not protect against change of form nor against non-literal copying.” The main problem that has arisen in this area is working out what an idea is and thus what aspects of a work will not be protected by copyright.”” This question recently came to a head in the UK in a number of cases dealing with non-literal infringement of computer programs. While it was agreed that protection should not be limited to the code in which the program was written, there has been disagreement over where and how the limits of the protected subject matter are to be set. There has also been disagreement over the extent to which, if at all, American decisions in this

area are relevant in the UK. When the question of copyright infringement of computer programs first arose in the UK, the courts followed the approach that had been developed in America. One of the earliest American cases to explore the nature of copyright infringement in relation to computer programs in the USA was the decision of Whelan v. Jaslow:’! a copyright infringement action in relation to a computer program designed to run a dental laboratory. One of the more important aspects of the decision was that it established that not only the code but also the structure of a computer program could be protected under American copyright law. As a result of accepting that copyright protection included the non-literal elements of a computer program, the court also had to consider what the limits of protection were. The court in Whelan began by stating that the purpose or function of a utilitarian work (such as a computer program) was the work’s idea.” On this basis the court said that the line between protected and non-protected subject matter was determined by reference to the end that the work aimed to achieve. Turning to the question of how the line between protected and non-protected subject matter was to be drawn, the court applied what is known as the “doctrine of merger’. This provides that where there is only one way of expressing an idea, then the expression will not be protected by copyright: instead it is part of the public domain. When applied to the case in hand, the court said that this meant that anything that was essential to the function of the program (i.e. the running of the dental laboratory) was part of the ‘idea’ and thus excluded from copyright protection. In contrast, anything that was not necessary to that purpose would be part of the expression of the idea and thus 69 See Designers Guild v. Williams [2001] FSR 113, 120-2.

70 ‘Nobody has ever been able to fix the boundary between idea and expression and nobody ever can.’ Nichols v. Universal Pictures Corp. (1930) 45 F (2d) 119, 121 (Judge Learned Hand). See also LB Plastics v. Swish [1979] RPC 551, 629; John Richardson v. Flanders [1993] FSR 497, 527.

71 797 F 2d 1222 (1986); [1987] FSR 1. 72 797 F 2d 1222, 1236 (1986).

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protected. This meant that the structure of a program could be protected if the programmer had some choice in the way they created the structure of a program.” On the facts, the court held that the ‘efficient management of a dental laboratory could be accomplished in a number of different ways with a number of different program structures. The result was that the structure of the claimant’s program was part of the expression, not the idea’.”4 The approach adopted in Whelan v. Jaslow (and the decisions that followed it) was rejected in the later decision by the US Court of Appeals for the Second Circuit in Computer Associates y. Altai.’ This was an infringement action in relation to the defendant’s job scheduling program for controlling the order in which tasks were carried out by a computer. The claimant’s argued that the common interface component of the defendant’s program (which enabled the program to be used with different operating systems) had been copied from one of claimant’s programs. Finding that the claimant’s copyright had not been infringed, the court laid down a three-step test to be used for determining whether copyright had been infringed.

(1) Abstraction. The first task for the court is to draw up a guide to the shape of the work. To do this, the court said it was necessary to dissect the program and isolate each level of abstraction within it. Starting with the final expression of the program (the object code), the court retraced and mapped out the program designer’s steps from implementation to formative concept. (2) Filtration. Once the elements of the work had been identified, it was then

necessary to separate the protectable expression from the non- protectable parts of the work. The aim of this second step is to locate the core of protectable subject matter. In particular, the court said that as a result of the doctrine of merger, it was necessary to exclude those elements that could only be expressed in one way. This is the case where the elements of a work are dictated by efficiency, where they are indispensable in the treatment of a given topic, where they can only be described in a particular way, or where the elements are shaped by the function or purpose that the work is intended to achieve. The court also said that elements that are common in the public domain ought to be excluded.

(3) Comparison. Once the core of protectable subject matter had been identified, the remaining task for the court was to determine whether this had been taken by the defendant. One of the first cases to deal with the question of copyright infringement of computer programs in the UK was the High Court decision of John Richardson v. Flanders.’”° The claimant produced and marketed computer programs for labelling 73 797 F 2d 1222, 1236 (1986). 74 Ibid. Whelan was criticized because it assumed that only one idea underlies any computer program, and that everything else must be expression. For a similar approach in New Zealand, where the idea was confined to the ‘basic idea’ see Plix Products v. Frank Winstone [1986] FSR 63.

73 (1993) 23 IPR 385.

76 [1993] FSR 497.

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and stock control for pharmacies. The defendant produced a new version of the program, which was written for IBM-compatible computers. As the two programs

were written in different languages, the claimant did not allege that the defendant had copied any part of the source code in its program. Instead, the claimant argued that ‘the assembly of parts amounted to a copying of the specific compilation in which the claimant’s copyright lay.’ Ferris J began by stating that copyright protection of computer programs in the United Kingdom extended beyond the text of the code to include the non-literal elements of the program.”” Given this, Ferris J had to consider which of the various

non-literal parts of the program were protected. In so doing,’® Ferris J said that he found the approach of the US court in Computer Associates v. Altai particularly useful in separating idea from expression. Following the US decision, Ferris J also said that it was necessary to filter out those elements dictated by efficiency, or by external factors, as well as those elements which are common in the public domain.” The next case to consider copyright protection of computer programs in the UK was the 1994 decision of Ibcos Computers v. Barclays Mercantile.°° This was an infringement action in relation to a computerized accounts payroll package for agricultural machinery dealers (known as ADS). The program had been written by the defendant whilst in the employment of one of the claimant companies. Having left the company, the claimant developed a suite of competing programs (Unicorn) which were alleged to infringe the claimant’s copyright in the ADS package. In considering whether the ADS package had been infringed, Jacob J reviewed the earlier British decisions on copyright protection for computer programs. While Jacob J agreed with Ferris J in John Richardson that the scope of protection in computer programs may extend beyond the text of the code,*! he disagreed with many other aspects of the decision. In particular, while Ferris J found the three-step test set out in Computer Associates useful in determining the scope of protection, Jacob J found it unhelpful. More specifically, Jacob J said that as a similar approach could be adopted following UK jurisprudence, it merely complicated the matter to introduce decisions based on a different statute.** Instead, Jacob J said that when determining whether a

work has been infringed it was necessary to apply the test contained in the statute and ask, has a substantial part of the work been taken?*?

77 Ferris J also observed that copyright protection was ‘not limited to the “structure and organization” of the program’. John Richardson v. Flanders [1993] FSR 497, 527.

78 [1993] FSR 497. 79 See also Total Information Processing v. Daman {1992] FSR 171 (if there is only one way of expressing an idea, then it is not the subject of copyright).

80 [1994] FSR 275. 81 Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275, 302. 82 Tn contrast to legislation in the USA which expressly excludes ideas and facts from protection, Jacob J said that the UK law did not demand a search for the core of protectable expression. As should be clear from this chapter, British law does in fact require a similar approach. 83 Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275, 289.

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Jacob J was also highly critical of the particular techniques of filtration that Ferris J used in John Richardson. In particular, Jacob J said that under British law there is

no accepted rule that if there is only one way of expressing an idea that the mode of expression is not protected.** That is, Jacob J denied that the doctrine of merger

had any place in British law. He also stressed that unlike the position in America, it was possible for functional objects to be protected under British copyright law (although as Kenrick v. Lawrence pointed out, the protection offered for functional objects may be very limited).° In more positive terms, Jacob J said that while general ideas are not protected, if an idea was detailed enough, it would be protected. This means that if all a defendant has done is to copy a general idea, they will not infringe.*® Jacob J’s judgment, aspects of which have been affirmed in subsequent decisions,*’ is helpful in that it reminds us of the need to consider infringement in light of the basic principles of British copyright law. Jacob J’s judgment is also useful in that it reminds us that there is no easy way of distinguishing between non-protectable ideas and the remainder of the work which may be protected: this is particularly the case with computer programs.® The decision as to where the line is to be drawn between idea and expression is ‘a matter of degree’*’ and as such impossible to predict in advance. This is especially the case in relation to computer programs, where there is still a degree of uncertainty about the extent of non-literal protection. Having said this, it is possible to provide some guidance as to the factors that may influence decisions as to what is excluded as an idea. In some cases, the decision as to where the line is to be drawn will depend on the judicial attitude towards the grant of copyright. In this context it is helpful to bear in mind the policy rationale for the exclusion of ideas from the scope of copyright protection. At present, the courts seem to be wary about extending the scope of copyright protection (although this is far from clear) and, as such, seem likely to construe the subject matter that is classified as an idea broadly. Another factor that influences decisions as to what constitutes an idea is the way the work in question is perceived and valued. In line with this, the courts have said that the type of conduct that amounts to an infringement will differ according to the type of work in question. For example, the courts have suggested that a copyist may legitimately take greater amounts of technical or historical material than would be permitted in the case of a work of fiction.” In other cases, the way the work is construed may have less to do

84 Jacob J argued that Total Information Processing v. Daman [1992] FSR 171 misinterpreted Kenrick v. Lawrence (1890) 25 QBD 99.

85 Cantor Fitzgerald International v. Tradition (UK) [2000] RPC 95. 86 Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275, 305. 87 Cantor Fitzgerald International v. Traditional (UK) [2000] RPC 95.

88 See also Computer Associates v. Altai (1993) 23 IPR 385, 406, 410. 89 Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275, 291. 90 Ravenscroft v. Herbert [1980] RPC 193, 205-6.

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with policy goals of copyright than with the way the work is perceived and the perspectives adopted by the judiciary.”!

6 IS WHAT THE DEFENDANT HAS TAKEN THE SAME AS OR SUBSTANTIALLY SIMILAR TO THE COPYRIGHT WORK? Once the protected elements of the work have been identified, it is then possible to compare the copyright work with what the defendant has taken and ask whether they are the same or substantially similar.” To infringe, parts of the defendant’s work must be the same as or substantially similar to the claimant’s work. One useful way of thinking about whether the defendant’s work is the same as or substantially similar to the copyright work is to focus on the types of situations where infringement takes place. More specifically, it is useful to distinguish between what can be called identical copying and non-identical copying. In circumstances where in carrying out the restricted activity, the work used by the defendant is identical to the copyright work, the task of determining infringement is relatively straightforward. More problems arise, however, where the defendant’s work is not identical to the

copyright work. In order to ensure that the protection offered to copyright owners is of some value, copyright law has long recognized that protection ought not to be limited to situations where the defendant uses an exact copy of the work.” The reason for this is that if copyright protection was limited to situations where identical copies of the work were used, plagiarists would be able to escape infringement simply by making minor variations to the copied work. Copyright law provides protection against non-identical copying in two situations. These are where a defendant:

(i) takes part of a work (e.g. where half of a book is photocopied or a sample of a sound recording is copied); (ii) changes the form of the work (e.g. where a play is translated from English into Spanish, or is converted into a film). Before looking at these, it should be noted that the two categories are neither °l This can be seen in the way data division of a program (which defines the nature and structure of the files used by the program) were construed. In Total Information Processing Judge Baker likened the data division to a table of contents of abook, which he said would be unlikely to be protected as part ofabook. Cf. Ibcos Computers v. Barclays Mercantile Highland Finance [1994] FSR 275, 303. 92 As the House of Lords highlighted in Designers Guild v. Williams 2001] FSR 113, copyright infringement does not involve a work for work comparison. Rather it is important to focus on what the defendant derived from the claimant’s work. °> Thus, in the case of abook as well as protecting the surface ofthe text (the printed words), copyright law also protects the intangible property that lies behind or, more accurately, is represented in the text.

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exhaustive nor mutually exclusive. It is possible, for example, for a defendant to change the form of a non-literal element of a work, or to take a portion of a work and to change it. It should also be noted that the protection provided against identical copying does not apply to all the categories of works. This is because, as we saw in Chapter 6, the scope of the rights differs between authorial and entrepreneurial works. More specifically, while owners of literary, dramatic, musical, and artistic works are

protected against both direct infringements and situations where the form of the work is changed, the owners of entrepreneurial works are only protected where the infringing act is carried out in relation to a direct copy of the work. This means that literary, dramatic, musical, and artistic works (authorial works) are protected against both forms of non-identical copying. In contrast, the only type of non-identical copying that arises in relation to entrepreneurial works is where part of the work is taken.” 6.1

WHERE

A DISCRETE

PART

OF A WORK

IS COPIED

The first type of non-identical infringement that we consider arises where the restricted act takes place in relation to part of the work.®° This is the case, for example, where half of a book is photocopied, a section of a painting is imitated, or a sample of a sound recording is reproduced. It has long been accepted that infringement may occur where the restricted act takes place in relation to part of the copyright work. This is now to be found in section 16(3) of the 1988 Act which provides that a person will infringe if the restricted act is carried out in relation to the work as a whole, or

any substantial part of it. Unlike the other forms of non-identical copying, which only apply to authorial works, infringement where part of a work is copied applies to all works protected by copyright. 6.1.1 What is a substantial part? In order to infringe, the restricted act must take place in relation to the work or a

substantial part thereof.”° For the most part, the courts decide the question of whether the taking of part of a work is an infringement on the facts of the case. The one exception to this is found in section 17(4) of the 1988 Act which states that copying in relation to a film, television broadcast or cable programme includes making a photograph of the whole or any substantial part of any image forming part of the film, broadcast or cable programme. This means that where someone takes a photograph of a single image from a film and reproduces it on a T-shirt, a poster, or a website they would infringe. 94 See Norowzian v. Arcs [1998] FSR 394. 95 In most cases the defendant uses an identical part of the work. There is no reason, however, why the

approach outlined below could not be applied where a part which is modified (e.g. where a sample is taken from a sound recording and is overlaid with other sounds).

96 CDPA s. 16(3). The term ‘substantial part’ was first introduced in CA 1911, s. 1(2). The term had

however been used in case law prior to 1911 (where taking was contrasted with ‘fair-use’ of a work). Factors previously used were adopted under the 1911 Act: Hawkes & Sons v. Parmount Film Service [1934] 1 Ch D593.

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Beyond this statutory example, the question of whether a restricted act carried out in relation to part of a work amounts to an infringement always depends on the facts of the case. In particular, the question of whether a copyright work has been infringed depends on the nature of the work, on what is taken, the way the work was created, and on the conduct of the parties. The factual nature of the infringement inquiry means that it is often difficult to state in advance when a particular work may be infringed. This uncertainty is particularly problematic for bodies such as libraries who deal with copyright works on a day-to-day basis and who need to provide advice as to the types of uses which are permissible. Faced with this uncertainty, it is not surprising that standards and protocols have been formulated in many industries that set out in a clear and readily quantifiable manner the type of copying that is permissible. Perhaps the most well-known example is the rule of thumb that 10 per cent or one chapter of a book may be copied. Similar standards have also been formulated to deal with the digital sampling of musical works and are currently being formulated in the multimedia industries. While these standards do not take account of the qualitative nature of infringement, they do provide an important and workable way of dealing with a difficult issue. A number of different factors are taken into account when deciding whether the use of part of a work is an infringement. What they share in common is that the fate of a defendant depends on the relative importance of the part that is taken.”” In more positive terms a person will only infringe where the part taken is an essential, vital, or important part of the work.” Before looking at how the relative importance of a part is ascertained, it should be noted that a number of different factors may influence a court when deciding whether there has been an infringement. These include the reason why the part was taken, the relationship between the parties (whether they are in competition), whether the use is degrading, and the nature of the work (whether it is a work of information or fiction). 6.1.2 When is a part important? The question of whether a part is sufficiently important to be a substantial part of the overall work is a question of fact and degree. While the evidential nature of the infringement inquiry means that each case will depend on its facts, it is possible to make some general comments about the way that importance is likely to be judged. (i) The first and most general point is that the question of whether a part is important and thus substantial is decided by the courts.” In many cases, particularly those involving more technical or esoteric subject matter, the courts may rely on

97 Sillitoe v. McGraw-Hill Book Co. (UK) [1983] FSR 545; Hawkes & Sons v. Parmount Film Service [1934] 1

Ch D 593, 605-6 (CA). 98 Hawkes & Sons v. Paramount Film Service [1934] 1 Ch D593, 606 (CA) (where the defendant’s broadcast of part of the claimant’s song, while not prolonged, was held to be ‘a substantial, vital and essential part’). 99 Designers Guild v. Russell Williams [2000] FSR 121, 132 (CA).

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expert evidence from computer programmers, musicologists, choreographers, and other specialists as to the relative importance of the part.!° At the end of the day, however, it is for the court to decide whether the part taken is important. (ii) The importance of the part is judged from the point of view of the person to whom the work is addressed.'®' Thus in Billhofer v. Dixon Hoffmann J rejected the submission that the part taken was only substantial if it was of visual significance to a layman. Instead, he said that the relative importance of the part should be judged by the kind of person to whom the drawing is addressed. In the case in hand, this was an engineer. In one case, the focus on the views of the person to whom the work was addressed meant that the salient features of design drawings for an exhaust system were not to be assessed by the visitor observing the exhaust pipe mounted on a plinth at the Tate Gallery. Instead, they were to be judged by an engineer wanting to make an exhaust pipe to fit under a car.' In dealing with an infringement action brought in 1934 in relation to the copying of twenty-eight bars from the well-known military march called “Colonel Bogey’, the courts were confident that anyone hearing the part taken would recognize it. With the diversification of music that has occurred since then, however, it is unlikely that a similar test could be applied today.

(iii) The next point to note is that the relative importance of the part taken is judged in terms of its importance to the copyright work and not the defendant’s work.’* The reason for this is that the test imposed by the statute is whether the part used by the defendant is a substantial part of the claimant’s copyright work, not whether it is a substantial part of the defendant’s work.!™ As a result it does not matter that the part taken forms an important part of the defendant’s work, nor that the part is used repeatedly in the defendant’s work (as often happens with the digital sampling of musical works). In this context it should be noted that the importance of the part taken is judged in terms of the copyright work as a whole. That is, as is the case with the preliminary inquiry into whether copyright subsists, the work as a whole must not be dissected.’°° This means that the work against which the importance of the part is judged may include both protected and non-protected elements. This is in contrast to the approach adopted towards the part that has been taken, where copyright law is only concerned with those aspects of the part which are protected.! (iv) The criteria by which the importance of a part is determined are restricted to 100 Cantor Fitzgerald International v. Tradition (UK) [2000] RPC 95.

:

101 Billhofer Maschinenfabrik v. Dixon [1990] FSR 105; Francis Day & Hunter v. Bron [1963] Ch 587, 623. 102. Billhofer Maschinenfabrik v. Dixon [1990] FSR 105, 120. 103 Designers Guild v. Russell Williams [2000] FSR 121, 131. A point further emphasized in the House of Lords: [2001] FSR 113, 119, 124-5.

104 Warwick ‘importance of substantial part 105 Ladbroke

Films v. Eisnger [1969] 1 Ch 508; Hyperion Records v. Warner Music (1991, unreported). (The the copied part to the defendant’s recording is a poor guide as to whether or not it is a of the work from which it was taken’ particularly where the recordings were in different styles.) (Football) v. William Hill (Football) [1964] 1 WLR 273. See Biotrading & Financing v. Biohit

[1998] FSR 109, 121-2.

106 Tbid. (when considering whether a part taken from a drawing was a substantial part of the claimant’s work, the non-original parts of the work should not be considered).

INFRINGEMENT

bd

those that are relevant to the nature of the work in question. This means that the quality of what is taken must be assessed by reference to the interest protected by the copyright. As we explained earlier, this is because copyright protects the relevant skill and labour expended by the author in creating the work: the relevance or otherwise of the labour being determined by the type of work in question. In the case of an artistic work the importance of the part taken is judged in terms of its visual significance. Thus, in Billhoffer the court said that the question of whether part of an artistic work is substantial depends upon the importance of the particular dimensions and spatial arrangements depicted.'°’ In Chappell v. D. C. Thompson,'®* where four lines from a twenty-line poem were taken, the importance of the part was judged in terms of its literary merit. In relation to typographical arrangements, it is the presentation and layout (as opposed to the particular words and images published in the edition) that is protected.!° The fact that the importance of a part of a work is to be judged in terms of criteria that are relevant to the type of work in question means that certain things are not taken into account when determining whether a part is important and thus substantial. For example, the mere fact that part of a work is commercially important or that there is a market for it should not matter when deciding whether the part is substantial. Similarly, it does not matter that a part plays a key role in communicating the idea behind the work,'!” that the author has an emotional attachment to it, or that it offers psychoanalytical insights into the mind of the author. While in other contexts such factors may be relevant, they should not be taken into account when considering whether a part is important and thus substantial. It is also clear that while a part may be important to the functioning of the work, if it is not also significant in terms of criteria relevant to the work in question it will not be substantial. In the case of an artistic work this means that while a part may be important to the functioning of a work, if it is not visually important then it will not be a substantial part. This can be seen, for example, in Johnstone Safety v. Peter Cook where the court had to consider whether a relatively small but functionally important feature of a sectional design of a plastic traffic cone which enabled the cones to be conveniently stacked was a substantial part of the drawing. Ralph Gibson LJ said that the fact that the feature was functionally important did not make it ‘more potent’ for demonstrating that a substantial part had been reproduced. As the feature had ‘no substantial significance in the visual image of the artistic work’ it was not a substantial part of the work.'!! Similar questions also arise where a small part of a computer program is copied. In

these circumstances it is sometimes pointed out that the program will not function or 107 Billhofer Maschinenfabrik v. T.H. Dixon & Co. [1990] FSR 105.

108 [1928-35] MacG CC 467. 109 Nationwide News v. Copyright Agency Ltd. (1996) 136 ALR 273. 110 Rose Plastics GmbH v. William Beckett & Co. (Plastics) 1989 FSR 113, 123; Billhofer Maschinenfabrik v. Th. Dixon [1990] FSR 105.

'1l Johnstone Safety v. Peter Cook [1990] FSR 161, 178.

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will not function properly without the part.'!? Given that “every part of a computer program is essential to its performance’ it has been suggested that every part, however small, should be treated as a ‘substantial part’ of the program.'!’ This approach has been rejected in the United Kingdom.!! The reason for this is that it applies the wrong criteria to test whether the part is important.'!° While it may be clear that the functional importance of part of a computer program is not a relevant consideration when deciding whether the work has been infringed, it is not yet clear which aspects of a computer program will be relevant. (v) While the use of the term ‘substantial’ suggests that importance should be judged in terms of the amount taken, the inquiry is as much concerned with the quality as the quantity of the part taken.''® The relative use that is made of these criteria depends on the facts of the case in hand. Where a large portion of the work is copied, the quantity of what is taken will usually be enough on its own to establish infringement. In these cases, there is no real need to look to the quality of what is taken. Thus, there is little doubt that where a defendant photocopies 80 per cent of a book that this would be a reproduction of a substantial part of the work and thus an infringement.''” In other cases, however, the question of whether part of a work is a substantial part depends on the quality of the part taken. So long as a part is a vital or material part of the work as a whole, even a very small part of a work may be a substantial part. As importance is a relative term, it is not possible to predict in advance when a part will be considered to be important. Given this, perhaps the best way to get a feel for the way importance has been judged is to look at some relevant examples. In Kipling v. Genatosan it was suggested that four lines which formed the crescendo of Kipling’s thirty-two-line poem ‘If were a substantial part of the poem.!!* In another case, however, four lines from a twenty-line poem were not considered to be a

substantial part of the work.'! The reason for this was that as the four lines had no sort of literary merit they were not considered to be an important part of the work. In Hawkes v. Paramount Film Service the court held that twenty-eight bars taken from a military march called “Colonel Bogey’ was a substantial part of the work. The explanation given for this was that everyone hearing the march played through would

‘2 Cantor Fitzgerald International v. Tradition (UK) [2000] RPC 95, 130. Ibcos agen Mercantile Highland Finance [1994] FSR 275, 285.

v. Barclays

113 See Data Access Corp. v. Powerflex Services (1999) 45 IPR 353 (HC of Australia) citing with approval

Cantor Fitzgerald v. Tradition [2000] RPC 95. 114 Cantor Fitzgerald International v. Tradition (UK) [2000] RPC 95, 130. ‘15 Interlego v. Tyco [1988] RPC 343 (PC); Electronic Techniques (Anglia) v. Critchley Components [1997] FSR 401. 16 Ladbroke (Football) v. William Hill (Football) [1964] 1 WLR 273, 276 (Lord Reid). See also Designers Guild y. Williams [2001] FSR 113, 121, 125.

7

Tn Sillitoe v. McGraw Hill [1983] FSR 545 Judge Davies QC held that 2,125 words from an original of

20,000 words and 3,931 words from an original of 80,000 words were both substantial.

118 [1923-8] MacG CC 203.

119 Chappell v. D. C. Thompson [1928-35] MacG CC 467.

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179

recognize the part that had been taken as being the leading melody (or tune) of the march.'”° It was also the part by which the march was chiefly known and the cause of its popularity. In ITP v. Time Out, the court held that in copying part of the claimant’s compilation of television and radio programmes, Time Out (a weekly listings magazine) reproduced a substantial part of the copyright work.'*! The court stressed that a key factor in finding that the part taken was important and thus substantial was that Time Out had concentrated on the peak viewing times and on the programmes which occurred at irregular times. In essence, Time Out took the parts of the TV listings that were of most value to users. A similar approach was adopted in Express Newspapers. In considering whether the copying of the small sequences from an original work of somewhere between 700 and 750 different sets of grids and five-letter sequences (which was used in a newspaper game), the court said that the part was substantial because it was ‘the only part of the work that on that day will be any matter of consequence to anybody’.!”” In some cases the courts have suggested that a part will not be substantial if the amount that is taken would not itself attract copyright. This can be seen in Francis Day and Hunter where the owners of copyright in the song “The Man Who Broke the Bank at Monte Carlo’ brought an infringement action against a person who made a film of the same name. In response Lord Wright said that the ‘copying which is complained of is the use of the title, and that is too unsubstantial on the facts of this case to constitute infringement.’””’ A similar approach was adopted in the parody case of Williamson Music v. Pearson where the only parts left in the defendant’s parody of the claimant’s song “There’s Nothin’ Like a Dame’ were the words ‘we got’, which

were repeated several times. Judge Baker QC held that the words were not a substantial part of the copyright work, noting that ‘in themselves the words would not be copyright as a literary work’.'* (vi) One issue that has yet to be addressed by the courts relates to the question: how is the substantial part of an entrepreneurial work to be decided? In answering

this question the issue that needs to be addressed is whether it is possible to speak in a meaningful way about the important part of an entrepreneurial work. The reason for this is that in most cases the quality of the entrepreneurial work will not change 120

Hawkes & Sons v. Paramount Film Service (1934) 1 Ch D 593, 609 (CA); West v. Francis (1822) 5 B &

Ald 737, 743. King Features v. Kleenman [1941] AC 417.

121 [1984] FSR 64, 74. 122 Express Newspapers v. Liverpool Daily Post & Echo [1985] FSR 306, 311. See also PCR v, Dow Jones Telerate [1998] FSR 170.

123 Francis Day & Hunter v. 20th Century Fox [1940] AC 112, 123-4. 124 [1987] FSR 97, 107. After some early cases suggesting a different test for infringement by way ofparody, this case confirmed that no special rules apply. See also Schweppes v. Wellington [1984] FSR 210. Cf. Glyn v. Weston Feature Film [1916] 1 Ch 261; Joy Music v. Sunday Pictorial Newspapers (1920) [1960] 2 QB 60.

125 Moreover, a substantial part of a newspaper protected by copyright as a ‘literary work’ may well not be a substantial part of the ‘typographical arrangement’: Nationwide News v. Copyright Agency Ltd. (1996) 34 IPR 53,71.

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throughout the work.'”° For example, it is highly unlikely that the format of an article would change midway through, or that the mode of recording would change during a song. While the quality of the content may change, it is highly unlikely that the quality of the entrepreneurial work will differ between different parts of the work. Thus, while the crescendo of a poem or the salient parts of a report may be important as literary works, when viewed as typographical works there is no reason why the part that contains the crescendo of the poem or the salient parts of a report should be any different from the non-important parts. Similarly, while a three-second sample that contains the hook of a song may be an important part of a musical work, it does not necessarily follow from this that the way the three seconds were recorded will be any different from the way the rest of the song was recorded. Indeed it is more likely that the quality of the sound recording will be the same throughout the recording than change from part to part.!*° While there may be some exceptions, in most cases the various parts of an entrepreneurial work will be of equal importance. If no one part of the work is any more important than any other, this means that it will not be possible to rely on the quality of the part taken as a test for substantiality. Instead, it is necessary to fall back on the quantity of what is taken.!’ (vii) In certain situations the question has arisen as to whether the taking of an

insubstantial part of the copyright work over a period of time amounts to the taking of a substantial part of the work. This question arises in two situations. The first is where a defendant regularly takes insubstantial amounts from a single copyright work. For example, while a student may not infringe the copyright in a 300-page textbook if they copied five pages, what of the situation where over the course of an afternoon the same student went to a photocopy machine twenty times and photocopied a different five-page section each time? While the copying of five pages may not amount to an infringement, what of the copying of 100 pages? The second scenario is where copyright works are created regularly and the defendant consistently takes insubstantial amounts from different works. For example, would it be an infringement for an evening newspaper to regularly reproduce an insubstantial amount taken from daily financial reports of foreign markets that appeared in a morning paper? The question of whether cumulative taking can constitute an infringement was considered in the Court of Appeal decision of Newspaper Licensing Agency v. Marks & 126 Tt may be that the important part of the sound recording would be treated as that part embodying the most distinctive, unusual, or catchy sounds—thus reflecting, for example, the musical work, performance, and so on, rather than the quality of the ‘recording itself’. Newspaper Licensing Agency v. Marks & Spencer [1999] EMLR 369 (CA) (cuttings did constitute a substantial part of the newspapers, most particularly to readers interested in the retail trade and consumers generally’ (para. 14). Although it is difficult to tell from the judgment whether some part of the articles qua typographical works were more important than other parts it seems that the court focused on the information (content) of the article rather than the page layout). '27 Tt has been suggested that in this context a ‘substantial part’ simply means any part of the work so long as it is not so small as to be trifling or insignificant: Laddie et al., para. 5.67. This interpretation is implicitly supported by CDPA s. 17(4) (making a photograph of any image forming part of the film, broadcast or cable programme). 128 Newspaper Licensing Agency v. Marks & Spencer [2000] EMLR 704.

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181

Spencer.'** Peter Gibson LJ looked at cumulative copying in terms of the two situations mentioned above. Where a defendant regularly takes insubstantial amounts from a single copyright work,’ Peter Gibson LJ said that it was possible that the repeated systematic copying from the same work could constitute an infringement.!°° Presumably, a person will only infringe where the acts can reasonably be seen as a single act. In Electronic Techniques v. Critchley Laddie J said that while in extreme cases the court might feel justified in treating the defendant’s separate acts of copying as a single act spread over time, he added that ‘the concept of infringement by taking small and regular amounts was problematical’. As such, it was an issue that needed to be looked at by a senior court.'*! Where parts are repeatedly copied from different works, Peter Gibson LJ said that it would not amount to an infringement. As he said, ‘I do not understand how in logic what is an insubstantial part of a work can when aggregated to another insubstantial part of another work become a substantial part of the combined work’.' Here the main issue should be the size of the copyright work. If it is decided that the works are separate and distinct, they should be treated the same as any other work. 6.2

CHANGE

OF FORM

The second situation where the copyright owner is protected against non-identical copying is where the defendant changes the form of the work. It has long been accepted that copyright in a work need not be reproduced in the same form as it appears in the original work for infringement to take place. This is now reflected in section 17(1) of the 1988 Act which states that copying in relation to a literary, dramatic, musical or artistic work means reproducing the work in ‘any material form’. The protection against copying of the work in all material forms means, for example, that a novelist will be protected where their work is changed into a play or a film, translated into another language, or digitized. 6.2.1 What types of change of form are protected? It is important to reiterate that the ability to control the work in a changed form only applies to literary, dramatic, musical, and artistic works.'*’ Section 21 of the 1988 Act,

which explains what is meant by the right of ‘adaptation’ (which is given to owners of literary, dramatic, and musical works), provides a useful starting point for exploring the types of changes protected by copyright. In relation to literary and dramatic works, the 1988 Act provides that adaptation means a translation of the work, the conversion 129 In so doing Peter Gibson LJ noted that cases often cited in this area, namely Cate v. Devon Constitutional Newspaper (1889) 40 Ch D 500 and Trade Auxiliary v. Middlesborough (1889) 40 Ch D 425 were unhelpful. Newspaper Licensing Agency v. Marks & Spencer [2000] EMLR 704, 716-17; 739 (Mance LJ). 130 Tbid., 717 (para. 33). See also 739 (para. 108) (Mance LJ). 131 Electronic Techniques (Anglia) v. Critchley Components [1997] FSR 401, 410.

132 Newspaper Licensing Agency v. Marks & Spencer [2000] EMLR 707, 716, 717. 133 CDPA s. 17(2). As regards other works, where there is no express indication in the Act, the extent of protection will depend largely upon how the courts interpret the term ‘copying’.

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of a non-dramatic work into a dramatic work (and vice versa). This would cover, for

example, the conversion of a novel into a film script, or the translation of a book written in English into French. The owners of copyright in computer programs are protected against an arrangement or altered version of the program or a translation (which includes a version of the program in which it is converted into or out of a computer language or code).'** Musical works are protected against arrangements or transcriptions of the work; and an adaptation of a database means an arrangement or

altered version of the database or a translation of it.'°° In relation to artistic works, section 17(3) provides that copying includes the making of a copy in three dimensions of a two-dimensional work, as well as the making of a copy in two dimensions of

a three-dimensional work.!*° In addition, section 17(2) of the 1988 Act provides that reproducing the work in any material form includes storing the work in any medium by electronic means. Section 17(6) also provides that copying includes the making of copies that are transient or incidental to some other use of the work. Combined together, these provisions ensure that the digitization of literary, dramatic, musical, and artistic works would amount to a breach of copyright. Beyond the specific examples listed in the 1988 Act, the question of how different a copied work can be from the original work and still infringe is decided by the courts on the particular facts of the case. Ultimately the answer to this question is closely connected to the way the work is defined. Laddie J in Autospin summed up the approach of the courts in these situations when he said [I]t should be borne in mind that it is not enough to say that the defendant has ‘used’ the claimant’s work. He must have reproduced it. In my view the court should ask the question is it accurate to say that the alleged infringer’s article is, from a common sense point of view,

a reproduction of this particular type of literary work?!’” The courts have been fairly generous when considering the extent to which copyright owners are protected against change of form. For example, the courts have held that copyright was infringed when actors re-enacted a Punch cartoon as a revue sketch,’*® when aspects of a book written about the events behind the Charge of the

Light Brigade were included in a screenplay,'*’ and a photograph was reproduced as a painting.'*° The copyright in a musical work is likely to be infringed where it is reproduced as sheet music, on CDs, tapes, or in MP3 format. The protection against

change of form was construed very broadly in PCR v. Dow Jones Telerate where Lloyd J 134 CDPA s. 21(3)(ab). 135 CDPA s. 21(3)(ac). 136 See Bradbury Agnew v. Day (1916) 32 TLR 349 (performance of a cartoon as a tableaux vivant living picture was held to be a reproduction in a material form). Cf. Hanfstaengl v. Empire Palace [1894] 2 Ch 1 (decided under the 1862 FACA). See also King Features Syndicates v. O. & M. Kleeman [1941] AC 417. 137 Autospin (Oil Seals) v. Beehive Spinning [1995] RPC 683.

138 Bradbury Agnew v. Day (1916) 32 TLR 349. 139 Harman v. Osborne [1967] 2 All ER 324. 140 Bauman v. Fussell [1978] RPC 485.

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said that the paraphrasing of the salient points found in a factual report about the

current status of cocoa crops may be a form of copying.'*! Given that there are only a limited number of ways that you can say, ‘there are lots of cocoa pods in a tree’, to suggest that the paraphrasing of information may be a form of copying is akin to giving protection over ideas and information. 6.2.2 Objective similarity While the mercurial nature of the copyright work means that copyright owners are protected against change of form in a wide variety of situations, nonetheless there are limits to the scope of the protection. As we mentioned above, protection is not granted over those aspects of a work which are not relevant to the type of work in question, to non-original aspects of a work, nor over ideas. Another factor that limits the situations where change in the form of a work constitutes an infringement arises from the requirement that in order to infringe, the derived form must be “objectively similar’ to the copyright work.!” The requirement of objective similarity means that to infringe, the relevant part of the defendant’s work must be a copy or representation of the whole or part of the original work.'* In many instances the question of whether two works are objectively similar will be answered by the 1988 Act. In particular, it will be answered by the right of adaptation and the specific protection offered to artistic works where they are changed from two-dimensional to three-dimensional (and vice versa). Beyond this, the question of whether the defendant’s work is objectively similar to the copyright work has arisen in two situations: both concerned with infringement of literary works. The first is where the copyright work consists of instructions of how to make or do something. While literary copyright in the instructions will be infringed if the instructions are photocopied or are repeated in different words, the copyright will not be infringed where someone follows the instructions. Thus a person will not infringe the literary copyright in a recipe if they follow the instructions and bake a cake to the recipe.'* This is because what is protected is the literary effort in creating the recipe as a work of information and not the cake per se. Similarly, a person who knits clothes according to a knitting guide does not infringe copyright in the guide.'*° The need for objective similarity is also important where the copyright work 141 [1998] FSR 170. See also Elanco Products v. Mandops [1980] RPC 213. 142 Francis Day Hunter v. Bron [1963] Ch 587, 623. 143 Brigid Foley v. Ellot [1982] RPC 433 (Megarry VC). 144 Elanco v. Mandops [1980] RPC 213. See also M. S. Associates v. Power [1988] FSR 242 (interlocutory proceeding for alleged infringement of computer program). 145 Davis (J. & S.) Holdings v. Wright Health Group [1988] RPC 403, 414. Autospin (Oil Seals) v. Beehive

Spinning [1995] RPC 683, 698. 146 Brigid Foley v. Ellott [1982] RPC 433 (‘tkere is no reproduction of the words and numerals in the knitting guides in the knitted garments produced by following the instructions’). Autospin (Oil Seals) v. Beehive Spinning [1995] RPC 683, 701. (No infringement of the claimant’s charts for calculating the dimension of oil seals to make such oil seals.)

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describes something. As with instructional works, the key issue here is when is a

description replicated? While copyright in the literary work will be infringed if the work is photocopied, the position is less clear where someone makes or uses the object that has been described in a two-dimensional format. The problem has become acute with developments in computer-aided design (CAD) which means that it is now ‘possible to define any shape in words and letters. Therefore a design in a drawing can be defined equally accurately in non-graphic notation. In fact many threedimensional articles are now designed on computers. A literary work consisting of computer code therefore represents the three-dimensional article’.!4” The question of the protection available to a descriptive literary work was considered by Pumfrey J in Sandman v. Panasonic.'“* This was a copyright infringement action brought in respect of two circuit diagrams that were included in an article published in the journal Wireless World. The claimant argued that the copyright that existed in the two-dimensional literary work was infringed when it was made into a three-dimensional circuit diagram and incorporated into amplifiers, CD players, radio tuners, and cassette decks. Pumfrey J began by noting that the chief problem confronting the claimant was Lord Oliver’s comment in Interlego that protection for change of form from 2D to 3D was limited to artistic works. On the strength of this Pumfrey J said that there may appear to be ‘no way out of this difficulty, if one accepts that a literary-work is twodimensional’. Pumfrey J went on to say, however, that ‘I suspect that the proper answer is that the circuit itself is a reproduction because it still contains all the literary content of the literary work, albeit in a form which would require analysis for it to be extracted.’

That

is, Pumfrey

J accepted

that in certain

circumstances

a

two-dimensional literary work that described something could be reproduced in a three-dimensional form. Two points are pertinent here. The first is that it is necessary to distinguish between factual and non-factual descriptions. The reason for this is that it is much more likely that a (factual) description written by an engineer would be protected than a description written by a novelist or a poet. It is unlikely that the copyright in a novel that describes a particular scene will ever be infringed when someone draws it.° The second is that it seems that a literary work that describes something will only provide protection against a ‘reproduction’ of the work where the description is very detailed. Thus, someone may infringe where they make a three-dimensional article from a data file in a computer (a literary work) which precisely defines the shape of the article.'>! By limiting protection to situations where the object is precisely defined, this means that the problem of inhibiting creation in the same area is avoided.

147 Autospin (Oil Seals) v. Beehive Spinning [1995] RPC 683, 698. 148 [1998] FSR 651. 149 Sandman v. Panasonic UK [1998] FSR 651.

150 Laddie et al., para. 7-38. 151 Autospin (Oil Seals) v. Beehive Spinning [1995] RPC 683, 701.

INFRINGEMENT

7 SECONDARY

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INFRINGEMENT

As we explained at the outset of this chapter, to ensure that copyright owners are provided with effective protection, copyright law has long recognized that it is not enough merely to provide remedies against those who copy or perform the copyright work without requisite permission. To this end, copyright law also provides owners with protection against those who aid and abet the primary infringer (secondary infringement). There are two important aspects of secondary infringement. The first, which relates to the scope of protection, is that secondary infringement is concerned with people who in a commercial context either deal with infringing copies or who facilitate such copying. The second notable feature of secondary infringement is that liability is dependent on the defendant knowing or having reason to believe that the activities in question are wrongful.!*?

7.1

TYPES

OF SECONDARY

INFRINGEMENT

Secondary infringement can be divided into two general categories. First, those who distribute or deal with infringing copies once they have been made; and secondly, those who facilitate copying by providing the equipment or means that enable the copying to take place. 7.1.1 The distribution of infringing copies

The first general category of secondary infringement is concerned with people who deal with infringing copies.of the work in a commercial context. To this end sections 22 and 23 of the 1988 Act provide that the copyright in a work is infringed by a person who without the licence of the copyright owner: (1) imports an infringing copy into the UK otherwise than for his private and

domestic use,'°? (2) possesses an infringing copy in the course of business,'™ (3) sells or lets for hire, or offers or exposes for sale or hire an infringing copy, (4) in the course of business exhibits in public or distributes an infringing copy,'°° or 152 CDPA ss. 22-4, 27. See Laddie ez al., ch. 10. 153 CDPA s. 22.

154 Business is defined in CDPA s. 178 as including a ‘trade or profession’. In Pensher Security Doors v. Sunderland City Council [2000] RPC 249, 280-2, Aldous LJ held that (i) the letting of flats by a local authority was a ‘business activity’, and (ii) that the council possessed infringing copies (in the case security doors which infringed the claimant’s copyright in its design drawings) ‘in the course of that business even though there was no intention to distribute the infringing copies. This was because possession of the doors was an integral part of the business of letting the flats and thus not ‘incidental’ to the business. 155 An art gallery carries on business even though certain paintings are not for sale: Pensher Security Doors y. Sunderland City Council [2000] RPC 249, 282.

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COPYRIGHT

(5) distributes an infringing copy, otherwise than in the course of a business, to such an extent as to affect prejudicially the copyright owner. Section 27(2) provides that an article is an ‘infringing copy’ if its making constituted an infringement of the copyright in the work in question. In the case of imported copies, infringing copy also includes ‘notional infringements’, that is copies which if they had been made in the United Kingdom would have infringed copyright at the time of making, or would have constituted a breach of an exclusive licence agreement relating to the work.’ This provision has proved to be problematic.!>” Its significance has been reduced, however, by the extension of liability for primary infringement to include the issuing of copies, including the importation of copies from outside the EEA. Liability for secondary infringement by importation remains important in cases of importation from one EEA state to another: however, this right is subject to the Treaty of Rome and the principle of exhaustion.'® 7.1.2 Providing the means for making infringing copies or performances The second general category of secondary infringement is concerned with people who facilitate copying. This occurs, for example, where someone provides the equipment or the means that enables the copying to take place. There are a number of different situations where the provision of the means for making infringing copies or performances will amount to a secondary infringement. Section 24(1) provides that a person is liable for infringement where they supply an article that is specifically designed or adapted for making copies of the copyright work. More specifically, section 24(1) provides that copyright in a work is infringed by a person who without the licence of the copyright owner (a) makes, (b) imports into the UK, (c) possesses in the course of business, or (d) sells, or lets for hire, or offers or

exposes for sale or hire an article specifically designed or adapted for making copies of that work. It should be noted that section 24(1) states that the article must be specifically designed or adapted for the purpose of copying. This means that it is not enough that an article, such as a photocopier or a tape-to-tape recorder, has the potential to copy. Rather, for the section to operate the article must be specifically designed for the copying of a particular work. This would be the case, for example, where someone makes a template or a mould of a copyright work that is used to create infringing copies.

Special provisions are also made for people who transmit the work without the appropriate permission. Section 24(2) states that copyright in a work is infringed by a person who without licence transmits the work by means of telecommunications 156 CDPA s. 27(3), Sched. 1, para. 14(3).

157 Described by Laddie et al., para. 18.28 as ‘a perplexing provision’. One question that has been debated is who does the hypothetical making—the maker abroad, the importer, or someone else. See W. Rothnie, Parallel Imports (1993), 199-241. 158 CDPA s. 27(5). See above at pp. 10-13, 40-6.

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system (such as a fax). It does not apply, however, to transmission by broadcasting or inclusion in a cable-programme service. As with all forms of secondary infringement, infringement is dependent upon the defendant ‘knowing or having reason to believe that infringing copies of the work will be made by means of the reception of the transmission in the UK or elsewhere.’ Where the copyright in a literary, dramatic or musical work is infringed by a performance at a ‘public place of entertainment’,'®? any person who gave permission for that place to be used for the infringing performance is also liable for infringement. This does not apply, however, where the defendant gave permission on reasonable grounds that the performance would not be infringed.'” Special provisions also apply to those who facilitate an infringing performance. Section 26 deals with the situation where copyright is infringed by a public performance or by the playing or showing of the work in public by means of apparatus for (a) playing sound recordings, (b) showing films, or (c) receiving visual images or sounds conveyed by electronic means. In these situations, the following people will infringe: (i) The person who supplies the apparatus which enables the act of primary infringement to take place is liable for infringement. This covers someone who supplies equipment to play records or show films. Infringement here is conditional on the fact that where an apparatus is normally used in public, the defendant did not reasonably believe on reasonable grounds that it would be used to infringe copyright.'®! (ii) An occupier of premises who gave permission for an apparatus to be brought on to the premises will be liable if they knew or had reason to believe that the apparatus was likely to be used to infringe copyright.' (iii) A person who supplies a copy of a sound recording or a film will be liable if they knew or had reason to believe that the copy was likely to be used to infringe copyright.’©

7.2

ACTUAL

OR

CONSTRUCTIVE

KNOWLEDGE

One of the notable features of secondary infringement is that liability is dependent on the defendant ‘knowing or having reason to believe’ that the activities in question are wrongful. That is, liability is dependent on the defendant having either actual or constructive knowledge. The question of whether a defendant has the requisite knowledge is decided objectively.’ As such, it does not matter that the defendant may 159 Defined in CDPA s. 25(2) to include premises occasionally used for public entertainment.

1e0 161 162 163

CDRAs; CDPA s. CDPA s. CDPA s.

NnNDN

25 (0) 26(2). 26(3). 26(4).

164 See Laddie et al., paras. 10.5 ff.

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not have believed that the act in question was wrongful. All that matters are the conclusions a reasonable person would have reached in the circumstances. The question that needs to be asked is whether the defendant knew or had reason to believe that they were dealing with or helping to facilitate the creation of an ‘infringing copy’ of the copyright work. In answering this question, the courts have stressed that the defendant must be in a position where they are able to evaluate the information that is given to them.'® This means that they must be given a reasonable period of time to consider the information.'© It also means that the information that they are given must be sufficiently detailed as to the nature of the work in question: general allegations about infringement will not suffice.!*’ The courts have also said that it is not enough for the facts to lead a reasonable person to suspect the relevant conclusion.'®* Although it will enhance the claimant’s case where the defendant is supplied with a copy of, or given reasonable access to, the copyright work, the circumstances of the case may be such that the reasonable defendant could have ‘known’ about the wrongful nature of their activities without ever having seen the copyright work.'°

7.3

DEVICES

DESIGNED

TO CIRCUMVENT

COPY

PROTECTION

The 1988 Act contains two provisions dealing with situations where a person facilitates access to works to which the person concerned is not entitled to use or receive. The first provision, which is found in section 296, applies where works are issued to the public in an electronic form which is copy-protected. This includes any device or means intended to prevent or restrict copying of a work or impair the quality of copies. For example, in the 1980s record companies introduced a system called ‘Series Copyright Management System’ which allowed for the making of first-generation but not second-generation copies of sounds embodied on Digital Audio Tape (DAT)— that is, copies of copies. The system worked by triggering a device fitted in electrical goods. Section 296 of the 1988 Act gives a person issuing such electronic copies rights similar to those given to a copyright owner as regards secondary infringement of copyright. More specifically, rights are given to control the making or trading in ‘any device or means specifically designed or adapted to circumvent the form of copyprotection employed.’ Moreover, a person will be liable if they publish information intended to enable or assist such circumvention. As with secondary infringements, a 169 LA Gear v. Hi-Tec Sports [1991] FSR 121, 129 (action for infringement of copyright in the drawings of its shoes by importation of infringing copies. Since the claimant had sent the defendants a letter and copies of the drawings to the defendant, they had reason to believe these were infringing copies). 166 The normal period is often 14 days. Cf. Monsoon v. Indian Imports [1993] FSR 486. 167 Hutchinson Personal Communications

[1997] FSR718.

v. Hook Advertising [1995] FSR 365; Metix UK v, Maughan

168 ZYX Music GmbH v. King [1997] 2 All ER 129. 169 Pensher Security Doors v. Sunderland City Council [2000] RPC 249.

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person is only liable where they know or have reason to believe that the device or information will be used to make infringing copies.'”° The second provision that deals with anti-circumvention is in section 298 of the 1988 Act. This applies to a person who charges for the reception of programmes broadcast or cablecast from the United Kingdom or who sends an encrypted transmission from the United Kingdom. This would cover many of the existing satellite and cable broadcasters, such as Sky, Film Four, etc. A person covered by section 298 has the same rights as a copyright owner against a person who makes or trades in various ways in apparatus which is ‘designed or adapted to enable or assist persons to receive the programmes or other transmissions when they are not entitled to do so.’!7! This would seem to cover the situation where somebody made or sold fraudulent smart cards or decoders to enable reception of Sky channels to persons who were not subscribers.'”” It is also a criminal offence to receive such a transmission dishonestly, and to make, import or sell unauthorized decoders.'” 7.4

REFORM:

TECHNOLOGICAL

SYSTEMS

OF PROTECTION

The current provisions dealing with anti-circumvention will need to be expanded to give effect to Article 6 of the Information Society Directive that will require member states to introduce more general provisions in relation to circumvention of technological measures. More specifically, the Directive requires member states to provide ‘adequate legal protection’ against a number of activities in relation to the circumvention of ‘effective technological measures’. Technological measure is defined as ‘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, which are not authorized’ by the right-holder. A technological measure is ‘effective’ where the use of a protected work, etc. ‘is controlled by the rightholders through application of an access control or protection process, such as encryption, scrambling or other transformation of the work or a copy control mechanism which achieves the protection objective.’ Having defined ‘technological measure’, Article 6 goes on to prohibit various unauthorized activities relating to such measures. First, Article 6(1) proposes that member states provide adequate protection against the act of circumvention itself, where this is done ‘in the knowledge, or with reasonable grounds to know that he or she pursues that objective.’ Secondly, member states are to introduce measures to 170 CDPA s. 296. 171 CDPA ss. 298, 299. See BBC Enterprises v. Hi-Tech Xtravision [1992] RPC 167 (manufacture in UK of decoders for sale abroad infringed, s. 298; ‘not entitled’ meant ‘not authorized’).

172 British Sky Broadcasting Group v. David Lyons [1995] FSR 356. Note also R v. Bridgeman & Butt [1996] FSR 538 (re-enabling or extending range ofreception on old smart cards for Spain, where the transmitter did not supply cards, nevertheless was violation ofthe criminal offence in CDPA s. 297A and thus a conspiracy to defraud).

173, CDPA ss. 297, 297A (added by Broadcasting Act 1990, s. 179).

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protect against a host of related activities that facilitate such circumvention, including manufacture, import, and distribution of devices, products or components or the provision of services.'’* These activities are to attract liability/penalties where: (i)

they are promoted, advertised or marketed for the purpose of circumvention;

(ii) the device (etc.) has only a limited commercially significant purpose or use other than to circumvent; or (ili) the device (etc.) is primarily designed, produced, adapted or performed for the purpose of enabling or facilitating circumvention. A number of points are worth noting about these provisions. First, they apply without prejudice to the existing provisions on computer programs contained in the Software Directive.'”? Secondly, they go well beyond existing UK provisions, for example, in that they are not restricted to electronic copies and by including the provision of services. Thirdly, while some devices (such as forged smart cards for decrypting broadcasts) are clearly intended to disable technological measures (and thus within the prohibition), devices which serve legitimate purposes (such as general purpose personal computers) fall outside the scope of the provisions. This is the case even if they can be used to avoid technological protection (as was the case with SCMS). Fourthly, the provisions are designed to meet some of the fears that if digital delivery becomes the primary form of delivery of all works, whether protected by copyright or not, users will have to get permission and pay not only for delivery of protected works, but for all works. This fear is met because a technical protection measure which is used to restrict access to purely non-copyright works (for example those in which copyright has lapsed) is outside the definition of technological measures. As a result, the prohibition against circumvention will not apply. A person may thus break an anti-circumvention device sealing in such information. Fifth, it is made explicit that the provisions should not inhibit bona fide research into cryptography.”

7.5

REFORM:

RIGHTS

MANAGEMENT

INFORMATION

Article 7 of the Information Society Directive will also require member states to bring in laws protecting ‘electronic rights management information’. Rights-management information is defined as ‘information provided by rightholders which identifies a work or other subject matter . . . the author or any other right-holder, or information about the terms and conditions of use of the work or other subject matter, and any

number or codes that represent such information.’ The information falls within the scope of protection when it (or any of it) is attached to a copy of a work or appears in connection with the communication of a work to the public.!7” 74 175 176 177

Member states may also prohibit private possession of such devices: Info. Soc. Dir., Recital 49. Information Society Directive, Recital 50. Tbid., Recital 48. Tbid., Art. 7(2).

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The Directive requires member states to provide adequate protection against the removal or alteration of any electronic rights-management information. The Directive also requires measures against the dissemination of copies from which such information has been removed. Both forms of liability occur only ‘if such person knows, or has reasonable grounds to know, that by so doing he is inducing, enabling, facilitating or concealing an infringement of any copyright.’!”* Although the introduction of a provision protecting the integrity of information used in relation to works may at first sight seem relatively uninteresting, its importance should not be underestimated. This is essentially for two reasons. The first relates to the fact that works in digital form are ‘plastic’. In other words, it is easy for works in digital form to be modified or altered. The protection of rights-management information prevents the removal from works of various identifying insignia (which is information basically equivalent to the title page of a book (author, publisher, ISBN)).In so doing it will allow us to keep track of information. The second reason for protecting rights-management information is that it is seen as having potential to enable direct contracting between content holders and consumers, the ‘metering’ of uses of works, and enabling rights clearances more generally (for example, in relation to the production of multimedia works).!”? 178 Tid. '79 Various projects have been established to standardize information in electronic copyrightmanagement systems, including IMPRIMATUR (Intellectual Multimedia Property Rights Model and Technology for Universal Reference). See M. Schippar, ‘Purchase and Licensing of Digital Rights: The VERDI Project and the Clearing of Multimedia Rights in Europe’ [2000] EIPR 198.

S DEFENCES

1 INTRODUCTION In this chapter we look at the exceptions that a defendant may rely upon when sued for infringement of copyright. Most of these exceptions are found in Chapter III of Part 1 the 1988 Act (where they are referred to as permitted acts). As Laddie J said, Chapter III ‘consists of a collection of provisions which define with extraordinary precision and rigidity the ambit of various exceptions to copyright protection.”! In addition to the exceptions in the 1988 Act the courts have also developed a number of common law defences that a defendant may rely upon when sued for infringement of copyright. The exceptions examined here provide that certain acts that might otherwise constitute an infringement of copyright do not incur liability. They only come into play once a claimant has established that copyright has been infringed. Where this occurs, the onus of proof falls on the defendant to prove that one of the exceptions applies.” Given that the exceptions span a wide variety of activities, it is not surprising that they perform a number of different roles. In some cases, the exceptions promote and encourage the creation of works. This is particularly the case where the permitted use transforms the original work in some way. Some of the exceptions overcome the market failure that arises where an economically optimal use would not occur for one reason or other. This occurs, for example, where the dealing is so small that the transaction costs of formulating an agreement outweigh the value of any licence that may be negotiated between the parties.* In other cases the defences are intended to protect other non-copyright interests, such as the protection of privacy and free speech." In other cases the exceptions prevent monopolies from being abused® and ' Pro Sieben Media v. Carlton UK Television [1997] EMLR 509.

? To the extent that defences derogate from property rights, they tend to be construed narrowly. However, there does not appear to be any consistent process of interpreting copyright exemptions strictly against the

defendant. Beloff v. Pressdram [1973] 1 All ER 241; Distillers Co. (Biochemicas) v. Times Newspapers [1975] QB

613; The Longman Group v. Carrington Technical Institute Board of Governors [1991] 2 NZLR574 (HC NZ).

3 W. Gordon, ‘Fair use as market failure’ (1982) Columbia Law Review 1600 CDPA s. 30 (criticism or review), s. 59 (public recitation), ss. 57, 66A (difficulty locating author), s. 60 (abstracts), s. 74 (sub-titling), s. 35 (recording of broadcasts for education), s. 36 (educational copying).

* See e.g. CDPA s. 29 (private study), s. 70 (home taping). > CDPA s. 50B (decompilation), s. 73 (cable retransmission).

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help to preserve material that is culturally and historically valuable.° Some of the defences encourage the parties to enter into collective licences.’ As the 1988 Act reminds us, the mere fact that an activity falls within one of the

permitted acts does not mean that it does not contravene some other legal right.* An obvious example being breach of contract. In recent years questions have arisen as to whether the law should limit a person’s ability to contract out of the exceptions.’ So far, British copyright law has taken a piecemeal approach to these issues, and the various provisions which prevent contracting-out are examined in their particular contexts.'? The more general issue about the relationship between contract and copyright is reviewed in Chapter 12. (i) External influences. For the most part, the exceptions to copyright protection available in the UK have largely been unaffected by regional or international influences. Under the Berne Convention,'! members of the Union are permitted to create exceptions to the exclusive rights, in limited circumstances.’ In particular, exceptions to the reproduction right must satisfy the so-called ‘three-step test’.’* According to this test, all exceptions must (i) be limited to certain special cases, (ii) not conflict with

a normal exploitation of the work, and (iii) not unreasonably prejudice the legitimate interests of the author. As TRIPs requires that all limitations comply with the threestep test, the test has become more important.’ Despite this, as with other aspects of international copyright law, the test has had little direct impact upon the exceptions that exist in British law. In contrast, European developments have had a more pronounced impact upon the

copyright exceptions available in the UK. As we will see, a number of the defences currently available in British law, such as those in relation to computer programs and databases, were introduced as a result of European Directives. More important changes are likely to occur when the Information Society Directive is implemented. This is because the Directive limits the exceptions and limitations that member states may make available in relation to the reproduction and communication rights. We look at the likely impact of the Directive at the end of the chapter. 6 CDPA s. 61 (folksongs), s. 75 (archives). 7 CDPA s. 143. 8 CDPA s. 28(1).

9 T. Vinje, ‘A Brave New World of Technological Protection Systems: Will there be room for copyright?’ [1996] EIPR 431. 10 CDPA s. 50A, s. 50B, s. 296A(1)(a), s. 296A(1)(b), s. 296A(1)(c); CDPA s. 296B. Broadcasting Act 1996, s. 137,

11 As regards phonograms and broadcasts, see Rome Art. 15(1). 12 Minor exceptions are permitted in accordance with the understandings expressed at various conferences

but these must be de minimis: see WTO Panel Report, United States: Sec. 110(5) of the US Copyright Act (15 June 2000) WT/DS160/R.

13 Berne Art. 9(2); Rome Art. 15(2); TRIPs Art. 13. 14 The WTO Dispute Panel has assessed whether various provisions of US law passed the test and thus complied with Art. 13 TRIPs. WTO Panel Report, United States: Sec. 110(5) of the US Copyright Act (15 June 2000) WT/DS160/R. Under the WPPT exceptions to the rights of phonogram producers are also subject to the ‘three-step test’: WPPT Art. 16.

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2 FAIR DEALING Of the various permitted acts in Chapter III, perhaps the most well known are the fair-dealing defences that are found in sections 29 and 30.!° These provide that a person will not be liable if they can show: (1) fair dealing for the purposes of research or private study, section 29(1); (2) fair dealing for the purposes of criticism or review, section 30(1); or (3) fair dealing for the purpose of reporting current events, section 30(2).

Before looking at the three defences, we wish to make some general comments about fair dealing.

2.1 “DEALING It is important to note that all that is meant by dealing is that the defendant has made use of the work. Dealing does not imply that there has to be some sort of transaction between the parties.'©

2.2)

PURPOSE

One of the notable features of UK copyright law is that fair dealing is only permitted for the purposes specifically listed in the 1988 Act. This means that the dealing must be fair for the purpose of research or private study, criticism or review, or the reporting of current events. As such, it is irrelevant that the use might be fair for a purpose not specified in the Act, or that it is fair in general. Thus, the fact that it may be impracticable for a commercial organization to circulate and distribute articles cut from a newspaper does not make the photocopying of the articles fair. Instead, it makes it a reason to seek an appropriate licence.'” The restricted approach adopted in the UK should be contrasted with American copyright law which has a general defence of fair use such that if the court is satisfied that the use is fair, then there will be no infringement." In thinking about whether an alleged infringer falls within one of the purposes listed in the 1988 Act, it is important to note two things. The first is that the courts have construed the specific purposes liberally.!? As such, the first hurdle (namely that the dealing falls within one of the purposes in the 1988 Act) has been relatively easy to

15 These defences were first introduced in the CA 1911, s. 2(1)(a).

16 Copinger, para. 9-06-07. '7 Newspaper Licensing Agency v. Marks & Spencer [1999] EMLR para. 18. 18 Copyright Act 1976 (US), s. 107.

19 Newspaper Licensing Agency v. Marks & Spencer [2000] 4 All ER 239, 257 (Chadwick LJ) (CA). See also Pro Sieben Media v. Carlton Television [1999] FSR 610, 620.

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satisfy. The second point relates to the standpoint of interpretation that will be adopted when deciding the purpose for which the work was used, At first glance the language of the statute seems to suggest that the test for determining the purpose of the dealing should be decided according to the subjective intentions of the alleged infringer. However, as Aldous LJ pointed out in Hyde Park it is not necessary when deciding the purpose of the dealing, ‘for the court to put itself in the shoes of the infringer of the copyright’.’° Instead, a more objective approach ought to be adopted. This ensures that the court does ‘not give any encouragement to the notion that all that is required is for the user to have sincere belief, however misguided, that he or she

is criticizing a work or reporting current affairs’.”!

2.3

THE

DEALING

MUST

BE FAIR

Once a defendant has shown that their dealing falls within one of the purposes listed in the 1988 Act, they must then show that the dealing was fair. The determination of whether a dealing is fair is a question of degree and impression.” While it is not possible to provide precise guidelines as to when a dealing will be

fair, it is possible to identify a number of factors that may influence the way this question is answered. It should be noted that the relative importance of each of these factors will vary according to the case in hand and the type of dealing in question.

2.3.1 Is the work unpublished? Where the dealing takes place in relation to a work that has not been published or made widely available to the public, this will weigh against the dealing being fair. As Aldous LJ said, it is “difficult to imagine that it could be fair dealing to use a work that had not been published nor circulated to persons for the purpose of criticism, review or newspaper reporting’.”? It is likely that the weight a court gives to the fact that a work is unpublished will vary according to the nature of the work in question. The fact that a work is unpublished would presumably be more significant in relation to private letters than it would be for official reports that revealed matters of public importance.

,

2.3.2 How the work was obtained

The method by which the copyright material has been obtained has also been a factor in determining whether the dealing is fair.”* It is less likely for a dealing to be fair if the

20 Hyde Park Residence v. Yelland {2000} EMLR 363 (para. 21). 21 Pro Sieben Media v. Carlton Television [1999] FSR 610, 620. 22 Hubbard v. Vosper [1972] 2 QB 84.

23 Hyde Park v. Yelland [2000] EMLR 363, 378 (para. 34). Following British Oxygen Liquid Air [1925] 1 Ch 383. Cf. Lord Denning, Hubbard v. Vosper [1972] 2 QB 84.

24 Beloff v. Pressdram [1973] 1 All ER 241.

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dealing relates to a work that is leaked or stolen, than a work that is obtained legitimately.”> 2.3.3 The amount taken

The quantity and quality of what is taken will be a crucial factor in deciding whether a dealing is fair. As Lord Denning MR said in Hubbard v. Vosper, you ‘must consider the number and extent of the extracts’ and ask are ‘they altogether too many and too long to be fair?’ This is because lengthy and numerous extracts or extracts of the most important parts of a work will reduce the expected returns to the copyright owner. By focusing on the quantity and quality of what is taken, the courts have recognized that fair dealing should not undermine the role copyright plays in encouraging creativity. The relative importance of the part taken (as well as whether the courts will concentrate on the quantity or quality) will vary according to the facts in hand, the purpose for which the work was used, and the type of work in question. While in most cases the defence will only apply where part of a work was taken, in some cases it may be legitimate to take the whole work.?’ 2.3.4 Use made of the work

Another factor that may influence the decisions as to whether a dealing is fair is the use that is made of the work in question. In some instances, it may be possible to reproduce someone else’s work without comment or analysis and it be a fair use. However, a use is more likely to be fair if the defendant can show that they have added

to or re-contextualized the part taken. That is, a defendant will have a stronger case if they can show that the dealing was transformative.”* This is particularly the case with fair dealing for criticism or review. It seems that the fact that a defendant derives a commercial benefit from the dealing will weigh against them when attempting to show that the dealing was fair. As Chadwick LJ said in the Court of Appeal decision of Newspaper Licensing Agency v. Marks & Spencer ‘a dealing by a person with a copyright work for his own commercial advantage—and to the actual or potential commercial disadvantage of the copyright owner—is not to be regarded as a “fair dealing” unless there is some overriding element of public advantage which justifies the subordination of the rights of the copyright owner’.”?

2° Beloff v. Pressdram [1973] 1 All ER 241; Queensland v. TCN Channel Nine [1993] IPR 58 (Sup. Crt. of Qld.); British Oxygen v. Liquid Air [1925] 1 Ch 383. Cf. Time Warner v. Channel 4 [1994] EMLR 1.

26 Hubbard v. Vosper [1972] 2 QB 84. *7 Thid., 94-5, 98 (Megaw LJ) (example of a parishioner quoting an epitaph on a tombstone in the churchyard); Sillitoe v. McGraw Hill [1983] FSR 545; Associated Newspapers Group v. News Group Newspapers [1986] RPC 515, 520; cf. Zamacois v. Douville [1943]

2 DLR 257 where the Canadian Exchequer Court

suggested that the copying of an entire work cannot qualify as fair dealing. 28 Newspaper Licensing Agency v. Marks & Spencer [1999] EMLR 369, 380 (Lightman J) . 29 Tbid. [2000] 4 All ER 239, 257 (Chadwick LJ) (CA).

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2.3.5 Motives for the dealing Another factor that may influence the decision as to whether a use is fair relates to the motives of the alleged infringer.*° The court must ‘judge the fairness by the objective standard of whether a fair minded and honest person would have dealt with the copyright work in the manner’ in question.*! Thus, where a person acts dishonestly or for a motive that the courts finds questionable (such as being primarily motivated by financial gain), it is likely to weigh against them. In contrast, if an alleged infringer can show that they were acting benevolently or were motivated by some altruistic or noble cause, this will increase the chances of them establishing that the dealing was fair. 2.3.6 Consequences of the dealing Another factor that will influence the decision as to whether a dealing is fair relates to the impact that the dealing will have upon the market for the work. This is particularly important where the parties are in competition and the defendant’s use of the work acts as a substitute for the purchase of the original work. This would be the case, for example, if in criticizing a work a defendant showed all of a film.

2.3.7 Could the purpose have been achieved by different means? In some cases, the courts have asked whether the purpose could have been achieved in a manner that is less intrusive on the copyright holder’s rights.’ While there can be few objections to this test being used to determine whether a dealing is fair, problems may arise in the way it is applied by the courts. This can be seen in Hyde Park v. Yelland. This case concerned an application for summary judgment against the Sun newspaper for publishing stills of Dodi Fayed and Diana, Princess of Wales, taken from security film, the copyright in which was owned by the claimant. The defendant argued that the stills revealed the times when Dodi and Diana were present at Villa Windsor and therefore exposed the falsity of statements made by Mohammed Al Fayed. At first instance it was argued that it was not necessary for the Sun to have published the images taken from the video. Instead, it was suggested that the same result could have been achieved via written word. In particular it was argued that the Sun could have interviewed the security guard and said that they had seen the photographs without actually publishing them. The Court of Appeal agreed. As Aldous LJ said, ‘the information as to the timing of arrival and departure of Dodi and Princess

Diana could have been given in the articles by the reporter in the Sun stating that he had seen the photographs which proved the Princess and Mr Dodi only stayed at the 30 Hyde Park v. Yelland [2000] EMLR 363, para. 36 (CA); Pro Sieben v. Carlton UK Television [1999] FSR 610, 614 (Walker LJ); Beloffv.Pressdam [1973] 1 All ER 241, 263.

31 Hyde Park v. Yelland [2000] EMLR 363, 379. Followed in Newspaper Licensing Agency v. Marks & Spencer [2000] 4 All ER 239, 250 (Gibson LJ) (CA).

32 Hubbard v. Vosper [1972] 2 QB 84. 33 Newspaper Licensing Agency v. Marks & Spencer [1999] EMLR 369, 382-3 .

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Villa for 28 minutes’.** In so doing, the Court of Appeal implied that the pictures were no more effective evidence than the written word.°°

2.4

SUFFICIENT

ACKNOWLEDGMENT

In certain situations, for the fair dealing defence to apply the dealing must be accompanied by a ‘sufficient acknowledgment’. In essence this means that the author and the work must be identified. It should be noted that sufficient acknowledgment is not required in all cases. (i) In relation to fair dealing for research or private study, sufficient acknowledgment is only required for databases.*°

(ii) In relation to fair dealing for criticism and review, sufficient acknowledgment is required for all works.*” (iii) In relation to the reporting of current events, sufficient acknowledgment is required for all works (other than a photograph).** However, no acknowledgment is required in connection with the reporting of current events by means of a sound recording, film, broadcast, or cable programme.*?

Where required, the defendant must show that they have identified both the work

and the author of the work.*° A work can be identified by its title or by some other description.*' The author can be identified by name, pseudonym or by other means such as a photograph or a logo.** Whatever method is chosen, it must convey ‘to a reasonably alert member of the relevant audience that the identified person is the author’.* It is important to note that it is the author and not the owner of the copyright work who must be identified.“* There is no need for the author to be identified where a work is published anonymously or, in the case of an unpublished work, where it is not possible for a person to ascertain the identity of the author by reasonable inquiry. It seems that even in these cases the work still needs to be identified. 34 Hyde Park v. Yelland [2000] EMLR 363, 379. 3° Mance LJ also said the interest ‘in resolving general falsity did not require the misappropriation of the stills or their supply to the Sun, presumably for money or their publication by the Sun’. Hyde Park v. Yelland [2000] EMLR 363, 392.

36 CDPA s. 29(1A).

37 CDPA s. 30(1). 38 CDPA s. 30(2).

39 CDPA s. 30(3). 20° GDPA 6.178. 41 42 seven name

Pro Sieben Media v. Carlton Television [1999] FSR 610, 616. Tbid., 625. The logo of Pro Sieben in the top right-hand corner a stylized figure 7 (Sieben means in German) was sufficient acknowledgment. Newspaper publishers need to be identified by the of the newspaper that they publish: Newspaper Licensing Agency v. Marks & Spencer [1999] EMLR

369, 384.

43 Pro Sieben Media v. Carlton UK Television [1997] EMLR 509, 597. 44 Express Newspapers v. Liverpool Daily Post [1985] 3 All ER 680.

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With these general points in mind, we now turn to consider each of the specific fair dealing defences.

3 FAIR DEALING

FOR THE

PURPOSES

OR PRIVATE

OF RESEARCH

STUDY

Section 29(1) provides that fair dealing of a work for the purpose of research or private study does not infringe copyright in the work. The defence applies where the dealing takes place with literary, dramatic, musical, and artistic works, as well as to the

typographical formats of published works. It does not apply where the dealing is with a broadcast, cable programme, sound recording, or film.” The limited scope of the defence has been criticized because it ‘fails to reflect the increasing importance of non-textual media for both study and research.” Special rules apply to the research or private study defence with respect to databases and computer programs. These are looked at below. The rationale for this defence lies in the belief that research and study is necessary to generate new works. It also recognizes that research and study does not normally interfere with the incentives and rewards that copyright provides to creators and owners. In effect, the defence helps to fulfil copyright’s goal of maximizing the production of works. The defence also takes account of the fact that dealings of this kind would often be difficult to detect. In order for a defendant to rely upon the research or private study defence they must show (i) that the use made of the copyright work was for the ‘purpose of research or private study’ and (ii) that the dealing was ‘fair’. With the exception of databases, there is no need for the work and the author to be sufficiently acknowledged. 3.1 IS THE DEALING STUDY ?

FOR THE ‘PURPOSE OF RESEARCH

OR PRIVATE

>

To fall within section 29(1), the defendant must show that the dealing was for the

purpose of research or private study. There is no requirement that the research or private study be for academic purposes. As such, it will potentially include situations where a person copies material to

investigate their family history. There is also no requirement that the research or private study be a non-profit activity. As such, the defence is available for commercial research. It has been said that research means ‘a diligent and systematic inquiry or investiga45 CDPA s. 29: Pro Sieben Media v. Carlton UK Television [1997] EMLR 509. 46 Copinger, para. 9-08.

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COPYRIGHT

tion into a subject’.*” A person involved in research will usually be involved in a process whereby they synthesize the material in question. They will be involved in a process that leads towards (or at least intends to lead towards) a particular result: be it a conclusion, a decision, an answer to a problem, an article, or a book. Thus, where

someone photocopies material to assist in the writing of an essay or to help them decide what type of stove to buy, they will potentially fall within the defence. In contrast, the supply of material is not research. Similarly, while copying done to establish an archive may benefit researchers, it would not of itself fall within the

defence. While a person engaged in research is usually involved in a transformative process, a person engaged in private study suggests that they are involved in the acquisition of knowledge.** As such, private study would include situations where a student is preparing for a seminar, or where a person photocopies the racing results from various newspapers to study the form of a particular horse.

3.2 THE DEALING MUST BE ‘FAIR’ The mere fact that a defendant can show that the work was used for private study or research does not necessarily mean that the dealing will be exempt from liability. It is also necessary to show that the dealing was fair. As we explained earlier, a number of different factors will influence the decision as to whether a particular dealing is fair. In this context the most important are likely to be the amount taken, whether the work is readily available, the effect that the dealing has on the market for the original work, and whether the dealing is commercial in character.

3.3

SPECIAL

CASES

3.3.1 Copying by third parties

In many cases, the person who does the copying will also be the person who carries out the research. In some circumstances, however, the primary actor may not be the person engaged in the research. This might be the case, for example, where a research assistant or a librarian makes photocopies for academics or students. The 1988 Act recognizes that for the defence to apply, it is not necessary for the activity that leads to the alleged infringement to be undertaken by the researcher or student. That is, it is possible for an agent to do the copying on behalf of the researcher or student. There are two important limitations on the ability of a defendant to rely upon the research or private study defence where the copying is done by a third party. The first is that the dealing must be for defendant’s own research or study.*® The second 47 De Garis v. Neville Jeffress Pidler (1990) 18 IPR 292 (FCA). 48 Tbid., 298-9. It is unclear why the term private is included in relation to study. 49 Sillitoe v. McGraw Hill Book Co. [1983] FSR 545; Longman Group v. Carrington Technical Institute [1991] 2 NZLR 574 (CANZ).

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201

limitation is found in section 29(3)(b).°° This provides that copying by a person other than a researcher or student is not a fair dealing if the person doing the copying knows it will result in ‘copies of substantially the same material being provided to more than one person at substantially the same time and for substantially the same purpose’.®*'! This means that lecturers are unable to use the research or private study defence where they make multiple copies of a work for their students. 3.3.2 Decompilation of computer programs As a result of changes introduced to implement the Software Directive, the research and private study defence is limited in relation to computer programs. Section 29(4) provides that it is not fair dealing to (a) convert a computer program expressed in a low-level language into a version expressed in a higher-level language or (b) incidentally in the course of so converting the program to copy it. Section 29(4) ensures that the decompilation of computer programs is taken outside the remit of the research and private study defence. Instead, defendants will have to resort to the more limited defence under section 50B (which is discussed below). It should be noted that the

fair-dealing defence is available for other uses of computer programs. 3.3.3 Databases

The research or private study defence is also modified in relation to databases.** As we mentioned earlier, it is not necessary for a work to be sufficiently acknowledged for section 29(1) to be brought into operation. However, section 29(1A) provides that for a defendant to rely upon the fair-dealing for research or private-study defence where the dealing takes place in relation to a database, they must show that the ‘source is indicated’. It is important to note that section 29(1A) requires that the ‘source is

indicated’ rather than there be ‘sufficient acknowledgment’. At best this seems to impose a legal obligation to ensure good research practices. The second modification made to the research or private-study defence in relation to databases is found in section 29(5). This provides that the doing of anything in relation to a database for the purposes of research ‘for a commercial purpose’ is not fair dealing with the database. Thus, where a database is used to research for the market testing of new drugs or for a commercial training course, the defence would not apply. Whether research in an independent school or a private university is for a commercial purpose is unclear.

50 This should be read in conjunction with the education copying defences discussed below (especially CDPA s. 38) and the relevant collective licensing schemes (see below at p. 268).

51 CDPA s. 29(3). Cf. Longman Group v. Carrington Technical Institute [1991] 2 NZLR 574 (CANZ).

52 Database Reg. 8(1). See J. Adams, ‘The Reporting Exception: Does it still exist?’ [1999] EIPR 383.

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COPYRIGHT

4 FAIR DEALING

FOR CRITICISM

OR REVIEW

Section 30(1) provides that fair dealing with any work for the purpose of criticism or review does not infringe the copyright in the work. This is subject to the proviso that the dealing is accompanied by a sufficient acknowledgment. The section 30(1) defence recognizes the value of criticism or review. It also recognizes that for a person to critique someone’s work, they will normally need to cite the author—something that authors might be reluctant to allow. The defence prevents copyright owners from using copyright to control who should review their works, when they may do so, and what parts of the work may be used. In order to rely upon the defence, a defendant must show that (i) the dealing was for the purpose of criticism or review, (ii) the dealing was ‘fair’, and (iii) the dealing

was accompanied by sufficient acknowledgment. Before looking at these, it should be noted that fair dealing for criticism or review was modified by the 1996 Broadcasting Act. This provides that any provision in an agreement is void in so far as it purports to prohibit or restrict relevant dealings with a broadcast or cable programme in another broadcast or cable programme, where the inclusion falls within fair dealing for the purpose of reporting current events.*4

4.1 WAS THE DEALING FOR THE PURPOSE OF ‘CRITICISM OR REVIEW ? For a defendant to rely upon section 30(1), they must show that the dealing was for the purpose of criticism or review. As we explained above, the courts take an objective approach when deciding the purpose for which the work was used. The courts have also said that criticism and review should be construed liberally.* The broad nature of the defence is reflected in the fact that the criticism or review may be of the work as a whole or a single aspect of a work. The criticism may be of the thought or philosophy underpinning a work,” or its social and moral implications.*” The criticism or review is not confined to the work itself. Thus, the defence will apply

where a work is copied in order to criticize another work.** Similarly, a television programme that used extracts from Kubrick’s film A Clockwork Orange to criticize the decision to withdraw the film from distribution, fell within the defence. As Henry LJ explained, this was because the fair dealing defence applies ‘equally where the °>- Time Warner v. Channel 4 [1993] EMLR 1, 14; Barier v. News Group Newspapers [1997] FSR 812. °4 Broadcasting Act 1996, s. 137.

°° Newspaper Licensing Agency v. Marks & Spencer [2000] 4 All ER 239, 257 (Chadwick LJ) (CA); Pro Sieben Media v. Carlton Television [1999] FSR 610, 620. 56 Hubbard v. Vosper [1972] 2 QB 84, 94 ff; Time Warner v. Channel 4 [1994] EMLR 1, 15.

57 Pro Sieben Media v. Carlton Television [1999] FSR 610, 621. 8 Beloff v. Pressdram [1973] 1 All ER 241; Associated Newspapers Group v. News Group Newspapers [1986] RPC 515.

DEFENCES

203

criticism is of the decision to withdraw from circulation a film in the public domain, and not just the film itself.

4.2

WAS

THE

DEALING

FAIR?

Once a defendant has shown that the dealing was for the purpose of criticism or review, they must then show that the dealing was fair. As we explained earlier, a number of different factors will influence the decision as to whether a particular dealing is fair. In this context the most important of these are likely to be the amount taken, the effect on the market, whether the information was published, and the nature of the dealing. When deciding whether a dealing for the purpose of criticism or review is fair, the courts do not consider whether the criticism itself is fair.°° Rather, they take account of whether the extent of the copying is fair to illustrate or support the criticism. As such, the criticism may be malicious, unbalanced or motivated by

insecurity without forfeiting the defence. In these circumstances an author’s remedy for malicious and unjustified criticism lies in the law of defamation, not copyright.°

4.3

SUFFICIENT

ACKNOWLEDGMENT

The third and final factor that a defendant must show to fall within the criticism or review defence is that the dealing was accompanied by ‘sufficient acknowledgment’. This is required for all works. The issue of sufficient acknowledgment was discussed above.

5 REPORTING

OF CURRENT

EVENTS

Section 30(2) provides that ‘fair dealing with any work (other than a photograph)? for the purpose of reporting current events does not infringe the copyright in the work provided it is accompanied by a sufficient acknowledgment.™ No acknowledgment is required, however, in connection with the reporting of current events by means of a sound recording, film, broadcast or cable programme.” As Gibson LJ explained, the reporting of current events defence aims to strike a 59 Time Warner v. Channel 4 [1994] EMLR |, 15.

60 There is no need for the critical work to be representative of the original. Time Warner v. Channel 4 [1994] EMLR 1, 12.

61 Pro Sieben Media v. Carlton Television [1999] FSR 610, 619.

62 CDPA s. 30(1). 63 This means that a newspaper is not able to take photographs from another paper and claim this defence. Hence the need to rely on the criticism or review defence in Barier v. News Group Newspapers [1997] FSR 812. 64 Cf, CA 1911, s. 2(1)(a) which referred to fair dealing with any work for the purposes of newspaper summary. This became ‘reporting current events’ in CA 1956, s. 6(3).

© CDPAs.30(3).

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COPYRIGHT

‘balance between protection of rights of creative authors or the wider public interest (of which free speech is a very important ingredient).’ In order to rely upon the defence, a defendant must show (i) that the dealing was for the purpose of reporting current events, (ii) that the dealing was ‘fair’, and (iii) that there was sufficient

acknowledgment.®’ However, no acknowledgment is required in connection with the reporting of current events by means of a sound recording, film, broadcast, or cable programme.®

5.1 WAS THE DEALING FOR THE PURPOSE CURRENT EVENT?

OF REPORTING A

As we explained above, the courts take an objective approach when deciding the purpose for which the work was used. The courts have also said that the reporting of current events should be construed liberally. To fall within the defence, the dealing must take place in relation to an event that is current. An event will be current if it deals with a contemporary issue. The older the issue, the less likely it is that it will be treated as having any currency. An event that took place some time ago may however be current if it is still under discussion. For example, in Hyde Park it was accepted, both at first instance and by the Court of Appeal (albeit grudgingly), that although the stills in the Sun were published more than a year after the visit by Dodi and Princess Diana to Villa Windsor, that the events still had some currency. As Jacob J said, ‘at the time of publication the events

were still very much under discussion that it would pedantic to regard them as anything other than current.’ For the defence to apply, a defendant must also show that the dealing took place in relation to an event.’' It seems that certain matters by their very nature will be treated as events. Thus, matters of national or political importance (planned minimum wage proposals, campaign about child labour, a case about alleged race bias at a rival establishment, or announcements about the Euro”), as well as major sporting contests (the World Cup,’’ Wimbledon, or the Olympics) are likely to be events.”4 In contrast, matters that are trivial, ephemeral or immaterial will not be treated as °° Newspaper Licensing Agency v. Marks & Spencer [2000] 4 All ER 239, 249 (Gibson LJ) (CA). 67 CDPA s. 30(2)

68 CDPA s. 30(3). 6° The value placed on freedom of information and freedom of speech requires that gateway to be wide, Newspaper Licensing Agency v. Marks & Spencer [1999] EMLR 369, 382. 70 Hyde Park Residence v. Yelland [1999] RPC 655, 661. 71 The concept of ‘current events’ is narrower than ‘news’: Newspaper Licensing Agency v. Marks & Spencer [1999] EMLR 369, 382; cf. [2000] 4 All ER 239, 249 (Gibson LJ) (CA).

” Tbid., 267 (Mance LJ) (CA). According to Lightman J, the event ‘may be a matter of entirely local interest or of interest to few people’: Newspaper Licensing Agency v. Marks & Spencer [1999] EMLR 369, 382 (para. 18).

73 British Broadcasting Corporation v. British Satellite Broadcasting [1992] Ch 141. 74 Chadwick LJ took a more subjective approach when he said the publication of an article which features comments that relate to or impact upon the appellant’s products was an event: Newspaper Licensing Agency v. Marks & Spencer [2000] 4 All ER 239, 257 (CA).

DEFENCES

205

events. For example, it has been said that comparisons of products such as wines, chicken Kiev, and taramasalata,”° lifestyle articles on choice of underwear, and the

times of television programmes were not current events.”° The fact that a matter is currently of interest or in the press does not mean that it is a current event.’” However interesting an article may be, the fact that it is reported in a newspaper does not necessarily make it a current event. Thus, it was suggested in the NLA decision that the mere fact that a fashion editor of a journal featured a Marks & Spencer garment did

not make it a current event.” While trivial or immaterial matters will not ordinarily be treated as events, it is possible for such matters to be transformed into an event through media coverage. This can be seen in Pro Sieben where a matter that was otherwise of limited and ephemeral interest (here it was the sale by a member of the public of an interview about a women pregnant with octuplets to German television),’”” was nonetheless treated as an ‘event’. This was because the volume and intensity of the media coverage was sufficient to bring the media coverage within the ambit of current events. The material dealt with by the defendant must relate to or be relevant to the current event in question. This means that the defence will not cover any dealing that takes place outside of the current event in question. Thus, it was held that the Daily Mail newspaper was unable to rely on the death of the Duchess of Windsor to justify the republication of correspondence between her and her husband.*° Similarly in Hyde Park, the Court of Appeal held that the publication of the driveway stills that showed the arrival and departure times of Dodi and Princess Diana did not fall within the current events defence. This was because the material in question (the driveway stills)

did not correlate with the event in question (the purpose being to expose the lies of Mr Al Fayed).*! The upshot of this is that while the publication of historical material is not ordinarily a current event,® old information may become relevant in response to some fresh event. As Walton J said, [T]he publication of historical material, material that is strictly historical, may nonetheless be of urgent necessity in reporting current events. One has only to think, for example, of correspondence dealing with nuclear reactors that have just blown up or have had a core melt-down: that might date from a very considerable period previous to the event happening, but would be of a topical nature in order to enable a report of what actually happened to

be properly prepared.” 75 76 77 78

Newspaper Licensing Agency v. Marks & Spencer Independent Television Publications v. Time Out Newspaper Licensing Agency v. Marks & Spencer Newspaper Licensing Agency v. Marks & Spencer

[1999] [1984] [1999] [2000]

EMLR 369, 383. FSR 64. EMLR 369, 382. 4 All ER 239, 250 (Gibson LJ); 267 (Mance LJ)

(CA). 79 Pro Sieben Media v. Carlton UK Television [1999] FSR 610.

80 Associated 81 The Court use of the work. 82 Newspaper 83 Associated

Newspapers Group v. News Group Newspapers [1986] RPC 515. of Appeal looked to the relevant parts of the Sun to ascertain the perceived purpose of the Hyde Park v. Yelland [2000] EMLR 363, 374, 379-80. Licensing Agency v. Marks & Spencer [1999] EMLR 369, 382 (para. 18). Newspapers Group v. News Group Newspapers [1986] RPC 515.

206

COPYRIGHT

5.2 WAS THE DEALING FAIR? Once a defendant has shown that their dealing was for the purpose of reporting of current events, they must then show that the dealing was fair. A number of different factors will influence the decision as to whether a particular dealing is fair. In this context the most important are likely to be how the information was obtained, the

amount taken, the motive for the dealing** and whether it is reasonably necessary to refer to the work in order to deal with the events in question.®° It also seems that the courts will be influenced by what is taken to be normal behaviour in the circumstances. Thus, in the World Cup case, it was fair for the defendant to reshow the goals and match highlights, typically thirty seconds of a ninety-minute match, even though these were clearly the most important extracts. This was because the sequences were the normal and obvious means of illustrating the news report.*° It has also been suggested that the commercial nature of a dealing will weigh against a defendant trying to establish that the dealing was fair. A more extreme view was taken by Mance LJ in the NLA decision. While he was not willing to express a final opinion on the matter,*” Mance LJ had doubts about whether it was possible to extend the fair-dealing exception, which represents a public interest exception to copyright, to the reporting of current events for private commercial purposes.*® Such an approach is problematic in that it will greatly restrict the ability of commercial media to rely upon fair dealing. A more realistic approach was adopted by Jacob J in the first instance decision of Hyde Park v. Yelland, where he held that the fact that the security guard and the Sun had both expected to make money from the publication of the pictures did not derogate from the fair-dealing justification.’ As Jacob J said, the ‘press often have to pay for information of public importance. And when they publish they will always expect to make money. They are not philanthropists.’”

5.3.

SUFFICIENT

ACKNOWLEDGMENT

The third and final factor that a defendant must show to fall within the defence is that the dealing was accompanied by ‘sufficient acknowledgment’ (which was discussed 84 Newspaper Licensing Agency v. Marks & Spencer [2000] 4 All ER 239, 258 (Chadwick LJ) (CA). 85 Associated Newspapers Group v. News Group Newspapers [1986] RPC 515, 519. Hyde Park v. Yelland

[2000] EMLR 363, 393 (para. 78).

2

86 Although the BBC and the BSB were in competition, Scott J did not think it to be important because ‘highlights’ of this nature do not really compete with a full-length live broadcast lasting 90 minutes. 87 Newspaper Licensing Agency v. Marks & Spencer [2000] 4 All ER 239, 267 (Mance LJ) (CA). 88 “The rationalization that in a capitalist society all economic activity serves the public good does not avoid the distinctions.’ Ibid. 89 Cf. Initail Services v. Putterill [1968] 1 QB 396. 90 Hyde Park v. Yelland [1999] RPC 655, 663. The Court of Appeal overturned Jacob J’s decision. While the

Court of Appeal did not address the issue directly, the fact that the security guard and the Sun benefited financially from the dealing seems to have influenced the finding that the use was not fair. When combined with other factors, the Court of Appeal concluded that to ‘describe what the Sun did as fair dealing is to give honour to dishonour’: Hyde Park v. Yelland [2000] EMLR 363, 379 (para. 40).

DEFENCES

207

earlier).°! This is required for all works (other than a photograph).”* However, no acknowledgment is required in connection with the reporting of current events by

means of a sound recording, film, broadcast, or cable programme.”?

6 INCIDENTAL

USES

The urban landscape is full of works that are protected by copyright. Most city centres contain an array of murals, buildings, sculptures, and advertisements.”* This creates a

potential problem for photographers, film-makers, broadcasters, painters, and the like who wish to represent that landscape. If a movie is filmed in a public place, it is highly likely that the final product will include a number of different copyright works. This gives rise to a potential problem in that the recording of these works is prima facie an infringement of copyright. To ensure that problems of this nature do not arise, section 31(1) provides that copyright in a work is not infringed by its ‘incidental inclusion’ in an artistic work, sound recording, film, broadcast or cable programme.” This means that a defence is available where a copyright work, such as a painting, is incidentally included in the background of another work, such as a film. Section 31(2) extends the defence to include the exploitation of works that incidentally include other works. This ensures that the showing, as distinct to the making, of a film does not infringe. The question of when a work is ‘incidentally included’ in another work was considered in IPC Magazine v. MGN.*° This was an action for infringement of artistic copyright that grew out of a TV advertising campaign run by the defendant (MGN). The claimant in this case was the publisher of a magazine called Woman. The defendant, who was the publisher of the Sunday Mirror newspaper, ran an advertising campaign to promote their women’s magazine (called Personal), which they gave out for free with their Sunday paper. The defendant’s television advertisements showed a glum-faced woman holding a copy of the claimant’s magazine. The defendant superimposed a black band with the letters 57p (which was the price of Woman) in large white type across the claimant’s magazine. In a subsequent scene in the advertisement, the same woman, now smiling, was shown with a copy of the defendant’s magazine and the slogan: ‘Free with the Sunday Mirror.’ The claimants brought an action for infringement of artistic copyright in the masthead, the layout, and the photographs on the magazine cover. In response the defendant argued inter alia that

91 See above at p. 198.

92 CDPA s. 30(2) 3 CDPA s. 30(3). \o

94 See also CDPA s. 62 (re public display of artistic works). 5 CDPA s. 31(1). CA 1956, s. 9(4) (works of architecture), s. 9(5). 96 IPC Magazines v. MGN [1998] FSR 431. \o

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COPYRIGHT

the inclusion of the claimant’s magazine was merely incidental to the broadcast and, as such, that they could rely upon the section 31 defence. The defendant’s argument was rejected on the basis that the use was not incidental. In so doing the Deputy Judge said that a use was incidental if its inclusion was ‘casual, inessential, subordinate, or merely background’.”’ Applying this test to the facts of the case, the judge said that the use was not incidental ‘since the impact of the advertisement would be lost entirely if the front cover of Woman was not used. The inclusion of the copy of Woman was an essential and important feature of the advertisement. The impact could not be more obvious.” In essence, the judge suggested that a copyright work would only be incidentally included if it could be removed from the alleged infringing work without effecting its structure or essence. The judge also rejected the defendant’s argument that the test for whether a work was incidentally included was to be decided according to the main subject of the advertisement.” The defence will apply irrespective of whether a work is accidentally or deliberately included.’ This is not the case, however, with musical works or lyrics (as well as a

sound recording, broadcast or cable programme of a musical work or lyrics). The reason for this is that section 31(3) says that a musical work or lyrics shall not be regarded as being incidentally included if it is deliberately included. This means that the defence is not available where a song is chosen for the background of a film, or a song from a radio is deliberately played in the background to a broadcast. Thus if the makers of the police drama, The Bill decided to have a scene where a character was listening to a radio playing a Rolling Stones’ song, this would not be an incidental inclusion. However, if a musical work was accidentally included in a live broadcast,

this would be caught by the defence. Thus, a broadcast of a football match that accidentally included a sound recording played over the public address system would fall within the defence.}”!

7 DISCLOSURE

IN THE

PUBLIC

INTEREST

Until recently, it was widely accepted that a person who makes a disclosure in the public interest would not be liable for any consequential copyright infringement. As a result of the Court of Appeal decision in Hyde Park v. Yelland, however, there are now serious doubts about the continued viability of this common law defence. The first case to recognize the public interest defence for an infringement of copy°7 IPC Magazines v. MGN [1998] FSR 431, 441.

8 Ibid.

*° It therefore does not depend on the user’s intention or on the views of those who witness the use. Ibid. 100 Tbid. This is confirmed by CDPA s. 31(3), which declares that a musical work, or lyrics (as well as a sound recording, broadcast or cable programme of a musical work or lyrics) shall not be regarded as being incidentally included if it is deliberately included. 101 Laddie et al., para. 2.161.

DEFENCES

209

right was Beloff v. Pressdram.' In that case the claimant, a political correspondent with The Observer, brought an action against the satirical political journal, Private Eye, for reproducing a secret memorandum that described a conversation between the claimant and a senior politician. Private Eye sought to defend its action on the ground that the disclosure of the memorandum was in the public interest. This was on the basis that the memorandum revealed the name of the politician who supplied the claimant with information and the techniques that the claimants used to acquire the information. Drawing inspiration from the public interest defence in breach of confidence, Ungoed-Thomas J said that the ‘public interest is a defence outside and independent of statutes, is not limited to copyright cases and is based on a general principle of common law.’!°? Accordingly, the public interest defence may override copyright. Ungoed-Thomas J explained that the defence was limited. Since the publication of the memorandum did not disclose any inquity or misdeed, it did not apply in the circumstances of the case. The principle enunciated in Beloff seemed to receive the approval of the Court of Appeal in Lion Laboratories v. Evans.'™ In this case the manufacturers of a breathalyser (the Lion Intoximeter) sought to prevent the defendant newspaper, the Daily Express, from publishing extracts of a confidential internal memorandum which cast doubt on the accuracy of the breathalyser. The defendant claimed that the public had an interest in knowing that the breathalyser might be faulty. They also said that the public interest should override the rights of the copyright owner. All three members of the court of Appeal accepted that the public interest defence was available in an action for infringement of copyright. According to the Court of Appeal, if the alleged fault with the breathalyser was not investigated, a significant number of motorists could have been wrongly convicted of driving with excess alcohol. On the basis that there was a seriously arguable case that the disclosure was justified in the public interest, the Court refused to grant interim relief. The validity of the common law defence seemed to have been affirmed by section 171(3) of the 1988 Act which says that nothing in the Act ‘affects any rule of law preventing or restricting the enforcement of copyright, on grounds of public interest or otherwise’.'” This is confirmed by Hansard, which shows that Parliament intended to preserve a common law public interest defence.'°° Despite the apparent affirmation of the public interest defence in the 1988 Act, serious doubts must exist over the status of the public defence as a result of the Court of Appeal decision in Hyde Park v. Yelland. It will be recalled that this case concerned an application for summary judgment against the Sun newspaper for publishing stills 102 [1973] 1 All ER 241. 103 []973] 1 All ER 241, 259. See below at pp. 965-70. 104 [1985] QB 526. 105 CDPA s. 171(3) was so interpreted by most commentators, the only doubt was as to the scope of the exception See Copinger, 22.48; G. Dworkin and R. Taylor, Blackstone’s Guide to the Copyright Designs and Patents Act 1988 (1989), 81-2.

106 Lord Beaverbrook, 491 Hansard, HL, 8 Dec. 1987, col. 77.

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COPYRIGHT

of Dodi Fayed and Diana, Princess of Wales, taken from security film, the copyright in which was owned by the claimant. The defendant argued that the stills revealed the times when Dodi and Diana were present at Villa Windsor and therefore exposed the falsity of statements made by Mohammed Al Fayed. As such, the publication was in the public interest. The Court of Appeal found that there was no arguable defence. The court did not consider that it was in the public interest to publish the stills to prove that Al Fayed’s statements were false: the information could have easily been made available by the Sun without infringing the claimant’s copyright. While the court could have argued that the public interest defence did not succeed on the facts, the majority doubted whether the defence existed at all. Aldous LJ, with whom Stuart-Smith LJ agreed, said that there is no general public interest defence to an action for infringement of copyright in the UK. He gave three reasons. First, on the basis that the statutory regime was exhaustive, Aldous LJ observed that no such defence is recognized in the code. Secondly, he said the defence of disclosure of information in the public interest was inappropriate, because copyright restricts reproduction of the form of a work, not the information it contains. Thirdly, Aldous LJ argued that the defence was incompatible with the Berne Convention.’ In addition, Aldous LJ held that the reasoning in Beloff and Lion Laboratories lacked any substantial basis in precedent. Although Aldous LJ denied the existence of a public interest defence, he recognized that the courts do retain a power under their ‘inherent jurisdiction’ to refuse to enforce copyright where it offends against the ‘policy of the law’. For Aldous LJ the circumstances where the courts would refuse to enforce copyright on the basis that it would be against the ‘policy of the law are very limited. These include situations where the work is scandalous, immoral, or contrary to family life; the work itself is injurious to

public life, public health, and safety, or the administration of justice; or where a work incites or encourages others to act in a way which is injurious to public life, public health, and safety, or the administration of justice. Mance LJ declined to go as far as Aldous LJ. Instead Mance LJ accepted that Parliament had intended, via section 171(3), that the courts should retain some

discretion to refuse to enforce copyright on public interest grounds. However, he argued that this discretion is much more limited than the defence recognized in breach of confidence cases. He also said that it could not be used in the same general area as covered by one of the statutory permitted acts. According to Mance LJ, the countervailing public interest was of more limited scope in the case of copyright,

given that it is a property right and regulated by statute.!©° It is not clear what is at stake in the different approaches of the majority and Mance LJ. It is not obvious whether anything turns on the distinction between a power to

107 Cf. Berne Art. 17. See Ricketson, para. 9.72. 108 Hyde Park v. Yelland [2000] EMLR 363, 389. Cp. pp. 105-7 above. 109 Hyde Park v. Yelland [2000] EMLR 363, 392. See R. Burrell, ‘Defending the Public Interest’ [2000] EIPR 394.

DEFENCES

211

refuse to enforce a right (as recognized by the majority), and a defence (as recognized by Mance LJ). One difference between the two approaches relates to the factors to be

taken into account by the court when deciding whether to override the interests of the copyright owner. Aldous LJ indicated that the circumstances in which the court will not enforce copyright must derive from the work itself. In contrast, Mance LJ argued that circumstances justifying the public interest defence might relate to the actions of _a particular owner of the copyright.'' Another difference between the two approaches relates to the scope of the defence. As we noted earlier, Aldous LJ set out a

list of circumstances where the court would not enforce copyright. In contrast, Mance LJ’s judgment offers little assistance as to when the ‘public interest defence’ would apply, except to indicate that the circumstances were more limited than in cases of breach of confidence.''! Nevertheless, Mance LJ’s approach is more flexible than the approach of the majority.

8 LIBRARY

USES

The 1988 Act provides librarians of prescribed, non-profit libraries with a number of defences.'!* Libraries are prescribed by the Secretary of State and the defences cover inter alia school, university, and local authority libraries.’

8.1

COPIES

FOR

RESEARCH

OR

PRIVATE

STUDY

Provided that a librarian (from a prescribed, non-profit library) supplies individuals at cost and for purposes of research or private study, they may copy up to one article in an issue of a periodical (section 38), or a reasonable extract from any other publication (section 39).!!4 Section 43 allows librarians to make and supply single copies of a literary, dramatic or musical work that had not been published when they were supplied to the library, and where the copyright owner had not prohibited copying thereof.'!°

N10 Tbid., 363, 394-5. 111 Perhaps Jacob J’s test at first instance in Hyde Park Residence 1, Yelland [1999] RPC 655 will be useful. ‘It is unlikely that the defence will succeed unless the court can be reasonably certain that no right-thinking member of society would quarrel with the result.’ 112 CDPA s. 37; Copyright (Librarians and Archivists) (Copying of Copyright Material) Regulations 1989 (SI 1989/1212). Different classes of library are prescribed by the Regulations in relation to different exemptions.

113, CDPA s. 37(1)(a). See J. Griffiths, ‘Copyright and Public Lending in the United Kingdom’ [1997] EIPR 499, 501.

114 CDPA ss. 38-40. ‘Prescribed library’ means those specified in Part A, Sched. 1 to the Regulations. CDPA s. 40 qualifies s. 38 and s. 39 so that it cannot be used as a mechanism to facilitate multiple copying. 115 The provisions in CDPA ss. 38-9 and s. 43 require the person requiring the copy to pay the cost price of its production.

212

8.2

COPYRIGHT

LENDING

OF WORKS

Special defences also exist where libraries lend copyright works. Section 40A provides that copyright in a work of any description is not infringed by the lending of a book by a public library if the book is eligible to be within the Public Lending Right Scheme.'!® The second defence that relates to the lending of works is found in section 40A(2). This states that copyright in any work is not infringed by the lending of copies of the work by a prescribed library or archive (other than a public library) that is not conducted for profit.

8.3

LIBRARY

COPYING

Libraries are allowed to make copies of periodical articles, or the whole or part of a published edition of a literary, dramatic or musical work in order to supply another library.''” Libraries are also able to copy from any item in order to preserve or replace material in a library’s permanent collection without infringing copyright in any literary, dramatic or musical work.!®

9 EDUCATIONAL

USES

The copying that takes place in educational institutions is governed by a complex web of provisions. In addition to the fair-dealing defences and the defences for library copying we have already looked at, the 1988 Act contains a number of defences that relate to the copying carried out by schools and other educational establishments (which includes universities and colleges of further education).!!”

9.1

COPYING

FOR

INSTRUCTION

AND

EXAMINATION

The 1988 Act contains a number of defences that relate to copying carried out for pedagogical purposes. Section 32(1) provides that copyright in a literary, dramatic, 6

Rental Directive, Art. 5. On the uncertain scope of the provision see Griffiths, ‘Copyright and Public

Lending’ [1997] EIPR 499, 502.

'17 CDPA s. 41. This does not apply if at the time the copy is made the librarian knows or could reasonably ascertain the name and address of a person entitled to authorize the making of the copy: CDPA s. 41(2). 18 CDPA s. 42. This applies to prescribed libraries and archives where the item is in the permanent collection and it is not reasonably practicable to purchase a copy for that purpose. 119 As specified by the Secretary of State under his powers under CDPA s. 174(1)(b); s. 174(3). ‘School’ is defined by reference to the Education Act 1996, the Education (Scotland Act) 1962 and the Education and Libraries (Northern Ireland) Order 1986 (SI 1986/59: NI 3). The Copyright (Educational Establishments)

(No. 2) Order 1989 (SI 1989/1068) specifies that universities, theological colleges, and various institutions providing further education are ‘educational establishments’. These provisions have been extended to apply to teachers employed by a local authority to give instruction to pupils unable to attend an educational establishment: the Copyright (Application of Provisions relating to Educational Establishments to Teachers) (No. 2) Order 1989 (SI 1989/1067).

DEFENCES

213

musical, or artistic work is not infringed if it is copied in the course of, or preparation for, instruction. This is subject to the proviso that the copying is done by the person either giving or receiving the instruction (i.e. the teacher or student), and that the copying is not done by means of a reprographic process.'”? The defence enables, for example, a student or a teacher to write out a poem in longhand without fear of infringing copyright in the work. While it is commonly said that the section is of limited value since it does not allow for reprographic copying, one issue that is unclear is whether the defence would apply to digital copying carried out for the purpose of

instruction and examination.”! A similar defence exists for copying done for the film-making courses. Section 32(2) says that the ‘copyright in a sound recording, film, broadcast or cable programme is not infringed by its being copied by making a film or film sound-track’ in the course of, or preparation for, instruction in the making of films or film soundtracks. This is subject to the proviso that the person giving or receiving the instruction does the copying. A special defence applies to copying done for the purpose of preparing or giving examinations. Copyright is not infringed by anything done for the purposes of setting exam questions, communicating the questions to the candidates, or answering the questions. This defence does not apply, however, to the making of a reprographic copy

of a musical work to be used in an exam.!”* 9.2

COPYING

SHORT

PASSAGES

IN ANTHOLOGIES

AND

COLLECTIONS

Section 33 provides that copyright is not infringed where a ‘short passage’ from a published literary or dramatic work is included in a collection that is intended for use in an educational establishment.!”* This is subject to the proviso that (i) the collection consists mainly of material in which no copyright subsists, (ii) the inclusion is acknowledged, and (iii) the inclusion does not involve more than two excerpts from

copyright works of the same author in collections published by the same publisher over any period of five years. These restrictions greatly restrict the utility of the defence.'** The defence would be used, for example, to compile a list of cases, many of which were out of copyright.

120 CDPA s. 32(1). This does not apply to subsequent dealings (sale, hire or offering for sale or hire). 121 Reprographic copying is defined in CDPA s. 178. 122

CDPA s. 32(3). On subsequent dealings with copies see CDPA s. 32(5).

123 CDPA s. 33; CA 1956 s. 6(6); CA 1911 s. 2(1)(iv). 124 The work from which the passage is taken must itself not be intended for use in an educational establishment, and no more than two excerpts from copyright works by the same author may be published in collections by the same publisher over any period of 5 years. Moreover, the collection in question must be described as being for use in educational establishments, must consist mainly of material in which no copyright subsists, and there must be a sufficient acknowledgment.

214

9.3

COPYRIGHT

PERFORMING,

PLAYING,

OR

SHOWING

WORKS

A special defence exists to protect the performing, playing, or showing of literary, dramatic or musical works before an audience consisting of teachers and pupils at an educational establishment.’ Section 34(1) operates by deeming certain performances not to be public performances and hence not to be infringements of the performing right. To fall within the defence, the performance must be before an audience consisting of teachers and pupils at an educational establishment. The performance must be carried out either by a teacher, a pupil or by any other person for the purposes of instruction. This will exempt performances, whether by students or outsiders, before students in a drama class. It does not cover pupil performances to audiences of parents.!° A similar defence exists with regard to the showing of films and broadcasts and the playing of sound recordings before an audience of teachers and pupils for the purposes of instruction.'’” While this would cover the showing of a documentary about the first moon landing to a primary-school class, it would presumably not cover school film societies since they are for pleasure and not instruction.

9.4

RECORDING

OF BROADCASTS

AND

CABLE

PROGRAMMES

Section 35 provides that in the absence of a ‘certified licensing scheme’,'** educational establishments may make a recording of a broadcast or cable programme, or a copy of such a recording for the educational purposes of that establishment.!*? As educational establishments have entered into a number of relevant certified licensing schemes,

section 35 has little practical importance.

9.55

REPROGRAPHIC

COPYING

Section 36 provides that to the extent that licences are unavailable, educational establishments may reprographically copy 1 per cent of literary, dramatic, and musical works and a typographical arrangement per quarter of a year for the purposes of instruction without infringing copyright.’*° Again, the operation of the section 36 defence is limited as a result of the fact that educational establishments have entered into a number of relevant certified licensing schemes.

125 CDPA s. 34(1).

126 CDPA s. 34(3). 127 CDPA s. 34(2). These are deemed not to be public performances. 128 CDPA s. 143.

129AEDPA $135(1):

190 CDPA's: 36.

DEFENCES

9.6

LENDING

215

OF COPIES

Copyright in a work is not infringed by the lending of copies of the work by an educational establishment.'*!

10

PUBLIC

ADMINISTRATION

The 1988 Act contains a number of defences that facilitate involvement in, and the dissemination of information about, public administration. To this end the 1988 Act

provides that copyright is not infringed by anything done for the purposes of parliamentary or judicial proceedings,’ or for proceedings of a Royal Commission or statutory inquiry.!** This means that copyright is not infringed if a barrister digitally scans a case report, or a police officer photocopies a statement for use in a trial. The 1988 Act also provides that copyright is not infringed by anything done for the purposes of reporting such proceedings.'** This means that law reports do not infringe copyright in the barristers’ statements, a defendants’ evidence, or a speech of a judge. It should be noted that these defences do not extend to the copying of the published reports of such proceedings.'*° As such, the defence does not apply, for example, to the photocopying of law reports. Special defences also enable the copying of material that is open to public inspection pursuant to a statutory requirement (this would apply to material on the patents, designs, and trade mark registries);'*° to material that is communicated to the Crown in the course of public proceedings;'*’ and, in certain circumstances, to material on public records.'**

131 CDPA s. 36A was introduced into the 1988 Act by the Related Rights Reg. 11.

132 CDPA s. 45(1); CA 1956 ss. 6(4), 9(7), 13(6), 14(9), 14A(10). 133 CDPA s. 46(2). 134 CDPA

ss. 45(2); 46(2). The latter, which relates to Royal Commissions

and statutory inquiries, is

limited to the reporting of any such proceedings held in public. 135 This would include arbitration proceedings, London & Leeds Estates v. Paribas (No. 2) [1995] 1 EGLR 102, 106. Note also Auckland Medical Aid Trust v. Commissioner of Police [1976] 1 NZLR 485 (proceedings must have commenced);

Television New Zealand v. Newsmonitor Services [1994] 2 NZLR 91, 100 (High

Court of Auckland) (extends to situation where a work is required to be reproduced so that legal advisers can properly advise client whether or not it is appropriate to commence legal proceedings or to defend proceedings which'are threatened).

136_.CDPA s. 47., 137 CDPA s. 48. 138 CDPA ss. 47 and 49. CDPA s. 50 provides a defence for acts specifically authorized by an Act of Parliament.

216

COPYRIGHT

11

CULTURAL

PRESERVATION

A number of defences aid in the preservation of cultural objects.!*? A designated nonprofit organization may record a song and make copies available for research or private study even though there is copyright in the words or music. This is subject to the proviso that the words are unpublished and are of unknown authorship.” In addition, where an article of culture or historical importance cannot lawfully be exported from the UK unless a copy of it is made and deposited in an appropriate library or archive, it is not an infringement to make that copy.'*! Finally, a recording of a broadcast or a cable programme of a designated class,'*” or a copy of such a recording, may be made for the purpose of being placed in an archive maintained by a designated body without thereby infringing any copyright in the broadcast or cable programme or in any work included in it.!*?

12

EXCEPTIONS

FOR ARTISTIC

WORKS

A number of defences exist in relation to artworks. Given that artistic works protect a broad array of subject matter from paintings and sculpture through to typefaces and industrial designs, it not surprising that these defences are similarly eclectic. In addition to the defences listed below, it should be noted that a number of defences exist in relation to industrial designs. These are discussed below.'“*

12.1

REPRESENTATION

OF WORKS

ON

PUBLIC

DISPLAY

A special defence exists in relation to the representation of artistic works on public display.'*? Section 62 provides that copyright in (a) buildings and (b) sculptures, models for buildings, and works of artistic craftsmanship if permanently situated in a public place or in premises open to the public, may be represented in a graphic work, photographed, filmed, broadcast, or cable-cast without a licence. The defence also applies to subsequent dealings of the representation. Thus, a postcard of a sculpture in 139 See above at p. 212 (ability of libraries to make copies for purposes of preservation). M40 CDPA s. 61. The making of the recording must not infringe any other copyright and must not have been prohibited by any of the performers.

41 CDPA s. 44, 142 All broadcasts other than encrypted transmissions and all cable programmes have been designated for

this purpose. 143 CDPA s. 75. The Copyright (Recording for Archives of Designated Class of Broadcasting and Cable Programmes) (Designated Bodies) Order 1993 (SI 1993/74).

144 CDPA ss. 51-3. See below at pp. 625-30. 45 See also incidental use defence in CDPA s. 31 discussed at pp. 207-8 above (but with CDPA s. 62 there is no need for the use to be incidental).

DEFENCES

217

Trafalgar Square can be reproduced and distributed without infringing copyright in the sculpture. Similarly, a film of a new building could be made or broadcast without the consent of the owner of copyright in the building. It seems that the defence applies to both private and public buildings. If so, this means that a company that was taking photographs of private homes to be stored on a database for use by real estate agents could rely upon the defence to avoid a claim for infringement of the copyright in the building. One potential problem with the defence is that section 62 says that copyright in such a work is not infringed. As such the defence would seemingly not apply to any preliminary drawings or plans that were used to create the public work. If so, it greatly reduces the scope of the defence.!*°

12.2

ADVERTISEMENTS

FOR

SALE

OF AN

ARTISTIC

WORK

Section 63 declares that it is not an infringement of copyright in an artistic work to copy it or to issue copies to the public in order to advertise the sale of the work. This means that it is permissible when selling a painting to take a photograph of the painting and to publish it in a catalogue. Section 63 serves to reconcile the conflict that may arise where the artistic work and the copyright in that work are owned by different parties. It does this by preventing the copyright owner from exercising their copyright so as to hinder the owner of the artistic work from selling it. It should be noted that subsequent uses of the copy, such as selling it, are not covered by the

defence.'*” This means that the sale of a catalogue formerly used to advertise the sale of the work is prima facie an infringement of copyright.

12.3

SUBSEQUENT

WORKS

BY THE

SAME

ARTIST

It is common practice for artists to build upon and develop earlier works they have created. A potential problem that arises for artists who sell the copyright in their works is that copyright owners may object to the artist continuing to work in the same style. Under general copyright principles, artists are able to develop the same ideas as long as they do not copy a substantial part of the expressive form of the earlier work. To ensure that owners of copyright in an earlier work are unable to stifle an artist’s ability to work in the same style, section 64 adds that an artist is able to copy their earlier works, provided they do not repeat or imitate its main design.

12.4

RECONSTRUCTION

OF BUILDINGS

Section 65 allows for the reconstruction of a building without infringement of any copyright in the building or in the original drawings or plans for it.'4* This ensures 146 Copinger, para. 9-90.

147 CDPA s. 63.

148 CDPA s. 65.

218

COPYRIGHT

that an owner of a building is able to carry out repairs without having to seek the approval of the copyright owner.

12.5

USE

OF TYPEFACES

IN THE

ORDINARY

COURSE

OF PRINTING

A special defence exists where typefaces (which are protected as artistic works) are used in the ordinary course of printing. Section 54 provides that it is not an infringement of copyright in an artistic work consisting of the design of a typeface to use the typeface in the ordinary course of printing activities. The section also provides that it is not an infringement to possess or do anything in relation to the material produced by such a use.!”

13

EXCEPTIONS

FOR COMPUTER

PROGRAMS

Special provisions in the 1988 Act, which follow from the Software Directive, govern how far it is permissible to copy and otherwise use computer programs without infringing. These defences ensure that a lawful user is able to make a back-up copy, to decompile a program for certain purposes, and to adapt or copy the program where necessary for the lawful use of the program. A recent report by European Commission on the implementation of the Software Directive concluded that overall the aims of the Directive had been achieved. The Commission did however make some comments about the way that the Directive had been implemented in the UK, which may require adjustment in the future.'°° During the passage of the Software Directive it was decided that the defences for the making of back-up copies, the decompilation of programs, and the adaptation and copying of programs for the lawful use of the program were so important that the parties should not be able to contract

out of them. In a similar vein, section

296A(1)(c) provides that where a person has use of a computer program under an agreement, any term or condition in the agreement shall be void in so far as it purports to prohibit or restrict the “use of any device or means to observe, study or test the functioning of the program in order to understand the ideas and principles which underlie any element of the program.’ One issue that may impact upon the scope of the defences relates to the question of whether computer programs are seen as databases (and thus protected under the database right). As we alluded to in our discussion of the database right, if ‘database’ is defined broadly enough it may include computer programs. If so, this will impact upon the relevance of the copyright defences. This is because there are fewer defences 149 CDPA s. 54. The typeface itself may be reproduced 25 years after the year of authorized marketing. CDPA s. 55. See J. Watts and F. Blakemore, ‘Protection of Software Fonts in UK Law’ [1995] 3 EIPR 133.

150 Report from the Commission on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs, COM (2000) 199 final (Brussels, 10 Apr. 2000), 2.

DEFENCES

219

available to a defendant in relation to infringement of the database right than are available for infringement of copyright.

13.1

MAKING

BACK-UP

COPIES

Section 50A(1) provides that it is not an infringement of copyright for a ‘lawful user’!>! of a copy of a computer program to make any back-up copy of it, which is necessary for them to have for the purpose of their lawful use.'** By enabling users to make back-up copies, it provides a form of insurance in case a computer program fails or is corrupted. Importantly section 50A(3) provides that any term or condition in an agreement that purports to prohibit or restrict an act that is permitted under section

50A is void.’ The scope of the defence will depend on when it is ‘necessary’ for a lawful user to make a back-up copy. It is likely that this will depend on factors such as the relative stability of the program (the more vulnerable the program the more the need for back-up), the environment in which the program operates, and the consequences of a program failing (it is more likely that a court will consider it necessary to make a back-up copy where the program is used for air traffic control or to assist in heart surgery than where it is a computer game).

13.2

DECOMPILATION

One of the problems facing creators of computer programs is that they have to ensure that their creations can be used in conjunction with existing products and processes. In the same way in which a manufacturer of spare parts for cars needs to ensure that their products are the appropriate size and shape, so too producers of computer programs and devices used in conjunction with existing programs need to ensure that

their products comply with the pre-existing standards. While some of this information will be generic and widely available, some of it may be hidden in the program. For a producer to ensure that their creations are compatible (or inter-operable) with pre-existing systems, they need to have access to the information that is hidden in the program. Some developers (most famously IBM) publish such information to encourage

others to construct

further application

programs

or add-on

devices,

whereas others license the information. In some circumstances, the only way in which 151 Defined as a person who has a right to use the program: CDPA s. 50A(2). In its Report on the Software Directive, the Commission said that ‘lawful acquirer’ (which was the term used in the Directive), meant a

‘purchaser, licensee, renter or a person authorized to use the program on behalfof the above’. Report from the Commission on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs COM (2000) 199 final (Brussels 10 Apr. 2000), 12. 152 The Commission said that the notion of ‘back-up’ meant ‘for security reasons’ and that the result of the wording of Art. 5(2) was that only one copy is permitted. Report from the Commission on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs COM (2000) 199 final (Brussels 10 Apr. 2000), 18.

153 CDPA s. 50A(3), s. 296A.

220

COPYRIGHT

the relevant information can be obtained is by decompiling or reverse engineering the program. The process of decompilation reduces the object code in the program to a form that approximates with the source code. The potential problem with this is that as decompilation involves intermediate copying of a program, it is prima facie an infringement of copyright.!* After considerable debate it was decided to include a defence for decompilation in the Software Directive.’° This found its way into British law via section 50B. Before looking at the defence it should be noted that the parties cannot contract out of the decompilation defence.'° It should also be noted that the importance of section 50B is reinforced by the fact that fair dealing for the purpose of research and study does not apply to the decompilation of computer programs.!*” Section 50B provides that it is not an infringement of copyright for a lawful user of a copy of a computer program expressed in a low-level language to convert it into a higher-level language (that is, to ‘decompile’ it) or incidentally in the course of converting the program, to copy it. This is subject to the proviso that:

(a) itis necessary to decompile the program to obtain the information necessary to create an independent program which can be operated with the program decompiled, or with another program (the ‘permitted’ objective); and

(b) the information permitted objective.

obtained

is not used for any purpose

other than the

These conditions will be not be met, for example, where (i) the relevant information is readily available to the lawful user, (ii) the decompilation is not confined to acts

necessary to achieve the permitted objective, (iii) the lawful user supplies the information to any person to whom it is not necessary to supply it in order to achieve the permitted objective, or (iv) the lawful user uses the information to create a program which is substantially similar in its expression to the program decompiled or to do any act restricted by copyright.!°* In its Report on the Implementation of the Software Directive, the Commission was critical of the way Article 6 had been implemented in the UK. (Article 6 sets out the decompilation exception.) In particular, the Commission said there are four reasons why section 50B may be non-conforming. First, section 50B’s use of ‘lawful user’ appears not to include a ‘person authorized on behalf of the licensee or person having a right to use a copy of the program.’ Secondly, while Article 6 mentions ‘reproduction of the code and translation of its form’, this has been implemented in

section 50B as ‘expressed in a low-level language to convert it into a higher-level language.’ Thirdly, there is no restriction in the UK to ‘parts’ of the decompiled 154 See Copinger, para. 9-61. S. Chalton, ‘Implementation of the Software Directive in the UK’ [1993] EIPR 138, 141.

155 Software Directive, Art. 6.

156 CDPA ss. 50A(3), 50B(4), 50D(2). 157 CDPA s. 29(4). 158 CDPA s. 50B(3).

DEFENCES

221

program: instead section 50B is restricted to ‘such acts as are necessary to achieve the

permitted objective’. The final criticism is that the section 50B defence is not expressly subject to the three-step test (as is required under Article 6(3) ).!°? It is possible that British courts could construe section 50B in such a way as to comply with many of the criticisms (if it was felt desirable).

13.3

COPYING

AND

ADAPTING

FOR

LAWFUL

USE

In the absence of contractual terms to the contrary, section 50C(1) allows a lawful

user of a computer program to copy or adapt it if ‘it is necessary for his lawful use’. An example of a situation where it will be necessary to copy for a lawful use is given by section 50C(2). This says that it is not an infringement for a lawful user of a copy of a computer program to copy or adapt it for the purpose of correcting errors. This defence does not apply to the making of back-up copies (section 50A), or to the decompilation of programs (section 50B).

14

EXCEPTIONS

FOR

DATABASES

Section 50D provides that it is not an infringement of copyright in a database for a 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) to do, in the exercise of that right, anything which is necessary for the purposes of access to and use of the contents of the database or of that part of the database. This means that if in the course of searching a database, the database is downloaded into the memory of a computer, this will not be an infringement. It is important to bear in mind that fair dealing for the purposes of research and study is not available for databases. This increases the relative importance of the section 50D defence. As with the defences for the making of back-up copies and decompilation, it is not possible to contract out of the section 50D defence.!

15

EXCEPTIONS

FOR WORKS

IN ELECTRONIC

FORM

Under section 56, if the purchaser of a work in electronic form (such as a computer program or an e-book) is entitled to make further copies or adaptations of the work, then unless there is an express stipulation to the contrary, so too is anyone to whom

159 Report from the Commission on the implementation and effects of Directive 91/250/EEC on the legal protection of computer programs COM(2000) 199 final (Brussels, 10 Apr. 2000), 14. 160 Database Reg. 9.

222

COPYRIGHT

the ownership of the copy has been transferred. That is, the defence applies when a back-up copy is transferred if the original copy is no longer usable. Any copies remaining with the original purchaser after transfer are infringing.'*!

16

DEFENCES

16.1

EXPIRY

FOR

OF FILM

FILMS

AND

SOUND

RECORDINGS

COPYRIGHT

As we saw earlier, one of the changes brought about as a result of the Duration Directive is that copyright in films expires seventy years from the end of the calendar year in which the death occurs of the last to die of the following: the principal director, the author of the sceenplay, the author of the dialogue, or the composer of any music specifically created.'*? One of the consequences of this is it may be difficult to determine when copyright in a film actually expires. To ensure that this uncertainty does not unduly hinder subsequent uses of the film, section 66A provides that copyright in a film is not infringed if (i) it is not possible by reasonable inquiry to ascertain the identity of any of the relevant persons and (ii) that it is reasonable to assume that the copyright has expired or that the last relevant person has been dead for over seventy years.

16.2

CHARITABLE

USES

OF SOUND

RECORDINGS

The 1988 Act provides that it is not an infringement of the copyright in a sound recording to play the sound recording as part of the activities of, or for the benefit of, a club, society or other organization.'® This is subject to the proviso that (i) the organization is not established or conducted for profit, (ii) that its main objects are charitable or are otherwise concerned with the advancement of religion, education or social welfare, and (iii) that the proceeds of any charge for admission to the place where the recording is to be heard are applied solely for the purposes of the organization.’™

17

BROADCAST

AND

CABLE

PROGRAMMES

Various acts are permitted in relation to the making, retransmission, and reception of 161 CDPA s. 56(2)—(3). See C. Millard in H. Jongen and A. Meijboom (eds.), Copyright Software Protection in the EC (1993), 224.

162 CDPA s. 13B(2). See above at p. 151.

163 CDPA s. 67(1) does not apply to musical works. 164 EDPA s. 67(2).

DEFENCES

223

broadcasts. In addition to the provisions we have already looked at in relation to

archives'® and education,'® the following defences may apply. 17.1

INCIDENTAL

RECORDING

FOR

THE

BROADCASTING

OR CABLE

PROGRAMME

A person authorized to broadcast or include in a cable-programme service a work may make a recording of it for purposes of the broadcast or cable programme.'®’ This is subject to the requirement that the recording should not be used for any other purpose and should be destroyed within twenty-eight days of first being used.'®* This ensures that any temporary copies that are made in the course of broadcasting or cable programme will not infringe.

17.2

RECORDING

FOR

PURPOSES

OF SUPERVISION

As part of the regulatory framework that governs the broadcasting industry, a number of organizations are given the task of supervising broadcast programmes. To ensure that these bodies are able to fulfil these tasks, the 1988 Act provides that supervisory bodies (such as the BBC, the Independent Television Commission, the Radio Author-

ity, and the Broadcasting Standards Commission) may make recordings of broadcast or cable programmes for the purpose of controlling broadcasting and cable programmes.'©?

17.3

“TIME-SHIFTING

Section 70 provides for the much debated time-shifting defence that allows for the private recording of broadcasts so that they may be watched at a later time. The making for private and domestic use of a recording of a broadcast or cable programme solely in order to view it or listen to it at a more convenient time does not infringe any copyright in the transmission, or of works included in the transmission.!”° This enables a person to video a programme to watch at a more convenient time. It also enables radio programmes to be taped so that they can be listened to later.

165 CDPA s. 75. 166 CDPA ss. 32(2), 34(2), 35. 167 CDPA s. 68. 168 See Phonographic Performance v. AEI Rediffusion Music [1997] RPC 729 (holding that the making of permanent recordings for the purpose of broadcast could not be treated as authorized under compulsory licence).

169), EDPAISi 69: 170 Websites may arguably be treated as cable programmes: Shetland Times v. Dr Jonathan Wills [1997] FSR 604. In that event, the time-shifting exception may provide users with significant scope for copying.

224

17.4

COPYRIGHT

FREE

PUBLIC

SHOWING

OR PLAYING

A special defence exists where a broadcast or cable programme is shown or played to a non-paying audience.'’! The defence only applies to copyright in the broadcast or cable programme or any sound recording or film included in it.” An audience will be paying if they have paid admission, or if goods or services are supplied at that place at prices which are substantially attributable to the facilities afforded for seeing or hearing the broadcast or programme, or at prices exceeding those usually charged there and which are partly attributable to those facilities.!’* Consequently, a wine bar wishing to have a television on for the benefit of customers only needs to obtain licences from the owners of copyright in literary, dramatic, or musical works that are included in the broadcast.

17.5

PHOTOGRAPHS

OF TELEVISION

BROADCASTS

The making for private and domestic use of a photograph of an image from a television broadcast or cable programme is not an infringement of copyright.!”* The exception does not extend to photographs of artistic works included in TV broadcasts or cable programmes.'”°

17.66

RECEPTION

PROGRAMME

AND

RETRANSMISSION

OF BROADCAST

IN CABLE-

SERVICE

A special defence in section 73 deals with the retransmission of broadcasts by cable operators. The defence helps to ensure that people in areas where reception of the broadcast is very poor or restricted are able to get access to programmes.!”° The defence also takes account of the fact that certain cable-programme operators are under a ‘must carry obligation.!”” Section 73 applies where a broadcast made from a place in the United Kingdom is received and immediately retransmitted in a cable-programme service. The section goes on to state that copyright in the broadcast is not infringed in two situations.!”8

(i) Where a cable operator is obliged to retransmit a broadcast under a ‘relevant '71 CDPA s. 72. The defence also excuses infringement of any copyright in any sound recording or film included in the broadcast or cable programme. However, it does not excuse any infringement of the copyright in, for example, musical works comprised in the broadcast or cable programme if no licence has been obtained. 172 CDPA s. 72(1). 173 CDPA

s. 72(2)(b). Residents or inmates and the members

of a club or society are not normally

regarded as having paid for admission.

VANEDPA $.71. 175 Tn these circumstances, it would be necessary to rely upon other defences (e.g. CDPA s. 31). 176 Copinger, para. 9-108. '7 The Broadcasting Act 1996 requires all licensed diffusion services to carry all BBC and IBA programmes. For the background see Copinger, para. 9-107.

78 CDPASi73(3).

DEFENCES

225

requirement’, but the retransmission extends outside the original broadcast area, the 1988 Act provides that there is no infringement of the copyright in the broadcast.'”” However, any work included in the broadcast is only to be treated as licensed by the owner of copyright in the work, subject to the payment of a reasonable royalty. (ii) Copyright in a broadcast is not infringed if and to the extent that the broadcast is made for reception in the area in which the cable-programme service is provided and forms a ‘qualifying service’.!*° The Act also provides that copyright in any work included in the broadcast is not infringed if and to the extent that the broadcast is made for reception in the area in which the cable-programme service is provided. However, where the making of a broadcast was an infringement of copyright in the work, the fact that the broadcast was retransmitted in a cable-programme service will be taken into account in assessing damages for that infringement.'*?

17.7

MODIFICATION

OF BROADCASTS

Section 74 allows a designated body to make copies of television broadcasts or cable programmes to provide subtitled or modified copies of TV broadcasts and cable programmes to people who are deaf, hard of hearing, or physically or mentally handicapped.'** The making and supply of such copies does not infringe any copyright in the broadcasts or cable programmes or in any work included in them.'*? This defence does not apply, however, if there is a relevant certified licensing scheme in existence.'*4

18 18.1

NOTES

OR

MISCELLANEOUS

RECORDINGS

OF SPOKEN

DEFENCES WORDS

As a result of changes introduced by the 1988 Act, it is now possible for a person who makes a speech to have copyright in the speech. This innovation gave rise to a concern that speakers would be able to use the new copyright to restrict people who record speeches (such as journalists) from making use of their recordings. To avoid this, section 58 provides that the copyright that vests in a person who makes a speech 179 CDPA s. 73(2)(a). 180 CDPA 73(2)(b). Qualifying service means a regional or national Channel 3 service, Channel 4, 5, and

S4C (both analogue and digital); the teletext service; and the television and teletext services of the BBC. CDPA s. 73(6).

181 CDPA s. 73(2). 182 CDPA s. 74. The National Subtitling Library for Deaf People has been designated for this purpose: Copyright (Subtitling of Broadcasts and Cable Programmes) (Designated Body) Order 1989 (SI 1989/ 1013).

183 CDPA s. 74(1). 184 CDPA s. 74(4)and s. 143.

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COPYRIGHT

cannot be used to restrict the use of recordings made of their speech for the purpose of reporting current events.'® For the defence to operate the recording must be a direct record of the spoken words, and the speaker must have not prohibited the

recording of their speech.'*° 18.2

PUBLIC

RECITATION

Section 59(1) provides that the reading or recitation in public by one person of a reasonable extract from a publicized literary or dramatic work does not infringe any copyright in the work so long as it is accompanied by a ‘sufficient acknowledgment’.'*” Section 59(2) provides that copyright in a work is not infringed where a recording or recitation covered by section 59(1) is included in a sound recording, a broadcast or a cable-programme service.

18.3

ABSTRACTS

Where an article on a scientific or technical subject is published in a periodical accompanied by an abstract indicating the contents of the article, it is not an infringement of copyright in the abstract or in the article to copy the abstract or issue copies of it to the public.'** This provision does not apply, however, if or to the extent that there is a relevant licensing scheme certified under section 143 of the Act.!®? As no licensing scheme has been established in this area, the defence plays an important role in ensuring the circulation of scientific information.

18.4

DIFFICULTIES

WITH

IDENTIFYING

AUTHORS

Where works are of unknown authorship, a fixed term of copyright replaces the

normal post-mortem term.'”° Similarly, in the case of films, where it is not possible to

identify any of the persons by whom the calculation of the term of protection is normally made, a fixed term operates. In both situations the possibility arises that while a user may rely on the fixed term, the author may later become known. If so, the longer conventional term would apply.!”! In order to ensure that this does not create problems, there is a defence to infringement where reasonable inquiry cannot ascertain the identity of any author of a work and it is reasonable to suppose that copyright has expired in the work.!°?

185 CDPA s. 58. Cf. CA 1911, s. 2(1)(v), 20 (political speeches at public meetings). 186 CDPA s. 58. 187 Defined in CDPA s. 178. 188

CDPA s. 60(1).

189 CDPA s. 60(2). 190 CDPA s. 12(3). S&S -—_ © 191CO CDPA ss. 12(4); 13(4). Cf. CDPA 13(9) where there is no person.

192 CDPA ss. 57, 66A.

DEFENCES

18.5

TIT-FOR-TAT

227

COPYING

The courts have refused to enforce copyright because the claimant was involved in activities similar to the defendant. In Express Newspapers v. News, Browne-Wilkinson V-C refused to enforce the copyright owned by one newspaper against a competitor who copied a story. This was because the claimant newspaper had itself indulged in a similar act of appropriation.'”* The judge explained that the claimant should not be allowed to ‘approbate and reprobate’. This is sometimes referred to as the tit-for-tat defence. It is probably better seen, however, as an exercise of the court’s judgment as to the balance of convenience in proceedings for an interim injunction, or as an exercise of the equitable discretion to refuse injunctive relief where the claimant has unclean hands. It is not a defence to an action for damages.

18.6

RIGHT

OF REPAIR

As part of the general jurisdiction to refuse to enforce copyright where it would contravene public policy, the courts have sometimes treated a person as having a right to repair their property even though to do so would be a direct or indirect reproduction of a copyright work. This was taken furthest by the House of Lords in British Leyland v. Armstrong,'** where it was held that manufacturers were entitled to make spare parts for motor vehicles (even though to do so would be to indirectly reproduce the claimant’s design drawings) so as to facilitate the repair of such vehicles. However, the defence enunciated in British Leyland has subsequenly been qualified to such an extent that it is hard to imagine any situations where it might apply. In Canon Kabushiki Kaisha,'*° Lord Hoffmann said that for the defence to apply it must be plain and obvious that the circumstances are unfair to customers and that the monopoly is anti-competitive. Soon after that decision, the scope of the repair defence was further restricted in Mars v. Teknowledge.'© There Jacob J held that the British Leyland defence could not be applied to claims for infringement of copyright in computer software or to rights in databases because those rights stemmed from exhaustive European statutory regimes.’”” The upshot of this is that the right of repair has effectively been abolished.'”*

193 194 195 196 \o

[1990] [1986] [1997] [2000]

FSR 359. RPC 279. FSR817. FSR 138.

197 Mars v. Teknowledge [2000] FSR 138 (the defence was unlikely to succeed unless the court can be reasonably certain that no right-thinking member of society would quarrel with the result). 198 See G. Llewellyn, ‘Does Copyright Recognize a Right to Repair?’ [1999] EIPR 596, 599.

228

COPYRIGHT

19

FUTURE

REFORMS

As we have already mentioned, the Information Society Directive limits the exceptions permitted in member states to a number of specific situations. Before examining the exceptions allowed in the Directive of 22 May, 2001, a number of general points should be observed. The early proposals contained a very limited catalogue of exceptions, reflecting the limited concerns of the Directive with the ‘information society’. The final version of the Directive now contains a huge list of defences, many covering the analogue environment. Of these it is only obligatory for member states to introduce a defence as regards transient or incidental acts of reproduction.'” All the other exceptions are optional. The list is exhaustive: member states may not maintain any other exceptions.”°° The Directive divides the exceptions into two categories: five that relate to the reproduction right, and fifteen that relate to both the reproduction right and the communication right. Member states are also able to extend the exceptions to cover distribution of copies ‘to the extent justified by the purpose of the authorized act of reproduction.*°! This means that where copying is permissible, member states are also able to permit the sale of those copies to the public. It should also be noted that the defences listed in the Directive are subject to the three-step test.’ That is, the defences are only available in certain specific cases and should not be interpreted so as to allow their application to be used in a manner that unreasonably prejudices the right-holders’ legitimate interests or conflict with the normal exploitation of their works. Because the list is so long, we do not propose to examine in detail all the exceptions in the Directive. However, it may be helpful to highlight a few of the provisions that are likely to have the greatest impact.

19.1

PHOTOCOPYING

In its current form, the Directive says that member states may provide a defence for the making of ‘reproductions on paper or any similar medium, effected by the use of any kind of photographic technique or by some other process having similar effects provided that right-holders receive fair compensation.’”?°> Member states are allowed to permit, inter alia, photocopying of all types of works, except published musical works.*” The defence is broader than the existing UK fair dealing for research defence in that it is not limited by purpose. It is narrower, however, in that it is subject to a ‘fair 199 See above at p. 143. 200 See Information Society Directive, Recital 32. But only to the reproduction and communication right. Defences relating to public performance, e.g. in CDPA s. 34, are unaffected. 201 Information Society Directive, Art. 5(4).

202 Jbid., Art. 5(5).

203 Tbid., Art. 5(2)(a). 204 The impact of photocopying is particularly acute in this sector.

DEFENCES

229

compensation’ requirement. The way fair compensation is achieved is left to member states.

It is not clear how the requirement of fair compensation would be implemented in the UK. In some member states, existing laws compensate copyright holders for losses from photocopying via levies raised on photocopying equipment.”” However, no such scheme exists in the UK.” It would alternatively be open to the government to make the reproduction rights subject to compulsory licences for photocopying.” It may be that neither course would be necessary because the collective licensing schemes that currently operate in the UK in relation to photocopying provide fair compensation to right-holders.7%

19.2

OTHER

REPRODUCTIONS

(INCLUDING

HOME

TAPING)

The Directive will allow member states to permit other reproductions on any medium made for the private use of a natural person and for non-commercial ends. This is ‘on the condition that the right-holders receive fair compensation’.“” This allows member states to permit home taping on traditional analogue video and audiocassette tapes. At present UK law only allows home taping for the purpose of research or private study, and for time shifting.*'° As such, it seems that the Directive may broaden the legitimate activities of users. However, the requirement of fair compensation may require the introduction of a tape or equipment levy scheme.*"! Alternatively it may require that the exception be turned into a compulsory licence. How the UK will implement the Directive waits to be seen. Previous proposals for a tape levy foundered in the face of opposition by blank tape manufacturers and interest groups representing handicapped persons (notably blind users). If the objections previously raised to a tape levy still carry weight, it is likely that the government will opt for a compulsory licensing scheme. The Directive provides that the defence should ‘take account of the application or non-application of technological measures.””!* The intent of this is not at all clear but

205 See German Copyright Act 1965, Art. 54a; Whitford Committee, para. 229-32, 59-60; G. Kolle, ‘Reprography and Copyright Law: A Comparative Study Concerning the Role of Copyright Law in the Age of Information’ (1975) 6 IIC 382.

206 Rejected by the Whitford Committee. 207 See German Copyright Act, Art. 54h(1). 208 On fair compensation, see Information Society Directive, Recital 35. 209 Thid., Art. 5(2)(b).

210 CDPA ss. 29, 70. 211 The idea of a ‘tape levy’ is that a collective agency is empowered to collect a levy that is paid by all purchasers ofblank tapes, and distribute it to the owners of the copyrights so as to compensate the copyright owners for the losses caused by domestic copying. A number of countries, including France, Germany, and Portugal have introduced a home taping levy in video- and audio-tape. See Whitford Committee, paras. 301—4. The Whitford Committee, para. 330, proposed that the UK impose such a levy on recording equipment and the 1986 White Paper one on tapes: Report of the Committee on Copyright and Designs Law (Cmnd. 6732, 1977); White Paper, Intellectual Property and Innovation (Cmnd. 9712, 1986). 212 Information Society Directive, Art. 5(2)(b).

230

COPYRIGHT

it probably means that copying should not be permitted in relation to those works that are protected by technological systems, such as encrypted broadcasts.”

19.3

REPORTING

CURRENT

EVENTS

The Information Society Directive would also permit member states to provide defences for the reproduction and communication of works or other subject matter in connection with the reporting of current events. This defence is only to be available as long as the source and, if possible, the author’s name are indicated. It is also only allowed to the extent justified by the ‘informatory purpose’: that is the purpose of providing the public with information.”"* This seems to require two minor modifications to the existing fair-dealing defence in section 30(2). First, section 30(2) should be amended to state that a dealing is only

fair if it is limited to ‘the extent justified by the informatory purpose’. Second, the requirement of ‘sufficient acknowledgment’ (which is currently limited to print-based reporting) will need to be extended to all forms of reporting.

19.4

CRITICISM

OR

REVIEW

Member states would be allowed to provide defences for quotations for purposes such as criticism or review. This is subject to the proviso that the quotations relate to a work or other subject matter that has already been lawfully made available to the public, that the source is indicated, and that their use is in accordance with fair practice and to the extent required by the specific purpose.”!° The exceptions allowed in the Directive are broader than those in section 30 of the 1988 Act in so far as the Directive speaks of quotations for purposes such as criticism or review. In other respects it is narrower. In particular, the fact that the use is limited to ‘quotations’ rather than ‘dealings’ may restrict the defence so that it cannot be used for artistic works. The requirement that the use be ‘limited to the extent required by the specific purpose’ is probably more restrictive than current interpretations of the fair-dealing defence—such as that in the Clockwork Orange case. As the defence is not to be available with respect to unpublished works, it will limit the similar but more flexible position adopted by the judiciary.

19.5

LIBRARIES

AND

EDUCATIONAL

ESTABLISHMENTS

The Directive would allow for exceptions of ‘specific acts of reproduction’ which are not for direct or indirect economic or commercial advantage by publicly accessible libraries, museums, educational establishments, and archives.”!® Examples of such acts

*13 Information Society Directive, Recital 38-9.

214 Thid., Art. 5(3)(c).

215 Thid., Art. 5(3)(d).

*16 Tbid., Art. 5(2)(c). Note Recital 42.

DEFENCES

231

would include reproduction for archiving and conservation purposes. The existing UK provisions can probably be maintained.”!” Publicly accessible libraries, museums, and educational establishments may also be

provided with a defence as regards communication or making available of works on dedicated terminals to individual members of the public for the purpose of research or private study.*'® This would seem to allow for a defence to libraries which allow members of the public to access databases in the library building. Member states are also allowed to provide defences for the reproduction and communication to the public of works for the sole purpose of illustration for teaching or scientific research. This is subject to the conditions that (i) the source is indicated

and (ii) the amount reproduced is limited to that which is ‘justified by the non-commercial purpose to be achieved’.?!°

19.6

MISCELLANEOUS

PURPOSES

Member states may also operate exceptions:

(i)

in relation to ephemeral recordings by broadcasting organizations;””°

(ii)

in relation to reproductions of broadcasts in hospitals and prisons;**!

(iii)

for the benefit of people with a disability; 222

(iv)

for public security, or for the purposes of the proper performance of an administrative or judicial procedure;””’

(v)

in relation to use of political speeches and public lectures;”**

(vi)

in relation to use during religious and political celebrations;””°

(vii) in relation to uses of artistic works permanently located in public;”° (viii) in relation to incidental use;?”” (ix)

use for advertising sale of an artistic work;””

(x)

use for the purpose of caricature, pastiche or parody;”””

(xi)

use in connection with demonstration or repair of equipment;”*

21

“N

See CDPA ss. 42, 61, 44, 75.

218 Information Society Directive, Art. 5(3)(n). 219 Tbid., Art. 5(3)(a). Note Recital 42. 220 Thid., Art. 5 (2)(d); Recital 41. co o

221

Tbid., Art. 5(2)(e).

222 Thid., Art. 5(3)(b); Recital 43. 223

w

Tbid., Art. 5(3)(e).

224 Thid., Art. 5(3)(f). 225 Tbid., Art. 5(3)(g). uw

226 Jbid., Art. 5(3)(h). 227 N Tbid., Art. 5(3)(i).

228 Ybid., Art. 5(3)(j).

229 Thid., Art. 5(3)(k).

230 Tbid., Art. 5(3)(I).

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COPYRIGHT

(xii) use in reconstruction of buildings;”*! (xiii) uses in other cases of minor importance where exceptions already exist under

national law.’ 231 Information Society Directive, Art. 5(3)(m).

232 Tbid., Art. 5(3)(o).

10 MORAL

RIGHTS

1 INTRODUCTION Once a work qualifies for copyright protection two distinct categories of rights may arise. In addition to the economic rights that are granted to the first owner of copyright, the 1988 Copyright Act also confers moral rights on the authors of certain works.! Moral rights” protect an author’s non-pecuniary or non-economic interests.° The 1988 Act provides authors and directors with the right to be named when a work is copied or communicated (the right of attribution), the right not to be named as the author of a work which one did not create (the right to object against false attribution), and the right to control the form of the work (the right of integrity). The moral rights recognized in the UK are more limited than the rights granted in some other jurisdictions where, for example, authors are provided with the right to publish or divulge a work, to correct the work, to object to the alteration or destruction of the original of a work, to object to excessive criticism of the work, and to withdraw a

work from circulation on the ground that the author is no longer happy with it (because, for example, it no longer reflects the author’s world view, or because the

person to whom the economic rights in the work have been assigned has failed to exploit it). Infringement of a moral right in the UK is actionable as a breach of a statutory duty* and will result in an award of damages. The moral rights of integrity and attribution recognized under the 1988 Act last for the same time as the copyright in the relevant work. The right to object to false attribution is less extensive, only lasting | See W. Cornish, ‘Moral Rights under the 1988 Act’ [1989] EIPR 449; R. Durie, “Moral Rights and the English Business Community’ [1991] Ent LR 40; J. Ginsburg, “Moral Rights in a Common Law System’ [1990] Ent LR 121; Copinger, ch. 11; Laddie et al., ch. 27; P. Anderson and D, Saunders (eds.), Moral Rights Protection in a Copyright System (1992). 2 The term ‘moral rights’ is derived from the French droit moral. 3 Ginsburg, ‘Moral Rights in a Common Law System’ [1990] 121. This does not mean that they cannot be used to secure economic benefits. The estate of French painter Maurice Utrillo has benefited considerably from the grant of the right to use Utrillo’s name in relation to certain paintings. See J. Merryman, ‘The Moral Right of Maurice Utrillo’ (1993) 43 American Journal of Comparative Law 445; A. Dietz, ‘The Artist’s Right of Integrity under Copyright Law: A Comparative Approach (1994) 25 IIC 177.

4 CDPA s. 103.

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COPYRIGHT

for twenty years after the author’s death.° After the author’s death, moral rights usually are exercised by his or her heirs,° but in some countries may be enforced by executive bodies such as the Ministry for Culture. The moral rights in the 1988 Act were introduced to give effect to Article 6 bis of the Berne Convention,’ which requires that members of the Union confer on authors the right of attribution and integrity. More specifically, it states that: Independently of the author’s economic rights, and even after the transfer of the said rights, the author shall have the right to claim authorship of the work, and to object to any distortion, mutilation or other modification of, or other derogatory action in relation to, the said work, which would be prejudicial to his honour or reputation.

Instead of replicating Article 6 bis verbatim, the British legislature chose to introduce a series of detailed statutory provisions, each of which contains a number of conditions, limitations, and exceptions.’ This has led commentators to suggest that the manner in which Article 6 has been implemented in the United Kingdom is ‘cynical, or at least half-hearted’.!° Given that failure to give effect to Article 6 bis

does not represent a ground of objection to the World Trade Organization,’ it is unlikely that much will come of these complaints. While moral rights have received a considerable amount of support,"! particularly

> UK law also describes a further right, that of privacy in photographs, as a ‘moral right’: CDPA s. 85. We consider this in the section on limits to exploitation in Ch. 11. Breach of confidence may provide something akin to a divulgation right: see e.g. Prince Albert v. Strange (1848) 2 De G & Smith 652 (1849) 1 MacG CC 25 (preventing unauthorized disclosure of previously unpublished artwork on grounds of common law copyright and breach of confidence). © The rights pass on death to the person nominated by testamentary disposition, or else to the person to whom copyright is being passed; otherwise they are to be exercised by personal representatives, CDPA s. 95(1). As an exception, the right against false attribution passes to the author’s personal representatives: CDPA s. 95(5).

7 While various moral rights existed in the UK prior to 1989, it was widely believed that the protection was not sufficient to meet the criteria in the Berne Convention. The Gregory Committee (1952), Cmd. 8662,

paras. 219-26 had been reluctant to introduce such rights in 1956, anticipating difficulties in their drafting. The Whitford Committee, Cmnd. 6732, paras. 51-7, impressed by the form of their implementation in Dutch law, recommended their adoption in 1977. See G. Dworkin, ‘Moral Rights and the Common Law Countries’ (1994) 5 AIPJ5, 11. 8 These were introduced at the Rome Conference in 1928. See Ricketson, paras. 8.92—8.116. Art. 6 bis was

in some ways a compromise. Durie tells us that the terms ‘honour and reputation’ were introduced in place of ‘moral interests of the author’ to satisfy objections of common law jurisdiction. Most importantly, Art. 6(2) left Union countries free to determine the conditions under which the rights were to be exercised. Durie, ‘Moral Rights and the English Business Community’, [1990] Ent LR 40; Ricketson, para. 8.98. ° CDPA ch. IV. The criticisms are that the provisions do not implement Berne; do not improve the position of authors; are, in practical terms, ineffective; and neglect the essential characteristics of moral rights. '0 Ginsburg, ‘Moral Rights in a Common Law System’, [1990] Ent LR 121, 129. 11 Cornish has suggested that the express recognition of moral rights may lay the foundation for less meagre treatment in future—particularly by penetrating judicial attitudes. Cornish, ‘Moral Rights under the 1988 Act’, [1989] EIPR 449,

'2 Although TRIPs requires members states to comply with Arts. 1 to 21 of Berne, it is notable that the agreement says that ‘Members shall not have rights or obligations under this Agreement in respect of the rights conferred under Art. 6 bis of that Convention.’

MORAL RIGHTS

235

from creators, they have also been subject to a degree of criticism.'’ At a general level, moral rights have been criticized for the fact that they are founded upon a romantic image of the author as an isolated creative genius who in creating a work imparts their personality upon the resulting work. Under this model, moral rights enable the author to maintain the ‘indestructible creational bond’ that exists between his or her personality and the work.'* The notion of the romantic author, which has become unfashionable in the second half of the twentieth century, has been criticized because

it presents an unrealistic image of the process of authorship. In particular, it has been criticized for the fact that it fails to acknowledge the collaborative and inter-textual nature of the creative process.'°

Another criticism made about moral rights focuses on what is perceived as their foreign or alien nature.'® More specially, it has been suggested that moral rights, which have their origin in continental copyright systems,'’ cannot be readily absorbed or transplanted into a common law system.'* Any attempt to do so will not only fail, it will also upset the existing copyright regimes. Moral rights have also been criticized on the basis that they represent an unjustified legal intervention into the working of the free market. Such arguments highlight the fact that moral rights typically secure authors’ interests at the expense of entrepreneurs, disseminators, and exploiters of copyright.'? Given this, it is not surprising

that while authors’ groups argue for further entrenchment of the rights (so that they are inalienable), the entrepreneurial interests lobby for further restrictions on the rights and their subjugation to voluntary market transactions.”” Another criticism 13, Dworkin, ‘Moral Rights and the Common Law Countries’, (1994) 5 AIPJ 5, 34 (opposition to moral rights has at times bordered on the hysterical). 14 Dietz, ‘The Artist’s Right of Integrity Under Copyright Law’, (1994) 25 IIC 177, 182. 15 Pp Jaszi, ‘On the Author Effect: Contemporary Copyright and Collective Creativity’ (1992) 10 Cardozo Arts and Entertainment Law Journal 293. 16 For a discussion of tension along such ‘comparative’ lines, see I. Stamatoudi, ‘Moral Rights of Authors in England: The Missing Emphasis on the Role of Creators’ (1997) 4 IPQ 478. For similar concerns see the Gregory Report. For a less caricatured approach, see G. Dworkin, ‘Moral Rights and the Common Law Countries’, (1994) 5 AIP] 5, 6.

17 The earliest French cases based moral rights on contract. However, by the end of the nineteenth century the courts recognized an artist’s moral rights in their own right. For the French and German histories, see D, Saunders, Authorship and Copyright (1992), chs. 3 and 4. For a recent statement of the position in France, P. Dulian, ‘Moral Rights in France through Recent Case Law’ (1990) 145 RIDA 126. For an exhaustive (if dated)

account, S. Stromholm, Le Droit Moral de L’Auteur en droit Allemand, Francaise et Scandinave (1966).

18 While historically, there have been those who have wished to confine copyright to the protection of an author’s pecuniary interests, they have not in general succeeded. The Engravings Act of 1735, for example, was directed, in part, to protecting an engraver against ‘base and mean’ imitations. See Gambart v. Ball (1863) 14 CB (NS) 306; 143 ER 463 (submission that Engravings Acts could not be relied on to prevent photography on grounds that the Act’s sole purpose was protection of reputation and quality, which was not diminished in a photograph, was rejected). 19 Moral rights have been characterized as limits on the ‘right of the owner of the copyright to do what he likes with his own’. Preston v. Raphael Tuck [1926] Ch 667, 674.

20 Dworkin, ‘Moral Rights and the Common Law Countries’, 5, 36 argues for ‘a fair balance between the genuine moral interests of the author and the genuine economic interests of those using and exploiting copyright works’, but his employment of the language of balance does not take the analysis very far.

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made of moral rights is that they prioritize private interests over the public interest. More specifically, it has been suggested that moral rights may inhibit the creation and dissemination of derivative creations, such as multimedia works and parodies.?! For example, if an author was to use their moral right of integrity to prevent the publication of a parody of their work, this would conflict with the right to free expression, and thus with broader public interests. With these initial points in mind, we now turn to look at the moral rights which are recognized in the UK.

2 THE RIGHT OF ATTRIBUTION (OR PATERNITY) The right of attribution or, as the statute prefers, the right of paternity is perhaps the most well known of all the moral rights recognized in the UK. In essence the right of attribution provides the creators of certain types of works with the right to be identified as the author of those works. While the right of attribution cannot be assigned, as we will see, it can be waived. The moral right of attribution lasts for the same period of time as the copyright in the relevant work.

The right to be named as author of a work carries with it a number of symbolic, economic, and cultural consequences. The reason for this is that the name of the author performs a number of different roles: it facilitates the management of intellectual works (through indexes, catalogues, and bibliographies), the channelling of royalties (for example from the Public Lending Right), the interpretation of the work (in so far as it provides a psychological or biographical history of the author), the celebration, reward, and sustainment of authorial talent or genius,” and the construction of the individual as the creator of an intellectual ‘oeuvre’. In many cases, the right

to be named as author of a work will often be unnecessary because it is in the interests of all the parties concerned in the exploitation of the work to attribute it. Where this is not the case, however, the right of attribution is potentially a very important right. Before looking at the right of attribution in more detail, it should be noted that an author may be able to rely on a number of mechanisms other than the right of attribution to ensure that they are named as author. Publishing contracts, for example, will often contain terms dealing with attribution which may be enforced against a publisher and possibly also against third parties who knowingly induce 21 J. Gaster, ‘Copyright and Neighbouring Rights in the European Information Society’, in Copyright in

Multimedia: Papers from the Aslib Conference held on 19 July 1995 (1995),

22 See R. Chartier, ‘Figures of the Author’, in Sherman and Strowell. 23 A link is frequently drawn between the right to be named and the ability to gain a reputation and make an income as an author or artist. See Tolnay v. Criterion Film Productions [1936] 2 All ER 1625.

24 Ibid. (breach of contractual stipulation to give author of a screenplay credit was held to give rise to

claims for damages for loss of advertising and publicity which would enhance the author’s reputation in the future).

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such breaches. In some circumstances, such a term might be implied into a contract.2? The right to be named as author of a work may also be ensured by other means such as union power and industry standards.”* The law of reverse passing-off might also be used to prevent another person from falsely claiming that they are the author of a work.

2.1

SUBSISTENCE

OF THE

RIGHT

OF ATTRIBUTION

In order for the right of attribution to arise it is necessary to show two things. First, it is necessary to show that the work in question is the type of work that the right applies to. Secondly, it is also necessary for the right of attribution to have been asserted.” We will deal with each of these requirements in turn. 2.1.1 Relevant works

The right of attribution is only granted to the creators of a limited number of works. More specifically, the right is only recognized in relation to original literary, dramatic, musical, and artistic works, and in films. In the case of literary, dramatic, musical, and

artistic works the right is granted to the author of the work. In the case of films, the right of attribution is granted to the director.” Within these general categories, a number of specific types of works do not give rise to a right of attribution. The right of attribution does not arise in relation to works made for the purpose of reporting current events. Nor does it apply to contributions

to a newspaper, magazine or periodical, or an encyclopedia or similar work.”? These exceptions, which are difficult to reconcile with the Berne Convention, reflect government concessions to the lobbying power of the newspaper and other publishing industries. The objections were informed by fears that the need to name the author of a work would interfere with the prompt delivery of news.*° It was also feared that in enabling an author of a news story to be named, it would undermine the image of the news as being objective and neutral. The 1988 Act also states that the right of attribution does not apply to computer

25 Miller v. Cecil Film Ltd. [1937] 2 All ER 464 (implying term that credit should not be given to person other than the plaintiff author, but not implying a term that the plaintiff should be mentioned). 26 See D. Read and D. Sandelson, ‘Credit Where Credit’s Due’ [1990] Ent L R 42.

27 The requirement of assertion and the rules governing who is bound by an assertion have the effect that the attribution right occupies a grey area between property rights and rights in personam. In many cases, third parties will be bound by the attribution right whereas an author who was forced to rely on contract law might not succeed. 28 For such works created prior to 1 Aug. 1989, see COPA, Sched. 1, para. 23(2)—(3) (the right applies:

except in the case ofafilm made before that date; and other works where the author died before that date; or

where the author had assigned the copyright before that date).

29 CDPA s. 79(6). 30 Laddie et al., para. 27.14; Copinger, para. 11-34.

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programs,*' computer-generated works,* typefaces,** and works protected by Crown or similar copyright.** No satisfactory policy-based justification has been given for denying authors of computer programs or typefaces a right of attribution. 2.1.2 The requirement of assertion The right of attribution does not arise until it has been asserted.*° Even if it has been asserted, in an action for infringement of the attribution right the courts take into account any delay in asserting the right when considering remedies.*° The imposition of the requirement of assertion is said to be justified because Article 6 bis merely requires members of the Union to confer on authors the right ‘to claim’ authorship.*” However, it has been suggested that such an interpretation is unsustainable given that Article 5(2) of the Berne Convention requires that an author’s ‘enjoyment and exercise of these rights shall not be subject to any formality.”** As the TRIPS agreement does not require that Article 6 bis of Berne be implemented, the merits of these arguments are unlikely to be tested before the WTO.°? In general, the right can be asserted in one of two ways. First, when copyright in a work is assigned, the author or director includes a statement that asserts their right to be identified.” Secondly, the right may be asserted by an instrument in writing signed by the author or director. The form of assertion has an important impact on the extent to which third parties are bound to comply with the right.*! If the first mode of assertion is chosen, it binds the assignee and anyone claiming through them, whether or not they have notice of the assertion. If the second mechanism is employed, however, the assertion only binds those who have notice of the assertion. The former is consequently the more effective mode of assertion. There seems to be no reason why an author or director should not use both methods or make a number of assertions. 31 TRIPs Art. 10 states that computer programs shall be protected as literary works under the Berne Convention. Thus while TRIPs Art. 9 does not require that members apply Art. 6 bis, it seems (somewhat counter-intuitively) that Art. 10 requires that Art. 6 bis be applied as regards computer programs. 32 Perhaps on the ground that such works do not fall within Berne that is a Union for the protection of the rights of authors: Berne Art. 1. °° CDPA s. 79(2). Typefaces are probably within the scope of Art. 2(7), which requires members only to protect such works by copyright if they do not offer protection as designs and models. Typefaces also fall under the remit of the Vienna Convention. 34 CDPA s. 79(7). Perhaps justified because of Berne Art. 2(4).

35 CDPA s. 78(1). 36 CDPA s. 78(5). 37 The requirement of assertion also helps to overcome some of the problems that may arise in tracing authors, Laddie et al., para. 27.10. 38 See Ginsburg, ‘Moral Rights ina Common Law System,’ [1996] Ent LR 121, 128. 39 It has been argued that ‘the assertion requirement will have to go when the legislation is amended and that such an amendment is already overdue.’ I. Stamatoudi, ‘Moral Rights of Authors in England’ (1997) 4 IPQ 478, 504. 40 This may be difficult because the author need not be a party to such an assignment, for example, where

he or she is not first owner. But, in such circumstances, if there is an assertion, it does not seem to matter that the author was not party to the assignment.

SESCDPA'SA78:

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Two additional modes of assertion exist in relation to artistic works.” First, the right will have been asserted if the artist is identified on the original, copy, frame, mount or

other attachment when the artist or the first owner of copyright parts with possession of the original.’ Such an assertion binds anyone into whose hands the original or copy comes (including borrowers and purchasers), whether or not the identification is still present or visible. If the work is exhibited in public thereafter, the artist should

be named.* Secondly, the right may be asserted by the inclusion of a specific statement to that effect in a licence that permits copies of the work to be made.*° This kind of assertion binds the licensee and anyone into whose hands a copy made in pursuance of the licence comes, whether or not they have notice of the assertion.”

2.2

INFRINGEMENT

The attribution right provides that when the work is dealt with in certain ways, that authors and directors have the right to be identified as author of the work. In order for the right of attribution to be infringed, it is necessary to show that: (i)

the author has not been properly identified;

(ii) the work has been dealt with in circumstances where attribution is required; and

(iii) none of the defences or exceptions applies. 2.2.1 Nature of the identification

For the attribution right to be infringed, it is necessary to show that the author has not been properly identified. In order to be properly identified, the name of the author must appear in or on each copy of the work in a clear and reasonably prominent manner.*® Where it is not appropriate for the name of the author to appear on each copy of the work, the name must appear in a manner which is likely to bring their identity to the notice of a person acquiring a copy of the work.” So long as the name

becomes apparent during its use, there does not seem to be any need for the author to be named in a way which can be ascertained prior to acquisition of the copy.” Thus, an author of a book might be named on the inside of the work. Where a performance, exhibition, showing, broadcast or cable transmission is involved, the author has the right to be identified in a manner likely to bring his or her identity to the attention of a person seeing or hearing the communication. Where the relevant work is a building, the identification should be visible to persons entering or approaching the building.”! If in asserting the right of attribution, the author specifies that a pseudonym, initials or some other form of identification such as a symbol (as the Artist-formerly42 44 46 48 50

See 491 Hansard (HL) cols. 346-56. CPDA s. 78(4)(c). CDPA s. 78(2)—(3). CDPA s. 77(7). Copinger, P Pppara. 11-16.

43 45 47 49 51

CDPA s. 78(3)(a). Described as “ill-drafted’ by Copinger, para. 11—25. CDPA s. 78(4)(d) CDPA s. 77(7)(a). CDPA s. 77(7)(b).

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known-as-Prince requires) be used, then that form of identification should be adopted.” Otherwise any reasonable form of identification may be used. It is not clear whether the attribution right gives rise to a right of anonymity, which may be valuable in raising public curiosity about the work and in protecting the author from vilification or criticism. However, it seems unlikely from the wording of the provisions that if an author made it clear that they wanted the work to be published anonymously, that this would be treated as the particular form of identification that had to be used. 2.2.2 Circumstances where attribution is required The right to be identified as author or director of a work only arises when the work is dealt with in certain ways. While the particular circumstances in which the right arises varies depending upon the type of work in question, in all cases the right applies whether the act is carried out in relation to the whole work or a substantial part thereof. An author of literary or dramatic work has the right to be identified whenever copies of the work are published commercially, or the work is performed in public or broadcast.°’ This means, for example, that the author of a play has the right to be named when copies of the play are sold in bookshops or the play is performed in public. Similarly, the writer of a filmscript has the right to be named when videos are sold to the public or the film is broadcast on television (but not, it seems, on rental copies). The right applies equally to adaptations of the work: so the author of a French novel has the right to be named on copies of an English translation. Songwriters are treated slightly differently. The author of the music or lyrics of a song has the right to be named on commercial publication of copies of the song— such as the issue of song-books, sound recordings or films containing a recording of the song. However, the right of attribution given to the author of a song does not extend to circumstances where the song is performed in public or broadcast.>> This limitation, often dubbed the disc-jockey exception, was introduced so that disc-jockeys and broadcasters would not have to name the songwriters when songs are played at discotheques or broadcast. It thus allows them to continue the current practice whereby only the name of the recording artist is mentioned.» Where a right of attribution relates to an artistic work, the artist has the right to be identified where the work is published commercially, is exhibited in public, or where a visual image of it is broadcast or included in a cable transmission. If an artwork is filmed, the artist should be identified when copies of the film are issued to the public or if the film is shown in public. The 1988 Act also specifies that the creator of a °2_CDPA s. 77(8).

oP GDPAS.77(7)(a): >4 Although the practice of renting copies of films in plain packaging is common, this does not depend upon the absence ofa right of attribution in relation to rental: for in such cases, the director of a film or the author of other works included therein will usually be identified in the film credits.

72 GDPA 5.7.72), (3),

56 This was so even though there was no specific obligation to do so. However, WPPT Art. 5 now confers moral rights on the performers of ‘live aural performances or performances fixed in phonograms’.

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building, sculpture, or work of artistic craftsmanship should be named where ‘copies of a graphic work representing it, or of a photograph of it’ are issued to the public.” The author of a work of architecture has the right to be identified on the building as constructed. If a series of buildings are made, however, the architect only needs to be identified on the first building to be constructed. The director of a film has the right to be identified whenever the film is publicly shown, broadcast or included in a cable service. The director also has the right to be named on copies of the film, but not (it seems) where the films are rented. 2.2.3 Exceptions

A number of exceptions and qualifications are placed upon the scope of the right of attribution by the 1988 Act. The right of attribution is constrained by section 79(3) which provides that if the employer or copyright owner authorized reproduction etc. of the work, then the right does not apply.°* It has been suggested that this exception can be explained on the basis that as an employer has paid for the creation of the work, they should have complete freedom to exploit it. It is also said that they should not be required to keep detailed records of who contributes to a collaborative work.” In so far as the right of attribution plays a role in the establishment of an author’s or artist’s reputation, the link between authorship and livelihood is less important when the creator is employed. The 1988 Act also provides that the right of attribution will not be infringed where the act in question amounts to fair dealing for the purpose of reporting current events by means of a sound recording, film, broadcast, or cable programme.” The 1988 Act also provides that the attribution right is not infringed where the work is incidentally included in an artistic work, sound recording, film, broadcast, or cable programme.°! Exceptions also exist where the work is used for the purposes of examinations, parliamentary or judicial proceedings, and government inquiries.” Further exceptions to the right of attribution exist in relation to works that lie at the interface between design law and copyright law. The defences to infringement of copyright granted by sections 51 and 52 of the 1988 Act also apply to infringement of the attribution right. Consequently, if a person makes an article to a design °7 CDPA s. 77(4). 8 CDRAs: 7943): 59 Laddie et al., para. 27.12. 60 CDPA s.79(4)(a). This corresponds with CDPA s. 30(2)—(3), which require ‘sufficient acknowledgment’ in cases of fair dealing for reporting current events by other means, such as in newspapers. The effect is that the fair-dealing defences parallel the moral rights provisions: fair dealings where acknowledgment is required but not provided are likely to be infringements of both the copyright and the author's moral right.

61 CDPA s. 79(4)(b). 62 The right of attribution applies to cases which would not infringe copyright because they amount to cases of fair dealing for purposes of criticism or review. However, because a finding of fair dealing requires ‘sufficient acknowledgment’ of the author, most cases of fair dealing will not infringe the moral right of attribution. These provisions relate to Berne Art. 10, which is intended to protect the author’s attribution right: see Gregory Committee, para. 42.

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document, there is no need to obtain the permission of the copyright owner, or to name the author of the design. This is also the case where twenty-five years has elapsed since an artistic work has been industrially applied. Such a time limitation fits awkwardly with the broader conception of moral rights as the personal rights of the artist. 2.2.4 Waiver

Finally, it should be noted that an author can waive his or her right of attribution. Waiver of the right of attribution, which is relevant for activities such as ‘ghost writing’, is discussed in more detail below in the context of the integrity right.

3 THE

RIGHT

TO OBJECT

TO FALSE

ATTRIBUTION

The right to object to false attribution is the oldest of the UK’s statutory moral rights.® Re-enacted in section 84 of the 1988 Act, this right is effectively the flip side of the attribution right: the right of attribution provides authors with the right to be named upon works which they have created, whereas the right to object to false attribution provides individuals with the right not to be named on works which they have not created. Unlike the right of attribution, the right to object to false attribution applies whether or not the claimant is an author. The right to object to false attribution applies to persons® wrongly named as the authors of literary, dramatic, musical, and artistic works and as the directors of films. The right of false attribution only lasts for twenty years after the death of the person who is falsely said to be the author. The right is infringed by a person who issues copies of a work to the public, or exhibits in public an artistic work on which there is a false attribution (rather than by the person who makes the false attribution). The right can also be infringed by a person who performs, broadcasts or shows the work and who knows that the

63 CDPA s. 87(2). 64 CDPA s. 84(6) re-enacts CA 1956, s. 43 which, in turn, was an expansion to literary, dramatic, and

musical works of Fine Art Copyright Act 1862, s. 7(4). Gregory Committee, para. 225. CDPA, Sched. 1, para. 22. The general transitional provision of the 1988 Act states that no act done before 1 Aug. 1989, is actionable as a violation of these moral rights, but preserves causes of action previously arising under s. 43 of the 1956 Act for violating the right against false attribution of authorship. 65 For discussion of whether the Berne Convention implicitly requires recognition of such a right see Ricketson, para. 8.105 (suggesting Berne does not cover the case where an author is seeking to deny rather than establish his or her authorship). 66 Clark v. Associated Newspapers [1998] 1 All ER 959, 964, According to Lightman J, the section confers a personal or civic right (at 965). 67 The provision does not contain the usual exceptions for computer programs or computer-generated works, so that while the author of a program has no right to be named, a person who is not the author of a program has the right not to be named as its author.

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attribution is false. Section 84(5) also provides for infringement where certain commercial acts are done with the knowledge that the attribution is false.°* Whether a work has been attributed to the wrong person depends on ‘the single meaning which the . . . work conveys to the notional reasonable reader.” There is no need for the complainant to prove that the attribution actually caused him or her any damage.” Examples of situations where the right has been violated include the attribution of a newspaper article to a member of the public written by a journalist but based on conversations between the two,’! and a newspaper parody of a politician’s diaries.”? In another decision, an author’s work was held to be falsely attributed when

it was attributed to the author after having been substantially added to by another person without their consent.”’ On this basis, it seems that a replica of a painting that included the signature of the original artist could be said to be falsely attributed, since the replica painting would not be solely made by the original artist.’ In the case of artistic works, a special provision extends the right to object to false attribution to circumstances where the work has been altered, even if that alteration only amounts to a deletion of part of the work. This would be the case, for example, where a detail is cut from a broader canvas and sold as an unaltered original.” The right would also be infringed where a black-and-white drawing was colourized.”° The right to object to false attribution of authorship is supplemented by various non-statutory causes of action, such as the action for passing off or defamation.” Under the former, a person can complain where a work is misrepresented as being by

68 CDPA s. 84(5), (6) (possessing or dealing with a falsely attributed copy of the work in the course of business or, in the case of an artistic work, dealing with it in business as the unaltered work of the artist when in fact it was altered after leaving his possession, knowing or having reason to believe that there is false attribution). 69 Clark v. Associated Newspapers [1998] 1 All ER 959, 968; [1998] RPC 261.

70 Thid., 965. 71 Moore v. News of the World [1972] 1 QB 441 (finding false attribution in a newspaper article entitled ‘How my love for the Saint turned sour by Dorothy Squires’, written in the first person by journalist on basis of conversations with Squires). It is not altogether clear whether the work was falsely attributed because Squires had not written the words, or because she had not spoken them. In the light of the changes in the 1988 Act, which confer copyright on spoker. words, it seems that a verbatim account by a journalist of a speech should not be treated as having been falsely attributed to the speaker.

72 Clark v, Associated Newspapers [1998] 1 All ER 959; [1998] RPC 261. 73 Noah v, Shuba [1991] FSR 14 (finding no false attribution of 17 words added to passage extracted from the plaintiffs work, since these words did not constitute a work, but that there was false attribution of the extract as a whole as attributed solely to the plaintiff). In effect the plaintiff succeeded in protecting his right to endorse the defendant’s services, and thus indicates a potential usefulness in the context of ‘personality merchandising’. 74 Preston v, Raphael Tuck [1926] Ch 667 (replica with no signature would not be falsely attributed). 75 CDPA s. 84(6) (introduced in response to a complaint of this sort by the English painter Landseer). For discussion of the extent of such alterations see Carlton Illustrators v. Coleman [1911] 1 KB 771 (alteration

must be material in the senses that it might affect the credit and reputation of the artist). 76 Ibid. (in a case where colour was taken to be a very important element).

77 Indeed, Fine Art Copyright Act 1862, s. 7(4) was described as ‘a kind of statutory prohibition against

what is commonly known as a passing off of the goods of one person as the goods of another’: Carlton Illustrators v. Coleman [1911] 1 KB771, 779.

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the claimant, when it is in fact the work of the defendant.”* In Ridge v. English Illustrated Magazine the defendant published a story that they attributed to the plaintiff, a well-known author, which in fact had been written by a grocer’s assistant from Bournemouth.” The court instructed the jury to find the publication to be defamatory if ‘anyone reading the story would think that plaintiff was a mere commonplace scribbler’.®°

4 RIGHT

OF INTEGRITY

The right of integrity is one of the most important of the innovations in the 1988 Act. The moral right of integrity lasts for the same time as the copyright in the relevant work. The right of integrity is the right to object to derogatory treatment of a work, or any part of it. The basis for this authorial prerogative is that the artist, through the act of creation, has embodied some element of his or her personality in the work that ought to be protected from distortion or mutilation.*! In some cases, this carries with it the corollary that the artist feels some degree of responsibility for the work.®? The desire to protect the reputation of authors was also a factor used to support the right. 4.1

SUBSISTENCE

OF THE

RIGHT

As with the other moral rights recognized under the 1988 Act, the right of integrity is given to the author of a literary, dramatic, musical or artistic work and the director of a film.*° It does not apply to computer programs nor to computer-generated works.*4 With respect to computer programs, the exclusion is justified on the basis that it may 78 Passing off requires a claimant to demonstrate not merely a misrepresentation, but also the existence of goodwill and likelihood of damage. It is broader than s. 84 in that s. 84 relies on a single meaning, whereas a misrepresentation can be established in passing off in circumstances where a substantial or large number of consumers are likely to be misled. See Clark v, Associated Newspapers [1998] 1 All ER 959. 79 Ridge v. English Illustrated Magazine [1911-16] MacG CC 91. 80 The law of defamation may apply if the attribution is false. For example, in Marengo v. Daily Sketch (1948) 65 RPC 242 (a cartoonist called KIM succeeded in a passing off action against another cartoonist using

the name KEM; Samuelson v. Producers Distributing [1932] 1 Ch (passing off by using similar title to play for

film).

81 Dietz, ‘The Artist’s Right of Integrity under Copyright Law’, (1994) 25 IIC 177, 181. 82 This is the case, for example, with Stanley Kubric’s reaction to copy-cat violence (and the resulting media coverage) that followed the release of the film he directed, A Clockwork Orange (1971). 83 CDPA s. 80(1). For such works created prior to 1 Aug. 1989, see Sched. 1, para. 23(2)—(3) (the right applies: except in the case of a film made before that date; and other works where the author died before that date; or where the author had assigned the copyright before that date). Colourization of pre-1989 black-andwhite films would not infringe the moral right ofintegrity. See Laddie et al., para. 27.21. However, in so far as the film consists of photographs ofwhich the director is the author, colourization might incur liability on the

basis of ‘false attribution’ under CDPA s. 84(6). Cf. Carlton Illustrators v. Coleman [1911] 1 KB771 (on Fine

Art Copyright Act 1862, s. 7 ). This last caveat would not apply to films made after 1956.

84 CDPA s. 81(2). See the discussion in relation to these exclusions from the right of attribution above as to whether this is compatible with Berne.

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be necessary to alter, debug, improve or modify a program to render it suitable to achieve its purpose.*° The integrity right does not apply to a work made for the purpose of reporting current events,*° to publications in newspapers, or collective works of reference such as encyclopedias.*’ In the latter case, the relevant publishers were keen to retain their power to edit or otherwise alter any submissions without

having to consult contributing authors.*® 4.2

INFRINGEMENT

OF THE

RIGHT

In order for the right of integrity to be infringed, an author or director must be able to show that: (i)

there has been a ‘derogatory treatment’ of the work;

(ii) the work has been dealt with in circumstances where the author is protected from derogatory treatment; (iii) none of the exceptions apply; and (iv) the right has not been waived or the action consented to by the author. 4.2.1 Derogatory treatment

In order for an author or director to show that the right of integrity has been breached, it is necessary to show that there has been a ‘derogatory treatment’ of their work. Before looking at the meaning of ‘derogatory’, it is necessary to explore what the Act means when it refers to a ‘treatment’ of the work. (i) Treatment. ‘Treatment’ of a work means any ‘addition to, deletion from, alteration to or adaptation of the work’. The concept of the work that is employed here is that of an autonomous artefact, which is neither born out of, tied to, or related to other works nor to its environment. Moreover, the work has its own internal integrity or logic (a beginning, middle, and end; a foreground, middleground, and background; line, shade, colour).*? For a treatment of the work to take place, it seems that the defendant must interfere with the internal structure of the work.”’ This idea of

85 Cf. Copinger, para. 11-55 (observing that inept alterations to a computer program which are still likely to be regarded as the work ofthe original author . . . may be highly damaging to his reputation). But the right of integrity for the author of a computer program is limited even in France: Dietz, “The Artist’s Right of Integrity under Copyright Law’, (1994) 25 IIC 177, 184.

86 CDPA s. 81(3). 87 CDPA s. 81(4). 88 See Copinger, para. 27-76 ff. 89 Pasterfield v. Denham [1999] FSR 168, 180. This structural approach is evident in the interpretation of the concept of ‘alteration’ under the Fine Art Copyright Act 1862, s. 7(4) in Carlton Illustrators v. Coleman {1911] 1 KB771 and Preston v. Raphael Tuck [1926] Ch 667.

90 No indication is given as to the degree of significance to be attached to changing the ‘meaning’ rather than the structure, sequence, and organization of the work. Laddie et al. para. 27.17 (actual physical treatment not as important as message).

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treatment would, it seems, cover a situation such as in Noah v. Shuba?! where seven-

teen words were added to the claimant author’s medical guide. It would also cover situations where a portion of a painting was cut from its original canvas and exhibited; a song was chopped up and inserted into a megamix,” a drawing was reproduced

in reduced size or recoloured;” or a black-and-white film ‘colourized’.* In these cases

the internal composition or structure of the work is changed. The definition of treatment that is used in the UK is narrower than is employed in Article 6 bis of the Berne Convention that requires that the author be able to object to ‘any . . . derogatory action’ in relation to a work. The broader definition used in Berne seems to acknowledge that a treatment of a work can take place even though the composition or structure of the work is not altered. Importantly it suggests that a treatment of a work can take place where the meaning and significance of the work is affected. It has been suggested, for example, that the mere act of placing a work in a new context such as the hanging of a religiously inspired artistic work alongside a piece of erotic art would probably not amount to a treatment of a work under UK law. It would, however, amount to a treatment of the work under the Berne Convention.” In the absence of much case law, we can only speculate as to which of the following scenarios would be considered to be a ‘treatment’ under UK law: placing two written works side by side in a bound volume? Changing the title of a work? Placing a book in an offensive or vulgar dust jacket?*° Placing a caption on the frame of a painting? Placing a caption beside a painting?” Placing a ribbon around the neck of a sculpture of a goose? Placing a sculpture designed for a particular location in a different location? Performing a song’s lyrics to a different tune? Performing a tragedy in a manner whereby it seems like a farce?’ Adding recordings of the claimant’s music to a film of which he did not approve?” Interrupting a film for advertising breaks?! The type of activities that will be considered to be a ‘treatment’ is further restricted 91 [1991] FSR 14. 92 Morrison v. Lightbond [1993] EMLR 144.

°3 In Tidy v. Trustees of the Natural History Museum (1998) 39 IPR 501, 503 neither party disputed that a reduction was an alteration. Cases of alteration under Fine Art Copyright Act, s. 7(4) will be clear cases of ‘treatment’: Carlton Illustrators v. Coleman [1911] 1 KB 771 (colouring of drawing) and Preston v. Raphael Tuck [1926] Ch 667. °4 Huston v. Turner Entertainment (1991) 23 IIC 702 (French Cour de Cassation) (injunction granted to

prevent television broadcast of colourized version of Asphalt Jungle). See B. Edelman, “Applicable Legislation Regarding the Exploitation of Colourized Films’ (1992) 23 IIC 629; J. Ginsburg, ‘Colors in Conflicts’ (1988) 36 Journal of the Copyright Society USA 810. °° Both Cornish (p. 313) and Dworkin and Taylor (p. 97) argue that to put an artistic work in a pornographic exhibition would not be a treatment. © Mosely v. Staley Paul & Co. [1917-23] MacG CC 341 (where such action was held to be defamatory). °7 Pasterfield v. Denham [1999] FSR 168, 180. 8 Ricketson, para. 8.107.

99 Shostakovich v. Twentieth-Century Fox Film Corp. (1948) 80 NYS (2d) 575 (failed). Apparently the claim was successful in France; Societe le Chant de Monde v. 20th Century Fox cited in Durie, ‘Moral Rights and the English Business Community’, [1991] Ent LR 40, 42. 100 T, Collova ‘Les interruptions publicitaires lors de la diffusion de films a la television’ (1990) 146 RIDA 124,

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247

by the fact that treatment is defined to exclude translations of literary and dramatic works, and arrangements or transcriptions of musical works involving no more than a change of key or register.'°' It is unclear why moral rights are deemed to be inappropriate here. One rather implausible explanation is that such acts never affect the internal structural or composition of a work.' Another possible explanation is that these activities would amount to adaptations of the work and as such require the consent of the copyright owner.'” However, it is clear that an inaccurate translation may have a negative impact upon an author of a literary work.'!™ It may be that in order to minimize the incompatibility between UK law and Article 6 bis that the courts might treat an inaccurate or poor-quality translation as if it were not a ‘translation’ at all, thus falling outside the scope of the exclusion.!™ (11) ‘Derogatory’. Once it has been shown that there has been a treatment of the work, it is then necessary to show that the treatment was ‘derogatory’. Section 80(2)(b) of

the 1988 Act states that a treatment is derogatory if it amounts to a ‘distortion’ or ‘mutilation’ of the work; or if it is otherwise prejudicial to the honour or reputation of the author.!° As yet there is little indication of what the 1988 Act means when it talks about the ‘distortion’ or ‘mutilation’ of a work.'’ There appears, however, to be a growing (if surprising) consensus that in order for a work to be distorted or mutilated, the action must be prejudicial to the honour or reputation of the author.’ The question of what the phrase ‘prejudicial to honour and reputation’ means was considered in the Canadian case of Snow v. The Eaton Centre.' Michael Snow, a 101 CDPA s. 80(2)(a). 102 See Dworkin, ‘Moral Rights and the Common Law Countries’, (1994) 5 AIP] 5, 22. 103 See P. Goldstein, ‘Adaptation Rights and Moral Rights in the UK, the US and the Federal Republic of Germany (1983) 14 IIC 43.

104 e.g. the French case of Leonide Zorine v. Le Lucernaire [1987] ECC 54. 105 There is authority that suggests that a ‘translation’ must be accurate: Wood v. Chart (1870) LR 10 Eq 193, 205; Lauri v. Renad [1892] 3 Ch 402.

106 CDPA s. 80(1), (2). 107 In Tidy v. Trustees of the Natural History Museum (1998) 39 IPR 501, 503 it was accepted that a reproduction in reduced size is not a mutilation. 108 Pasterfield v. Denham [1999] FSR 168, 182 (approving Laddie et al., para. 27.17: ‘what the plaintiff must establish is that the treatment accorded to his work is either a distortion or a mutilation that prejudices his honour or reputation as an artist’); Copinger, para. 11-42; Ricketson, para. 8.107 (otherwise concepts of distortion and mutilation could lead to problems because they appear to be ‘highly subjective’). Snow v. The Eaton Centre (1982) 70 CPR (2d) 105 (Canada) (‘I am satisfied that the ribbons do distort or modify the

plaintiffs work and the plaintiff's concern that this will be prejudicial to his honour or reputation is reasonable under the circumstances’). If this is right, then it is possible that highly distorting treatments, such as parodies, which may not be prejudicial to the author’s reputation, do not infringe the integrity right. An alternative view is that distortions and mutilations are to be treated as per se prejudicial, and that prejudice need only be proved for lesser cases of ‘treatment’. In Tidy v. Trustees of the Natural History Museum (1998) 39 IPR 501, 504 the submissions that the treatment was a ‘distortion’ was treated as an alternative to the submission that it was ‘otherwise prejudicial’. The two views largely depend on differing interpretations of the words ‘or otherwise’, but also reflect disagreement as to interpretation of the Berne Convention itself: see Ricketson, para. 8.112

109 Snow v. The Eaton Centre (1982) 70 CPR (2d) 105 (Canada).

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sculptor of international repute, created a work entitled ‘Flight-Stop’ which he sold to a shopping complex in Toronto called the Eaton Centre. The work comprised sixty geese flying in formation. The Eaton Centre tied ribbons around the necks of the geese as a Christmas decoration. Snow argued that this was prejudicial to his honour and reputation (the Canadian Copyright Act being in similar terms to the British 1988 Act).'!? Snow was adamant that his naturalistic composition was made to look ridiculous by the addition of the red ribbons, which he likened to the addition of earrings to the Venus de Milo. Snow’s views were also shared by a number of wellrespected artists and experts. Although the Eaton Centre produced another artist to deny the claim, the Ontario High Court ruled for Snow and ordered that the ribbons be removed. In so doing the court indicated that so long as they were not irrational, the author’s word on the matter would be sufficient. More specifically, O’Brien J said that the words ‘prejudicial to honour and reputation’ involved a certain subjective element or judgement on the part of the author, so long as it was reasonably arrived at. In ascertaining what is meant by the phrase ‘prejudicial to the honour or reputation of the author’, as used in the 1988 Act, British courts have shown little inclination to follow the emphasis in the Snow case. In Tidy v. Trustees of the Natural History Museum," the cartoonist Bill Tidy gave the gallery of the Natural History Museum the right to exhibit a series of black-and-white cartoons of dinosaurs he had drawn. Tidy claimed that his right to integrity in the drawings had been violated when in putting the cartoons in a book the gallery reduced the size of the cartoons from 420 mm x 297 mm to 67 mm x 42 mm and added coloured backgrounds to the black-andwhite originals. Tidy complained that the reductions had less of a visual impact, that the captions were unreadable, and that the process led to the inference that he had not been bothered to redraw the cartoons so as to ensure that they were suitable for publication in a book. In the High Court, Rattee J refused Tidy’s application for summary judgment for breach of his right of integrity, explaining that he was far from satisfied that the reductions amounted to a distortion of the drawings. The judge also suggested that in order to find the gallery’s treatment of the cartoons was prejudicial to Tidy’s honour, it was necessary to have evidence as to how the public perceived the defendant’s acts. Referring to Snow, Rattee J said that he would have to be satisfied that the view of the artist was one which is reasonably held, which ‘inevitably involves the application of an objective test of reasonableness’.!!2 Without further evidence, Rattee J said he could not see how he could draw such a conclusion.

A County Court judge has recently gone further and argued that for a treatment to be derogatory, ‘what the plaintiff must establish is that the treatment accorded to his work is either a distortion or a mutilation that prejudices his honour or reputation as an artist. It is not sufficient that the author is himself aggrieved by what has 110 CDPA s. 12(7) RSC 1970 c. C-30.

‘ll Tidy v. Trustees of the Natural History Museum [1996] EIPR D-86; (1998) 39 IPR 501 (reductions of cartoons). See also Laddie et al., para. 27.18 (court unlikely to treat author’s own reaction as determinative ) 112 Tidy v. Trustees of the Natural History Museum [1996] EIPR D-86; (1998) 39 IPR 501.

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249

occurred.”'!* Applying that test the judge took the view that certain colour variations between the original and the artwork in question (the design of a brochure), the omission of trivial matter, and the reduction in size were not derogatory. The judge added that while the changes to peripheral matters were of the kind that ‘could well be the subject of a Spot the Difference competition in a child’s comic’, it would be wrong to elevate such differences to a ‘derogatory treatment’. Despite these decisions, it is still unclear how derogatory treatment will be construed in the UK. In particular, there is still some uncertainty as to whether the question of whether a treatment is prejudicial to the honour or reputation of an author is to be judged from an objective or subjective standpoint. Under UK law one would expect that the notion of reputation used in this context would be similar to that which is employed in defamation law.'* If this were the case, one would expect that the question of whether or not conduct was prejudicial to an author’s reputation should be judged from the viewpoint of right-thinking members of society (that is, objectively). While ‘reputation’ is a familiar concept in British law, the same cannot be said for ‘honour’. If ‘honour’ is taken to refer to what a person thinks of themself (and is thus similar to the Roman law concept of dignitas), it would seem that prejudice to honour might well involve a strong subjective element.'!° This distinction might be important where a defendant parodies the claimant’s work in such a way that a member of the public would be unlikely to find that the claimant’s reputation was harmed because they would not believe the parody to be the claimant’s work.'!® Nonetheless, the claimant might nevertheless feel offended. 4.2.2 Circumstances where the author is protected from derogatory treatment The right of an author or a director to object to, or prevent, the derogatory treatment of their work only arises when the work or copies thereof are dealt with in certain

ways (section 80). While these acts vary according to the category of work involved, basically they arise where someone communicates, disseminates or otherwise renders the derogatory treatment available to the public. As a result of this requirement, the right to integrity is not a right to prevent destruction or spoliation of the work

itself.1!” In relation to literary, dramatic, and musical works the right to object to derogatory treatment is infringed when a derogatory treatment of the work is published commercially, performed in public, broadcast or included in a cable-programme service. It

113 Pasterfield v. Denham [1999] FSR 168, 182. 'l4 Ricketson, para. 8.110 (explaining that these terms were preferred to the wider concept of ‘moral or spiritual interest of the author’).

115 Laddie et al. para. 27.18 (honour refers to integrity as a human being). This is consonant with the Report of Michael Plaisant at the Brussels Conference revising Berne: see Ricketson, para. 8.110. 116 Copinger, para. 11-46. 17 Such a right has been accepted in the US Visual Artists Rights Act. At the Brussels Revision of Berne, one of the voeux adopted said that countries introduce such a prohibition. See Ricketson, para. 8.109.

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is also infringed when copies of a film or sound recording embodying the derogatory treatment are issued to the public.''* In turn, with an artistic work, the right is infringed by a person who publishes commercially or exhibits in public a derogatory treatment of the work. The right is also infringed where someone broadcasts or includes in a cable programme or shows in public a film including a visual image of a derogatory treatment of the work.!!? Further acts are specified in relation to works of architecture, sculpture, and works of artistic craftsmanship.’ In relation to films, the right of integrity is infringed whenever a derogatory treatment of the film is shown in public, broadcast, or when copies of a derogatory treatment of the film are issued to the public.'?! In addition, it should be observed that certain acts may amount to a secondary infringement of the right of integrity.!?* This will occur where in the course of business a person possesses, sells or lets for hire, offers or exposes for sale or hire, exhibits in public, or distributes an article which they know or have reason to know, is an

infringing article. In this context an infringing article means a work or a copy of a work which has been subjected to a derogatory treatment and has been, or is likely to be, the subject of any of the infringing acts in section 80. Secondary infringement only takes place if the dealing prejudicially affects the honour or reputation of the author. If the treatment itself is derogatory, it seems likely that the dissemination of the treatment will prejudice the honour or reputation of the author. 4.2.3 Exceptions and defences

A number of exceptions are placed upon the right of integrity by the 1988 Act. It is notable that there are no defences for fair dealing, nor for the design—copyright interface. Some commentators have therefore suggested that the defences are ‘unduly narrow’.!3 In the case of works created by employees,’ the right of integrity does not apply to anything done by or with the authority of the copyright owner except in two particular situations.’ The general rule, then, is that an employer can deal publicly with derogatory treatments of an employee’s work. In these circumstances, the authorial prerogative gives way to the demands of the employer for control.!”° This means, for 118

CDPA s. 80(3)(a), (b). These are identical to the occasions on which an author has a right to be

identified under CDPA s. 77(2): no differentiation is made for songs as in CDPA s. 77(3).

119 CDPA s. 80(4)(a). 120 CDPA s. 80(4)(c). 121 CDPA s. 80(6).

1227 CD PATS283: 123 Laddie et al., para. 27.27.

124 works 125 CDPA

CDPA s. 82. The same rules apply to works in which Crown or parliamentary copyright subsist and in which copyright originally vested in an international organization under CDPA s. 168. The provision refers to the circumstance where works vested in the director’s employer by virtue of s. 9(2)(a). The Copyright and Related Rights Regulations 1996 (SI 1996/2967) amended the provisions

on film authorship and ownership without altering the reference in CDPA s. 82(1)(a).

126 Dworkin, ‘Moral Rights and the Common Law Countries’ (1994) 5 AIP] 5, 27, ‘the exceptions and qualifications to moral rights . . . were attempts by the UK Government to modify . . . moral rights in the light of business reality.’

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RIGHTS

251

example, that artists who work for a design firm will not be able to use their right of integrity where their artworks are modified either by their employer or by other employees. Similarly, an employee who drafts a report will not be able to restrain publication of a version that is rewritten on behalf of the employer. The exceptions to this general position relate to circumstances where the author/ employee has been, or is to be, identified. Although the law privileges the needs of the employer and the copyright holder, those needs do not extend as far as continuing to name the employee where the work has been modified. Consequently, ‘the right does not apply to anything done in relation to such a work by or with the authority of the copyright owner unless the author or director (a) is identified at the time of the relevant act, or (b) has previously been identified in or on published copies of the work.’!’” However, even in these cases, the right of integrity is not infringed if there is ‘sufficient disclaimer’. That is, if there is a clear and reasonably prominent indication

that the work has been subjected to treatment to which the author or director has not consented. !78 There are also special defences to infringement of the moral right of integrity. In particular, the right is not infringed by anything done for the purpose of avoiding the commission of an offence (such as under the Obscene Publications Act 1959 or the

Public Order Act 1986), complying with a duty imposed by or under an enactment, or in the case of the British Broadcasting Corporation ‘avoiding the inclusion in a programme broadcast by them of anything which offends against good taste or decency or which is likely to encourage or incite crime or to lead to disorder or to be offensive to public feeling.’!”? In the case of a work of architecture, the right is limited. Where an architect is identified on a building which is subject to derogatory treatment, the architect is given the right to have their identification as architect removed

from the building.!*° 4.2.4 Waiver

Although the moral right of integrity, like the other moral rights, cannot be assigned, section 87 of the 1988 Act ensures that they can be waived by way of agreement in writing. Such waiver can be specific or general, and relate to existing or future works.

It has been said that most ‘objective observers would acknowledge that such wide waiver provisions, both in theory and in practice, erode significantly, indeed drive a coach and horses through the moral rights provisions. 13! This is because the industries that exploit copyright works tend to require authors and artists to enter standard

form contracts which require them to waive the integrity rights. Even the requirement that waiver be in writing, which provides authors with some residual protection, 127 CDPA s. 82(2). ES CDPA S178. 129 EDP AS18146),

130 CDPA s. 80(5). 131 Dworkin, ‘Moral Rights and the Common Law Countries’, (1994) 5 AIP] 5, 28. Durie, ‘Moral Rights and the English Business Community’, 40, 48, calls this ‘the greatest compromise in the Act’.

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is compromised by section 87(3) which states that the general law of contract and estoppel applies to informal waiver.

4.3

ALTERNATIVE

AND

RELATED

FORMS

OF RELIEF

If an argument based upon the moral right of integrity fails (or is dubious), an author may fall back on protection under common law or contract.!? If a work is presented as being that of the author but has been substantially altered, that representation could be defamatory. Thus in Humphries v. Thompson' a newspaper which serialized a story but changed the names of the characters and omitted and added other text was found by the jury to have defamed the author by damaging her literary reputation. Similarly, in Archbold v. Sweet,** an author successfully claimed that his reputation had been injured by the publication of a further edition of his work that contained a number of errors. The new edition would have been understood by the public to have been prepared by the author.!° Similarly there are many situations in which an author may be able to rely on contract rather than moral rights to object to derogatory treatment of their work. In Frisby v. BBC,'*° the plaintiff had written a play for the BBC, and the BBC deleted a line ‘My friend Sylv told me it was safe standing up ...” on the ground that it was indecent.'*’ The complex contractual arrangement prohibited the BBC from making ‘structural’ as opposed to ‘minor’ alterations to the script. The court decided the contract was a licence and considered whether the alteration was structural or minor. The claimant alleged that it was essential to and even the climax of the play. In contrast, the BBC claimed it was a minor deletion. Goff J granted the injunction, saying that the author ‘prima facie would appear to be the best judge’ of the significance of the line. 132 For a general review of the common law analogues to moral rights, see G. Dworkin, ‘Moral Rights: The Shape of Things to Come’ [1986] EIPR 329. 133 [1905-1910] MacG CC 148. Interestingly, the jury rejected the defendant’s arguments that any moral obliquity would attach to them, as publishers, rather than the author. 134 [1832] 172 ER 947; See also Springfield v. Thame (1903) 89 LT 242.

135. See also Ridge v. English Illustrated Magazine [1911-16] MacG CC 91 (where the defendant published a

story attributed to the plaintiff, a well-known author, but in fact written by a grocer’s assistant from Bournemouth. Instruction to jury to find defamation if ‘any one reading the story would think that plaintiff was a mere commonplace scribbler’). 136 See Frisby v. BBC [1967] Ch 932. ; 137 The defence under CDPA s. 81(6)(c) means that claimant in Frisby v. BBC would still have to rely on contract.

I] EXPLOITATION AND OF COPYRIGHT

USE

1 INTRODUCTION As we saw in Chapter 6, copyright law confers on the first owner exclusive rights over the exploitation of the work. These rights exploited in a number of ways. Most obviously, the rights enable control the sale of both the original work as well as copies of

of copyright certain are capable of being copyright owners to the work. By selling

copies of the work at an appropriate level, the copyright owner can ensure they reap a

reward sufficient to cover the costs of producing the work. This form of exploitation is most important where the market for the work is limited and the owner can easily be linked to a purchaser: as with sales of limited editions of engravings or prints by artists.

If copyright law only gave the first owner the right to exploit the work, its economic usefulness would be limited. Few authors have the financial ability, econemic acumen, or the willingness to print and sell their own works. Consequently, the law treats copyright as a form of personal property that can be exploited in a number of ways, most importantly by being assigned or licensed.’ This enables copyright to be transferred to those who can exploit it most profitably. Where this occurs the terms of the transfer-agreement will determine how the profits are to be distributed. As we will see, such transfers are often arranged in advance of the creation of a work, for example, where an author enters into a publishing contract prior to writing a book. Moreover, since some

works

can

be exploited

in a variety of ways, there may be many

assignments, licences, and sublicences. With new forms of exploitation, the web of transactions is becoming ever more complex.

One of the characteristics of the intangible property protected by copyright is that it has the potential to be used by a range of different people at the same time. For example, a sound recording can be played in numerous public places (such as pubs,

shops, and discos) simultaneously. As works are increasingly exploited in this manner, the role of licensing in exploitation becomes ever more important. In some situations the copyright owner will be able to license the use of the work by the customer directly (for example where sale of software on a floppy disc includes a licence to ! CDPA ss. 1 and 90(1).

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make the immaterial copies necessary to run the program). In other cases, owner—user relations are mediated by an agency or collective management systems. In this chapter, we look at the ways copyright can be exploited or transferred. After looking at the most important forms of exploitation, viz. assignment and licensing, we look at the transfer of copyright in the case of mortgages, bankruptcy, or death. In turn, we look at situations where the rights are exploited by way of compulsory licence. Finally, we look to the important role that collecting societies play in copyright exploitation. Before doing so, it is important to note that assignment, licence or other transac-

tion in relation to copyright is only effective if the purported assignor was able to enter the transaction. Consequently, it is important to ensure that the person entering

the transaction is the owner, or is appropriately authorized by the owner.” In this respect it should be noted that where there are joint proprietors, all of them must consent to any transaction (if it is to effect more than their own share). Particular

difficulties may arise in relation to transactions made by minors. These are only inviolable if made for the benefit of the minor. If not so made, on reaching majority, the minor can have such a transaction set aside.‘

2 ASSIGNMENT An assignment is a transfer of ownership of the copyright. As a result of an assignment, the assignee stands in the shoes of the assignor and is entitled to deal with the copyright as he or she pleases. Although an assignment may be for payment of a royalty (as well as for a fixed sum), the nature of the assignment means that if the assignee transfers the copyright to a third party, the transferee takes free of the personal agreement to pay royalties.°

It is not necessary that all of the copyright be assigned.° In contrast with other types of property, where the tendency is to simplify transfers by limiting the ways in which the rights can be divided up, copyright law takes a liberal view of what may be assigned. In particular, copyright allows partial assignments by reference to ‘times, territories and classes of conduct’.’ For example, an agreement to write a book might include an exclusive grant of all rights. In turn, the publisher might parcel out the exploitation of the work by way of hardback, paperback, newspaper serialization, 2 Beloffv.Pressdram [1973] RPC 765. 3 Powell v. Head (1879) 12 Ch D 686. * Chaplin v. Frewin (Publishers) [1966] Ch71. > Barker v. Stickney [1919] 1 KB 121 (royalty clause not enforceable against subsequent assignees but only on the basis of contract against the initial assignee). See J. Adams, ‘Barker v. Stickney Revisited’ [1998] IPQ 113 (arguing that the case was wrongly decided, in particular, that the agreement constituted a charge); Copinger, para. 5-69 (discussing role of the doctrine of mutual benefit and burden).

© CDPA s. 90(2).

? Kervan Trading v. Aktas (1987) 8 IPR 583, 587.

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USE OF COPYRIGHT

255

audiotape, reprography, electronic distribution, dramatization, translation, as well as by being filmed.’ Restrictions that are geographical in nature are subject to EC rules, so that agreements that are intended to divide up the Common Market will be prohibited.’ In order for an assignment to be valid, it must be in writing and signed by or on behalf of the assignor. It has been held that sufficient writing might be provided by an invoice or receipt.'° The assignment should identify the work concerned with sufficient clarity so that it can be ascertained, though the courts have admitted oral (‘parol’) evidence to assist in the process of identification.'’ No special form of words is required, so a transfer of “all the partnership assets’ will include a transfer of any copyright owned by the partnership.’? Assignment of copyright is a distinct legal transaction and is not effected by mere sale or transfer of the work itself.!* Thus, if a person sells an original painting or manuscript, this (of itself) only transfers the personal property right in the chattel: the copyright remains with its owner.‘ If a vendor wishes to transfer the copyright as well as the personal property in the chattel, this should be done explicitly. Where an assignment is made orally, this will be ineffective at law. However, the general equitable rule that treats a failed attempt at a legal assignment as an oral contract to assign the interest will usually apply to attempted assignments of copyright. So long as there is valuable consideration, an oral contract of this nature will be specifically enforceable.'? Where this occurs a prospective assignee will be treated as the immediate equitable owner.'® While such an equitable owner may commence an action against an infringer and secure interlocutory relief, the legal owner needs to be joined as a party before final relief can be secured.” A prospective copyright owner (usually an author) can also make assignments of future copyright. That is, they can assign the copyright in works not in existence at the time of the agreement.'® This will be useful, for example, where a painting is commissioned, or where a music publishing agreement is entered into before a songwriter creates the songs. However, it seems that the assignment of future copyright only operates where the agreement is for valuable consideration, since it is only in 8 See further Copinger, para. 27.15-16. For consideration of the limits of such parcelling see Copinger, para. 5.87. 9 IHT International

Heiztechnik

v. Ideal-Standard,

Case

C-9/93

[1994]

1 ECR

I-2789.

It seems,

geographical restrictions may not be imposed so as to subdivide the UK: Copinger, para. 5.92. Cf. British Actors Film Co. v. Glover [1918] 1 KB 299.

10 Savoury v. World of Golf [1914] 2 Ch 566. 11 Tbid. Batjac Productions v. Simitar Entertainment [1996] FSR 139, 146-7.

12 Murray v. King [1986] FSR 116, 124, 128, 130, 134-5 (FCA). 13 Cf. CDPA s. 93; CDPA s. 56. 14 Cooper v. Stephens [1895] 1 Ch 567 (supply of electro blocks for printing of copyright drawings did not assign copyright). 15 Western Front v. Vestron [1987] FSR 66, 78 (copyright a unique property).

16 Wilson v. Weiss (1995) 31 IPR 423; Ironside v. HMAG [1988] RPC 197. 17 Batjac Productions v. Simitar Entertainment [1996] FSR 139, 146-7. 18 CDPA s. 91(1) (reversing PRS v. London Theatre of Varieties [1924] AC 1).

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these circumstances that the assignee would be ‘entitled as against the whole world’.!” An assignment does not need to be registered to be valid. Priority is determined by reference to rules as to first-in-time and bona fide purchase. In the case of legal assignments, the first transfer in-time has priority over claims deriving from subsequent purported transfers of the same rights. Assignments effective in equity will only be defeated at the hands of alater bona fide purchaser for value without notice of the earlier assignment. 2.1

PRESUMED

TRANSFERS

Although transfer of ownership of copyright (or its component rights) is usually governed by contract, an important exception exists in relation to film production agreements. Where a contract concerning film production is concluded between an author and a film producer, the author is presumed to have transferred his or her rental right to the film producer.”® The presumption only operates in relation to authors of literary, dramatic, musical, and artistic works, and therefore does not apply to the director ofa film. Moreover, the presumption does not apply to the author of a screenplay, dialogue or music specifically created for and used ina film.”! The presumption is important in relation to the incorporation of pre-existing works in films, for example where the author of a novel agrees to their work being made into a film, or a musical composer agrees to their work being used in a soundtrack. The presumption can be rebutted by an agreement to the contrary, which it seems can be express or implied.

3 VOLUNTARY

LICENCES

The powers conferred on the copyright owner are most commonly employed by the copyright owner giving licences to particular individuals permitting them to carry out specified activities. At a basic level a licence is merely a permission to do an act that would otherwise be prohibited without the consent of the proprietor of the copyright.” A licence enables the licensee to use the work without infringing. So long as the use falls within the terms of the licence,”? it gives the licensee an immunity from action by the copyright owner. 19 Laddie et al., para. 13.6. 20 CDPA s. 93A. Implementing Rental Rights Directive, Art. 2(6). See Copinger, para. 5.96.

21 CDPA s. 93A(3).

22 British Actors Film Co. v. Glover [1918] 1 KB 299; Canon Kabushiki Kaisha v. Green Cartridge Co. [1997] AC 728, 735.

23 Where a licensee breaches the agreement the question arises whether there is merely an action for breach of contract or for infringement of copyright: if the act is outside the scope of the licence, it is an infringement; if the breach relates to a condition precedent for the licence, the action will also infringe (Miller v. Cecil [1937] 2 All ER 464); moreover, if the breach is sufficiently serious to amount to a repudiation of the contract, this may be accepted by the copyright owner and an action will lie for infringement of copyright as regards subsequent acts.

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USE

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In contrast with an assignment (where the assignor relinquishes all interest in the copyright), the licensor retains an interest in the copyright. Indeed, no proprietary interest is passed under a licence,” though in most circumstances a licence is binding on successors in title of the original grantor of the licence.” While the essential nature of a licence is that it is a mere permission, copyright law has developed a sophisticated repertoire of ways whereby a work might be licensed. Licences may take many forms: from a one-off permission through to an exclusive licence. Licences may be limited geographically, temporally, and in relation to specific modes of exploitation of the copyright work. For the most part, the choice of terms of a voluntary licence is up to the parties to determine. As such, they will depend on the needs, capacities, and wishes of the parties.

3.1

EXCLUSIVE

LICENCES

Of the different forms of licence, perhaps the most significant is the ‘exclusive licence’. An exclusive licence is an agreement according to which a copyright owner permits the licensee to use the copyright work. At the same time, the copyright owner also promises that they will not grant any other licences and will not exploit the work themselves. The legal consequence of this is that the licence confers a right in respect of the copyright work to the exclusion of all others including the licensor.*® In some ways it is the intangible property’s equivalent of a ‘lease’.*” While a bare licensee acquires the right not to be sued in relation to the acts set out in the licence, an exclusive licence confers on the licensee a ‘statutory procedural

status’ that is equivalent to that of the proprietor.”* Undoubtedly the most significant aspect of this is that, unlike a bare licensee, an exclusive licensee can sue infringers without having to persuade the proprietor to take action on their behalf.”” Section 101(1) of the Act declares that an exclusive licensee has the same rights and remedies in respect of matters occurring after the grant of the licence as he or she would have if the licence had been an assignment. An exclusive licensee is given the same rights as a copyright owner and therefore has the right to bring proceedings in respect of any infringement of the copyright after the date of the licence agreement. Indeed, an action can be brought by both the copyright owner and an exclusive licensee: special provisions dealing with this situation are provided for in section 102. Exclusive licences of legal interests in copyright have to be in writing and signed by or on behalf of the assignor”’ if the licensee wishes to take advantage of his statutory entitlement to

24 CBS v. Charmdale [1980] FSR 289, 295. 2° CDPA s. 90(4). 26 Cf. Sega Enterprises v. Galaxy Electronics (1998) 39 IPR 577. 27 D, Vaver, ‘The Exclusive Licence in Copyright’ (1995) 9 IPJ 163, 165 (which also reviews the history of such licences).

28 Copinger, para. 5.201.

29 The copyright owner is made party to the proceedings, if necessary by joining it as a defendant. 30 CDPA s. 90(3).

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sue for infringement.! This is in contrast to a non-exclusive licence, which may be made orally, or in writing; and might be contractual or gratuitous, express or implied.*? In practice, the grant of an exclusive licence can often be seen as equivalent to an assignment.*? Consequently, publishers are often happy to be granted exclusive licences, rather than full assignments, by authors.*4 However, there are legal differ-

ences between an assignment and an exclusive licence. The first difference arises from the fact that an assignee becomes the copyright owner, whereas an exclusive licensee does not. One of the consequences of this is that the remedies available to the exclusive licensee are limited to those that arise in an action for breach of contract against the copyright owner.*> The second difference is that the rights given to licensees are less certain and can be defeated at the hands of a purchaser in good

faith for valuable consideration and without notice (actual or constructive) of the

licence.*° Third, an exclusive licensee may not always be able to grant a sublicence or transfer the benefit of his licence to a third party.*” Fourth, the rights of an exclusive licensee may be limited by implied terms.** Finally, a copyright owner who wishes to permit another to exploit a work can retain better protection by giving an exclusive

licence.*?

In some situations it may be difficult to determine whether a copyright owner has assigned his or her copyright or merely granted an exclusive licence.” Whether a person is an exclusive licensee or an assignee is a matter of construction of the agreement. The question to be answered is whether there is evidence from which an intention to assign can be inferred. The way in which the parties describe the arrangement will be influential, but not conclusive. Use of terms such as ‘grant’, ‘sole’, and ‘exclusive rights’, and provisions on ‘retransfer’ if the copyright is not exploited, might indicate an assignment.*! However, these descriptions may be ignored if the tenor of the agreement suggests that in substance there is an assignment.** Occasionally, the courts have treated provisions concerning ‘royalties’ as suggesting that the arrangement is an exclusive licence rather than an assignment.® But in all cases the 31 CDPA s. 101. 32 Godfrey v. Lees [1995] EMLR 307. 33 Chaplin v. Frewin [1966] Ch71, 93. 34 The Publishers’ Association Code of Practice (revised and reissued 1997) recommend s that in a publishing contract the author should normally retain copyright. 35 CBS v. Charmdale [1980] FSR 289, 297.

3© CDPA s. 90(4).

37 Copinger, para. 5.196. Publishing contracts are generally non-assignable: see Laddie et al., para. 14.23. °8 e.g. in Frisby v. BBC [1967] Ch 932 (in the case of a licence the courts will more readily imply a term

limiting the right ofthe licensee to alter the work),

39 Barkerv.Stickney [1919] 1 KB 121. 40 Western Front v. Vestron [1987] FSR 66, 75. 41 Jonathan Cape v. Consolidated Press [1954] 3 All ER 253; Messager v. BBC [1929] AC 151; British Actors Film Co. Ltd. v. Glover [1918] 1 KB 299, 308. 42 Messagerv.BBC [1929] AC 151.

43° Western Front v. Vestron [1987] FSR 66, 75-6.

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court should beware of linguistic formalism and infer the intention from all the

circumstances of the case.“ 3.2

IMPLIED

LICENCES

In certain circumstances the court may see fit to imply a licence to use a copyright work. However, for the most part the courts have been reluctant to imply licences from the circumstances.*? The courts have indicated that they will normally only imply terms into a contract in two situations. First, terms may be implied ‘by law where they are ‘inherent in the nature of the contract’. Secondly, terms may be implied to fill gaps left in an agreement. However, the courts will only interfere in this way where it is necessary to provide ‘business efficacy’. In relation to terms implied by law, the court is primarily concerned with whether the contract falls into a particular class. However, that is not to say that the express terms are not important. This is because they may indicate that the parties did not intend the normal incidents of the particular class of contract to apply. The classes subject to such implied terms are not closed, and change with the necessities of the times. An Australian case has indicated that one such class of contracts concerns ‘persons who prepared written material with the intention it should be used in a

particular manner.”*° The specific terms to be implied in this class then depend upon the ‘particular purpose’. For example, where an architect provides a client with plans, the court might determine the purpose (and the extent of any licence) from the fee when viewed in the light of the standard professional fee scales operating.*” Where courts are implying terms for particular cases, they look at the existing express terms and the surrounding context. It has been said that for a term to be implied it must be reasonable and equitable, necessary to give business efficacy to the contract, obvious that it ‘goes without saying’, capable of clear expression, and must not contradict any express term of the contract.** In Ray v. Classic FM, Lightman J found that an expert in music who had been engaged by a radio station to catalogue its musical recordings had copyright in the catalogues produced. While the terms of his consultancy were silent as to copyright, the court held that he had granted an implied licence to the radio station to do certain things with the catalogues. The scope of the licence was limited to use of the material for the purpose of broadcasting in the UK. This meant that claimant’s copyright was infringed where copies were made for the purpose of exploiting the database abroad. In less formal circumstances (particularly those involving consumers) the courts 44 Tbid., 76. 45. Phillips Electronique v. BSB [1995] EMLR 472, 481; Cescinsky v. Routledge [1916] 2 KB 325, 319. 46 Acohs v. RA Bashford Consulting (1997) 37 IPR 542 (FCA). 47 Blair v. Osborne & Tompkins [1971] 2 QB 78; Stovin-Bradford v. Volpoint Properties [1971] 1 Ch 1007.

Note that Ray v. Classic FM [1998] FSR 622 treats these cases as ones where the terms are implied to give business efficacy to the agreement. 48 BP Refinery (Westernport) v. Hastings Shire Council (1977) 16 ALR 363, 376 (Lord Simon of Glaisdale) approved in Ray v. Classic FM [1998] FSR 622.

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have tended to react flexibly in deciding the nature and extent of any licence. For example, it seems that sale of an article to a consumer usually carries with it a licence to repair that article,” and sale of a knitting pattern might carry with it an implied licence to the effect that a person can make the pattern for domestic, but not commercial, purposes.” Where the licence is claimed by a competitor who could have entered formal contractual arrangements but neglected to do so, the courts have been reluctant to imply a licence.°!

4 MORTGAGES Like other forms of property, copyrights may be mortgaged, that is assigned as security for a debt.” This can be a useful technique that enables copyright owners to raise funds. It has proved to be particularly common where a work is extremely expensive to create, as in the film industry.” In this context, a mortgage is achieved by way of an assignment of the copyright by the copyright owner to the mortgagee-lender. This is subject to a condition that the copyright will be reassigned to the mortgagor when the debt is repaid (or as the law describes this as ‘redemption’). In addition, it is important that the assignment reserves for the mortgagor a right to continue selling copies of the work. This is probably best achieved by reservation of an exclusive licence.>4 Alternatively, copyright can be used as security by way of a charge. While in these circumstance there is no assignment, the chargee gains certain rights over the copyright as security.*° In the case of both forms of security, the transaction must be in writing and signed by the parties in order to be valid. A mortgage or charge by a company of its copyright must also be registered within twenty-one days of its creation with the Registrar of Companies, if it is not to be void against the liquidator or a creditor of the company.* It has been assumed that a mortgagee has the powers of proprietor and is therefore able to sue infringers,°” even though as a matter of practice, the borrower is in a better position to police infringements. ‘Securitization’ is the name given to a further way of raising money from copyright. Typically, securitization involves selling tranches of (that is defined periods of 49 Sloar Thomson v. Barton [1977] RPC 537, 560-1; Canon Kabushiki Kaisha v. Green Cartridge Co. [1997] AC 728, 735.

°° Patricia Roberts v. Candiwear [1980] FSR 352. 51 Barier v. News Group [1997] FSR 812; cf. Express Newspapers v. News (UK) [1990] FSR 359 (tit-for-tat defence).

>? Copinger, para. 5-186. >> M. Henry, ‘Mortgages and Charges over Films in the UK’ [1992] Ent L R115. °4 On the importance and delicacy ofthe terms of the licence, see M. Antingham, ‘Safe as Houses? Using Copyright Works as Security for Debt Finance’ (Mar. 1998) 78 Copyright World 31, 32. °° Copinger, para. 5-189 seems to suggest that such a charge is equitable. While there is no definitional provision equivalent to PA 1977 s. 130, there seems no reason why it should not be legal. 56 Companies Act 1985, ss. 395 and 396, °7 Hardacre v. Armstrong (1905) 21 TLR 189.

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entitlement over) the rights to royalties accruing from bundles of copyrights: a wellknown example being in relation to David Bowie’s recordings. The reasons for creating these financial arrangements stem from the desire to exchange future possible income for immediate capital, which will facilitate reinvestment of that capital in new

projects.°°

5 TESTAMENTARY

DISPOSITIONS

Because copyright is personal property, it is capable of passing on the death of the proprietor either by will or according to the rules applicable in cases of intestacy. In the case of the death of one co-proprietor, because they hold copyright as tenants in common (rather than as joint tenants), the share of the deceased co-owner passes along with the rest of their estate.°? A presumption exists that where a work is unpublished and a bequest is made of a document or other material thing containing the work, the bequest is to be construed as including the copyright in the work, in so far as the testator was the owner of the copyright immediately before his or her death.”

6

BANKRUPTCY

On bankruptcy, copyright passes to the trustee in bankruptcy by operation of law.*! Where a court appoints a receiver to sell assets, both the appointment and subsequent sales by the receiver will involve transfers ‘by operation of law’ and therefore need not comply with the formalities requirements.®* Where copyright has been assigned in return for a royalty and the assignor subsequently becomes insolvent, that right also vests in the bankrupt’s trustee in bankruptcy.”

7 COMPULSORY

LICENCES

In general, if a copyright owner chooses not to allow others to exploit their rights then that is their prerogative.’ However, in certain exceptional circumstances the law will 58 See A. Wilkinson, ‘Securitization in the Music Industry’ (Dec. 1998), 86 Copyright World 26. 59 Lauri v. Renad [1892] 3 Ch 402, 412-13. Cf. Copinger, para. 5.161. 60 CDPA s. 93 and Sched. 1, para. 30. Cf. Re Dickens [1935] 1 Ch 267. co

61

Laddie et al., para. 12.13; Copinger, para. 5.71.

62eoMurray v. King [1986] FSR 116, 124, 130, 137 (FCA).

63 PRS v. Rowland [1997] 3 All ER 336. 64 Oscar Bronner v. Mediaprint, Case C-7/97 [1998] ECR I-7791, 7811 (AG, para. 56).

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intervene to force the copyright owner to license the work and require the ‘licensee’ to pay a fee. The basis for such action varies, as do the conditions on which the law permits the copyright owner’s wishes to be overridden. Provisions of this nature are called “compulsory licences’. In jurisprudential terms, the grant of a compulsory licence converts a property rule into a liability rule. Compulsory licences can arise either as a result of various provisions in the 1988 Act or through the general powers of the European Commission. We discuss these in turn. 7.1

COMPULSORY

LICENCES

IN THE

UK

Compulsory licences are only made available under British law in a small number of specifically defined circumstances. One reason why so few non-voluntary licences exist in the UK is because the international standards that the UK has committed itself to are generally incompatible with compulsory licensing. Although two provisions of the Berne Convention explicitly permit the national legislature to grant such licences, the UK no longer takes advantages of these provisions. As regards rights in phonograms, the Rome Convention intimates that compulsory licences may only be imposed as regards the broadcasting or communication to the public of phonograms.” Another reason for the limited circumstances in which compulsory licences are

available is that they are generally seen as unsatisfactory when compared with full property rights. This is because in contrast to exclusive property rights, the existence and terms of compulsory licences require some administrative procedure, which is costly and time-consuming when compared to free-market negotiations. Critics of the compulsory licence also complain that the value of a licence can only ever be accurately determined by negotiations in the marketplace. It is also argued that compulsory licences unfairly deprive the copyright holder of the most significant element of their rights, namely the right to bargain. There are no common

characteristics that explain the circumstances

compulsory licences are granted. In some cases they are granted in practices of ‘abuse’, usually where that abuse either prevented the product for which there was a clear demand or where the evidence copyright holder had imposed unjustifiable restrictive conditions.

in which

response to past production of a showed that the On other occa-

sions, compulsory licences are granted where changes in the market conditions

unduly strengthen the copyright owner’s interest. This sort of consideration explains the introduction of compulsory licences where copyright had lapsed but has been

6 See further R. Merges, ‘Contracting into Liability Rules: Intellectual Property Rights and Collective Rights Organizations’ (1996) 84 California Law Review 1293. 66 Berne Art. 11 bis(2) (the ‘Jukebox licence’); Berne Art. 13 (aka the ‘mechanical licence’). Berne Art. 17 is

not intended to permit any general system of compulsory licences but to cover such things as the maintenance of public order and morality. See Ricketson, para. 9.72. 67 Rome Art. 12. Note also Art. 15(2).

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revived by the Duration Regulations.®* We will limit ourselves to looking at the TV

Schedules and Needle-time Licences.” 7.1.1 TV schedules

Prior to the Broadcasting Act 1990, the BBC and ITV refused to provide advance information about TV schedules. In so doing they blocked the production of comprehensive weekly television guides to compete with their own guides (TV Times and Radio Times).’° After a Monopoly and Mergers Commission Report,’! the Broadcasting Act 1990 placed specified broadcasters under a duty to supply publishers with the titles and times of programmes which were to be included in the broadcaster’s service.” More significantly the 1990 Broadcasting Act also introduced provisions into the 1988 Act entitling publishers, once certain conditions are satisfied, to reproduce that information.”? The scheme requires the publisher to attempt, in the first instance, to reach a negotiated licence. However, if that fails the publisher can apply to the Copyright Tribunal to settle the terms on which it can reproduce the schedules.” The Tribunal may make such order as it determines to be reasonable in the circumstances.”° In News Group Newspapers v. ITP,’° a number of publishers sought to clarify the amount that had to be paid where they used information about BBC and ITV schedules. The Copyright Tribunal said that its task was to promote the dissemination of information, rather than to protect the financial interests of the broadcasters as copyright owners.”’ Consequently the Tribunal held that the fee should reflect the costs to the broadcasters and the extent of use by the publishers. (This was calculated by reference to circulation and to the number of days for which the information was published, with a minimum set to ensure that the marginal costs of supply were met.) The Tribunal assessed the basic costs of the broadcasters at £125,000 each and the administrative costs at £200 per publisher. Consequently, it imposed a rate of 0.003p for each day multiplied by the circulation (with a £200 minimum per publisher). One issue that has gone largely unnoticed is the impact that the Database Regulations may have on this compulsory licence. It seems that as a result of the Regulations, television listings will only be protected by the new sui generis right (see Chapter 13). The effect of this is likely to be that the compulsory licence is no longer available in

68 Duration of Copyright and Rights in Performances Regulations 1995 (SI 1995/3297), r. 24(1). 69 See Copinger, ch. 29. 70 ITP v. Time Out [1984] FSR 64. 71 The British Broadcasting Commission and Independent Television Publications: A Report on the Policies and Practices of the BBC and ITP oflimiting the publication of advance programme information (1995) (Cmnd.

9614). 72 Broadcasting Act 1990, s. 176. 73 Tbid., ss. 175, 176 and Sched. 17. 74 Tbid., Sched. 17, paras. 2-3.

75 [bid., Sched. 17, para. 5(1). 76 [1993] RPC 173.

77 Thid., 186.

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relation to the listings, for no such licence is referred to in the Database Regulations.

However, given previous EC] case law, it seems unlikely that the television broadcasters would revert to their former practice of refusing such licences.

7.1.2 Use of sound recordings in broadcasts and cable-programme services From 1946 to 1990, the owners of copyright in sound recordings (through PPL) insisted that broadcasters should limit the amount of time that they spent playing their recordings (so called ‘needle-time’). This was done to induce such broadcasters to employ their own musicians. A Monopoly and Mergers Commission Report concluded that these restrictions were an anti-competitive practice that adversely affected radio licensees and that it should be abandoned.’* In response, the Broadcasting Act 1990 introduced provisions making a compulsory licence available against a licensing body which either imposes restrictions on the total or proportionate time in which such recordings can be played,” or imposes unacceptable terms as to payment.®° The licence is confined to uses of ‘sound recordings’. Consequently, the licence does not encompass musical works or associated lyrics embodied in the recording, which must therefore be the subject of a separate agreement with the owner of these rights.*! The administration of the scheme parallels that dealing with the right to use information about TV programmes. After complying with certain procedural formalities,®” the broadcaster may broadcast the recording. During this time, they are treated as if they had been granted a licence.** However, the broadcaster must comply with any reasonable condition imposed on them by the licensing body.** The Copyright Tribunal may make such orders as it deems to be reasonable in the circumstances. It has been held that the power to review the conditions of the licence does not enable the Tribunal to require the licensing body to grant related ancillary rights, such as the right to dub recordings,” to keep copies indefinitely,*° or to provide other stations with copies of programmes compiled by the licensee. The scope and operation of the needle-time licence can be seen in AIRC y. PPL,* the Copyright Tribunal considered the effect of the removal of needle-time restrictions on the terms of licences between PPL and the AIRC. PPL sought a substantial increase in the rates that had been determined when airplay was restricted to nine 78 Collective Licensing: A report on certain practices in the collective licensing of public performances and broadcasting rights in sound recordings (1988) (Cm. 530), esp. paras. 7.44, 7.48, 7.49.

2 CDPA s. 135A(5).

8 Introducing CDPA ss. 135A to 135G. Some minor amendments to these provisions were made by the Broadcasting Act 1996. These limitations are permissible under Rome Art. 12. 8! These will be administered in the main by the PRS.

82 CDPA s. 135B. 82. CDPA6135C(1).

84 The Tribunal has held that a requirement that a licensee identify which programmes are supplied by third parties and the identity of the supplier is reasonable: The Association of Independent Radio Companies v. Phonographic Performance [1994] RPC 143, 188-9. 85 That is to make a further copy of recorded music. 8° Phonographic Performance v. AEI Rediffusion Music [1998] RPC 335, 358. 87 The Association of Independent Radio Companies v. Phonographic Performance [1994] RPC 143.

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hours per day. PPL argued that such an increase was justified by the huge increase in the applicant’s use of its records since the rates were last set by the Tribunal. In rejecting PPL’s argument for a substantial increase the Tribunal held that, whilst the amount of needle-time was a relevant consideration in assessing payment, on the facts, the abolition of needle-time had not only worked to the benefit of the broadcasters but also to the benefit of PPL.**

7.2

COMPULSORY

LICENCES

ORDERED

BY THE

EC

Compulsory licences may also be made available by the European Commission if a copyright owner is found to have violated Article 82 EC (formerly Article 86 of the Treaty) which prohibits the ‘abuse’ of a ‘dominant position’.®? Until recently, the jurisprudence drew a distinction between acts relating to the existence of copyright which could not amount to breaches of Article 82 EC because they were assumed to fall within the protective shield of Article 295 EC (formerly Article 222 of the Treaty), and ‘exercises’ of copyright which might amount to abuses. It was therefore thought that a refusal to license a use of copyright, being an act pertaining to the existence of the right, could not amount to a violation of Article 82. That view became unsustainable after the Court of Justice’s decision in RTE and Independent Television Publications v. Commission (known as “The Magill’ case).?°

The decision in Magill arose from the practice whereby the Irish broadcasting organization (RTE), who owned copyright in its television schedules, refused to license newspapers to publish TV listings in a weekly format. The effect of this was that the only weekly guides available were those issued separately by RTE and the other broadcasting organizations (BBC and ITV). As such, if a viewer wanted to plan their television viewing for the week ahead, they would have to purchase all three magazines. Magill, who proposed to publish a comprehensive guide, claimed that the refusal to license contravened Article 82. The Commission agreed and ordered the defendant to license the listings.”! The Court of Justice, affirming the Court of First Instance’s decision, held that the

broadcasting organizations held a dominant position in the market for weekly television magazines.” The Court of Justice also agreed that the refusal to license was an abuse. The Court observed that the refusal to license an intellectual property right ‘cannot of itself constitute abuse of a dominant position’ but that ‘the exercise of an exclusive right by the proprietor may, in exceptional circumstances, involve abusive

88 [1994] RPC 143, 183-4. 89 |. Goraere, The Use and Abuse of Intellectual Property Rights (1996), 135-50.

90 [1995] 4 CMLR 18. 91 Magill TV Guide/ITP, BBC and RTE (1989) OJL 78/43. 92 [1995] 4 CMLR 18, 718 (para. 50). The EC)’s reasoning on this point has also been treated as less than fully satisfactory: T. Vinje, “The Final Word on Magill’ [1995] EIPR 297, 299. Subsequent commentaries have suggested that one distinguishing feature of Magill was that the dominance of RTE, ITV, and the BBC was in the provision of broadcasting services.

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conduct.” The Court agreed with the Court of First Instance that this was a case of abuse, because there was a specific, constant, and regular potential demand on the part of consumers for comprehensive weekly listings, which was being unmet because the appellants would only offer their own partial weekly guides. There was no ‘justification’ for this behaviour related either to broadcasting or to the publishing television magazines. The consequence of the refusal to license was that the broadcasters reserved to themselves the secondary market of weekly television guides by excluding all competition on that market. The Court of Justice emphasized the ‘exceptional’ nature of the circumstances where it would require intellectual property rights-owners to license their rights. Subsequent analysts have desperately sought to find the touchstone whereby the scope of Magill could be defined.” At its broadest, Magill appeared to suggest that where one person owns an intellectual property right which not only confers the exclusive power to control a primary market, but also some related/auxiliary market, and that right-holder refuses to supply the secondary market (or supplies it in some partial way), the Commission may order compulsory use of the intellectual property right. This might mean, for example, that a compulsory licence would be made available where a novelist refused to permit the making of a translation, or a playwright the staging of a play. At its narrowest, Magill could be confined to its own particular facts: Subsequent case law—of the European Court of Justice, the Court of First Instance, and the English High Court—suggests that those who emphasized the narrowness of the scope of application of Magill (to intellectual property rights) were probably correct.’° In Oscar Bronner v. Mediaprint®’ (the facts of which did not concern intellectual property) the ECJ reiterated that all four factors mentioned in Magill must be present: there must be a refusal to supply material which is indispensable to another’s business; that refusal must prevent the appearance of new products for which there is potential consumer demand; the refusal must not be justified by objective considerations; and the zefusal must be likely to exclude all competition in the secondary market. The mere exercise of power from a primary market into a secondary market is clearly not sufficient. Perhaps the most important of the four factors is that the material must be indispensable to the applicant’s business. This can be seen from the Court of First Instance decision in Tierce Labroke v. Commission.”* The case concerned a complaint by the proprietor of a chain of betting shops in Belgium to the effect that a refusal by 93 [1995] 4 CMLR 18, 718 (para. 50). °4 N. Jones, ‘Euro-defences: Magill Distinguished’ [1998] EIPR 352. 95 R. Greaves, ‘Magill est Arrivé’ [1995] ECLR 244, 245-6.

96 In Phillips Electronics NV v.Ingman [1999] FSR 112 Laddie J observed that Magill might not apply in the

same way to all intellectual property rights. More specifically, he observed that in Magill ‘what was being considered were the rights in a sub-species of copyright.’ 97 Case C-7/97 [1998] ECR I-7791. (Refusal by one newspaper to allow a competitor to utilize its home delivery service not an abuse of dominant position.) 98 Case T-504/93 [1997] ECR II-923 (appeal pending, Case C-300/97P).

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the owner of rights in certain televised pictures of French horseraces to allow retransmission in the applicant’s betting shop amounted to a breach of Article 82 EC (then Article 86 of the Treaty). The Court of First Instance held that there was no such

abuse. It said that the relevant market in which the defendant had dominance was the retransmission of broadcasts of horseraces, and that the complainant’s market was that of betting shops. However, while the refusal to license the complainant was an exercise of power from a primary market into a secondary market, the case differed from Magill in that the secondary market already operated and the refusal to license in no sense prevented the defendant from operating in it. Indeed, it already had the largest share of that market. The provision of pictures was not essential for the applicant’s activity nor was the applicant proposing to introduce a new product for which their was ‘specific, constant and regular potential demand on the part of consumers’. It seems that it will be only in the rarest of cases that suitable conditions will exist to warrant the operation of the Magill principle. The Advocate General, Francis Jacobs, in his opinion in Oscar Bronner gave several reasons for this. First, he observed that Community law endorses the right to choose one’s trading partners and freely dispose of one’s property, and incursions on those rights requires careful justification.” Secondly, he noted that the justification for Article 82 is to prevent distortion of competition so as to safeguard the interests of consumers, not to protect the position of competitors as such. Thirdly, he observed that intellectual property rights are themselves limited so as to balance the interests of free competition with the need to provide incentives for research and development, and creativity. Because the process

of balancing occurs at the stage of delineating the right, refusal to license should not—in the absence of other factors—constitute an abuse.'°

8 COLLECTING

SOCIETIES

One of the central problems facing copyright owners who wish to exploit their works is how to monitor or police infringements. Where the main form of copyright was the book and the main mode of exploitation the sale of printed copies, this policing (typically undertaken by a publisher) was ad hoc and depended on monitoring activities in the marketplace. However, as copyright expanded to encompass a wider array of subject matter and (particularly ephemeral) uses, the problems of policing copyright have changed. One of the main mechanisms developed by copyright owners to monitor infringement has been collective systems of management and enforcement of rights, in particular, the ‘collecting society’.'°! 99 Case C-7/97 [1998] ECR I-7791, 7811 (para. 56); 7812 (para. 62).

100 Case C-7/97 [1995] 4 CMLR 718, 789 (para. 47). But refusing to allow parallel importation may be an abuse: Microleader Business v. EC, T-198/98 [2000] All ER (EC) 361.

101 For commentary, see Copinger, ch. 28; Laddie et al., paras. 15.14—-15.38.

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Collective administration is a system whereby certain rights are administered for the benefit of authors and/or copyright owners. The organizations that administer the rights are empowered to authorize various specified uses of their members’ works, normally by way of a licence.' The essential characteristic of these arrangements is that they are able to negotiate and act without individual consultation. In most cases the copyright owner assigns their rights to the society. Where this occurs the rights are pooled so as to create a repertoire of works at the disposal of potential users. The main UK collecting societies are: The Performing Right Society (PRS), formed in 1914, which administers as assignee the performing, broadcasting, and cable diffusion rights in music and lyrics. PRS annual income from all sources is in the region of £200 million.!

The Mechanical-Copyright Protection Society (MCPS), formed in 1924, which administers as agent the ‘mechanical rights’ in music and lyrics that is the right to make a sound recording (part of the reproduction right). Phonographic Performance Limited (PPL), formed in 1934, which administers as

assignee the performing, broadcasting, and cable diffusion rights in sound recordings. Video Performance Limited (VPL), which administers, as agent, the performing, broadcasting, and cable diffusion rights in relation to videos. Authors’ Licensing and Collecting Society (ALCS), formed in 1977, which, inter alia, collects fees for writers from the retransmission by cable of all terrestrial channels.

Copyright Licensing Agency (CLA), formed in 1982, represents authors’ and publishers’ licensing societies (including ALCS) with regard to reprographic reproduction. It enters blanket licences with educational authorities and universities, as well as

administering a ‘rapid clearance scheme’ for university ‘study-packs’ falling outside the terms of the site licence.

The Design and Artists’ Copyright Society (DACS), formed in 1983, administers, as agents, the reproduction rights for painters, printmakers, sculptors, and photographers. Educational Recording Agency (ERA), and Open University Educational Enter-

prises which license educational establishments to record off-air under schemes which have been certified.!™

102 M. Freegard, ‘Collective Administration’ (1985), Copyright 443. A similar definition can be found in

Satellite and Cable Directive, Art. 1(4). Note also the definition of ‘licensing body in CDPA s. 116(2).

103 On the history of the PRS, see T. Ehrlich, Harmonious Alliance: A History of the Performing Right Society (1989). For details of the PRS see http://www.prs.co.uk. 104 CDPA s. 35; Copyright (Certification of Licensing Scheme for Educational Recording of Broadcasts) (Educational Recording Agency) Order 1990 (SI 1990/879, as amended by SI 1996/191), and Copyright (Certification of Licensing Scheme for Educational Recording of Broadcasts) (Open University Educational

Enterprises Ltd.) Order 1993 (SI 1993/2755 as amended by SI 1996/190).

EXPLOITATION

8.1

AND

USE

OF COPYRIGHT

269

ORGANIZATION

As collecting societies are private organizations that have emerged in response to particular commercial environments, there is no great uniformity to their organizational structures. Nevertheless, it is worth considering the different dimensions of some of the existing societies.

8.1.1 Membership terms In terms of copyright owner-society relations, the relevant relationship will be determined in the membership agreement and the rules of the society. To ensure that each collecting society is capable of licensing the relevant right on behalf of the copyright ~ owner, the owner has to assign the right to the society or appoint the society as its

agent. The scope of any such assignment or agency will depend on the proposed function of the society. For example, a copyright owner joining the PRS is required to assign the ‘small rights’ relating to non-dramatic performances. The ‘grand rights’ relating to dramatic performances, which are not included, are administered by individual agreements. The rules of a society might also make provision for a member to assign rights in relation to works not in existence at the time of joining. A society may have different categories of membership (for example, author members and publisher members). As a member, a copyright owner will have power to vote at meetings and thus to influence the way the society operates. A collecting society will distribute any licensing revenues it collects in accordance with the rules of the society. Usually this will involve some kind of sampling mechanism that enables the society to estimate the amount that each member is proportionally entitled to. A society will usually first deduct its administration expenses. In some jurisdictions a portion of the revenue is used for ‘cultural purposes’ (for example to fund indigenous music culture in the country making the deduction) and for pension and welfare payments.'® Provisions exist within the rules of a society specifying the circumstances in which a person may leave the society, which will usually require a substantial period of notice. 8.1.2 Licensing arrangements

The collecting societies enter into negotiations with copyright users, either as associations of users or on an individual basis. Negotiations with associations of users will often result in the establishment of tariffs.'°° Sometimes a society—user agreement will cover more than just a licence fee. Some associations of users will involve themselves in ensuring that licence fees are paid by their members, or help in other ways in the

105 See A. Harcourt, ‘The Unlawful Deduction Levied upon UK Composers’ Performing Rights Income’ (Oct. 1996) 64 Copyright World 15 (criticizing the practice of European performing rights societies in deducting up to 10% of income in this way). 106 e.g. at sports grounds where music is played incidentally the PRS receives a rate of £1.56 per 1000

persons admitted; whereas for pop concerts the PRS charges 3% of box-office receipts. See BSB v. PRS [1998] RPC 467 (para. 4.29).

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COPYRIGHT

administration in return for a reduced tariff. Although the terms of licences will vary, it is common for collecting societies to grant a ‘blanket’ licence entitling users to use any work in the repertoire of the licensing body without restriction.!”

8.2

ASSESSMENT

At a practical level, collecting societies are a convenient way of resolving some of the difficulties faced by copyright owners and users in reaching appropriate arrangements.'* Collecting societies are useful in so far as they provide users with a focal point to locate and transact with copyright owners. Collecting societies reduce the ‘transaction costs’ that would otherwise exist in ascertaining and negotiating individual licences with individual copyright owners. This is particularly important where a user wishes to utilize a large number of copyright works, so that

transacting on an individual basis would be time-consuming and costly.! More-

over, where the society grants a user a blanket licence, this offers users a degree of flexibility. For example, where a blanket licence is granted to a disco or a radio station, it means that they do not need to determine in advance the works they are going to play. For the copyright owner, collective administration relieves an otherwise impossible burden of policing and enforcing rights. It also provides copyright owners with a bargaining power that they would not possess as individuals. Moreover, the possibility of collective administration has enabled owners to argue for the extension of rights in relation to subject matter that might not otherwise have been protected on the basis that it was unenforceable. Probably the most interesting thing about collecting societies is the way in which their emergence represents a significant shift in the character of copyright. As Thomas Streeter has observed, with collective administration copyright loses much of its character as a property right exploited through distribution of copies bought and sold in the marketplace. Instead, copyright becomes more like the legal underpinning of an institutional bureaucracy that attempts to simulate a market through statistical mechanisms. Each copyright loses its individuality and the ‘property form’ is replaced by a liability form. In effect, collecting societies turn an author’s property right into a right to receive welfare payments and a user’s licence fee into a tax upon

their activities,!!°

107 While the MCPS operates a blanket licence for re-recordings, first recording requires individual licensing: BPI v. MCPS [1993] EMLR 86, 139.

108 G. Davies, ‘The Public Interest in Collective Administration of Rights’ (1989) Copyright 81. 109 J. Fujitani, ‘Controlling the Market Power of Performing Rights Societies: An Administrative Substitute

for Antitrust Regulation’ (1984) 72 California Law Review 103, 106 (breaking down the transaction costs in

identifying and locating the copyright owner, obtaining the information necessary to negotiate a price, and

transaction time costs).

110 T. Streeter, ‘Broadcast Copyright and the Bureaucratization of Property’ (1992) 10 Cardozo Art & Entertainment Law Journal 567, 570, 576.

EXPLOITATION

8.3

INTERNATIONAL

AND

USE

OF COPYRIGHT

271

DIMENSIONS

Although collecting societies tend to operate at the national level, they form part of a global network of collecting agencies. For example, while performing rights are administered in the UK by the PRS, there are equivalent societies in the US (BMI, ASCAP), Australia (APRA), Germany (GEMA), France (SACEM), Belgium (SABAM),

and so on. Typically, there will be ‘reciprocal representation contracts’ between national copyright management societies.'!! Under these arrangements, one national society (A) undertakes, on a reciprocal basis, to manage the rights attached to the repertoire of a foreign society (B) within its sphere of operation, normally its national territory. The society (A) collects royalties on behalf of the foreign society (B), pursues infringers, takes any necessary proceedings in respect of infringement and transfers sums collected to (B). Effectively, these agreements can mean that a particular national society controls within the territory the entire world repertory of works. 111 See Copinger, para. 28-25.

ly LIMITS

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EXPLOITATION

1 INTRODUCTION The terms and conditions under which a copyright work is transferred or exploited are usually determined contractually by the parties. In this chapter we look at the exceptional situations where the law controls the way those rights are exploited. As we will see, sometimes these limits are designed to prevent a copyright owner from losing their rights. In other cases, the law may step in to stop a copyright owner from abusing their rights. We begin by looking at the various mechanisms that are used to regulate contracts between authors and entrepreneurs. We then go on to look at the impact

that British and European competition law has on the copyright owner’s ability to exploit their copyright. In turn we look at the ways in which copyright contracts are regulated in respect to users of copyright. Finally, we look at the various controls that are imposed on collecting societies. Before looking at these, it is important to note that there are many other restrictions placed on the owners’ ability to exploit and use the copyright work that we will not look at here.’ Although copyright is described as a ‘property right’ and therefore might be expected to give absolute dominion, copyright law operates as an exclusionary right: it prevents all parties (other than the copyright holder) from exploiting the work. Copyright does not, however, confer any positive rights on the proprietor of the copyright to make and sell copies of the work. Consequently, the copyright owner will be subject to the regulatory regimes in the field in question (relating for example to the showing of films or broadcasts) and criminal laws (such as obscenity or public order). Another factor that may affect the ability of a copyright owner to exploit a work are the rights that exist in any underlying works. For example, where the owner of the copyright in an English translation of a French novel wishes to exploit the copyright in the translation, it will be necessary for them to obtain the permission of the owner of copyright, if any, in the French novel that has been translated. With some copyright works, such as films or multimedia works, a whole host of prior rightowners will have to be identified, approached, and persuaded to consent to the

! The moral rights of attribution and integrity operate as techniques of control over the manner in which a work is exploited, and thus are frequently akin to statutory implied contract terms. See Ch. 10.

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273

exploitation.” It should be noted that one joint owner may not exploit the work without the licence of the other owners.?

2 LIMITS

ON AGREEMENTS AND

BETWEEN

AUTHORS

ENTREPRENEURS

This section considers the extent to which UK law will interfere to regulate the terms of transactions between authors and entrepreneurs, either to protect the psychological link between the author and his or her work, or to protect an author’s financial interests. A number of other jurisdictions, notably France and Germany, include within their copyright legislation provisions relating to the interpretation of copyright contracts. They also impose overriding terms that protect the financial interests of authors.* In the UK, there are very few provisions specifically directed at authors. The legal validity of such arrangements is generally dependent upon the law of contract, not the law of copyright. In the UK, the basic principle is that a contract freely entered into by an adult is binding. The court will not reopen the contract merely because the court thinks that the terms are unreasonable or unfair. The main way in which authors’ interests are protected derives less from legal regulation than from

collective processes

such as union

activity or the promotion

of standard

contracts like those formulated by the Society of Authors and the Writers’ Guild. Individual authors and artists are also better able to secure reasonable terms by the engagement of literary agents.” Having said this, a contract entered into between an author and entrepreneurs may be regulated in a number of ways. On occasions the general contractual doctrines of undue influence and restraint of trade have been used to protect particularly vulnerable authors from the more egregious of practices. In other cases the courts may interfere with the sanctity of the author—entrepreneur contracts where they are anti-competitive (either under domestic or European law). After looking at these, we will examine the specific terms that are implied by statute into certain contracts.

2 Sometimes it will be impossible to trace the relevant copyright holders, in which case the exploiter might take out insurance,

pay notional

royalties into a fund, or simply take a risk. Cf. CDPA

s. 190

(performers). 3 CDPA s. 173(2); Lauri v. Renad [1892] 3 Ch 402; Powell v. Head (1879) Routledge [1916] 2 KB 325, 330.

12 Ch D 686; Cescinsky v.

4 See G. Boytha, ‘National Legislation on Authors’ Contracts in Countries Following Continental European Legal Traditions’ [1991] Copyright 198; J. Black, “The Regulation of Copyright Contracts: A Comparative View [1980] EIPR 386.

> See D. De Freitas, ‘Copyright Contracts: A Study of the Terms of Contracts for the Use of Works Protected by Copyright under the Legal System in Common Law Countries’ [1991] Copyright 222. For an example, see B. Nyman, “The Author—Publisher Agreement’ [1995] Ent LR 127.

274

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COPYRIGHT

UNDUE

INFLUENCE

If a disadvantageous bargain is the result of the exercise of undue influence the court may set the bargain aside. An extreme example would be where an author assigned copyright to a publisher because of threats made by the publisher. However, the court’s power to interfere extends beyond those extreme scenarios to all situations where a ‘person in a position of domination has used that position to obtain unfair advantage for himself, and so caused injury to the person relying on his authority or aid.’® For the courts to interfere in the sanctity of the contract, two elements need to be satisfied. First, it must be shown that the parties are in a relationship in which one

person has influence over another. Secondly, it must be shown that the influence was used to bring about a ‘manifestly disadvantageous transaction’.’ If undue influence exists, the contract is then voidable, and copyright assigned thereunder may be revested in the author. It seems that since the contract is voidable (as opposed to void), contractual dealings with bona fide purchasers which take place before the contract is avoided will remain binding. In order to have a contract set aside on the basis of undue influence, it must first be

shown that the parties are in a relationship in which one person has influence over another. That is, it is necessary to demonstrate a ‘dominating influence’. The most common situation where this occurs is where the parties are in a fiduciary relationship; that is, one of trust. Where the relationship between the parties is deemed by the court to be ‘fiduciary’, the existence of a dominating influence is presumed. In most cases of copyright assignments, for example a publishing agreement, such a fiduciary relationship is unlikely to exist because there will rarely be any pre-existing relationship. An example of an exception to this is provided by Elton John v. James.’ There Elton John sought to avoid an agreement tying him and fellow songwriter Bernie Taupin to a publishing arrangement with James for six years. Nicholls J held that there was a ‘dominating influence’ even though the acquaintance of John, Taupin and James was short before the publishing agreement was signed, because James ‘really took charge’, while the writers were young and eager and received no independent advice, reposing trust ‘in a man of stature in the industry that he would treat them fairly’. A similar position was reached in O’Sullivan v. Management Agency.’ This decision arose as a result of the fact that a young and then unknown composer named Gilbert O’Sullivan, entered into an exclusive management agreement with the defendant. The defendant operated through a number of companies with whom O’Sullivan entered into publishing and other agreements. O’Sullivan later sought a declaration that these contracts were void and unenforceable on the ground, inter alia, that they had been

obtained by undue influence. Mars-Jones J held that the defendant was in a fiduciary

position and thus the agreements were presumed to have been obtained by undue © National Westminster v. Morgan [1985] 2 WLR 588, 599 (quoting Lord Shaw). 7 The relationship need not be one of domination: Goldworthy v. Brickell [1987] Ch 378, 404-6.

8 Elton John v. James (1985) [1991] FSR 397. 9 [1985]

QB 428.

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275

influence. The associated companies were equally subject to fiduciary obligations." Although there was no pressure on O’Sullivan to execute the agreements that did not matter. As Fox LJ said, on appeal, ‘[t]he fiduciary relationship existed. The onus was then upon those asserting the validity of the agreements to show that they were the consequence of the free exercise of Mr O’Sullivan’s will in the light of full information regarding the transaction. That has not been done. He had no independent advice about these matters at all’.!! In order to have a contract set aside on the basis of undue influence, it must also be shown that the dominating influence was used to bring about a transaction that was ‘manifestly disadvantageous’. The problems that confront authors and artists here is that in many cases their grievances are collective, rather than individual, in nature.

Consequently, the possibility exists for an assignee or exclusive licensee to deny that there is disadvantage by referring to agreements with other authors and the practices of other entrepreneurs. It should be noted that this tactic does not always work. For example, in Elton John v. James some of the publishing agreements were found to be

unfair even though James acted in a bona fide manner, imposing terms standard in the trade. In that case (as with the O’Sullivan decision), the court was influenced by the fact that the royalty under the contract was less than that paid to other ‘unknown’ artists.’

2.2

RESTRAINT

OF TRADE

The second way in which vulnerable authors are protected is via the doctrine of ‘restraint of trade’. As it suggests, this doctrine reflects a general policy of contract law that a person should be able to practise his or her trade.’* Contracts that restrict this right will be scrutinized by the courts to ensure that they are justified.’4 In these circumstances the courts have said that the terms must be no more than is reasonably required to protect the legitimate interests of the promisee and the public interest.'° This doctrine has been important in relation to long-term contracts that are common in the music industry. The impact of the doctrine of restraint of trade can be seen in Schroeder Music

10 [1985] QB 428, 448 (Dunn LJ). 11 On appeal, the central issue was to determine the appropriate remedy. Dunn, Fox, and Waller LJJ held that the court should try to achieve ‘practical justice’ and found that the assignments ofthe copyright should be set aside, the copyrights be returned to the author, and the manager be required to account for profits made from them, but subject to deduction of a service fee for his contribution to the composer’s success: [1985] QB 428, 458-9, 466-9, 471-3. See, generally, J. Tatt, ‘Music Publishing and Recording Contracts in

Perspective’ [1987] EIPR 132.

12 Elton John v. James (1985) [1991] FSR 397, 453. 13, Schroeder Music Publishing Co. v. Macaulay [1974] 3 All ER 616, 621 (Lord Reid). See also below at

pp. 915, 951-2. 14 Certain categories may be excluded from the doctrine: Esso Petroleum Co. v. Harper’s Garage [1968] AC 269; Panayiotou v. Sony Music Entertainment [1994] EMLR 229, 320. 15 This is referred to as the ‘Nordenfelt test’ after Nordenfelt v. Maxim Nordenfelt [1894] AC 535.

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Publishing Co. v. Macaulay,!6 where the House of Lords held that an agreement between a songwriter and a publisher was invalid because it was in restraint of trade. The agreement was in a standard form and required the songwriter to assign copyright in his works to the publisher. The most important factor was that the duration of the agreement was to be for five years and, if the royalties for the first five years exceeded £5000, for a further five-year period. In effect, the songwriter was bound to the publisher for ten years. However, the publisher was under no obligation to exploit the songs. Lord Reid suggested that even if there was a term requiring the publisher to use its best endeavours to promote the composer’s work, this would be of little use to the composer. He said, ‘if no satisfactory positive undertaking by the publisher can be devised, it appears to me to be an unreasonable restraint to tie the composer for this period of years so that his work will be sterilized and he can earn nothing from his abilities as a composer if the publisher chooses not to publish.’!” Only a clause permitting the composer to terminate the agreement could save it. Lord Diplock said that the doctrine of restraint of trade was part of a general jurisdiction to protect parties from unconscionable contracts. In these circumstances, the relevant question was whether the bargain was fair, that is, ‘whether the restrictions are both reasonably necessary for

the protection of the legitimate interests of the promisee and commensurate with the benefits secured to the promisor under the contract.’!8 Lord Diplock’s reliance on the broad notion of inequality of bargaining power, after receiving a positive reception,'® has been largely ignored in subsequent cases which have preferred to rely on the more concrete doctrines of restraint of trade, rather than develop general principles of this

sort.”°

Another situation where restraint of trade has been used to protect an author is in Zang Tumb Tuum v. Holly Johnson,” which dealt with a publishing agreement and a recording agreement that the group Frankie Goes to Hollywood signed with Perfect and ZTT respectively. The publishing agreement was for five years and the recording agreement possibly for nine years. Soon after the group became successful, Holly Johnson left the group. ZTT tried to enforce a ‘leaving member’ clause in the recording contract and sought an injunction to restrain him from working for another record company. ZTT’s action failed. Applying the doctrine of restraint of trade, the Court of Appeal set aside the recording contract and the publishing agreement. The Court was particularly influenced by the duration of the agreement: Dillon LJ said that ‘stringent provisions such as many of those in the recording agreement may be justifiable in an agreement of short duration. But the onus must, in my judgement , be on the recording company to justify the length and the one-sidedness of the '© Schroeder Music Publishing Co. v. Macaulay [1974] 3 All ER 616. =

7 Thid., 622.

18 Tbid., 623. 19 e.g. Clifford Davis v. WEA Records [1975] 1 All ER 237. 20 National Westminster v. Morgan [1985] 2 WLR 588 (rejecting inequality of bargaining power and

unconscionability) and Union Eagle v. Golden Achievement [1997] 2 All ER 215 (describing as ‘beguiling

heresy’).

21 Zang Tumb Tuum v. Johnson [1993] EMLR 61.

LIMITS

ON

EXPLOITATION

2/7

provisions as to its duration in this recording agreement.’?? The Court held that ZTT had failed to justify the terms. If in the light of these cases the doctrine of restraint of trade seems to offer substantial protection to authors and artists, it is important to observe the doctrine’s limitations that were highlighted in Panayiotou v. Sony Music Entertainment. Panayiotou, a songwriter and singer who worked under the name George Michael, sought to have the recording agreement which he had entered into with Sony in 1988 set aside. The background to the agreement was relatively complicated. In 1982 as a member of the group Wham!, Michael signed an agreement with a record company called Innervision. After some initial success, the validity of the agreement was called into question. Subsequent legal proceedings were settled and in 1984 a new agreement was entered into between Wham! and Sony (who had been licensees of Innervision).

This agreement placed Wham! under a potential obligation to record eight albums. When the group disbanded in 1986, Sony exercised its ‘leaving member clause’ which was to the effect that the 1984 agreement was to continue to bind Michael as an individual recording artist. After the success of Michael’s first solo album (Faith), the 1984 agreement was renegotiated and replaced by a new agreement with Sony (the 1988 agreement). This also bound Michael, if the defendant so wished, to deliver a

further eight albums and was to endure for fifteen years. As part of the renegotiation, Michael was given much improved financial terms. As a result of changes in the

corporate structure of the defendant company, Michael became disenchanted and in 1992 sought to release himself from his obligations to Sony. Parker J rejected Michael’s claim that the 1988 agreement should be set aside. The

main ground for rejecting George Michael’s claim was that it was contrary to public policy to seek to reopen a previously compromised action and that the 1984 agreement was such a compromise: the 1988 agreement being based on the 1984 predecessor, was covered by the same policy. However, aware that the case was likely to be appealed,” Parker J went on to consider whether, had there been no compromise, the 1988 agreement was an unreasonable restraint of trade. He found that the agreement was restrictive of trade,*° but that the restraint was reasonable. Although not explicit, Parker J appears to have accepted that the restraint was necessary to protect the

defendant’s interests, not merely in recouping investment they had placed in Michael, but also the investment they generally made in young artists who turned out to be unsuccessful.” Moreover, the restraint was reasonable as regards Michael’s interests given the generous remuneration which was to be promised to the artist: the length of 2 TWidi; 78: 23 Panayiotou v. Sony Music Entertainment [1994] EMLR 229. For criticism, seeA. Coulthard, ‘George Michael v. Sony Music: A Challenge to Artistic Freedom?’ (1995) 58 Modern Law Review 731.

*4 For criticism of this aspect of the case, see Coulthard, ibid., 736 (pointing out that the action compromised by the 1984 agreement did not involve the defendant, and moreover that the 1984 agreement contained no express promise not to reopen the 1982 agreement).

25 Tn fact, no such appeal was heard. 26 Panayiotou v. Sony Music Entertainment [1994] EMLR 229, 342. 27 Thid., 361.

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the agreement was simply a product of Michael’s success. Parker J added that when Michael’s obligations under the 1984 agreement were taken into consideration, the

1988 agreement hardly restrained Michael at all.?8 The Panayiotou case makes it clear that there are limits to the operation of the doctrine of restraint of trade. However, it has not provided any clear markers as to how to determine where those limits are. More specifically, it is unclear what the legitimate interests of a recording or publishing company are, and how the decision is to be made that the obligation (for example, to produce eight albums, rather than three albums or five-year deal), is reasonable. Moreover, the case introduced a new limitation on the doctrine through Parker J’s final reason for dismissing Michael’s claim: Parker J found that Michael, by requesting an ‘advance’ from Sony in 1992 had affirmed the existence of the contract and could not thereafter argue that it should be set aside.” If this approach is followed,” authors, artists, and performers who seek to have lengthy or one-sided agreements set aside, will have to take great care to ensure they do not accept the benefit of the agreement after being informed of its potential unenforceability.

2.3

ANTI-COMPETITIVE

CONTRACTS

A further ground on which a court might reopen an agreement between an artist and an entrepreneur is on the basis that it is anti-competitive. More specifically, a contract may be declared to be void by virtue of Article 81 EC (formerly Article 85 of the Treaty). As noted in Chapter 1, this renders void all agreements which affect trade between member states and which have the object or effect of distorting competition within the Common Market. The case of RAI/Unitel?! indicated that an exclusive contract with four opera singers for one operatic work was an agreement between ‘undertakings’ which might have an ‘appreciable effect’ on trade between member states and thus might be subject to Article 81. Although the Commission took the view that the agreement concerning the broadcast of the performance of Don Carlos at La Scala in Milan was subject to Article 81, the case was settled. As such, it remains unclear when such an agreement would be unlawful. It seems possible that a contract between an author and an entrepreneur would fall outside the scope of Article 81 because the effect on competition might not be ‘appreciable’. Alternatively, as with exclusive distribution agreements, the contract might be justifiable under Article 81(3) (though this would require individual exemption by the 28 Cf. Watson v. Prager [1993] EMLR 275. In fact, the 1988 agreement effectively required Michael to produce eight albums not the six that would have been needed to meet his remaining obligations under the 1984 agreement.

29 Panayiotou v. Sony Music Entertainment [1994] EMLR 229, 385-6. 30 It has been in Nicholl v. Ryder [2000] EMLR 632. For arguments against the affirmation doctrine, see A. Coulthard, “George Michael v. Sony Music: A Challenge to Artistic Freedom?’ (1995) 58 Modern Law Review 731, 741-3.

3! [1978] OJ L 157/39; [1978] 3 CMLR 306; 12th Report on Competition Policy 1982, para. 90.

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279

Commission).** An argument based on Article 81 was also raised but rejected in Panayiotou v. Sony Music Entertainment.** Parker J held that the 1988 agreement between Michael and Sony had no effect on trade between member states of the EU because the agreement operated ‘worldwide’,*4 that because the 1988 agreement replaced the 1984 agreement it in fact had no effect on trade at all, and did not have the object or effect of restricting competition.*® Moreover, because the agreement involved an assignment of copyright in the sound recordings to Sony, Parker J held that it fell within Article 295 (formerly Article 222 of the Treaty) which protects

property. Whether any or all of these conclusions are satisfactory has been doubted. However, had the contrary conclusion been reached that the agreement fell within Article 81(1), it is likely that the Commission would have been required to consider a deluge of individual applications for exemptions. Two recent developments are worth noting. The first is the Commission Regulation on Vertical Restraints

(discussed in Chapter 42), which makes available a block

exemption from Article 81 for ‘vertical agreements’ including exclusive supply agreements.*” This means that even if an agreement falls within Article 81 EC, it is exempt as long as the market share of the purchaser is under 30 per cent.** However, while a publishing, recording or songwriting contract would fall within the general definition of a ‘vertical restraint’ in the Regulation,’ the Block Exemption does not apply where the primary object of the agreement concerns intellectual property.*° We await to see whether the primary object of such an arrangement concerns intellectual property. This seems more likely with publishing than recording agreements. However, even if the Block Exemption does not apply, a restrictive agreement may be notified to the European Commission.

The second significant development is that section 2 of the 1998 Competition Act introduced a national provision equivalent to Article 81.*! It seems that an author or artist will be better served by the domestic provision, since they do not require that the applicant shows that the contract had an adverse effect on trade between member states. This is because the 1998 Competition Act only requires that the agreement ‘may affect trade within the United Kingdom’. There is no express requirement that 32 See F. Fine, ‘The Impact of EEC Competition Law on the Music Industry’ [1992] Ent LR 6, 7.

33 [1994] EMLR 229. For a review of this see A. Coulthard, ‘Panayiotou v. Sony Music Entertainment’ [1995] Journal of Business Law 414.

34 [1994] EMLR 229, 416. 35 Thid., 420. 36 Tbid., 425. 37 Such agreements will be minor agreements if the combined market share is less than 10% as falling outside of Art. 81(1): Notice on Agreements of Minor Importance OJ 1997 C 372/13, [1998] 4 CMLR 192. Below the threshold, the Commission considers that the competition authorities of member states should provide primary supervision.

38 Vertical Restraints Reg., Art. 3. Assuming it has no ‘hard core’ terms.

39 Tbid., Art. 2(1). 40 Tbid., Art. 2(3). 41 Competition Act 1998, s. 2. See J. Turner, ‘The UK Competition Act 1998 and Private Rights’ [1999] FIPR 181.

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COPYRIGHT

this effect must be ‘appreciable’ or ‘substantial’ (though there is an immunity from fines for ‘small agreements’ and ‘conduct of minor significance’).** However, as with the European provision, most vertical agreements are exempt from section 2 unless the agreement has as its primary object terms relating to the assignment or use of intellectual property.®

2.4

THE

STATUTORY

RIGHT

TO EQUITABLE

REMUNERATION

Although UK copyright law treats the terms of a contract as essentially a matter for voluntary negotiation, a significant exception has recently been introduced in relation to transfers of rental rights. This so-called ‘unwaivable right to equitable remuneration’ marks a first step in the transplantation of provisions protecting authors in countries such as France and Germany, via the process of European harmonization,“ into UK copyright law. Section 93B of the 1988 Act specifies that where a person transfers the rental right ‘concerning’ a film or sound recording to the producer of the sound recording or film, ‘he retains the right to equitable remuneration for rental’. The potential beneficiaries of the retained right are the authors of literary, dramatic, musical or artistic works and the principal director of a film.® The right applies whether the transfer is presumed under section 93A (or with performers, section 191F), or is voluntary transferred. The right to remunera tion cannot be excluded by agreement.*° The remuneration is to be claimed from the person ‘for the time being entitled to the rental right’, and the relevant time is presumably the time of rental rather than of claim. The right can only be assigned to a collecting society, by testamentary transmission, or operation of law (e.g. on bankruptcy). The amount deemed equitable is to be determined by agreemen t or, failing this, by the Copyright Tribunal. In determining what is equitable, the Tribunal is directed to take into account the importance of the contribution of the author or performer to the film or sound recording. Remuneration is not to be considered inequitable merely because it was paid by way of a single payment or at the time the rental right was transferred.‘

42 Competition Act 1998, ss. 39 and 40; Competition Act 1998 (Small Agreements and Conduct of Minor Significance) Regulations 2000 (SI 2000/262). 43 The Competition Act (Land and Vertical Restraints Exclusion) Order 2000 (SI 2000/310). ‘4 More specifically, the Rental Directive, Art. 4. 45 CDPA s. 191G has the same effect as regards performers. It seems that CDPA s. 93B applies not just to circumstances where the work is incorporated in a film or sound recording (for example, the music used on a film) but also where the work is to be rented with the sound recording or film, such as might occur with artwork on a record sleeve. This conclusion is consistent with the expansive definition of author in CDPA

s. 93B(1)(a) as covering authors of artistic works and the use in s. 93B(1) of ‘concerning’. However, s. 93C(3)

refers to the importance of the ‘contribution . . . to’ the sound recording or film.

46 CDPA s. 93B(5).

47 The right applies even where transfers were made pursuant to agreemen ts made prior to 1 Jan. 1994, but only if the author asserted a claim to that effect between 1 Dec. 1996 and 1 Jan. 1997. See Related Rights Reg. 33(b).

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2.5

THE

DROIT

DE SUITE

ON

EXPLOITATION

OR ARTIST'S

RESALE

281

ROYALTY

RIGHT

A number of jurisdictions confer on artists a special right, known as the ‘droit de suite’, that enables them to participate in the profits gained from the sales of their works.** The purpose of the right is to encourage and sustain the production of unique art-forms. Artists who produce paintings and sculptures have traditionally only received remuneration from the one-off sale of the original. A special right is seen as desirable to rectify the imbalance created in favour of cultural products disseminated by reproduction. More specifically, it is argued that by conferring a right of reproduction, copyright privileges authors of printed works over artists whose works are not susceptible to exploitation by means of sale of copies; some other right is needed to secure a revenue stream for such artists. The droit de suite (literally translated as the right to follow the work) enables artists to claim a portion of the price for which a work is resold. The idea is that an artist may sell a painting for a low price at a time when they are unknown and have little bargaining power. In due course, as the artist’s reputation develops, the painting may be resold for continually increasing sums. The droit de suite enables the artist to claim a proportion of the increased value. The right is seen to be justified not only because it encourages creation, but also because the artist is conceived (through the authorial link) as being responsible for the increase in value (economic success of their works). Consequently, although the right is essentially economic, it is sometimes categorized as a ‘moral right’. At present, no such artists’ resale right is recognized in British copyright law.” However, Article 14ter of the Berne Convention encourages the recognition of such rights, and most European countries do so.°° Because of the principle of ‘non-discrimination’, British artists may claim the benefit of any droit de suite recognized in other member states of the EU.’ Moreover, because of the potential

affects of the differences in national laws on the internal market for modern artworks,” a proposal is being considered at the European level to introduce such a right. The Proposed Resale Right Directive would apply to original works of art,°? that is to ‘works of graphic or plastic art’ provided they are made by the artist or are copies 48 The first legal recognition of such a right occurred in France in 1920. See L. de Pierredon-Fawcett, The Droit de Suite in Literary and Artistic Property: A Comparative Law Study (1991). For discussion of the emergence of the right in the broader context of structural changes in the French art market, see D. Booton, ‘A Critical Analysis of the European Commission’s Proposal for a Directive Harmonizing the Droit de Suite’ [1998] IPQ 165, 166 ff.

49 For previous British views see Report of the Committee on Copyright and Designs Law, ch. 17 (Cmnd. 6732 1977).

°° Belgium, Denmark, France, Germany, Italy, Luxembourg, Portugal, Spain, and Sweden. Proposed Resale Right Directive, Recital 8.

5! Thid., Recital 6. 52 Tbid., Recitals 8-13. >3 There are no transitional provisions. Presumably the right will be applied to existing works still in copyright, but only as regards sales after the implementation date for the Directive.

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considered to be original works of art.°*4 The Proposed Directive includes within that definition works such as paintings, engravings, tapestries, ceramics, photographs that satisfied those criteria, but not ‘works of applied art’. Consequently, the resale right would not only apply to unique works but also to certain works produced in multiples of limited editions. The proposed right would require member states to confer on such authors” the inalienable right to receive a defined percentage of the sales price obtained from any resale of the work involving ‘art market professionals’.*° The right would last for the full term of copyright protection.*” In calculating the artists’ entitlement, the proposal sets out a graduated scheme. A threshold would apply, below which the right need not apply and this is set at 4000 euro.”* Above that threshold, the percentage would decrease as the resale price increases: between

4,000 and 50,000 euro the artist would be entitled to 4 per

cent,” between 50,000 and 200,000, 3 per cent, for sales between 200,000 and 350,000, 1 per cent; for 350,000—500,000, 0.5 per cent and for sales above 500,000 euro, only

0.25 per cent. The total must not exceed 12,500 euro. While the resale royalty right would be assertable by the artist against the seller, member states would be permitted to provide for the collective management of sums paid over by virtue of the right. In order to enforce the right, authors would be able to require dealers to furnish relevant information concerning transactions in which they have been involved in the previous year.°! The Proposed Directive has been widely criticized, particularly from the perspective of the UK art market. One fear is that the effect of harmonizing ‘upwards’ will be to drive the sales of modern artworks out of Europe to the auction houses of New York, where no such ‘tax’ will be required of the seller. (Apparently when California created a droit de suite, Sotheby’s closed its auction house there.) In turn, this raises the issue of why artworks are sold in one location rather than another. These criticisms were taken on board in the Common Position, which is much more restrictive than the original proposal. In particular the Council inserted a provision permitting member states that currently have no droit de suite not to provide the resale right after the author’s death for a period of ten years. In addition, the Council insisted on a transitional period of five years between adoption and implementation. Cumulatively, this

°4 Proposed Resale Right Directive, Art. 2. But not manuscripts: Recital 18. But member states may extend the right to such works. °° Or, after death ‘those entitled under him’. See Proposed Resale Right Directive, Art. 6(1). Foreign authors— that is those from non-EU countries—may enjoy the right as long as authors from member states enjoy reciprocal treatment in the third countries concerned: Art. 7. 56 Jbid., Art. 1(2); Recital 17. 57 Tbid., Art. 8.

°8 Tbid., Art. 3(1). Member states may make the right available below that threshold so as to further the interests of young artists: Art. 3(2), Recital 21. °° Alternatively, member states may exact 5%. 6° Proposed Resale Right Directive, Art. 1(3), Art. 6(2). Member states may make persons other than the seller liable: Art. 1(4).

61 Tbid., Art. 9.

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would make the resale right inapplicable after an artist’s death for at least another fifteen years. The Commission considers this to be unacceptable, and the current state

of the proposal is uncertain.

3 COMPETITION

LAW

AND

THE

EXPLOITATION

OF

COPYRIGHT In this section we look at the impact that UK and European competition law has on the copyright owner’s ability to exploit copyright. In so doing, we take as our paradigmatic scenario the circumstance where a copyright owner licenses another commercial undertaking to exploit the copyright. This encompasses a number of different types of contracts: a publishing firm might license or assign film rights in a literary work to a film production company; the owner of film copyright might allow for the production and sale of videos; or the owner of software copyright might license the use of the software on a particular site. The key provision of European competition law affecting copyright agreements is Article 81 EC (formerly Article 85 of the Treaty). This renders void all agreements which affect trade between member states and which have the object or effect of distorting competition within the Common Market. Nevertheless, certain agreements that provide benefits may be exempt. On the whole, exemption requires application to the Commission. In contrast with the fields of technology licensing and vertical restraints, the Commission has been slow to develop block exemptions in the copyright field. The Technology Transfer Block exemption will exempt certain agreements which deal with copyright,” but only where such agreement is ‘ancillary’ to a pure patent licensing or know-how licensing agreements and to mixed patent and knowhow licensing agreements. The Regulation on Vertical Restraints will be of more general applicability: exempting many agreements relating to the distribution of copyright works (for example, the distribution of books or sound recordings).°° However, as we noted earlier the exemption does not apply where the primary object of the agreement is the assignment or use of intellectual property rights. Therefore it will

rarely be applicable to copyright licences, such as software licences. However, the exemptions made may provide an important guideline on the thinking of the Commission on terms in such agreements.

As a result of the Competition Act 1998, UK regulation of copyright agreements parallels European competition law. Section 2 introduces the ‘Chapter 1 prohibition’, which is equivalent to Article 81 EC. This is subject to an exemption regarding ‘vertical restraints’ (which like its European counterpart does not cover agreements primarily relating to intellectual property). Moreover, because an agreement will be

62 Technology Transfer Reg.

63 Vertical Restraints Reg.

64 Competition Act 1998, s. 2.

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deemed to be exempt from the national prohibition if it is exempt from the Community prohibition, the Technology Transfer Regulation might also provide exemption.® With these general points in mind, we now look at the cumulative effect of the chapter 1 prohibition and Article 81 EC on various terms that are used in copyright contracts.

3.1

AGREEMENTS

CONFERRING

EXCLUSIVE

TERRITORIAL

RIGHTS

A copyright assignment or licence commonly includes terms guaranteeing the licensee the exclusive right to sell the work in aparticular territory. For example, the licence may grant someone the exclusive right to sell paperback versions of a book in the United Kingdom, or to show a film in public in Belgium. It may also include an undertaking by the licensor not to put the work on the market in that territory and an undertaking by the licensee not to sell the work in the territories of other licensees. The inclusion of such a guarantee of exclusivity may be important to a licensee who has to invest in the advertising or marketing of the work, and who needs to ensure that they have a reasonable degree of control in the relevant market. In related situations, the Commission has recognized both the value of such terms

and also the threat posed by exclusive licensing to the achievement of the internal market. Consequently, the Commission treats exclusive agreements as legitimate, but simultaneously prohibits certain terms which it considers will have an unduly restrictive affect on the practices of parallel importers. Consequently, while the Commission allows terms which prohibit the active marketing of the work in the territory of another licensee, the agreement may not prohibit ‘passive’ sales. Where an exclusive territorial agreement covers the representation (or exhibition), as opposed to the distribution of copies of the work, it may also fall within Article 81 EC. In Coditel (No. 2),°’ a French company granted a Belgian company the exclusive right to exhibit the film, Le Boucher, in Belgium for seven years. The French company later licensed a German broadcasting company to broadcast the film on German television. When it did so, Coditel, a Belgian cable operator, included the film in its

Belgian service. The question referred to the European Court of Justice was whether the exclusive exhibition agreement was prohibited by Article $1 (then Article 85 of the Treaty). The Court held that in general exclusive licences of this nature did not automatically fall within Article 81. However, the Court added that it might do so if the royalties exceeded a fair remuneration; if the agreement was excessively long; or if the exercise of the right was likely to distort competition within the Common Market.

65 Competition Act 1998, s. 10 (parallel exemptions).

6° Technology Transfer Reg., Art. 1(2), Recital 15; Vertical Restraints Reg., Art. 4(b); See Re BBC [1976]

CMLR D-89. 67 Coditel SA v. Cine Vog Films SA (No. 2), Case 262/81 [1982] ECR 3381. 68 Case 262/81 [1982] ECR 3381, 3401-2 (paras. 15, 17, 19).

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RESTRICTIVE

FIELD

ON

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OF DISTRIBUTION

285

AGREEMENTS

Where a work has a number of potential markets, a copyright owner may wish to limit the field in which the licensee exploits the work. For example, a copyright owner may wish to license a work for sale by a book club, separately from sale by retail outlets. Such agreements are akin to ‘fields of use’ limitations. Under the Vertical Restraints Regulation these would be restrictions of the customers to whom the buyer may sell the contact goods or services. These would not be exempt unless the restriction is confined to active sales to an exclusive customer group allocated by the supplier to another buyer. If a copyright owner has given general retail rights exclusively to one person and book club rights to another, a restriction preventing the book club owner from actively selling outside the club would be exempt from Article 81.

3.3

PRICE

LIMITATIONS

A copyright owner may wish to restrict the price at which the licensee sells a particular product. They might also require the licensee to specify to subsequent purchasers that they may not resell the product at anything other than a specified price. Although such agreements have traditionally been treated as being unlawful, rather surprisingly from 1956 until recently the UK law went out of its way to tolerate one such pricefixing arrangement in the form of the ‘Net Book Agreement’. This was an agreement between members of the Publishers’ Association to impose certain conditions on booksellers as regards the price at which certain books (‘net books’) could be sold.®?

However, in 1995 the majority of publishers decided to abandon the net book system. As a result, the exemption previously afforded to the Agreement was removed.” Under the Vertical Restraints Regulation attempts at resale price maintenance con-

stitute ‘hardcore’ restrictions that prevent the block exemption from operating.”! An individual exemption would therefore be necessary.” The domestic position is similar: the general exemption of vertical agreements from the chapter 1 prohibition does not apply where the agreement has the object or effect of restricting the buyer’s ability to determine its sale price.

3.4

SITE

LICENCES

One of the characteristics of most digitized works is that in using the work users will ordinarily infringe copyright (in so far as they make a temporary reproduction on 69 Re Net Book Agreement 1957 [1962] 1 WLR 1347. 70 Re Net Book Agreement 1957 (No. 4) [1998] ICR 753. 71 VRR, Art. 4(a). 72 The European Court of Justice held the UK Net Book Agreement to fall within the then Art. 85 prohibition but said it might be justifiable under Art. 85(3), overturning the views of the Commission and Court of First Instance: Re Net Book Agreements: Publishers’ Association v. EC Commission, Case C-360/92P [1996] FSR 33; [1996] ICR 121; [1995] EMLR 185 (ECJ); Publishers’ Association v. EC Commission [1992] 4 All ER 70; [1992] ICR 842 (CFI).

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their computer). As a result, licences are frequently needed to permit such use. In the cases of software, databases, and journals in electronic form, it has become common

to limit permitted use to a particular location. The question arises whether such a restriction is anti-competitive. It has been argued that in as much as site licences operate as caps on output they are anti-competitive and fall within Article 81 EC. For example, if the effect of licensing software to one particular terminal restricts the productive use of that software, such a licence may fall within Article 81 EC. However, if a site licence is ‘open’ in the sense that it allows for expansion of output or has a clause allowing for further licences on commercial terms, then this objection does not operate.’”” Under the Technology Transfer Regulation,” restrictions on quantities of output will place agreement outside the block exemption.

4 REGULATION

FOR

THE

PROTECTION

OF USERS

In this section, we consider the ways in which the law interferes with copyright contracts for the benefit of ‘users’. By ‘users’ we primarily mean individual consumers who wish to utilize copyright-protected material. The idea of protecting users from unfair contracts imposed by copyright owners is a relatively new one. In part this has arisen because certain acts carried out by users have come to require the consent of copyright owners. In the past, a person who bought a book could do most acts that they wished with the book without the need for further consent: the book could be read, lent to a friend, or sold to a charity shop without raising any potential liability. Today, as a result of technological developments, many similar acts such as photocopying the book or reading an electronic version on screen might now require permission. The second reason why contracts between copyright holders and users are becoming increasingly common is that new techniques of distribution, particularly digital dissemination, are removing intermediaries from the distribution process. A consumer who formerly would have bought a hard copy of a phonogram from a retailer can now be supplied with an equivalent digital version over the Internet directly from the copyright holder. This direct contact allows the copyright owner to reinforce any rights they may have under copyright with obligations imposed as part of the contract they have with the owner. The main concern in these circumstances is that click-through contracts will extend copyright owners’ rights beyond their existing scope. Consequently, such licences might impose conditions for use of works in which copyright has lapsed, or in the case of software might prohibit the making of back-up copies or decompilation, or in other cases might prohibit criticism or review. As the use of electronic resources ’> M. Dolmans and M. Odriozola, ‘Site Licence, Right Licence? Site Licences under EC Competition Law’

[1998] ECLR 493; cf. J. Townsend, “The Case for Site Licences’ [1999] ECLR 169.

74 TERS Ane a(S):

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287

increases and such contracts become the norm, the ‘delicate balance’ between owners

and users encapsulated in statutory copyright may be sacrificed. Although the European Union has recently adopted a Directive specifying that ‘electronic contracts’ should be recognized as valid,’> it attempted to meet the concern that the terms of these contracts may be oppressive. This has been done in specific Directives by stating that certain exemptions may not be overridden by contract law.”° For example, the Software Directive allows certain acts including the

decompilation of computer programs. It also renders void contracts that attempt to restrict those rights.” A similar clause has been introduced to prevent contractual circumvention of defences to infringement of copyright in databases.”® Moreover, the Information Society Directive recently adopted of 22 May 2001, explicitly takes on board concerns about oppressive use of technological measures to prevent access to material falling within copyright’s carefully defined exceptions. The Directive will require member states to encourage right-holders to take measures that aim to achieve the objectives of certain exceptions or limitations. In the absence of such an agreement member states are able to take appropriate measures to ensure that right-holders provide the beneficiaries of such exceptions with appropriate means of benefiting from them.”

5 CONTROLLING

COLLECTING

SOCIETIES

In Chapter 11 we looked at the ways in which copyright owners exploit their rights by way of collective administration. While collective licensing can clearly be beneficial to both copyright owners and users, the existence of single bodies solely responsible for administering rights may also cause a number of problems. The problems posed are of two sorts: problems with members and problems with users. Problems with members typically occur because a copyright owner has little alternative to joining the society, which can thus impose restrictive terms. The second set of problems arises from the relations with users, who similarly have little alternative but to take a licence from the collecting society on whatever terms it chooses. Because of these problems collecting societies have been described (in terms similar to the atom bomb) as ‘at once

the most ingenious and the worst invention of mankind’.®° This section looks at how these problems have been recognized and regulated at a national and European level.*! 79 Electronic Commerce Directive, Art. 9(1). 76 Broadcasting Act 1996, s. 137.

77 CDPA ss. 50A, 50B, 296A(1)(a), 296A(1)(b), 296A(1)(c). 78 CDPA s. 296B. See also Database Reg. 19(2). 79 Information Society Directive, Recital 51. 80 A. Bertrand, ‘Performing Rights Societies: The Price is Right “French Style”, or the SACEM Cases’ [1992] Ent LR 147.

81 For a proposal that there be an ombudsman to regulate these relations see T. Meredith, ‘Dealing with Complaints against Collecting Societies’ (1995) 13(2) Copyright Reporter 58.

288

5.1

COPYRIGHT

REGULATION

OF MEMBER-SOCIETY

RELATIONS

The terms of membership and control over the collecting society are a matter, first and foremost, for the rules of the society. If a large enough number of members object to these rules, they can be changed by consent. Equally, if a majority of the members are unhappy with the management of the society, control can be changed.* Until the enactment of the Competition Act 1998, the main form of control of

society-member relations under UK law arose from the investigative powers of the Monopoly and Mergers Commission under Part IV of the Fair Trading Act 1973. Under this legislation, the Director-General of Fair Trading is able (after conducting a preliminary informal investigation) to refer ‘monopoly situations’ for investigation. Where this occurs, the Monopoly and Mergers Commission would assess whether the monopoly operated in a way that was contrary to the public interest. As a result of such a finding, a Minister could make an appropriate order, though the body would be likely to voluntarily change its operations to comply with the report. The Monopoly and Mergers Commission held this to be the case in relation to the Performing Right Society in its recent Report on the PRS.*® Another form of control over the rules of the society is to be found in Article 82 EC (formerly Article 86 of the Treaty). This prohibits the abuse by an undertaking of a dominant position. Most rights organizations constitute ‘undertakings’ and have a dominant position in the supply of relevant services to composers, authors, and publishers.*° The critical issue is in what circumstances the terms constitute an abuse. The influence of the Monopoly and Mergers Commission and the balancing exercised required by Article 82 EC has been felt in four important aspects of society— member relations. First, it is clear that under European law societies may not discriminate on grounds of nationality, for example, by conferring associate status on foreign authors. All collecting societies must permit other nationals from the EU to join the society.*” Second, the Commission has stated that the rules of collecting societies should ensure that no group of members obtains preferential treatment from revenue collected from the membership as a whole.®® Third, in Belgische v. SABAM,*°

the European Court of Justice held that abuse would occur if a society imposed 82 Copinger, para. 28-27, 8° The Competition Act 1998 established a Competition Commission to replace the Monopolies and

Mergers Commission.

84 A ‘monopoly situation’ exists, inter alia, where at least one-quarter of the supply of goods or services in the UK is controlled by a single person. Collecting societies typically fulfil this standard, since they are usually the sole supplier of relevant services to their members. This is a scale monopoly. The provisions also relate to “complex monopolies’. 85 Report on the Supply in the UK of the Services ofAdministering Performing Rights and Film Synchronization Rights (1996) (Cmnd. 3147).

86 For the opinion that such organizations are ‘undertakings’, see Belgische Radio en Televisie v,

SABAM, Case 127/73 [1974] ECR 313, 322-3 (AG Mayras).

87 Re GEMA (No. 1) [1971] CMLR D-35. 88 Re GEMA’s Statutes (No. 2) [1972] CMLR D-115.

89 Belgische Radio en Televisie v. SV SABAM, Case 127/73 [1974] ECR 313.

SV

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obligations on members which were not absolutely necessary for the attainment of the

society's objectives and which could encroach unfairly on members’ freedoms.” A restriction imposed upon a member must be ‘indispensable’ to the operation of the society, and must restrict the member’s freedom to dispose of their works no more than is absolutely necessary (the ‘equity’ test).°! Similarly, in the context of complaints against the PRS, the MMC recommended that further exceptions could be allowed to the exclusive assignments that PRS demanded of its members, in particular permitting them to collect their own live performance revenues.” Fourth, societies are not permitted to impose unduly lengthy notice periods. In Belgische v. SABAM, the European Court of Justice observed that rules operated by SABAM, the Belgian society of authors and composers, allowing the society to retain rights for five years after a member withdrew ‘may appear an unfair condition’, but left the specific determination of whether it was to the national authority.”

5.2

REGULATION

OF SOCIETY—USER

RELATIONS

Another way in which collecting societies are regulated is in terms of their relationship with users of copyright. Here the problem is that most people wishing to use copyright works have no alternative but to seek a licence from a collecting society. This places the society in a strong bargaining position, which may enable it to dictate terms of use to the licensee. In the absence of regulatory control, the society might charge exorbitant fees, discriminate unfairly between different kinds of users, or require parties to become licensees of many more works than the user wants. In order to ensure that this monopoly power is not abused, there are both domestic and European regulatory controls.” 5.2.1 The Copyright Tribunal The Copyright Tribunal (which replaced the Performing Right Tribunal in 1989) has wide-ranging powers to review licences and licensing schemes operated by collecting

90 Case 127/73 [1974] ECR 313, 317 (para. 15). °1 The MMC also found that the PRS did not have in place adequate systems for ensuring that the distribution of royalties was carried out equitably. It recommended that the PRS rectify these failings by publishing detailed accounts, as well as taking advice about its mechanisms of sampling and how changes in those mechanisms and distribution policies impact on members. Report on the Supply in the UK of the Services of Administering Performing Rights and Film Synchronization Rights (1996) (Cm. 3147) (paras. 2.119-2.121). 92 See Re GEMA (No. 1) [1971] CMLR D-35 (where the Commission

held that it was an abuse for the

German society to require the assignment of all categories of right). 93 Belgische Radio en Televisie v. SV SABAM, Case 127/73 [1974] ECR 313, 317 (para. 12), 325-6 (AG). See also GEMA (No. 2) [1972] CMLR D115 (Commission allowed 3 years’ minimum membership).

°4 The Fair Trading Act 1973 also contains a provision allowing for ‘general’ referrals of certain practices to the MMC, and this power underpinned the 1988 Report, Collective Licensing: A Report on Certain Practices in the Collective Licensing of Public Performances and Broadcasting Rights in Sound Recordings (Cm. 530) (1988).

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societies.” The Tribunal normally sits in panels of three, selected from a group of up to eight. While it has been said that the Tribunal carries out a ‘useful and indeed necessary function’, its procedures have been criticized as being costly and lengthy.”° The Copyright Tribunal is primarily concerned with the operation of ‘licensing bodies’. A licensing body is defined as a society or other organization that has as one of its main objects the negotiation or granting of copyright licences. A body is still a licensing body if it is an agent, as well as when it becomes the owner of copyright. This means, for example, that the MCPS (which operates as an agent) is within the jurisdiction of the Copyright Tribunal. However, a body is only a licensing body if its object is the granting of licences covering works of more than one

author.”

The 1988 Act distinguishes between two kinds of activities involving a licensing body, namely ‘licensing schemes’ and one-off ‘licences’. A licensing scheme is defined as any regime that specifies the circumstances and terms on which a licensing body is willing to grant licences.** The Tribunal can consider complaints by representative organizations concerning the terms of a proposed scheme; or complaints by organizations or individuals with respect to a scheme in operation.! The Tribunal has wide powers: it may approve or vary schemes, hold that particular applicants should be granted licences under such schemes, or approve or vary the terms of particular licences.'*' The Tribunal will also hear disputes over which applicants for licences fall within the scheme,’ as well as refusals to grant licences. The Tribunal may make an order declaring that the complainant is entitled to a licence. After the Tribunal makes an order, a scheme may be referred again by its operator, a claimant for a licence, or a representative organization.!% The criterion by which the Tribunal judges matters is one of ‘reasonableness’. As such, its role is more than one of ‘arbitration’.! Indeed, where there are several

reasonable solutions, the Tribunal’s job is to select whatever is the ‘most reasonable’.!°° In considering whether to make an order the Tribunal is instructed to have regard to a number of factors, of which the most important is to ensure there is no ‘unreasonable discrimination’ between the scheme or licence in issue and comparable

°° Though as is explained below, not every aspect of copyright is regulated by the Tribunal. See Related Rights Reg. 17(4); CDPA s. 205B; Database Regs., Sched. 2. °6 M. Freegard, ‘Forty Years on: An Appraisal of the United Kingdom Copyright Tribunal, 1957-1997’ (1998) 177 RIDA 3, 69, 63.

:

97 See D. Zeffman and J. Enser, ‘The Impact of UK Competition Law on the Music Industry’ [1993] Ent LR 67, 71 (licensing body arguably includes companies such as publishers).

BiCDPA seh ln, °° CDPA s. 118. 100 CDPA s. 119. 101 CDPA ss. 118-20. I2nCDPA's: 119. 103 CDPA s. 120.

104 British Airways v. The PRS [1998] RPC 581.

105 BPI v. MCPS [1993] EMLR 86, 139; 22 IPR 325, 333.

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schemes or licences.'°° Apart from that, specific factors are to be considered in relation to different schemes.'”” For example, if the scheme concerns reprographic copying, the Tribunal is to have regard to the availability of published editions, the proportion of the work copied, and the nature of the use to which the copies will be put. In addition to the factors specifically listed in the 1988 Act, the Tribunal will also take

account of factors indicated as relevant in EC Directives.!” In determining the reasonableness of licence fees, the Copyright Tribunal has often described its task as determining what a ‘willing licensor and willing licensee’ would have agreed.'”” The usual starting point for ascertaining what this may be is with previous agreements, which are evaluated by the Tribunal in the light of changed circumstances.'!® Because the Tribunal is directed to ensure that there is no unreasonable discrimination, it will often be presented with evidence of allegedly equivalent arrangements. These may include arrangements by the same licensing body with other categories of users,''’ or arrangements by similarly positioned licensing bodies with the same licensees.''? While evidence of schemes in other jurisdictions is frequently put forward, it has rarely been influential.'!? Other factors which are often treated as relevant include the extent of use, the size of the audience, and the user’s revenue. 5.2.2 Other avenues

A user who is dissatisfied with the terms of a licensing scheme or an individual licence from a collecting society might also be able to bring an action based upon either Article 81 or 82 EC

(formerly Articles

85 and 86 of the Treaty), or the two

prohibitions contained in the domestic Competition Act 1998.14 Applying Articles 81 and 82 EC, the ECJ has provided national courts with general guidance on legitimate collecting society behaviour. In particular, in Ministere Pubic v. Tournier'» it was argued that the arrangements between the French copyright management society SACEM and discotheques were prohibited under Articles 81 and 82 EC. In that case SACEM granted a blanket licence for its whole repertoire and charged discotheques according to a percentage of gross receipts. Some discotheque owners complained that the charges were excessive and that SACEM refused to grant licences for part of its repertoire, namely in relation to popular dance of Anglo-American

106 CDPA s. 129. Any discrimination should be ‘logical’: BSB v. PRS [1998] RPC 467, para. 5.4. Cf. M. Freegard, ‘Forty Years On: An Appraisal of the United Kingdom Copyright Tribunal, 1957-1997’ (1998) 177 RIDA 3, 57 (comparisons rarely used as guides).

107 CDPA ss. 130-5, 108 co BSB v. PRS [1998] RPC 467 (Satellite Directive, Recital 17).

109 110 111 112 '13

e.g. Working Men’s Club v. PRS [1992] RPC 227, 232. BACTA v. PPL [1992] RPC 149; BPI v. MCPS [1993] EMLR 86, 139. BACTA v. PPL [1992] RPC 149. Thid.; AIRC v. PPL [1994] RPC 143. British Airways v. The PRS [1998] RPC 581.

114 Competition Act 1998, s. 2 (ch. 1 prohibition). 115 Ministere Public v. Tournier and Verney, Case 395/87 [1989] ECR 2521.

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origin. The public prosecutor brought criminal proceedings against Tournier, who was director of SACEM, for ‘unfair trading’. As part of the action, certain questions were referred to the EC]. In relation to SACEM’s refusal to license use of music from abroad separately, the

Court noted that the parallel behaviour might amount to strong evidence of a concerted practice (contrary to Article 81). The Court added that it might be possible to account for the parallel behaviour on the grounds that direct licensing would require each society to establish their own management and monitoring system in other countries.''° With regard to SACEM’s decision only to grant blanket licences, the Court suggested that the test was one of ‘necessity’, that is whether the terms or practices were ‘necessary’ to safeguard the interests of authors etc. This was a matter for national courts to determine. With respect to the charges, the ECJ stated that ‘if it were proved that the fees of a dominant undertaking in one member state are appreciably higher than those charged in other member states and where such a comparison of the fee levels has been made on a consistent basis, it follows that the discrepancy ‘must be regarded as indicative of an abuse of dominant position’.!!” In such circumstances, the EC] indicated that the burden of proof was effectively reversed. Where this occurs it would be for the relevant collecting society ‘to justify the difference by reference to objective dissimilarities between the situation in the member state concerned and the situation prevailing in all the other member states.’!!8 Uncharacteristically the ECJ also volunteered some views on the extent to which

differences between SACEM and other societies were justified. More specifically, the

EC) found that one of the reasons for the marked differences between SACEM and

other equivalent societies was the level of operating expenses: the SACEM staff level was much larger than in other countries and the proportion of receipts taken up by administrative expenses was therefore higher. However, the ECJ did not consider that these differences in operating expenses could necessarily justify higher charges being imposed on useis. Instead, it said that rather ‘the possibility cannot be ruled out that it is precisely the lack of competition on the market in question that accounts for the heavy burden of administration and hence the high level of royalties,’!!? The decision of the European Court of Justice indicates that some collecting society practices will contravene Articles 81 and 82. It also made it clear that an assessment of the existence of anti-competitive behaviour or abuse is largely one for national authorities. It seems too that the Commission is unlikely to intervene and take action to enforce Articles 81 and 82 against collecting societies on the ground that the activities lack sufficient ‘Community interest’. For example in Tremblay, where a 16 Ministere Public v. Tournier and Verney, Case 395/87 [1989], ECR 2521; [1991] 4 CMLR 248.

117 Tbid., 2577 (para. 38). In Bassett v. SACEM, Case 402/85 [1987] ECR 1747, 1769 (para. 19) the Court

did observe that ‘it is not impossible, however, that the amount of royalty ... charged by the copyright management society may be such that [Art. 82] applies.’ '18 Case 395/87 [1989] ECR 2521, 2577 (para. 38). 119 Thid., 2578 (para. 42).

LIMITS

ON

EXPLOITATION

293

complaint was brought by French discotheques against SACEM on the ground that its charges were substantially higher than those charged elsewhere in the Community, after an initial inquiry the Commission decided not to pursue the complaint. It did so on the grounds that the effects of the pricing policy were felt only in France and that proceedings had already been initiated in the French courts. The European Court of Justice declined to overturn this analysis and compel the Commission to investigate

further.!”° For the future, then, complaints about society—user relations are best directed to national authorities. In the UK this would be to the courts or the OFT where Articles 81 and 82 are implicated, otherwise to the Copyright Tribunal. It should be noted that the effect of the Tremblay case is not to make Articles 81 and 82 irrelevant. Rather it merely indicates that the Commission no longer sees itself as having a central role in investigating complaints and enforcing these provisions in the context of collecting societies. 5.2.3 European harmonization of collecting societies As we have seen, although the Treaty imposes certain restrictions on the operation of collecting societies that will be investigated at a Community level, collective licensing is largely controlled at the national level. Occasionally, operators try to obtain Europewide licences,'*! and there will be clear economies of scale in doing so. In such circumstances, the limited jurisdiction of the national regulatory bodies may become problematic, and a European agency for controlling abusive conduct may need to be established.'”* In November 2000, the Commission held a hearing on collective management. While the hearing recognized the importance of collective administration, the participants indicated that a higher degree of approximation of the rules as to control of such organizations was desirable. In time, therefore, it would not be surprising to see some kind of initiative in this field. 120 Tremblay and Others v. EC Commission, Case C-91/95P [1997] 4 CMLR 211; Ibid., 427. See I. Stamatoudi, ‘The European Court’s Love—Hate Relationship with Collecting Societies’ [1997] EIPR 289.

!21 See H. Porter, ‘European Union Competition Policy: should the role of collecting societies be legitimized?’ [1996] 12 EIPR 673.

122 See also D. Zeffman and J. Enser, ‘The Impact of UK Competition Law on the Music Industry’ [1993] Ent LR 67,71.

i REPO Ries PERFORMERS RIGHTS, DATABASE RIGHT, AND PUBLIC LENDING RIGHT 1 INTRODUCTION In this chapter we outline three regimes which are related to but which fall outside of the remit of copyright law: performers’ rights, database right, and public lending right.

2 PERFORMERS’ RIGHTS While the creative or cultural contributions made by people who play instruments, read poetry, and act in plays have long been valued, nonetheless performers have been poorly served by intellectual property law. Indeed, it was not until technological changes at the beginning of the twentieth century (notably the emergence of soundrecording technologies and radio broadcasting) threatened the livelihood of performers that the law intervened to protect performers. This occurred in 1925 when criminal sanctions were introduced to discourage people from abusing a performer’s right to control the fixation and subsequent use of their performances.! The courts provided additional relief by allowing performers to bring civil suits for injunctions and damages for threatened breaches of the criminal law.? While it might have been expected that copyright law would have been expanded to accommodate performers, this was not the case. In part this was because the fleeting and transitory nature of performances meant that they could not satisfy the requirement of material form that is a prerequisite for the subsistence of copyright. Another reason why performers were ! Dramatic and Musical Performers’ Protection Act 1925, consolidated and amended in the Performers’

Protection Acts 1958 and 1972. See R. Arnold, Performers’ Rights (1997). 2 Rickless v. United Artists [1987] FSR 362.

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295

not protected by copyright was that they were considered to be subservient to the interests of the ‘proper’ rights-holders: namely, authors, composers, and dramatists. While authors and composers create primary works, performers were seen to merely translate or interpret these works. In short, it was believed (at least by some) that

performers were involved in acts that were less ‘creative’ than authors, graphic artists, and film directors. The second-rate status of performers was reflected in the decision that performers did not belong within the Berne Convention (along with the producers of phonograms and broadcasting organizations). Indeed it was not until the Rome Convention of 1961 that performers were recognized at the international level.’ The rights given to performers have been expanded further in the WIPO Performers and Phonograms Treaty 1996. Subsequent attempts to expand the protection available to performers often met with the response that it was not necessary to provide additional protection because performers were already compensated through industry pay awards. In part these awards reflect the fact that performers have learned to negotiate collectively, through union action (such as Actors’ Equity). Eventually, the lobbying efforts of performers paid off when the 1988 Act provided performers with the right to control the recording of live performances (and other related rights). As the rights were not assignable, they are described as ‘non-property’ rights. The 1988 Act also provided producers with certain rights when they entered into exclusive contracts to record performers.* The scope of the protection given to performers was further expanded as a result of European harmonization. To bring UK law into line with the Rental Rights Directive, the 1988 Act was amended from 1 December 1996 to provide performers with fully assignable ‘property rights’ and certain ‘rights to remuneration’.

2.1

RIGHTS

There are three types of rights available to protect performers: non-property rights, property rights, and remuneration rights. Performer’s rights are granted in relation to the performance of dramatic or musical works, readings and recitations of literary works, and also to ‘a variety act or any similar presentation’.° The performance must be given by one or more individuals. The beneficiary of the rights given in a performance is prima facie the performer. There are no exceptions where the performer is employed.° 2.1.1 Non-property rights A performer has the right to authorize the recording of a live performance. They also have the right to prevent the making of a recording of a live performance from a broadcast or cable programme in which it has been included.’ (These are the acts of ‘bootlegging’.) These rights are not infringed if the recording is made for private and 3 See above at pp. 35~7.

4 CDPA ss. 180-4.

© R. Arnold, Performers’ Rights (1997), ch. 3.

7 CDPA s. 182.

5 CDPA s. 180(2).

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domestic purposes. Performers also have the right to prevent their live performances being broadcast or included in a cable programme. Prior to the mass distribution of fixed recordings, this right would have been very important. Where a recording has been made without the consent of a performer, his or her rights are infringed when the wrongfully recorded performance is shown or played in public, broadcast or included in a cable-programme service. This right is only infringed where the defendant knew or had reason to believe the recording was made without the performer’s consent.* This would cover the playing of obviously bootlegged recordings at discotheques or over the radio. Performers are also given the right to control the distribution of illicit recordings. These are recordings made, otherwise than for private purposes, without the consent of the performer or the person, if any, having recording rights.” Importation and sale of illicit recordings is prohibited where the person knows or has reason to believe that the recording is illicit.!° All of these non-property rights are non-transmissible, except on death.!! Infringement is actionable as a breach of statutory duty. A person may also be subject to criminal liability if they knowingly commit certain commercial acts in relation to illicit recordings.'? At present, performers do not benefit from moral rights. However, a consultation process is under way to consider how UK law should be amended to give effect to Article 5 of the WIPO Performances and Phonograms Treaty (which provides for moral rights of attribution and integrity for performers).!> Consideration is also being given as to whether these amendments should extend to audiovisual performances. 2.1.2 Property rights

Performers are also given property rights in their performances. These rights were introduced in order to implement the Rental Rights Directive.!5 The performer’s property rights include the right to make copies of a recording of a qualifying performance, the right to issue copies of a recording to the public, and the right to rent or 8 CDPA s. 183. ? CDPA s. 197. 10 CDPA s. 184. 1l CDPA s. 192A.

'2 CDPA s, 198. Illicit recording is defined in CDPA s. 197. '3 See above at p. 39. '4 Copyright Directorate, Moral Rights for Performers: A Consultation Paper on Implementation in the UK of the WIPO Performances and Phonograms Treaty Obligations on Performers’ Moral Rights and on Further Developments in WIPO on Performers’ Moral Rights (1999). The document proposes that the moral rights granted to performers be formulated to contain similar limitations and exceptions as those granted to authors, most notably, a requirement of ‘assertion’ of the right of attribution. On such limitations, see Ch. 10. 15 See Ch. 2. The new regime applies to performances given before commencement: Related Rights Reg. 26(1). No act done in pursuance of an agreement made before 19 Nov. 1992 shall be treated as an infringement of any new right: Reg. 27. Where before commencement the owner or prospective owner of a performer’s right in a performance has authorized a person to make a copy of a recording of the performance, any new right, such as the issuing right or rental right, in relation to that copy shall vest on commenceme nt in the person so authorized: Reg. 31.

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297

lend copies.'® The definitions of these three rights correspond to those of a copyright owner.'’ In contrast with the other rights given to performers, these property rights are transmissible. Any assignments made must be in writing and signed by the assignor.'* In relation to film-production agreements, a performer is presumed, in the absence of an agreement to the contrary, to have transferred the rental right to the producer.!” 2.1.3 Right of remuneration

Performers are also given two ‘remuneration rights’. These were introduced in the process of implementing the Rental Rights Directive. The most important of these, at least financially, is the right to claim equitable remuneration from the owner of copyright in a sound recording of a qualifying performance, where the sound recording is played in public, broadcast or included in a cable-programme service.2° This right formalized the pre-existing practice whereby recording companies made ex gratia payments to bodies representing musicians. Under the new regime, performers must claim their revenue that accrues in the UK from the collecting society that administers the performing and broadcasting rights on behalf of the owners of copyright sound recordings, namely Phonographic Performance Limited. In practice, this is done via the collecting society PAMRA (the Performing Artists’ Media Right Association).*! The second remuneration right is less important. This provides that where a performer has transferred his or her rental right concerning a sound recording or film to the producer, the performer retains the right to equitable remuneration for the rental of sound recordings or films.” Both of the remuneration rights may only be assigned to a collecting society.”? In the absence of a relevant agreement, the Copyright Tribunal may determine royalty rates.* As yet there have been no cases where the Tribunal has been asked to assess what an equitable remuneration should be. In so far as the remuneration rights are intended to strengthen the bargaining position of performers, it is unlikely that the 16 CDPA s. 191A and s. 182A-C. The Copyright Tribunal has an ultimate power to override a performer’s right to consent, if he or she cannot be identified: CDPA s. 190, as amended. Prior to 1 Dec. 1996, the Tribunal

had power to override refusal of consent if itwas being unreasonably withheld.

'7 18 D 20

See Ch. 6. CDPA s. 191B. CDPA:s..191F. CDPA s. 182D.

21 PAMRA was formed in 1995 (backed by the Musicians’ Union, Equity, Re-Pro, and the Incorporated Society of Musicians), and represents all performers. It currently has over 9000 members and has reciprocal agreements with, inter alia, the corresponding Dutch (SENA) and German (GVL) societies. An alternative organization, Association of United Recording Artists (AURA), formed initially as a lobbying body, backed by the International Managers’ Forum and the British Association of Songwriters, Composers and Artists, also proposes to represent performers, especially named performers. 22 CDPA s. 191G. This scheme applies only to rentals after 1 Apr. 1997, and, with respect to rentals of sound recordings or films made in pursuance of an agreement entered into before 1 July 1994, is only available if there was appropriate notification before 1 Jan. 1997.

23 CDPA s. 191G(2).

24 CDPA ss. 182D(4), 191H.

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test of what a willing assignor and assignee of the right would have reached in the circumstances will offer much guidance as to the amount that ought to be paid. Rather, one might expect that equitable remuneration is defined proportionally. Under this approach, the rate to be paid to a performer would take account of the extent to which the contractual remuneration secured by the performer is a fair proportion of the profits. This would also take account of the relative importance of the claimant’s contribution.”° It is possible, however, that the notion of equitable

remuneration might be understood differently to mean that the performer ought to receive a rate similar to that which is received by other comparable performers. 2.1.4 Exclusive recording contracts

Special provisions exist in the 1988 Act that relate to exclusive recording contracts. Section 185 defines an exclusive recording contract as ‘a contract between a performer and another person under which that person is entitled to the exclusion of all other persons (including the performer) to make recordings of one or more of his performances with a view to their commercial exploitation.’ If the person having such rights is a qualifying person, then his or her consent is required by anyone else wishing to make a recording. A party who is the beneficiary of an exclusive recording contract may commence an action for breach of statutory duty against a person who makes such a recording,”® or who shows a wrongful recording in public or broadcasts it,”” as

well as against those dealing commercially in such illicit recordings.”* While performers’ non-property rights are not transferable, the person with an exclusive recording contract may assign rights under that contract.

2.2

DURATION,

DEFENCES,

AND

REMEDIES

All performers’ rights last for at least fifty years from the end of the year of the performance. However, if a recording incorporating the performance is released within this period,” the rights last for fifty years from the year of release.>! Rights vested in a performer at the time of their death may only be exercised by a person specifically nominated in the performer’s will or by their personal representative.>2 Performers’ rights are subject to a host of defences that, rather inconveniently, are contained in Schedule 2 to the 1988 Act. The defences parallel those for copyright and 25 Cf. the ‘compensation’ provisions where the employer of an inventor gains ‘outstanding benefit’ from a patent. See below at pp. 530-6.

6 27 28 29

CDPA CDPA CDPA CDPA

s. s. s. s.

186. 187. 188. 185(2), (3).

30 CDPA s. 191(2). The requisite ‘release’ includes the following acts if authorized: publication, playing or showing in public, or broadcasting or cable-casting to the public: CDPA s. 191(3). For further details on these rights, see Ch. 6.

31, CDPAis!.191. 22 CDPA®, 192.

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include fair dealing for criticism or review, fair dealing for reporting current events, incidental inclusion, as well as a range of educational and library defences. These are all discussed in Chapter 9, and the comments made there apply equally to performers (mutatis mutandis). One defence notable by its absence is the defence of fair dealing for research and private study. The reason for this is that most of the acts covered by the defence fall outside the rights conferred on performers (which do not extend to the making of recordings for private and domestic purposes). It does seem, however, that a performer will be in a weaker position than copyright owners where performances or works are reproduced for commercial research. Like copyright, the property and non-property rights are enforceable in civil and criminal actions. The usual remedies for breaches of statutory duty are available, namely injunctions, damages or account of profits. The right-owner may also prosecute for a range of statutory offences, seek orders which include delivery-up and disposal, and seize infringing articles from traders without premises. These remedies are discussed in Chapter 48.*°

2.3

FOREIGN

PERFORMANCES

Performances by foreign performers or performances that take place in foreign countries will be protected in the UK if the performance is ‘qualifying’. A performance is a ‘qualifying performance’ if it is given by a ‘qualifying individual’ or takes place in a ‘qualifying country’.** A “qualifying individual’ is a citizen of, or an individual resident in, a ‘qualifying country’.*’ A ‘qualifying country is defined as the United Kingdom, another member state of the EEA, or a country ‘designated ... as enjoying reciprocal protection’ under section 208 of the 1988 Act.*° Section 208 empowers Her Majesty to designate certain countries as qualifying countries by Order in Council: either countries party to a convention relating to performers’ rights (namely the Rome Convention or TRIPs), or countries deemed to give ‘adequate protection’ to

performances by British citizens, residents or taking place in the United Kingdom.*’ Where a country is designated, it seems that such designation operates retroactively.**®

Unfortunately, the relevant Order in Council does not contain any saving for vested 33 CDPA ss. 194-202. 34 CDPA s. 181. 35 CDPA s. 206. For a general analysis of concepts relevant to protecting foreign claims see above at pp. 5, 34-5.

36 There is no distinction drawn between ‘extension’ and ‘application’, though CDPA s. 208(5) allows Part II of the Act to be ‘applied’ to countries that in Part I are subject to ‘extension’. 37 Performances

(Reciprocal

Protection)

(Convention

Countries)

Order

1995

(SI 1995/2990)

which

revoked and replaced SI 1994/264. 38 This is done currently by way of the Performances (Reciprocal Protection) (Convention Countries) Order 1995. In this Order qualifying countries are divided into two categories: those under Part I of the Order which belong to the EEA or the Rome Convention, and performances connected to them are granted full protection; or under Part II of the Order, in which case connected performances receive more limited protection, being confined to the right to prevent the making of a sound recording from a live performance and the broadcasting or cable transmission of a live performance.

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rights or for those who have prepared arrangements on the assumption that no relevant performer’s right operated.*? Section 185, which confers equivalent rights on a person who is party to an exclusive recording contract, does so only if he or one of his licensees, is a ‘qualifying person’. A ‘qualifying person’, is defined as a ‘qualifying individual’ or a body corporate sufficiently connected with a ‘qualifying country’.*°

3 DATABASE

RIGHT

Many different technologies organize and order information: encyclopedias, filing cabinets, and textbooks all play their role in placing information in a usable format. Databases are another obvious example. While databases have existed in one form or another for a very long time, digital technology has transformed and revitalized databases. In particular, the digital database has enabled the production of facilities that enable easy access to vast collections of information. Examples familiar to lawyers include LEx1Is and wEsTLaw, as well as CD-ROMs such as the ‘Index to legal period-

icals’. The value of these facilities is the comprehensive nature of the information that they contain and the ease of access, rather than the way that information is ordered. While databases can cost a considerable amount of money to construct, they are readily copied. This makes them an ideal candidate for intellectual property protection.

Faced with the fact that the level of protection varied, sometimes considerably, between member states, the EC decided to harmonize the law that protected the effort that went into creating databases. Eventually these efforts took shape in the form of the Database Directive.*! The Database Directive required member states to introduce a two-tier system of protection for databases.” The first tier involves retaining copyright protection for databases that are ‘original’.*? This was discussed in Chapters 3 and 4. The Directive also requires member states to provide a second tier of protection by way of a new sui generis right known as the ‘database right’. Database rights arise in relation to databases, including those that fail to reach the specified originality threshold.“* The database right is separate from and in addition to any copyright protection 39 See Arnold, Performers’ Rights, 51-7. 40 CDPA ss. 181, 185(3), 206(1). 41 See above at pp. 47-8.

“2 Similar initiatives are being considered in the USA and at WIPO. A draft WIPO Database Treaty was circulated in Aug. 1996 but was not considered in the Geneva meeting in Dec. 1996. J. Reichman and P. Samuelson, ‘Intellectual Property Rights in Data?’ 50 Vanderbilt Law Review 51, 95-113. 43 Transitional provisions make it clear that databases which are already protected by copyright on 27 Mar. 1996, but which would not reach the standards required under the Directive, continue to enjoy protection until the end of the copyright term. 44 Database Reg. 13(2) says that it is immaterial whether or not the database or any of its contents are copyright works.

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301

that may exist in relation to a database. The new right was introduced into the United

Kingdom on | January 1998, in the Database Regulations.*? This new database right has been described as ‘one of the least balanced and most potentially anti-competitive intellectual property rights ever created.’ As yet, it is difficult to assess the impact of the new database right. In a number of ways the protection provided by the database right is stronger than that conferred by copyright—a rather bizarre situation given that the criteria of protection seems to be

more generous than for copyright. One of the problems with database protection is its potential to be extended indefinitely. If this occurs, third parties will have to pay to access the data or generate the data themselves. At the same time the exceptions to the database right are much narrower than exist for copyright. It has been doubted whether it was necessary for the protection of databases to be nearly as strong as it ig:f”

3.1

SUBSISTENCE

The database right is a property right that subsists in a database whether made before or after 1 January 1998.** A ‘database’ is defined as ‘a collection of independent works, data or other materials that are arranged in a systematic or methodical way, and are individually accessible by electronic or other means.” The database right only arises if there has been a substantial investment in obtaining, verifying or presenting the contents of the database. ‘Investment’ includes any investment, whether of financial, human or technical resources. It has been said that it is unlikely that a person who verifies the information in someone else’s database would be given any rights in the database. This is because ‘verification is for the owner of the data; it is not a back door

to copying.”® Investment may be ‘substantial’ in terms of quality, quantity or a combination of both. The basic term of protection is fifteen years.°' More specifically, the database right expires fifteen years from the end of the calendar year in which the database was

45 Copyright and Rights in Databases Regulations 1997 (SI 1997/3032). 46 J. Reichman and P. Samuelson, ‘Intellectual Property Rights in Data?’ 50 Vanderbilt Law Review 51, 81.

47 Tbid., 51. 48 Database Regs. 13(1), 27-8. It is immaterial whether or not the database or any of its contents is a copyright work, so that there may be a database right where there is no copyright, or there may be both copyright and a database right. It may also be possible for a database to attract copyright but not the database right if the selection and arrangement renders the collection the author’s own intellectual creation but there is not substantial ‘human’ investment in presenting the contents of the database. Nothing in these Regulations affects any agreement made before commencement; nor does any act done either before or after commencement, in pursuance of an agreement made before commencement

amount to an infringement of the database

right in a database.

49 Database Reg. 12. °° Fourth Standing Committee on Delegated Legislation, 3 Dec. 1997, Minister of State, Dept. of Trade and Industry (Ian McCartney). >! Where the making ofadatabase was completed on or after 1 Jan. 1983, the right begins to subsist in the database for the period of 15 years beginning on 1 Jan. 1998: Database Reg. 30.

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completed.** However, where a database is made available to the public before the end of the period fifteen years from when it was made, rights in the database expire fifteen years from the end of the calendar year in which the database was first made available to the public. It is possible that a database right might subsist for thirty years (and may thereafter be extended, as discussed below). Where copies of the database as published bear a label or a mark stating that the database was first published in a specified year, the label or mark shall be presumed to be correct until the contrary is proved.°? It is important to note that a new period of protection may be acquired for a database. For this to occur there must be a substantial change to the contents of the database. This will include a substantial change resulting from the accumulation of successive additions, deletions or alterations (so long as the changes constitute a substantial new investment in the database). In these circumstances the ‘new’ data-

base qualifies for its own term of protection.*4 This means that while a person can access an old version of a database in which the sui generis right has expired be able to extract and reuse the information from that public domain database, would infringe if they took the same information from a database in which in a period of protection subsisted.

3.2

MAKERS

AND

who will they new

OWNERS

The ‘maker’ of a database is the first owner of the database right.° Subject to an exception as regards employees, the maker of the database is the person who takes the initiative in obtaining, verifying or presenting the contents of a database, and who assumes the risk of investing in that obtaining, verification or presentation.*” The implication of this is that the maker must take the initiative and the risk of the investment. If one person takes the risk and another person takes the initiative, joint making may occur. Where a database is made by an employee in the course of employment, unless otherwise stipulated, the employer is regarded as the maker of the database.°®

52 Database Reg. 17. 53 Database Reg. 22(3). °4 For an economic critique of the Directive see C. Koboldt, ‘The EU-Directive on the Legal Protection of Databases and Incentives to Update: An Economic Analysis’ (1997) 17 International Review of Law & Economics 127.

°° Accessing such a database may be unproblematic where there is a hard copy, but much more difficult where the owner of database right has only distributed the database ‘online’ and has subjected it to regular updating. 56 Database Reg. 15.

57 Database Reg. 14. 58 Database Reg. 14(2). Where a database is made by Her Majesty or by an officer or servant of the Crown

in the course of his duties, Her Majesty shall be regarded as the maker of the database: Database Reg. 14(3). Where a database is made by, or under the direction or control of, the House of Commons or the House of Lords, the rule is varied: Database Reg. 14(4).

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TO COPYRIGHT

303

A number of presumptions simplify the task of proving ownership.” Where a name purporting to be that of the maker appears on copies of the database as published or on the database when it was made, the person whose name appeared is presumed to be the maker of the database and to have made it in an employment relationship. Where copies of the database as published bear a label or a mark naming a person as the maker of the database, the label or mark is presumed to be correct.

Both presumptions are rebuttable. The database right is an assignable property right, and sections 90-3 of the 1988 Act apply to the database right as they would to copyright works. It is also possible to license database rights, and licensing schemes and licensing bodies are subject to supervision in accordance with Schedule 2. The jurisdiction of the Copyright Tribunal has been extended accordingly.

3.3

INFRINGEMENT,

RIGHTS,

AND

REMEDIES

The database right is infringed where a person, without the consent of the owner of the right, ‘extracts’ or ‘reutilizes’ all of, or a substantial part of, the contents of the

database. ‘Extraction’ means the permanent or temporary transfer of the contents of a database to another medium by any means or in any form. Playing a song from a jukebox would not be an extraction because the contents are not transferred to another medium. ‘Reutilization’ means making those contents available to the public by any means. The ‘infringing’ act must take place in relation to a ‘substantial’ part of the contents of the database. The question of whether the part taken is substantial depends on the quantity and/or the quality of the part taken. Importantly, Regulation 16(2) provides that the repeated and systematic extraction or reutilization of insubstantial parts of the contents of a database may amount to the extraction or reutilization of a substantial part of those contents. The database right allows the maker to control the first sale, but not the subsequent distribution, of hard copies on which data is stored. Where a copy of a database has been sold within the EEA by, or with the consent of, the owner of the database right in the database, further sales within the EEA of that copy shall not constitute the extraction or reutilization of the contents of the database. It is interesting that the right is only exhausted by ‘sale’ and not other forms of transfer. Consequently, the sale by a customer of gratuitously distributed copies of databases, such as British Telecom telephone directories, may infringe. Oddly, where there has been first sale of hard copies on which data are stored, the Regulations only permit resale and not other forms of transfer. The Regulations appear to suggest that the lawful buyer of a copy of a database cannot give it away, nor rent it. In relation to the remedies available for breach of the database right, the Database

Regulations provide that equivalent provisions of the 1988 Act apply in relation to the 59 Database Reg. 22(1). 62 Database Reg. 12(2).

60 Database Reg. 12.

61 Database Reg. 12(3).

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database right and databases in which that right subsists, as they apply in relation to copyright and copyright works.® 3.4

EXCEPTIONS

AND

DEFENCES

3.4.1 Lawful use

A lawful user of a database which has been made available to the public in any manner is entitled to extract or reutilize insubstantial parts of the contents of the database for any purpose. This limitation may not be excluded by agreement. 3.4.2 Fair dealing

Where a database has been made available to the public in any manner, the database right is not infringed by a fair dealing with a substantial part of its contents if three conditions are satisfied: (i) if that part is extracted from the database by a person who is a lawful user of the database; (ii) if it is extracted for the purpose of illustration for teaching or research and not for any commercial purpose; and (iii) if the source is indicated.” In exempting pedagogical uses, this provision gives rise to the possibility that a person may infringe copyright in an original database, but not the database right in the component data.°° 3.4.3 Public lending

An exception is also made for public lending. For lending to be ‘public’ it must take place through an establishment which is accessible to the public. Such an establishment is permitted to charge borrowers an amount that does not go beyond what is necessary to cover the costs of the establishment.” However, permitting remote access is not deemed to constitute a lending. Bizarrely, the exception for public lending does not apply to the making of a copy of a database available for on-the-spot reference use. Even if the lending is gratuitous and in a public establishment, the Regulations suggest that it may be an infringement.” 3.4.4 Other defences

Defences also exist in relation to parliamentary and judicial proceedings, Royal Commissions and statutory inquiries, material open to public inspection or on an Orseehnaz: 64 Database Reg. 19. > Database Reg. 20(1). 66 On fair dealing, see Ch. 9. 67 Database Reg. 12(3). 68 Fourth Standing Committee on Delegated Legislation, 3 Dec. 1997, Minister of State, Dept. of Trade and Industry (Ian McCartney): ‘On the question of libraries holding databases and making them available for remote access, we believe that is likely to count as an extraction or reutilization of the database’s contents, and not as public lending. Public lending means that a copy of the database held by the library is lent out and is to

be returned. Public lending is excluded from the scope of the database right, under regulation 12(2).’

6 Ibid. ‘On-the-spot reference does not count as public lending under regulation 12(4), and is therefore covered by database right.’

RIGHTS

RELATED

TO COPYRIGHT

305

Official Register, material communicated to the Crown in the course of public business, public records, and acts done under statutory authority.” The Regulations also provide a defence where the extraction or reutilization occurs at a time when the identity of the maker could not be ascertained by reasonable inquiry, or in pursuance of arrangements made at a time when such identification was not possible. It must also be reasonable to assume that the database right has expired.’' There does not appear to be any limitation as regards television listings.

3.5

FOREIGN

DATABASES

The database right will only subsist where its maker was, at the material time” either:

a national of an EEA state; habitually resident within the EEA; a body incorporated under the law of an EEA state; a body with its principal place of business or its registered office within the EEA; or a partnership or other unincorporated body which was formed under the law of an EEA state which, at that time, satisfied certain

conditions.”

4 PUBLIC

LENDING

RIGHT

Although copyright in books enables authors to control (and seek compensation) where their works are copied, they have no right to prevent a range of people from reading the same book. Typically this occurs when books are repeatedly borrowed from a library. As borrowing reduces sales of a work, when it is carried out on a large scale (public libraries in England lend 600 million times a year), it can substantially reduce an author’s expected income. To remedy these problems, a public lending right was established in the UK in 1979.”* The Public Lending Rights Act 1979 provides a framework for the scheme which is contained in the Public Lending Right Scheme

1982.”° This Scheme has been amended a number of times and its modern form is set out in a 1990 text.”° 70 Database Regs., Sched 1: these correspond to the provisions of CDPA ss. 45-50. 71 Database Reg. 21(1). 72 Database Reg. 18. The ‘material time’ means the time when the database was made, or, if the making extended over a period, a substantial part of that period. 73 Database Reg. 18(2). The conditions are (a) that the body has its central administration or principal place of business within the EEA or (b) that the body has its registered office within the EEA and the body’s operations are linked on an ongoing basis with the economy ofan EEA state. 74 B. Brophy, A Guide to Public Lending Right (1983); J. Phillips, ‘Public Lending: The Structure of a New Statutory Right’ [1979] EIPR 187. 79 Public Lending Right Scheme

1982

(Commencement)

Order

(SI 1982/719);

Phillips, ‘The Public

Lending Right Scheme 1981’, 47. 76 (SI 1990/2360). Since then there have been further alterations in the Public Lending Right Scheme (Commencement of Variation) Order 1992 (SI 1992/3049) (altering Art. 46(a) of scheme); 1991 (SI 1991/ 2618) (removing Art. 6(2)(b)).

306

COPYRIGHT

The public lending right scheme entitles authors to remuneration where their works are loaned by public libraries.’? This is based on the principle that authors should be compensated for lost revenues since such loans are substitutes for sales. The public lending right does not provide authors with large sums of money. Basically, an author’® living in the UK” may register their right to receive a share of up to £6,000 per annum from a government fund of £5 million.® The right persists for the same period as copyright. To qualify for the scheme, authors must be EEC nationals or British or German residents. The right only applies with respect to books.*! The mechanism by which the fund is administered is left by Parliament to the Secretary of State. However, section 3(3) declares that the entitlement is to be “dependent on, and

its extent ascertainably by reference to, the number of occasions on which books are lent out from particular libraries.’ Libraries thus have to provide information about the books they have loaned. 77 & number of countries also recognize ‘public lending rights’. See S. von Lewinski, ‘Public Lending Right: General and Comparative Survey of the Existing System in Law and Practice’ (1992) 154 RIDA 3 (Denmark (1946), Norway (1947), Sweden (1955), Finland (1961), Iceland (1963), Netherlands (1971), Germany (1972), New Zealand (1973), Australia (1974), UK (1979), Canada (1986), and Israel (1986). These rights are not

within the remit of the Berne Convention and vary considerably from place to place. 78 Defined in Art. 4. Note that the author’s name should appear on the title page or be entitled to a royalty from the publisher: Art. 4(2).

79 Eligible authors are defined in Art. 5. At the date of application she should have her principal home in the UK or a country specified in Sched. 5. 8° Public Lending Right (Increase of Limit) Order 1993 (SI 1993/799); operative from 3 Apr. 1993; increasing the sum from £4.75m to £5m. (Previous increases: 1991 (SI 1991/158) to £4.75m; 1988 (SI 1988/ 609), £3.5m; 1985 (SI 1985/201), £2.75m; the fund was originally £2m.)

81 Eligible books are defined in Art. 6. Book means printed and bound publication but does not include books bearing corporate names, musical scores, and serial publications. The restriction to books of 32 pages has been removed.

PART

II

PATENTS

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14 INTRODUCTION

TO PATENTS

1 INTRODUCTION A patent is a limited monopoly that is granted in return for the disclosure of technical information. Under this Faustian pact, the applicant is required to disclose their invention so that it can be used (or worked) by a ‘person skilled in the art’.' In return, the state (in the guise of the Patent Office) issues the applicant with a patent that gives them the exclusive right to control the way their patented invention is exploited for a twenty-year period. While the protection provided by a patent, which is limited to twenty years, is not as long as the protection provided by copyright law or (possibly) trade-mark registration, the rights granted are more extensive. The rights granted to the patent owner cover most commercial uses of the patented invention. In addition, the rights will be infringed irrespective of whether or not the defendant copied from the patented invention. In part, the breadth of the patent monopoly is offset by the fact that patents are only granted if an applicant complies with a relatively onerous registration process. Unlike copyright, which arises automatically on creation of the work, patents are

only granted after the applicant satisfies the requirements of registration. Although the granting process may not be as onerous as some would like, it does impose a

number of limits and safeguards on the types of inventions that are patented, the scope of the monopoly granted, and the nature of the information that is disclosed in the patent. As such, rather than merely being seen as a prerequisite to grant, patent registration should be seen as a process in which policy goals are implemented and enforced. Two bodies grant the patents that operate in the UK. The first and oldest granting authority is the UK Patent Office. Patents granted by the UK Office only apply in the UK. A British patent cannot be infringed, for example, in Ireland or Germany. As of 1 June 1978, it is also possible to get a patent to protect inventions in the UK by

applying to the European Patent Office (EPO). It should be noted that the EPO grants a bundle of national patents. That is, rather than granting a single pan-European patent, the EPO grants a series of national patents. (The countries where protection is ! This is a notional person who has the requisite skill and knowledge appropriate to the type of invention in question.

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PATENTS

sought are chosen by the applicant.) Where an applicant designates the UK as one of the countries where they wish their invention to be protected, the resulting patent is known as a European patent (UK). While there are some subtle differences, once a patent has been grated by the EPO, it is treated as if it had been issued by the British Patent Office. Applications for grant of a patent can be made directly to the British Patent Office or the European Patent Office. It is also possible to apply to these offices indirectly by way of an international filing under the Patent Cooperation Treaty (PCT). The European Patent Convention (EPC) has surpassed the UK Patent Office as a source for applications for UK patents. As a result the question has arisen as to whether there is _ much to be gained from retaining a national patent office.” In line with the fact that there are two routes by which a patent for the UK can be granted, there are also two (interrelated) legal regimes that need to be taken into account. These are set out in the 1973 EPC and the 1977 Patents Act (which is modelled on the EPC). In addition, there

are also two different sets of tribunals that adjudicate on patent disputes: the tribunals at the EPO and the traditional British court structure (with some amendments for

specialist tribunals for patents).

2 HISTORY

OF THE

BRITISH UNTIL

PATENT

SYSTEM

UP

1977

The passage of the 1977 Patents Act marked an important change in British patent law. As well as introducing procedural and substantive changes, it also saw Britain’s entry into the EPC. While there are many important differences in the post-1977 law, in the following chapters we will encounter many concepts and ideas that predate the 1977 Act. For example, the image of the invention as the human intervention into nature that brings about a resulting physical change that underpins much contemporary jurisprudence, was well entrenched in British law by the mid-nineteenth century. In so far as patents can be seen as monopolies offered by the state as rewards, there are many historical antecedents. A notable example is the practice that came to prominence in sixteenth- and seventeenth-century Britain, where the Crown granted privileges to subjects in return for the subject carrying out some corresponding duty. Initially, these privileges were granted in letters patent, that is as ‘an open letter’ from the Crown to the subject (from which the term patent is derived). Unlike the present system, there were no formal checks or balances on the privileges granted by the Crown. As such, patents were frequently granted for activities that were already being performed by individuals. A famous example is the grant of a monopoly over the selling of playing cards.* Clearly, the grant of such a monopoly would have been ? See J. Phillips, ‘Time to Close the Patent Office Doors?’ [1990] EIPR 151.

3 Darcy v. Allen (1602) 11 Co Rep 84b; 77 ER 1131.

INTRODUCTION

TO PATENTS

311

detrimental to anyone who was already selling playing cards. As Crown grants of patents increased over the course of the sixteenth and seventeenth centuries, so too

did the criticism. Eventually, the Crown’s right to grant such privileges was challenged in the courts.‘ It was also subject to parliamentary intervention with the passage of the 1624 Statute of Monopolies, which imposed a general prohibition on the grant of patents by the Crown. While the Statute of Monopolies imposed a general prohibition on the grant of monopolies, an exception was made in section 6 where the grant related to “a manner of new manufacture’. As well as limiting the circumstances in which a patent could be granted, the 1624 Statute of Monopolies also limited the duration of the patents for new manufacture to a period of fourteen years. This period, which corresponded to two terms of apprenticeship, was based upon the idea that in return for the monopoly the patentee would teach the new ‘art’ to two sets of apprentices. While patents have existed in one form or another for many centuries, the patent system that exists today is largely a creation of the nineteenth century. Indeed many aspects of the registration process as well as many of the legal concepts that we look at in subsequent chapters crystallized over this period.? One of the most important changes that took place over the course of the nineteenth century was that patents changed from primarily being a creature of Crown prerogative to become a creature of bureaucracy. Although some of the trappings of the patent system’s early connection with the Crown remain, patents are better seen as the product of an administrative process than a form of Crown prerogative. The shift from Crown to administration was reinforced with the passage of the 1977 Patents Act that saw Britain enter into the EPC. Another important yet often overlooked change that took place in the nineteenth century was the crystallization of patent law. Indeed, it was only after the publication of the first textbooks on patent law and the first series of judicial decisions to consider the validity and infringement of patents that a distinct and relatively coherent body of law came into existence. Another important event that took place over the nineteenth century was that the emerging patent system was subject to a considerable amount of vocal and highly critical public scrutiny.® This scrutiny led not just to calls for the reform of patent law; but in some cases to calls for the abolition of the whole patent system itself. Critics of the patent system said that it was unnecessarily complicated, technical, and obscure. They also said that while applicants were able to benefit from the protection provided by the patent monopoly, the corresponding public interest in the disclosure of technical information was not being met. In part this was because in many cases the information disclosed in the patent was of limited practical value. Given the lack of control exercised over the nature and content of the information disclosed in the patent, key aspects of inventions were often not disclosed. As a result, third parties 4 Tbid.; 77 ER 1260; The Clothworkers of Ipswich Case (1614) Godb R 252; 78 ER 14. 5 See Sherman and Bently, 95-110. 6 The patent controversy was also important in so far as it led to public discussions about the goals and

functions of patent law (and intellectual property law more generally). See F. Machlup and E. Penrose, “The Patent Controversy’ (1950) 10 Journal of Economic History 1.

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PATENTS

were often not able to work or practise the invention from the information that was disclosed in the patent. Even where the information disclosed in the patent was potentially valuable, it was often very difficult for third parties to locate the relevant information. This was attributed to a range of factors from the fact that the titles of many patents did not match the subject matter of the invention, through to the fact that patent specifications were often not filed in a consistent or logical fashion. The criticisms of the patent system were also motivated by ideological concerns that focused on the monopolistic nature of the patents. Motivated by political economists, who championed laissez-faire ideas that the government should only interfere in the operation of the market where it was absolutely necessary, patent monopolies were presented as unjustifiable inhibitions on the market that inhibited free trade. (This is in contrast with critics of the Crown grant of patents in the seventeenth century when monopolies were seen to be undesirable because of their association with the Stuart attempts to govern without Parliament.) The criticisms made of the patent system had a longstanding impact on its shape and direction. Importantly, the shift away from patents being seen as a form of Crown prerogative opened the system up to the possibility of reform. Many of the objections to the existing patent laws were rectified in the 1883 Patents Designs and Trade Marks Act and by changes to Patent Office rules and guidelines. In turn many of the criticisms made of the registration process were met by a raft of administrative reforms. For example, the patent system was rationalized with the establishment of the Patent Office in 1852. In addition, patents were organized alphabetically and rules were introduced that helped to ensure that the titles of the patent corresponded to the patented invention. The growing practice of including a description of the invention (now called the specification) in the patent application was formalized. There was also more attention given to the form and nature of the information disclosed in the patent.

While many of the criticisms made of the patent system were met by legal and administrative reforms, nonetheless the criticisms made of the patent system continued to have an impact upon the way patents were viewed, long after the debates had ended. In part, this may explain why it was that from ‘1883 until after the end of the [Second World War], the courts tended to regard patent monopolies with some disfavour as being generally contrary to the public interest’.’ It is interesting to contrast these attitudes with the approach post 1949, where ‘the climate of opinion has changed. It is now generally recognised that it is in the public interest to encourage inventive genius. Accordingly the modern tendency of the courts has been to regard patent claims with considerably more favour than before’.’ This trend has become even more marked in recent years as the tribunals both in the UK and the EPO have grown increasingly inventive in their efforts to circumvent legislative obstacles to patent protection. Another notable trend that developed over the nineteenth century was the growing 7 Ethyl Corporations Patent [1972] RPC 169, 193 (Salmon LJ).

8 Ibid.

INTRODUCTION

TO PATENTS

313

influence that foreign patents systems had on the development of the British patent regime. As well as borrowing concepts from French and American patent law, aspects of the British registration process were modelled on foreign regimes. The second half of the nineteenth century also saw the growing internationalization of the patent system. These moves reached their peak with the signing of the 1883 Paris Convention’

(which now has over 140 member

countries).!° One of the notable

achievements of the Paris Convention was that it introduced the principle of national treatment. This is the principle that a convention country must treat the nationals of other signatory countries in the same way as it treats its own.'! Another notable aspect of the Convention was that it provided that an application for a patent in one member state should not prejudice later applications in other member states.’ This is achieved by requiring the later application to be treated as having the priority date of the earlier one. It should be noted that the Paris Convention does not impose minimum standards of protection for patents, as the Berne Convention does for copyright."

3 JUSTIFICATIONS

FOR

PATENTS

Over time, a number of different justifications have been given in support of the patent system. At times, the proponents of patent protection have emphasized the natural rights of inventors to the products of their mental labour.'* Others have argued that justice demands that an inventor’s contribution should be recognized by the grant of a reward.'? While arguments of this ilk have occasionally been relied upon in discussing aspects of the patent system, they have not been as popular as the public interest rationales. Having said that, the current debates about how indigenous interests should best be accounted for in the patent system have seen a resurgence of interest in arguments about inherent rights and justice. While commentators have occasionally drawn on natural rights in support of the grant of patents, the most common form of argument has concentrated on the public benefits that flow from the grant of patent monopolies. Although these arguments have changed over time, what they share in common is the basic idea that the 9 Bilateral arrangements that dealt with patent-related issues were entered into in the early nineteenth century. These were usualy in the form of Treaties of Freedom, Commerce, and Navigation. 10 See S. Ladas, The International Protection of Industrial Property (1930); E. Penrose, The Economics ofthe

International Patent System (1951); Asahi Kasei Kogyo [1991] RPC 485, 532 (HL). !l Paris Art. 2. The priority period is 12 months.

12 Tbid., Art. 4. 13 Although Paris Art. 4 ter requires mention of the inventor, Art. 4 quater requires that patents are not refused on the ground that sale of the product is restricted in domestic law, Art. 5 restricts the ability to forfeit the patent and the'availability of compulsory licences. 14 F Machlup and E. Penrose, ‘The Patent Controversy’ (1950) 10 Journal of Economic History 1, 11-17. 15 bid., 17-21.

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PATENTS

public should only ever have to endure the harm caused by the grant of a patent if the public receives some corresponding benefit. These arguments have tended to dominate discussion of the function of the patent system since the nineteenth century.

Initially, the public interest in the patent system was said to flow from the fact that the patentee introduced a form of technology that had not previously been available in the UK. Often this simply involved the patentee importing information about a trade or a craft from another country. Over time, this rationale was replaced

by the argument that the public benefit lay in the disclosure of the invention that occurred on publication of the patent application. That is, the justifications focused on the role that the patent system played in the generation and circulation of technical information. (This is often referred to as the ‘information function’ of the

patent system.) In particular it is said that patents act as incentives to individuals or organizations to disclose information that may have otherwise remained secret.!* Patents also encourage information to be disclosed in a way that is practically useful. At a more general level, the public interest in allowing patents is said to flow from the fact that the numerous patents that have been granted over time constitute a substantive and valuable database of technical and scientific information. The information function of the patent system was reinforced by the 1977 Patents Act and the EPC, which emphasized the need for the invention to be disclosed in such a way that it could readily be put into practice.!” The value and effectiveness of the information was also bolstered by the publication of patent specifications on the Internet.

While the primary focus of the patent system is on the disclosure of technical information for scientific and industrial reasons, the information that is collected at

patent offices throughout the world is occasionally used for other purposes. For example, historians have used the patent system as an indicator of public attitudes towards different technologies.'* More bizarrely, the fact that patent applications had been lodged for ovens for the burning of human corpses was used in a defamation action as evidence of the existence of gas chambers at Auschwitz.!° Patents have also been justified by the fact that they provide an incentive for the production of new inventions.” As Lord Oliver said in Asahi the ‘underlying purpose of the patent system is the encouragement of improvements and innovation. In return for making known his improvement to the public the inventor receives the benefit of a period of monopoly during which he becomes entitled to prevent others from

16 See D. Davies, ‘The Early History of the Patent Specification’ (1934) 50 LOR 86. 17 See below at pp. 457-61. 18 T. O'Dell, Inventions and Official Secrecy (1994). 19 Irving v. Penguin Books (11 Apr. 2000), para. 7.65 (QB). G. Reimann, Patents for Hitler (1945).

20 Kitch emphasized the way in which the grant of patents could be analogized to the grant of mineral rights, giving the grantee an incentive to invest in the exploitation of the ‘prospect’. See E. Kitch, ‘An Economic Review of the Patent System’ (1977) 20 Journal of Law & Economics 265.

INTRODUCTION

TO PATENTS

315

performing his invention except by his licence.”*! More specifically, it is said that as patents provide the possibility for inventions to be exploited for a twenty-year period, this means that investors will be more willing to fund research and development. In this sense, patents act as a vector that links scientific and technical research with commercial spheres.” Arguments of this nature have proved to be particularly important in situations where an invention can be readily ascertained (or reverseengineered) from the product which is put on the market (and no other form of protection exists). The fact that a product is patented is often used by retailers trying to gain a competitive advantage to show the innovative nature of their products. There is also a sense in which the fact that a product has been patented suggests that the product (or process) has been publicly sanctioned in some way or other. This has proved to be an important consideration in the ethical debates about whether patents should be granted for genetically modified humans, animals, and plants.

4 CURRENT

LEGISLATIVE

FRAMEWORK

The law that regulates the creation and use of patents that operate in the UK is a hybrid mixture of national, European, and international factors. In this section, we provide an introduction to the legislation, conventions, and treaties that we will encounter in subsequent chapters. We begin by looking at the most important regimes, namely the 1973 European Patent Convention and the 1977 Patents Act. We

then go on to look at the impact that the European Commission has had on patent law. After looking at the Community Patent Convention, we turn to look at some of the international treaties that have shaped British patent law. In particular, we look at the Patent Cooperation Treaty, TRIPs, and the Rio Convention on Biological Diversity.”

21 Asahi Kasei Kogyo [1991] RPC 485, 523 (Lord Oliver) (HL); Mansfield, ‘Patents and Innovation: An Empirical Study’ (1986) 32 Managing Science 173; Esswein/Automatic Programmer 1579/88 [1991] EPOR 120, 125. See J. Aubrey, ‘A Justification of the Patent System’, in J. Phillips (ed.), Patents in Perspective (1985); A. Plant, ‘The Economic Theory Concerning Patents for Inventions’ Silbertson, The Economic Impact of Patents (1973) chs. 2 and 14.

[1934] Economica 30; C. Taylor and A.

22 The role that the patent system played in inducing the invention and implementation of new industrial practices has been widely but inconclusively debated. See C. MacLeod, Inventing the Industrial Revolution (1988); H. Dutton, The Patent System and Inventive Activity during the Industrial Revolution: 1750-1852 (1986).

23 There are a number of other regional patent agreements, most notably the Bangui Agreement, the Harare Protocol on Patents, and the Eurasian Patent Convention (Moscow, 1994).

316

4.1

PATENTS

THE

EUROPEAN

PATENT

CONVENTION

The European Patent Convention (EPC) was signed in Munich in 1973 and came into

operation on | June 1978.” The EPC was based upon (and modified) the patent law of the various member states in force at the time. The EPC is an intergovernmental treaty that is distinct from the European Community. As such, membership extends beyond members of the EC. Currently, there are twenty member states of the EPC.° As we will see, the member states of the EPC recently agreed to revise the Convention.”° The EPC is primarily concerned with the granting of European patents. This was facilitated by the establishment of the European Patent Office (EPO) in Munich, which acts as a centralized system for the grant of European patents. When an applicant wishes to protect their invention in a number of European countries, the EPO

provides them with the benefit of a single application and search procedure, and a single grant of a bundle of national patents in each of the countries designated.”” Applications are made to the European Patent Office, situated in Munich. The applicant is required to designate the countries where they want their invention to be protected. The application is submitted to the Examining Division and appeals are made from there to a Technical or Legal Board of Appeal. In rare cases, the Boards of Appeal (or the president of the EPO) may refer legal matters to the Enlarged Board of Appeal. EPC applications must be in one of three official languages and the text of the patent must be in that language. Upon grant, a European patent becomes a bundle of national patents that have effect in each of the designated states for twenty years from the date of filing. The procedure for application to the EPO is similar to that for the

UK Patent Office.”*

When the EPC was being formulated, it was decided that for there to be an effective single granting process, it was necessary for the member states to harmonize the basic rules of patent law. This was particularly the case in relation to the rules on patentability and validity. As we will see, the tribunals at the EPO have had a substantial impact on this area of law. It is important to note that the EPC only provides a mechanism for the grant of national patents. As such, while the EPC is concerned with the validity of European patents, matters of infringement, enforcement, revoca-

tion, renewal, and litigation are exclusively dealt with by national law. One of the *4 Work began on a European patent system in 1949 in the Council of Europe with the Longchambon plan. For background see K. Haertel, ‘The Munich Diplomatic Conference on European Patent Law’ (1973) 4 IIC 271. P. Braendli (1974) 4 IC 402.

;

25 As of 1 Nov. 2000 the members were Austria, Belgium, Cyprus, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Liechtenstein, Luxembourg, Monaco, the Netherlands, Portugal, Spain, Sweden, Switzer-

land, Turkey, and the UK. “Turkey accedes to the EPC’ [2000] OJEPO 443.

26 See below at pp. 323-4. 27 The second

element

of the European

patent system, the Community

Patent Convention

(CPC),

provides for the establishment of Community-wide patent. It has not yet come into force. See below at pp. 319-20.

8 One important difference is that the EPC allows for third-party opposition to the grant during the 9 months after publication of the details of the grant. Opposition is not possible under the UK system, but it is open to a person who objects to the patent to seek revocation on similar grounds.

INTRODUCTION

TO PATENTS

317

consequences of this is that a patent granted at the EPO for two countries might be interpreted differently in each country. In order to reduce the chances of problems of this nature from arising, the EPO examiners, national judges, and examiners meet

annually, Further, a Protocol on the Interpretation of Article 69 of the EPC provides guidance as to how patents should be interpreted.” a2

1977 PALTENTs

ACT

The law that regulates the creation and use of patents in the UK is found in the 1977 Patents Act, as amended.” As the bulk of the 1977 Act was based upon the EPC, the passage of the 1977 Patents Act brought with it a number of substantive and procedural changes to British patent law. It also saw the UK’s entry into the EPC. In so far as the provisions of 1977 Patents Act are based on the EPC, the 1977 Act says that the provisions should be interpreted so as to give effect to the EPC and decisions made thereunder.*' The important task of ensuring that the UK law remains consistent with the law at the EPO has been recognized by the English courts in numerous cases.** Interestingly, the EPO has occasionally reciprocated by taking notice of the decisions of national offices and courts so as to avoid lack of uniformity in the law of the EPC countries.** Although there is no consistent pattern, pre-1977 decisions have not been treated as being wholly irrelevant when deciding questions under the 1977 Act. In some cases the courts have said that the 1977 Act swept away the old law.** In other cases, however, they have acknowledged that as the intent of the EPC was to harmonize existing national rules, pre-1977 decisions are still important.°° Despite this, as the jurisprudence at the EPO develops, it is clear that pre-1977 cases are becoming less important in the UK. 4.3

IMPACT

OF THE

EUROPEAN

COMMUNITY

While the European Community has not been involved in the reform of patent law anywhere near as much as it has in relation to trade marks and copyright, the Commission has been active in two areas. These are in relation to the duration of patents (via the Supplementary Protection Certificates scheme) and biotechnological inventions.*° In this context it is important to recall that the European Patent Convention, 29 PA 125(3). See B. Sherman, ‘Patent Claim Interpretation: The Impact ofthe Protocol on Interpretation’ (1991) 54 Modern Law Review 499.

30 This replaced the PA 1949.

31 PA s. 130(7);PAs. 91(1). 32 Wyeth’s Application [1985] RPC 545; Gale’s Application [1991] RPC 305, 322-3 (Nicholls LJ), 332 (Browne-Wilkinson V-C).

33, Wellcome Pigs T116/85 [1989] OJEPO 13, citing Stafford Miller’s Application [1984] FSR 258; ICI/ Cleaning Plaque T290/86 [1991] EPOR

RPC 612.

;

157 following Oral Health Products (Halsteads) Application {1977}

34 Unilever’s Application [1983] RPC 219; Merrell Dow v. Norton Healthcare [1996] RPC 76, 82; Hallen v. Brabantia {1990]'FSR 134, 139. 35 Gale’s Application [1991] RPC 305 (Parker LJ).

36 EU competition law also plays a key role in shaping British patents practice: see below at pp. 520-3.

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PATENTS

whose membership extends beyond the boundaries of the EC, is a separate and distinct treaty which operates outside the remit of the EC. The potential for overlap and conflict between the two regimes has been minimized by the fact that the two bodies have worked in tandem on many issues (which given the membership overlap is not that surprising). The first area of patent law where the EC has intervened is in relation to the duration of patent protection. Faced with growing delays caused by the need for

regulatory approval prior to marketing, patent owners argued that the time available for them to exploit their inventions was much shorter than the planned twenty-year period.*” To remedy this problem the EC introduced the so-called Supplementary Protection Certificates, which extend patent protection where it has not been possible for the patent proprietor to take full advantage of their patent rights over the period of the grant.** In particular, Supplementary Protection Certificates compensate the owner where they have not been able to market the patented product because of delays in seeking regulatory approval. The effect of the basic patent can be extended for up to five years by this supplementary right. The right is characterized as a right distinct from patents in order to avoid the apparent conflict that would otherwise occur with the maximum term under Article 63 of the European Patent Convention. A challenge made by the Spanish Government to this regime in 1995 was dismissed by the European Court of Justice.“ A corresponding scheme for Supplementary Protection Certificates has been introduced in the UK."! A second area where the EC has intervened in the patent field is in respect of biotechnological inventions. After a decade of heated debate, the Biotechnology Directive was formally adopted by the Council and the European Parliament on 6 July 1998. The Biotechnology Directive deals with the patentability*? and scope of protection conferred on biotechnological inventions.** As well as introducing special defences,*” the Directive also establishes a scheme for compulsory licences and cross licences to deal with the overlap between patent and plant variety protection.*© In 37 On the extent to which competitors may experiment prior to expiry of the patent, see below at pp. 506-8.

38 Council Regulation (EEC) no. 1768/2 of 18 June 1992 concerning the creation of a supplementary protection certificate for medicinal products (OJ 1992 L182/1). Regulation (EC) no. 1610/96 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 1996 L198/30-35). 39 The relevant regulatory authorities include the Medicines Control Agency, the Veterinary Medicines Directorate, the European Agency for the Evaluation of Medicinal Products, and the Pesticides Safety Directorate.

40 This was on the grounds that the Community did not have competence to legislate a new patent right, and that intervention could not be justified by reference to the need to harmonize laws for the internal market: Spain v. Council of the European Union, Case 350/92 [1995] ECR I-1985. 41 See below at pp. 550-5. 42 EC Directive on the Legal Protection of Biotechnological Inventions 98/44/EC of 6 July 1998; 98/44/EC of 6 July 1998; (1998) OJ L 213/13. (hereinafter Biotech. Directive)

43 Biotech. Directive, Arts. 1-7.

44 Ibid., Arts. 8-10. 45 Tbid., Art. 11. 46 Thid., Arto12:

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319

addition it also provides for the deposit of microbiological material.!” The bulk of the Directive was implemented in the UK in July 2000. It is accepted that the outstanding provisions (relating to compulsory licensing and deposit) will be implemented shortly.** During the passage of the Directive, the question arose as to the nature of the relationship between the Biotechnology Directive and the EPC. What would a British court do, for example, if the EPC and the Directive were in conflict? Problems of this nature were resolved when the Administrative Council of the EPO incorporated the

Biotechnology Directive into the Implementing Regulations of the EPC."” In so doing, the Administrative Council aligned the EPC with the provisions of the Biotechnology Directive. The Council also provided that the Directive should be used as a supplementary means of interpreting the EPC. As a result, the Recitals to the Directive can be taken into account where relevant. The controversial nature of the patenting of biotechnological inventions, which delayed the passage of the Directive for so long, has continued since it was passed. In addition to on-going public criticism of biotechnological patents, in November 1998 the Dutch Government filed a challenge to the Biotechnology Directive in the European Court of Justice. Italy has intervened in support of the Dutch, France has intervened in support of the Council of the EC.°! The grounds for annulment are a mix of procedural and substantive complaints.

44

THE

COMMUNITY

PATENT

CONVENTION

As part of the plans for the establishment of a European patent system in the 1960s and the 1970s, it was decided that a dual system of protection should be introduced.

The first element, which eventually emerged as the EPC, aimed to establish a centralized granting authority. The second part aimed to establish a single Community patent that was to be obtained by one central procedure and be binding in all member states. This came to be known as the Community Patent Convention (CPC), which was signed in Luxembourg in 1975.” One of the key advantages that is said to flow from the Community patent is that it would lead to a rationalization of patent 47 Tbid., Arts. 13-14. It also deals with implementation and review procedures Arts. 15-18. 48 Arts. 1-11 of the Directive were introduced into British law by Patents Regulations 2000 (SI 2000/2037) (in force 28 July 2000).

49 Administrative Council of the EPO 16 June 1999 amending the Implementing Regulations of the EPC [1999] OJEPO 437.

°° British Group of AIPPI, ‘Report Q 150: Patentability Requirements and Scope of Protection of Expressed Sequence Tags (ESTs): Single Nucleotide Polymorphisms (SNPs) and Entire Genomes’ [2000] EIPR 39, 40. 51 Netherlands v. Parliament, Case C-3777/98 [1998] OJ C378/13. See A. Scott, ‘The Dutch Challenge to the Bio-Patenting Directive’ [1999] EIPR 212.

>2 A. Krieger, ‘The Luxembourg Convention on the Community Patent: A Challenge and a Duty’ (1988) 19 IIC 143; V. Scordamaglia, ‘The Common Appeal Court and the Future of the Community Patent’ (1991) 22 IIC 334; V. Scordamaglia, “The Common Appeal Court and the Future of the Community Patent following the Luxembourg Conference’ (1991) 22 ITC 458.

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administration and thus to a reduction in costs. Unlike the EPC, the CPC has never come into force. To a large extent, these initial plans have recently been surpassed by EU moves to establish a single Community-wide patent. Under the CPC, a patent application would be made to an office at the EPO. To facilitate this, two new departments would be established: the Administration Diyision to deal with the administrative matters such as transfers and renewals of patents;

and the Revocation Division, to deal with applications to revoke Community patents. It is proposed that the system would offer a degree of flexibility, allowing an applicant to switch between EPC and CPC systems in early stages. A number of major problems emerged with the proposed system as regards languages and litigation. Under the 1975 Convention, it was proposed that an applicant would provide translations of claims in all (then eight) official languages. Under a 1989 revision to the CPC it is now proposed that this translation be of the complete text, not only the claims within three months of publication. Where this is not complied with, the patent would be void. This proposal would make a Community patent much more costly and less attractive. There will therefore be little advantage to an applicant for a Community patent than for a European patent. The advantages of the CPC would be limited to convenience and cheaper renewal fees. The Community patent would offer the possibility of Europe-wide litigation and enforcement (as well as challenge) through a Community patent court. The jurisdiction of the 1975 Convention was to be divided between national courts and the Community court, the former dealing with scope of protection, and the latter with validity. This was rejected in 1989. Under the revised CPC, the validity of a patent would be challengeable either by application to the Revocation division, or in a counterclaim for revocation before a national community patent court. Appeal from either would lie to a (yet to be established) Community Patent Appeal Court (COPAC). Appeal from a national court on other issues (such as damages) would be to the national appeal court. COPAC would also make the final decisions on appeals from the Administration and Revocation divisions. The plan was for COPAC to be an independent organization and not attached to the EPO or the ECJ. COPAC would be not only the appeal court but would also give preliminary rulings on the interpretation of the CPT, on request from national courts. With respect to remedies, the

national rules of the contracting state where the infringement occurred would have to apply. These Conventions have never been ratified by all the member states and have never entered into force.

4.5

INTERNATIONAL

TREATIES

As we mentioned earlier, international treaties have long played an important role in shaping aspects of British patent law. In addition to the Paris Convention (discussed above), the other treaties of note are the Patent Cooperation Treaty, TRIPs, and the

Rio Convention on Biological Diversity.

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321

4.5.1 Patent Cooperation Treaty The Patent Cooperation Treaty (PCT) was signed in 1970 and came into operation from 1978. The key feature of the Treaty is that it provides for a system of international application and preliminary examination procedure. The PCT currently has 108 contracting states. It is important to note that the Patent Cooperation Treaty only provides for an international application and search: the authority to grant the patent remains with the national patent office.*? The PCT provides a second route through which applications for patents that operate in the UK and the EPO can be made. Under the PCT, an applicant can apply to an international office and get an international search and an international preliminary examination. Once this is carried

out the application is sent to the designated national offices to decide whether to grant national patents. The centralized procedure is particularly useful for countries where the patent office is not capable of carrying out its own examination. The patent cooperation system is attractive because it reduces the fees payable and because of the lengthy period between the initial application to the international office and the time when that application is forwarded to the relevant national offices. The extra time, which varies between eight and eighteen months, gives applicants time to decide whether the invention is likely to be successful enough to warrant the translation costs that arise when the application is transferred to the national offices. 4.5.2 TRIPs

While TRIPs had a dramatic impact upon many developing countries, it had little direct impact upon European or British patent law. Perhaps the most significant change brought about by TRIPs relates to the limits imposed on compulsory licences. The impact of TRIPs may increase, however, as the jurisprudence at the World Trade Organization takes shape. In an important decision in relation to the patenting of computer programs, the EPO Board of Appeal noted that as the EPO was not a signatory to TRIPs, they were not bound by it. However, on the basis that TRIPs aimed at setting common

standards the Board said that it acted as an indicator of

modern trends.’ As we will see shortly, the member states of TRIPs are currently in negotiations over the reform of TRIPs.

53 The PCT was signed in Washington 1970; amended in 1979; modified in 1984. See K. Pfanner, ‘The Patent Cooperation Treaty: An Introduction’ (1979) EIPR 98; D. Perrott, “The PCT in Use’ [1982] EIPR 67; C. Everitt, ‘Patent Cooperation Treaty (PCT)’ (1984) 13 CIPAJ 383; [no author], ‘Patent Cooperation Treaty (PCT) in 1992’ (1993) 75 JPTOS 354; J. Cartiglia, “The Patent Cooperation Treaty: A Rational Approach to International Patent Filing’ (1994) 76 JPTOS 261; J. Anglehart, “Extending the International Phase of PCT applications’ (1995) 77 JPTOS 101. See below at pp. 344-5. 54 TRIPs Art. 2 requires members are to comply with Arts. 1-12 of the Paris Convention (1967). In addition TRIPs Arts. 27—34 increases the level of standards: Art. 27 as regards patentability; Art. 28 rights; Art. 29 disclosure requirements; Art. 30 exceptions; Art. 31 authorized uses; Art. 33 requires a term of 20 years from filing date. 55 IBM/Computer programs T1173/97 [2000] EPOR 219, 224-5.

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4.5.3 The Rio Convention on Biological Diversity The Rio Convention on Biological Diversity was signed in June 1992.°° While the Convention was not directly concerned with patent standards, it heralds a new approach to the way biological resources are used. The Convention provided developing countries with an opportunity to voice their unhappiness at the exploitation of indigenous resources by firms from the developed world. Of late, there have been numerous examples of situations where this has occurred: the Neem tree traditionally used in India to make medicines and insecticides has been the subject of thirty-seven patents in Europe and the USA;°’ there have been applications relating to the use of turmeric for treating wounds, and inventions based on genetic material obtained from the Hagahai people, a small ethic group in Papua New Guinea, have been patented. The Rio Convention on Biological Diversity offers a potential basis to control the uses made of traditional knowledge. The preamble recognizes the close and traditional dependence of many indigenous and local communities embodying traditional lifestyles on biological resources. It also recognizes the desirability of sharing equitably the benefits arising from the use of traditional knowledge, innovations, and practices relevant to the conservation of biological diversity and the sustainable use of its components.

While the Rio Convention may not have an immediate impact on patent law, it does represent a change of attitude towards the way natural resources are exploited which may impact upon the way patents are viewed. In particular it may help to undermine the pro-patent attitudes that have dominated for the last forty or so years. The impetus provided by the Rio Convention to reconsider the aims and functions of patent system has been reinforced by the growing body of literature that questions the often taken-for-granted assumption that technological development is both desirable and neutral. In so doing, commentators have emphasized the adverse physical and psychological effects of technology on individuals, their relations with society (alienation), and the planet in general (environmental problems). Technology is also seen as having vastly altered the nature of political government and reduced individual autonomy (computer databases, surveillance devices). Some authors have called for the democratic control of technology, in particular arguing that some research and development should be prohibited (note, for example, the debate over patenting higher life-forms).

°© There are 179 signatories to the Convention. The UK signed on 12 June 1992; the EC on 13 June 1992. °7 §. Kadidal, ‘Subject Matter Imperialism? Biodiversity, Foreign Prior Art and the Neem Patent Controversy’ (1996) 37 IDEA 371. E. Da Casta de Silva [1995] EIPR 546; M. Huft, ‘Indigenous and Drug Discovery Research: A Question of Intellectual Property Rights’ (1995) 89 Northwestern University Law Review 1678. 58 (26 Oct. 1996) New Scientist, 14.

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323

5 REFORM In this section we provide a brief overview of some of the proposed changes that are being made to the legislation and treaties that impact upon and shape patent law in the UK.

5.1

REVISION

OF THE

EPC

In the last decade or so, there have been growing calls for the European Patent Convention to be changed to take account of the technological, political and legal changes that have occurred since it was signed in 1973. To this end, a conference took place in Munich in November 2000 to discuss revision of the EPC.*? More specifically, the conference aimed to modernize the European patent system while maintaining the proven principles of substantive patent law and procedural law. The conference also aimed to undertake a comprehensive review of the EPC in light of technical and legal developments, and over twenty years of practical experience. The conference also wanted to bring the EPC into line with TRIPs, the future Community patent, and the provisions of the forthcoming (WIPO) Patent Law Treaty. At the end of the conference, the twenty member states of the EPC agreed to make a number of changes to the EPC.® It should be noted that as the proposed changes first have to be ratified by the Parliaments of the member states, the new provisions will not enter into force immediately.®! As the Chair of Administrative Council of the EPO said at the close of the Conference on 29 November 2000, ‘the Convention as revised at this Conference will ... probably not have legal effect for another four or five years’.° The conference clarified and strengthened the extent of protection conferred by European patents by expressly including so-called doctrine of equivalents.®* The conference also decided that the member states should exercise greater political responsibility over the EPO. To this end, the Conference decided that a regular conference of ministers should be held at least every five years.“* The conference also decided to authorize the Administrative Council so that it could adapt the EPC to international treaties and European Community legislation.® Given the increased activity of the European Community in patent law, this may prove to be an important change. °9 The Administrative Council of the EPO launched the revision project in 1998. 60 Act Revising the Convention on the Grant of European MR/3/00 Rev. le (hereafter EPC Revision Act).

Patents (EPC)

(Munich)

(29 Noy. 2000)

61 The revised text will enter into force 2 years after the 15th contracting state has ratified, or 3 months after all of the contracting states have ratified the revised text. EPC Revision Act, Art. 6. See also Arts. 3, 4.

62 Statement by Dr Roland Grossembacher, Chairman of the Administrative Council of the EPO, 29 Nov. 2000 (Press release).

63 Proposed new Protocol on the Interpretation of Art. 69: EPC Revision Act, Art. 2, item 2. 64 Thid., Art. 1, item 1. 65 Tbid., Art. 1, item 10.

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PATENTS

In addition, the conference approved a number of amendments that aim to simplify and streamline the patent grant procedure before the EPO.% These changes are intended to provide greater legal certainty for applicants and patent owners. In the future, for example, it will be possible ‘to file patent applications in any language, since a translation into one of the official languages of the EPO will not be required until a later date. During the procedure itself, applicants will benefit from improved protection against inadvertent legal consequences arising from the non-observance of time limits.”® Another important revision provides patent owners with the option of limiting the protection afforded by their patents, in a central procedure before the EPO. The existence of centralized procedure for amendment means that proprietors will not have to go through the national patent offices. It also means that should a patent as granted turn out to be invalid, it can be amended quickly. It was hoped that this would act as an ‘incentive to amend incorrectly granted patents quickly and at low cost’. The conference also aimed to streamline the European grant procedure. Notably, it was decided that the search and examination of the patent application should be brought together. Presently, search and examination are carried out in a number of different locations. It was argued that as the EPO’s vast collection of search documentation is available through its databases at all its duty stations, there is no longer any need to separate the two tasks. It is expected that this will lead to a ‘significant increase in the productivity and efficiency of the EPO’. The conference has also created the legal basis for special agreements between the contracting states concerning the translation of European patents and the introduction of a central court system for the enforcement of European patents, issues which are also of importance for the Community patent proposed by the European Commission.” It should be noted that contrary to the Base Proposal for the Revision of the European Patent Convention, which proposed the deletion of ‘computer programs as such’ from Article 52(2)(c),”° the conference decided not to delete computer programs from the list of non-patentable inventions in Article 52(2) of the EPC.7! As such, the

existing legal position remains unchanged. It should also be noted that in light of the leading political and legislative role that the European Union played in this area, it was decided that it was inadvisable to open up a parallel discussion on the protection of biotechnological inventions. At the conclusion of the conference, it was decided that further diplomatic conferences should be organized to consider things such as the protection of computer programs and biotechnology inventions, .as well as the changes required to implement the Community patent. 66 See e.g., EPC Revision Act, Art. 1, items 27-43. 67 Statement by Dr Roland Grossembacher, Chairman of the Administrative Council of the EPO, 29 Nov. 2000 (Press release).

68 EPC Revision Act, Art. 1, item 51. See below at pp. 357-8. 69 Tbid., item 22.

70 CA/1000/00e. Distributed by the German Federal Ministry of Justice on 27 June 2000. Diplomatic Conference 20-9 Noy. 2000.

71 BPC Revision Act, Art. 1, item 17.

INTRODUCTION

5.2

PROPOSED

EUROPEAN

TO PATENTS

COMMUNITY

325

CHANGES

There are currently a number of proposals for reform that have been put forward by the European Commission that will have an important impact upon patent law if and when they are finalized. After looking at the proposal for utility model protection, we look at the two proposals that have grown out of the Green Paper on Innovation.” In particular, we examine the plans for the establishment of a unitary patent valid throughout the EU, and the proposal for a Directive on patent protection for inventions related to computer programs.” 5.2.1 Utility model protection As part of its ongoing reform of intellectual property law, in 1995 the European Commission announced its intention to harmonize national laws as regards utility models.“ The European Commission followed up in August 1999 when it presented the Amended Proposal for the Protection of Inventions by Utility Model.”° While most European states already offer some form of utility model protection (variously referred to as petty patents, registered inventions, or more generally as second-tier protection), no such regime currently exists in the UK. As such, while in many countries the Commission’s proposal will require minor reforms, as far as the UK is concerned harmonization will require the introduction of a new right. While these proposals have received support in the UK, they have also been subject to considerable opposition. Despite this criticism, it seems that it will only be a matter of time before the UK will have to provide some form of utility model protection.

5.2.2 The Community patent The goal of establishing a single European patent has been on the political agenda for over thirty years. Undeterred by the failings of the CPC, on 5 July 2000 the European Commission proposed the creation of a Community patent.’”° The Commission has

ambitiously said that the Community patent should be available by the end of 2001. 72 COM (95) 382. The Green Paper also considers intervention into other areas of patent law, such as employees’ inventions, the use of patent agents, and the recognition of professional qualifications. 73 See O. Bossung, ‘The Return of European Patent Law to the European Union’ (1996) 27 IIC 287. Following the Commission’s Green Paper on Innovation Dec. 1995, in Nov. 1996 the Commission issued an Action Plan for Innovation in Europe, proposing three lines of action for tackling Europe’s perceived ‘innovation deficit’. Subsequent to this initiative, a Green Paper on the European Patent was adopted by the European Commission on 24 June 1997, the main proposal of which concerns the option of converting patent law into a Community instrument. This was followed by Promoting innovation through patents: the follow up on the Community Patent and the Patent System in Europe (1999) OJEPO 197. 74 Green Paper, The Protection of Utility Models in the Single Market (Brussels, 19 July 1995) COM (95) 370

final. 75 Amended Proposal for a European Parliament and Council Directive approximating the legal arrangements for the protection ofinventions by Utility Model (12 Aug. 1999) Brussels COM (1999) 309 final/2. The Proposal incorporates most of the amendments proposed by the European Parliament in Mar. 1999. 76 Proposal for a Council Regulation on the Community Patent COM (2000) 412 final Brussels (1 Aug. 2000).

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PATENTS

There are a number of key features of the proposal. The first is that the Community patent would provide inventors with the option of obtaining a single patent that is valid throughout the European Union. Under the proposal Community patents would be issued by the EPO. Community patents would coexist with the national and European patents giving inventors the option to choose the patent which best meets their needs. The Commission also proposes to create a new centralized Community tribunal within the framework of the European Court of Justice to deal with disputes relating to infringement and validity. Disputes relating to contractual licensing and ownership of the patent will be handled by national courts. The Commission has said that if the Community patent was introduced it would significantly lessen the burden on business and encourage innovation by making it cheaper to obtain a patent (by reducing translation costs). It will also provide a clear legal framework in case of disputes. 5.2.3 Patentability of computer programs On 19 October 2000, the European Commission launched a process of consultation

on the patentability of computer-related inventions. The aim of the consultation is to help the Commission decide the level of protection that ought to be granted to computer programs and computer-related inventions. In so doing, the Commission aims to strike the appropriate balance between promoting innovation and ensuring

adequate competition in the marketplace. The Commission also proposes to harmonize national patent laws in this area. In part the consultation process was motivated by the belief that the absence of EU-harmonized legislation is a potential barrier to industrial growth, competitiveness, and the development of the internal market. It has also been said that the current legal system is unsatisfactory in so far as it lacks clarity and legal certainty. The Commission has also recognized that while computer programs ‘as such’ are excluded from patentability, nonetheless thousands of patents for technical inventions using a computer program have been granted by national patent offices and by the EPO. While national and EPO provisions setting out conditions for the granting of patents for computer-related inventions are similar, their application in practice varies considerably. The Commission’s proposal in this area has become even more important, in light of the decision at the Revision Conference of the EPC not to delete the current exclusion of computer programs as such from the scope of patentable subject matter in Article 52(2)(c) of the EPC.

5.3

WIPO

PATENT

LAW

TREATY

In the last decade or so, the World Intellectual Property Organization (WIPO) been engaged in an ongoing programme of reform of international patent law. first concrete outcome from this process was the Patent Law Treaty (PLT) which completed in June 2000.”” The PLT, which opened for signature on 2 June 2000, 77 \NIPO, Patent Law Treaty (2 June 2000) PT/DC/47.

has The was will

INTRODUCTION

TO PATENTS

527

enter into force once it has been ratified by ten countries.’* In essence the PLT is an international treaty that aims to simplify and streamline procedures for obtaining and maintaining a patent. It also aims to harmonize patent procedures relating to national and regional patent applications and the maintenance of patents. The PLT promises to reduce the cost of patent protection (as a result of changes such as national patent offices sharing the results of search and examination procedures) and to make the process more user-friendly and widely accessible. The specific changes include: the use of standardized forms and simplified procedures that reduce the risk of error; cost reductions for inventors, applicants, and patent attorneys; elimination of cumbersome and complicated procedures; improved efficiency of patent offices and lower operating costs; possibility to introduce electronic filing of patent applications and related communications; standardization of patent formalities in all countries party to the PLT (including the incorporation of provisions under the Patent Cooperation Treaty); exceptions from mandatory representation; and the possibility to obtain a filing date, even if the main part of the application (description) is filed in a foreign language.”? Under the PLT, the requirements and procedures for national and regional patent applications, and those for Patent Cooperation Treaty international applications, will be harmonized. This will eventually lead to standardized formal requirements and streamlined procedures for all patent applications at both national and regional patent offices.

5.4

GLOBAL

HARMONIZATION

OF SUBSTANTIVE

PATENT

LAW

The next stage in WIPO reform of global patent law began in November 2000, when WIPO launched discussions on the harmonization of the substantive requirements of patent law.*° These discussions go beyond the Patent Law Treaty of June 2000, which focused on the task of harmonizing the processes by which patents are granted, to consider substantive issues. It is hoped that by standardizing the rules on patentability this will mean that as applicants will not have to prepare totally different patent documents for different patent offices, the costs of patenting will decrease. It is also hoped that it will increase predicability about patentability of inventions. Although the Patent Cooperation Treaty (PCT) contains some principles of substantive patent law, these are only taken into account at the international phase when an application is submitted under the PCT. PCT contracting states are free to apply 78 There were 107 signatories to the Final Act of the Diplomatic Conference (including the UK and the EPO) on 2 June 2000.

72 WIPO Press release PR/2000/222; WIPO, Patent Law Treaty (2 June 2000) PT/DC/47. 80 WIPO Standing Committee on the Law of Patents, ‘Suggestions for the further development of internal patent law’ (25 Sept. 2000) SCP/4/2. Negotiators attended a meeting of the Standing Committee on the Law of Patents (SCP), which met 6-10 Nov. 2000. For the background see R. Petersen, ‘Harmonization: a Way Forward’ (1987) 16 CIPAJ 234; R. Petersen, ‘Harmonization—or Backward’ (1987) 17 CIPA] 66; R. Petersen, “Harmonization: Postponement’ (1989) 18 CIPAJ 118, 293; R. Petersen, ‘On to Harmonization’ (1990) 19 CIPAJ 147; R. Petersen, “Harmonization Again’ (1990) 19 CIPAJ 356; J. Pagenberg, “WIPO: Diplomatic Conference in the Hague on Harmonization of Patent Law (1991) 22 IIC 682.

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PATENTS

any substantive conditions of patentability during the national phase of an international application. Importantly, it is at this stage that the national authorities make the important decision as to whether a patent should be granted. At present there are six basic legal principles under consideration by the Standing Committee on the Law of Patents. These are definitions of prior art, novelty, inventive step (nonobviousness), industrial applicability (utility), sufficiency of disclosure, and the structure and interpretation of claims. It is planned that a future meeting will consider ‘first-to-file’ versus ‘first-to-invent’, time-limits upon the publication of applications and post-grant opposition.®!

5.5

TRIPS

REVIEW

The member states of TRIPs are currently in the process of reviewing and updating the 1994 Agreement. One of the points agreed when TRIPs was drafted was that there would be a built-in review procedure. While the details of the negotiations are still unclear, one area that is on the agenda is the review of Article 27.3(b). This provides a limited exception in relation to plant and animal inventions to the general rule that patents should be granted in all areas of technology. While the TRIPs Council has begun to discuss this issue, it is expected that it may take some time for a conclusion to be reached. 81 The next meeting of the Standing Committee on the Law of Patents (SCP) is to be held in May 2001. Copies of SCP meeting documents are available from the WIPO website http://www.wipo.int/activities.

iss} THE

NATURE

OF A PATENT

1 INTRODUCTION Patents have changed dramatically since they were first granted in England and Wales over four centuries ago. Initially, patents were crude documents, often only one or two sentences long. Since then, patents have become much more sophisticated, complex, and lengthy. As we will see in the next chapter, the process by which a patent is granted has also changed dramatically. A lot of care and attention has been given to the form and content of the patent. If there is a kind of symmetry or logic to the patent system, the content of the patent is the key to that process. As such, to understand many facets of patent law, it is important to have a good grasp of the nature and content of

the patent. This chapter is intended to provide an introduction to the nature of the patent. In so doing we look at the different ways patents are described, the way patents are drafted, and the contents of a patent.

2 TYPES Patents are described in a number

OF PATENTS

of different ways in the UK. Most commonly, a

patent is seen as a legal document that confers a twenty-year monopoly on the patentee. Patents are also characterized in terms of the organization that grants them. As we saw earlier, the patents that operate in the UK are granted by two authorities: the British and European Patent Offices. The patents that operate in the UK are known either as British patents or European patents (UK). British patents are issued by the Patent Office in the United Kingdom and are subject to British law. In contrast, European patents are patents that have been issued by the EPO in Munich. A European patent (UK) is a patent issued by the European Patent Office where the applicant has designated the UK as a country where they want the patent to operate. While there are a number of differences between the two systems, once a European patent (UK) has been granted, it is treated as if it had been granted by the British Patent Office.' Another way of classifying patents is in terms of the subject matter that they protect. ! PA ss. 77-8, PA r. 80; EPC Art. 64.

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PATENTS

In some instances, patents are described by reference to the industry or branch of science to which the patented invention relates. So, for example, it is common to speak of chemical patents or biotechnology patents. In other instances more abstract language is used to describe the subject matter protected by the patent. Patents described in this way fall into two general categories: product patents and process patents. Product patents, which were the first type of patents to be recognized by British patent law, provide protection over physical entities or things (such as products, apparatuses, devices, and substances). Such a patent could, for example, be for a new type of contact lens or, as a patent agent might say, ‘a new type of optical membrane being made up of at least one polymer and at least one solvent.’ Product patents or, as they are also known, claims to a product per se confer protection over all uses of that product, no matter how the product was derived.’ In contrast process patents, which were recognized by patent law in the early part of the nineteenth century, protect activities or actions (such as methods, processes, or uses).* Such a patent would claim, for example, the particular method by which a contact lens is made (or, ‘the method of making an optical membrane from a solution comprising at least one polymer and at least one solyent’).° Sometimes a product per se claim will not be available because the product is already known in the field, and a claim to the process or use is therefore all that is possible. Beyond these two broad categories of patents, there are a range of hybrids.® A wellknown example is the ‘product-by-process’ patent.’ A notable feature of such a patent is that the scope of protection is defined in terms of the steps by which the product is produced. To continue with the example used above, a product-by-process patent might claim ‘a contact lens made by a particular method’. Where a product already exists but a new process is devised for producing that product, it may be desirable to claim both the process and the product produced by the process. Product-by-process patents are useful where the monopoly conferred on a process patent does not encompass dealings with products of the process. However, the benefits of productby-process claims are less important under the European Patent Convention since infringement of a process occurs where a person disposes of, uses or imports any

product obtained directly by means of that process.’ Nevertheless, product-by-process 2 Advanced Semiconductor Products/Limiting Feature T384/91 [1995] EPOR 97 [1994] OJEPO 169. 3 See Mobil/Friction Reducing Additive G2/88 [1990] OJEPO 93; Telectronics/Pacer T82/93 [1996] EPOR

386; [1996] OJEPO 274, 285. In MOOG/Change of category T378/86 [1988] OJEPO 386 the EPO explained: [The] division of patents into various categories (process or product) is legally important because the extent of protection depends to a crucial extent on the category selected, specific types of use being allocated to each category which in some cases differ substantially from each other. The difference in effect on the right conferred by a patent is the reason why it is at all justifiable to classify patents in categories. 4 Crane v. Price (1842) 134 ER 239. See Sherman and Bently, 108. 5 Advanced Semiconductor Products/Limiting feature T384/91 [1995] EPOR 97 [1994] OJEPO 169.

© ‘There are no rigid lines of demarcation between the various possible forms of claim.’ Mobil/Friction Reducing Additive G2/86 [1990] OJEPO 93, 98-9. IBM/Computer-related claims T410/96 [1999] EPOR 318.

7 Ethylene Polymers/Montedison T93/83 [1987] EPOR 144; Eli Lilly/Antibiotic T161/86 [1987] EPOR 366.

8 PA s. 60(1)(c); EPC Art. 64(2).

THE

NATURE

OF A PATENT

331

claims are still useful where there is no other information available to define the product by reference to its composition, structure or other testable parameter.’

3 DRAFTING

OF PATENTS

The drafting of patents, which is normally undertaken by patent agents, is an important part of the patent process. It is also a complex and difficult task. In part, these difficulties can be attributed to the nature of the subject matter that is protected by patent law and to the fact that it is sometimes very difficult to explain particular forms of technology in the form demanded by patent law. In certain instances, notably in relation to biological inventions, patent law has been forced to develop specific rules and procedures to enable them to meet the requirements for patentability. Another reason why patent drafting is often such a difficult process is that patents are at once technical, commercial, and legal documents. As such, they are written with

a number of different purposes in mind. As we saw earlier, one of the rationales for the grant of patents is that they encourage the dissemination of technical and scientific information. In the hypothetical patent bargain which sees patents as if they were a contract between inventors and the state, the information contained in the application is treated as the ‘consideration’ for the grant of the monopoly.'® As well as encouraging inventors to disclose information that may otherwise remain secret, the patent system also attempts to ensure that the information which is made public is placed in a format that is usable. To this end, a series of detailed rules and procedures regulate the way the patents are drafted.'! To take one example, patent law stipulates that the patent specification ought to disclose the invention in a manner which is clear enough and complete enough for the invention to be performed by a person skilled in

the art.'? While the patent system encourages inventors to disclose their technical creations, it would be incorrect to conclude from this that patentees necessarily draft their patents according to the rules and procedures set down by the law. In some cases an inventor may take out a patent, but attempt to manipulate the information in the patent application in a way which suits their own purposes. For example, as well as disclosing the invention an applicant may draft their patent in such a way as to attract sponsorship or to advertise the existence of their patent.'? 9 IFF/Claim Categories T150/82 [1984] OJEPO 309. 10 “This is the price which the inventor pays in return for his twenty-year monopoly.’ Mentor y. Hollister [1993] RPC 7, 9. See also Grant v. Raymond, 31 US (6 Pet) 218, 247 (1832).

1 e.g., PA r. 18-20; EPC r. 29-33. 12 PA s. 14(3); EPC Art. 83. See below at pp. 457-61. 13 In Cartonneries de Thulin v. CTP White Knight [2001] RPC 107, 116 Robert Walker LJ said patent attorneys in different industrial countries adopt perceptibly different approaches to drafting patent specifications: German (and other continentao) draftsmen tend to a ‘central’ style which concentrates on the ‘centre

of gravity’ of an invention: British (and still more, American) drafstmen tend to a ‘peripheral’ style which seeks to delimit the boundaries of an invention.

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Given that the information contained in a patent application may be used by an applicant’s competitors, it is understandable that applicants may be tempted to provide only the minimum amount of information that is necessary for them to obtain a patent. While patentees may not be able to obscure their inventions in the way they once were, applicants are only required to disclose such details of the invention as to enable a person skilled in the art to make the invention. As a result, a patent may not reveal important features about the invention such as the cheapest or strongest starting materials.'* This ‘know-how’ may provide the patentee with a strategic advantage over competitors that may be important when an invention is made available to the public. Ultimately, the degree to which applicants are able to draft patents for their own purposes depends upon how stringently the Patent Offices and the courts enforce the disclosure requirements. Another factor that adds to the complexity of the drafting process relates to what has been called the infringement—validity dichotomy (or as it is also known the Gillette defence). As the scope of the monopoly is determined by what is claimed in the patent, the applicants may be tempted to claim more than they perhaps ought. At the same time, however, applicants need to be mindful of the fact that if they draft

claims too broadly, this increases the chance there is for the patent to be declared invalid (primarily for lack of novelty). As matters of infringement and validity are heard in the same tribunal, the infringement—validity dichotomy helps to ensure that the scope of the patent monopoly corresponds to what was actually invented.

4 CONTENTS

OF A PATENT

Patents in Britain and the EPO are made up of four key parts: (i) an abstract,'> (ii) a description of the invention,’® (iii) one or more claims,'” and (iv) any drawings

referred to in the description or claims.'® Before looking at these in more detail, it is important to bear in mind a number of preliminary issues. The various components of a patent perform a number of different roles. Some of these, such as the abstract, are used both for administrative purposes and as a way of advertising the existence of the patented invention. The description and claims, which form the core of the patent, respectively disclose the invention in a usable form and demarcate the scope of the monopolly. It is also important to note that the contents of a patent application differ somewhat from the patent itself. While the patent and the application for a patent both contain a description and claims, the main difference is 14 Although there is no requirement of good faith note PA ss. 62(3) and 63(2). > PAs. 14(2)(c), PA r. 19; EPC Art. 78(1)(e), EPC r. 33. 16 PA s, 14(2)(b), PA r. 16; EPC Art. 78(1)(b), EPC r. 27.

7 PA s. 14(2)(b) and PA r. 16(2); EPC Art. 78(1)(c), EPC r. 29. 8 PA s. 14(b), PA r. 16(2), r. 18; EPC Art. 78(1)(d), EPC r. 32. Patent applications must also contain a

pe

request for the grant of a patent and designate the inventor.

THE NATURE

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that the patent application contains additional information—the request for grant. The request for grant, which is used for administrative purposes, normally includes the title of the invention (which clearly and concisely states the technical designation of the invention), as well as relevant biographical details of the applicants and patent agents (if used). In the case of EPO applications, the request for grant must also designate the contracting state or states in which protection is sought.!’ As it is permissible to amend the patent application during and after the grant process, the final form that a patent takes may differ from the initial application. This process of amendment is examined in more detail later.”° While UK and European patents are very similar,”! there are some differences that ought to be borne in mind. One of these relates to the language that is used to describe the components of the patent. More specifically, it relates to the fact that while the core of a British patent is known as the ‘specification’ (which comprises a description of the invention, the claims, and any drawings referred to in the description or claims), the EPC and the PCT speak of the contents of a ‘patent application’ rather than of the specification.** Another difference between UK and European patents relates to the controls that are exercised over the form and content of the patent. While similar in that both have to meet the statutory requirements for patentability, the rules of the EPC (but not the UK) provide detailed guidance as to the precise form that a patent should take. This is particularly the case in relation to the description and claims. With these initial points in mind, we can now turn to look at the contents of a

patent in more detail.

4.1

THE

ABSTRACT

The first element of a UK and EPO patent is the abstract.”* This is a brief summary (usually around 150 words) of the more important technical features of the invention. Normally, an abstract contains the title of the invention, a concise summary of the matter contained in the specification, and an indication of the technical field to which

the invention belongs. The relevant rules also provide that the abstract should outline the technical problem which the invention attempts to resolve, the gist of the solution to that problem, and the principal use or uses of the invention.”

Patent abstracts perform two main tasks. First, they are used by the Patent Offices as a search tool in the examination of other patent applications. To this end, the patent rules stipulate that abstracts ought to be drafted in such a way that they constitute an 19 PA s. 14(2)(a), PA r. 16(1)-(3); EPC Art. 78(1)(a), EPC r. 26. 20 See below at pp. 357-61, 463-8. 21 European patents which designate UK are treated as UK patents. PA s. 77. 22 PA s. 14. See Genentech’s Patent [1989] RPC 147, 197-9, 236-7, 261. A. White, ‘The Function and Structure of Patent Claims’ [1993] EIPR 243.

23 PA s. 14(2)(c), PA r. 19; EPC Art. 78(1)(e), EPC r. 33. 24 PA r, 19(2); EPC r. 33(2) (abstract may be amended by the Comptroller).

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efficient instrument for searching in the particular technical field.?° Abstracts, which are normally published around eighteen months after the application was filed, also alert third parties to the existence of the application. To ensure that abstracts are only used for these purposes, the 1977 Patents Act and the EPC stipulate that the abstract can only be relied upon to provide ‘technical information’. One of the consequences of this is that for patent law purposes the abstract does not form part of the state of the art.” This avoids the potential problem of the abstract anticipating the patent and in so doing rendering it invalid for lack of novelty. The fact that the abstract is only used for ‘technical’ purposes also means that it cannot be used to influence the scope of the monopoly.”® 4.2

THE

DESCRIPTION

The next element of a patent is the description.” As with the abstract, the description plays an important role in ensuring that the information function of the patent system is fulfilled. In many ways, descriptions are similar to scientific or technical papers: they explain what has been created, the problems that the invention solves, why it is important, and how the invention differs from what has been created before.*° In most cases, a description will begin with an account of the background to the invention.*! In so doing, it will summarize the prior art, usually referring to existing patents and other published documents. This information is used to understand the nature of the invention, for carrying out the search report, and for the purposes of examination.” Typically, a description will then disclose the invention as claimed.” This is usually done by outlining the technical problem that the invention attempts to solve and the solutions that it offers (which are often couched

in terms of the

advantages that the invention offers over the background art).* Following a brief 25 EPC r. 33(15) and PA r. 19(5) require that the abstract be drafted in such a way that it constitutes an efficient instrument for purposes of searching in the particular technical field, in particular by making it possible to assess whether there is a need to consult the specification (or patent application) itself.

26 PA s. 14(7); EPC Art. 85.

27 This is explicit in EPC Art. 85 and implicit in PA s. 14 (7). 28 Bull/Identification system T246/86 [1989] OJEPO 199. (The TBA refused to allow an applicant to use an abstract which suggested that the apparatus was a credit card as a way of expending the preliminary description and claims which had not suggested that the apparatus could include a portable object.) 29 PA s. 14(2)(b), PA r. 16(2); EPC Art. 78(1)(b), EPC r, 27-28a. Unlike the EPC which provides detailed guidance as to the contents of the description, the 1977 Patents Act and the rules are silent as to the form that the description in a UK application ought to take. See CIPA, para. 14.12. 30 On the specification see R. Merges and R. Nelson, ‘On the Complex Economics of Patent Scope’ (1990) 90 Columbia Law Review 839, 844; G. Myers, ‘From Discovery to Invention: The Writing and Re-writing of Two Patents’ (1995) 25 Social Studies of Science 57. 31 EPC r. 27(1)(b); EPO Guidelines C-Il, 4.3-4.4. See Sony/Television receivers T654/92 [2000] EPOR 148

(on the meaning of ‘background art’).

22 EPC £427(1)(b): 33, EPC r. 27(1)(c); EPO Guidelines C-Il, 4.5—4.6. 34 EPC r. 27 (1)(c). For criticisms of rule 27 on the grounds that it is ambiguous and uncertain see H. Ullrich, Standards of Patentability for European Inventions: Should an Inventive Step Advance the Art? (1977), 113s

THE NATURE

OF A PATENT

335

introduction to any drawings that are used,*° the description will normally provide a

detailed account of how the invention is carried out.°° To ensure that the invention is disclosed in such a way that it is of practical use to people in the art, patent law imposes a number of constraints upon the way inventions are disclosed. At a general level, the application ought to describe the invention in a manner that is clear and complete enough for it to be performed by a person skilled in the art.’ The description must also support the claims.** If the patent fails to meet these criteria, it may later be declared invalid. These issues are dealt with in more detail later.°? 4.2.1 Description of micro-organisms One of the rationales for the inclusion of the description in a patent application is that it ensures that the public is able to access and make use of the invention that is disclosed in the application. This is based on the presupposition that it is possible to describe the invention, whether using words, figures or diagrams, in such a way that

third parties will be able to understand and make use of the invention. While this assumption holds true in relation to most technologies, it is not necessarily the case in relation to biological inventions. The reason for this is that where an invention depends on the use of living materials such as micro-organisms or cultured cells, it may be impossible to describe the invention so that the public is able to make the invention.” The EPC’! and the 1977 Patents Act** attempt to address this problem by providing that if an invention involves the use of biological material which cannot be described in a way that enables the invention to be carried out by a person skilled in the art, the applicant must deposit a sample of this biological material at a ‘recognized institution’ (or depositary).** These issues were also addressed in the Biotechnology Directive.** The application must contain such relevant information as is available on the 35 EPR r. 27(1)(d); EPO Guidelines C-Il, 4.7. 36 The patent should include a specific description of at least one detailed embodiment, often referred to as the preferred embodiments. Occasionally, this will be unnecesary: see Toshiba/Semiconductor Device T407/ 87 [1989] EPOR 470. EPC r. 27(1)(f) adds that the applicant should, where necessary, state the way in which

the invention is capable of industrial exploitation. EPO Guidelines C-II, 41.2.

37 PA s, 14(3); EPC Art. 83. 38 PA s14(5)(c); EPC Art. 84. 39 See below at pp. 457-63. 40 In American Cyanamid (Dann)’s Patent [1971] RPC 425 the House of Lords held that there was no

obligation on a patentee under the 1949 Patents Act to supply the micro-organism to the public. See generally, B. Hampar, ‘Patenting of Recombinant DNA Technology: The Deposit Requirement’ (1985) 67 JPTOS 569; V.

Meyer, ‘Problems and Issues in Depositing Micro-organisms for Patent Purposes’ (1983) 65 JPTOS 455.

41 EPC r. 28, 28a. 42 PA s. 125A (introduced by CDPA, Sched. 5 para. 30). 43 Recognized depositary institutions include all international depositaries under the 1977 Treaty on the International recognition of the Deposit of Micro-organisms (the Budapest Treaty) (modified 1980). This established minimum requirements for maintaining an international depositary for microorganisms (UK joined 29 Dec. 1988). There are 38 states with 29 International Depositary Authorities. 44 Biotech. Directive Arts. 13-14; Patents (Amendment) Rules 2001, SI 2001/1412.

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characteristics of the biological material. In depositing a sample, the applicant is treated as consenting to the depositary making the sample available to any person after publication of the application.*° An applicant may require that until the application has either been abandoned or patented, the deposit should only be released to experts who are only able to use the culture for experimental purposes.*” Special rules also exist in relation to patent applications relating to nucleotide and amino acid sequences.*®

4.3

THE

CLAIMS

The next element of a patent is the claims.” While the purpose of the description is to ensure that the invention disclosed in the patent is of some practical use, the primary function of the claims is to set out the scope of the legal protection conferred by the patent.” There are basically two different types of claims, namely a claim to a physical entity (for example, a product, or apparatus) and a claim to a physical activity (for example a method, process, or use). As the Enlarged Board of Appeal at the EPO pointed out, there are no rigid lines of demarcation between the various forms of claims.?? Typically, a patent will consist of a number of claims that are arranged hierarchically.°? Such patents will commence with a widely drawn ‘principal’ or ‘generic’ claim that defines the invention by setting out its distinctive technical features. General claims of this sort are often followed by a series of narrower dependent or subsidiary claims (which may refer back to earlier claims).*? For example, the primary claim may be for a product (such as a contact lens) having a particular character (such as being made up of recycled plastic), whereas the dependent claims may limit the principal claim to certain quantitative parameters (such as minimum or maximum length). One of the reasons why claims are arranged hierachally is that it provides patentees 45 EPC r. 28(1)(b); PA s. 125A, PA r. 17; Patents Rules 1990, Sched. 2 46 Patents Rules 1990, Sched. 2, para. 1(4). EPC r. 28. 47 EPC r. 28(4); Patents Rules 1990, Sched. 2 para. 3(1). 48 EPC r. 27A. See also ‘Decision of the President of the EPO 2 Oct. 1998 concerning the presentation of nucleotide and amino acid sequences in patent applications and the filing of sequence listings’ (1998) 11

OJEPO Supp. No. 21.

49 PA s. 14(2)(b), PA r. 16(2); EPC Art. 78 (1)(c), EPC r. 29. The requirement of a claim was first

introduced in the UK by Patents, Designs and Trade Marks Act 1883 s. 5(5). However, the practice of including claims had been common from at least the 1830s. The claims is central to the operation of the European patent system: Mobil/Friction-Reducing Additive G2/88 [1990] OJEPO 93, 99; J. Kemp (ed.), Patent Claim Drafting and Interpretation. On the history see British United Shoe Machinery v. Fussell (1908) 23 RPC

631, 650.

°° PA s. 14(5); EPC Art. 84. Given that the claims define the scope of protection, the way the claims are interpreted is very important. See below at pp. 499-502. 51 Mobil/Friction-Reducing Additive G2/88 [1990] EPOR 73, 79. 52 The number has to be reasonable having regard to the nature of the invention claimed. EPC r. 29(5). In Oxy/Gel Forming Composition T246/91 [1995] EPOR 526, a patent with 157 claims violated EPC Art. 84 and

EPC r. 29(5): ‘patents should not be allowed to erect a legal maze or smokescreen in front of potential users of the inventions to which they lay claim.’ °3 Hallen v. Brabantia [1990] FSR 134, 140-1.

THE NATURE

OF A PATENT

337

with the flexibility to respond to any legal challenges which are made to the patent. More specifically, if claims are arranged hierarchically, a challenge to the patent may only lead to the principal or broadest claim being severed, leaving behind the more narrowly drafted claims.°? Confident in the knowledge that the validity of narrower claims are not dependent on the validity of the more general claims, patentees are able to draft claims more generously than they would otherwise be able to do. The rules at the EPC require that, where appropriate, claims ought to be in two parts.*° The first, which is called the ‘preamble’, sets out the technical features of the invention

which are necessary for the definition of the claimed subject matter, but which are already part of the prior art. This is followed by a ‘characterizing portion’ that sets out the novel technical features that the applicant wishes to protect.*” The so-called characterizing portion of the claim is neither required nor forbidden in the UK.** In British patents, the final claim will often be an omnibus claim, that is a claim that

largely mimics the way the invention is set out in the descriptions or the drawings.” While permissible in the UK omnibus claims are generally not permitted in EPO applications.” A notable feature of most patent claims is that they are, at least to the non-expert reader, difficult to understand. This not surprising given that patents are not written for the general reader, but for the relevant person skilled in the art. As well as being written for specialists, the drafting and reading of claims builds upon well-established and sophisticated techniques and procedures that make them difficult for the uninitiated to understand. Another reason why the claims may be difficult to understand is that they often use expressions not ordinarily employed in everyday speech. For example, while most people commonly talk about ‘mice’, a claim may refer to ‘non-human mammals’. Similarly a door handle may be called a ‘rotatable actuating means’*' and a sleeping car in a train known as ‘a communal vehicle for the dormitory accommodation of nocturnal viators’.°* Moreover, while in other contexts the rules of grammar are used to make the language we use easier to understand, this is not so

°4 G. Myers, ‘From Discovery to Invention: The Writing and Re-writing of Two Patents’ (1995) 25 Social Studies of Science 57, 82.

° See Van der Lely v. Bamfords [1964] RPC 54, 73, 76 (CA); Chiron v. Organon (No. 7) [1994] FSR 458, 460-6.

°° This provision, apparently put in to appease British interests, enables UK patents to be drafted according to the traditiona! British approach. 7 EPC r. 29(1)(b), EPO Guidelines C-IIl: 2; EPC r. 29(1). In the USA there are three parts: the preamble, transition, and body. See R. Merges, Patent Law and Policy (1992), 12. 58 CIPA, para. 14.21. 9 Raleigh Cycle v. Miller (1948) 65 RPC 141; Surface Silo v. Beal [1960] RPC 154; Deere v. Harrison McGregor & Guest [1965] RPC 461. 60 Rules 29(4) and 29(6). See CIPA, para. 14.25. Bayer/Polyamide Moulding Composition T 150/82 (1981)

OJEPO 431. In Phillips Electronic’s Patent [1987] RPC 244, the patentee was permitted to add an omnibus claim to a European patent (UK) on the grounds that it did not extend the scope of protection. 61 Southco v. Dzus Fastener Europe [1992] RPC 299. 62 Hookless Fastener v. GE Prentice (CCA 2d, 1934) 68 EF (2d) 940, 941. See also W. Woodward, ‘Definiteness

and Particularity in Patent Claims’ (1948) 46 Michigan Law Review 755.

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PATENTS

with patents, where claims are often made up of single lengthy, repetitive sentences.© Indeed, in one case an attempt to divide claims up into separate (shorter) phrases was considered to be ambiguous in scope.™ 4.3.1 Regulating the claims A number of different rules and procedures regulate the form that claims ought to take. At a general level, the contents of the claims must comply with the substantive requirements for patentability: namely, subject matter, novelty, and non-obviousness. The claims must also define the matter for which protection is sought in terms of the technical features of the invention, be clear and concise,” be supported by the description,® and relate to one invention or group of inventions that are so linked as to form a single inventive concept.” We wish to restrict ourselves here to the requirement that the claims be clear and concise (the other criteria are looked at later).

During the nineteenth century, when anti-patent feelings were at their peak, many patents were struck down because they contained trivial errors in grammar or spelling. While patent law is no longer as harsh as it once was, it still demands that the public should not be left in any doubt as to the subject matter covered by a particular patent. As the claims demarcate the scope of the monopoly, if the claims are unclear or inconcise, the extent of protection cannot easily be discerned. This would lead to the undesirable situation where third parties would not be able to determine whether they were infringing the patent. To ensure that this does not occur, patent law requires that the claims be clear and concise.’”” Objections that the claims are not clear and concise can only be raised pre-grant. Clarity may indirectly become an issue postgrant in relation to the requirement of sufficiency.’' Claims will be clear and concise if the skilled person is able to understand the language used.”* As the claims are read by the skilled addressee, this means that words and phrases which may not be understood outside the field of the invention may still be clear and concise. The parameters of the invention may be defined by quantitative criteria (such as size, weight, volume, temperature)

or qualitative criteria. While in most cases

applicants will use precise measurements to define their inventions, applicants may 63 “The repetitiveness of the claims and the lack of any indication of the strategic links between them, is part of what makes them so hard for a non-lawyer to read.’ G. Myers, “From Discovery to Invention: The Writing and Re-writing of Two Patents’ (1995) 25 Social Studies of Science 57, 75. The technique of drafting claims in this way can have important implications for their interpretation see: Glaverbel SA y. British Coal

[1995] RPC 255, 281.

64 Leonard’s Application [1966] RPC 269. 65 Beyond the requirements that are set out in the 1977 Patents Act, British law provides no further guidance as to the particular format that the claims ought to take. This is in marked contrast to the EPC that provides detailed guidance as to the form and content that claims ought to follow. 66 PA s. 14(5)(a); EPC Art. 84.

67 68 69 70

N

\o

PA PA PA PA

s. s. s. s.

14(5)(b); 14(5)(c); 14(5)(d), 14(5)(b);

EPC Art. 84. EPC Art. 84. PA r. 22; EPC Art. 82, EPC r. 30. EPC Art. 84, EPC r. 29.

71 PA s14(3)/Art 83 EPC. See below at pp. 461-3. 72 Strix v. Otter [1995] RPC 607.

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339

confine their descriptions to general relationships between component parts where nothing turns on finite limits.” One area where the requirement that the claims be clear and concise has been important is in relation to ‘functional claims’.”4 Functional claims define the invention by reference to the function or end that the invention performs, rather than the structure or elements of the invention. That is, instead of specifying what the invention is, a functional claim outlines what the invention does. For example, instead of claiming a modified form of bacteria in terms of its elements or structure, the invention may be described functionally as a bacteria which eats pollution.” Functional claims are permissible so long as they provide instructions that are sufficiently clear for the expert to reduce them to practice without undue burden.” Functional claims are permissible in the UK and the EPO” ‘if from an objective point of view, such features cannot otherwise be defined more precisely without restricting the scope of the claim’.”® In some cases, patentees use functional claims because the language and concepts are not available to describe the invention in any other way. This is often the case with biotechnological inventions.”’ In other cases, patentees may use functional language because it offers them a strategic advantage over competitors. For example, in describing how two metal plates are attached, a patentee might use functional language and claim a ‘means for attaching’ instead of claiming a ‘nut and bolt’. This has the advantage in that a competitor cannot get round the claim by using a screw. 4.4

DRAWINGS

The final component of a patent is the drawings. These provide a representation of the invention.*’ Along with the description, the drawings may be used to interpret the claims.*! The Patent Office rules provide very detailed rules as to the nature and form of the drawings. These range from the quality of the paper,” the size of the margin,® the use of shading* through to the height of the letters or numerals used. The standardization of the way inventions are represented plays an important role in ensuring the usefulness of the information provided by the patentee. 73 No-Fume v. Pitchford (1935) 52 RPC 231. 74 P Ford, ‘Functional Claims’ (1985) IJC 325; Efamol/Pharmaceuticals compositions T139/85 [1987] EPOR 229. Ciba-Geigy/Synergistic herbicides T68/85 [1987] EPOR 302; General Hospital/Contraceptive T820/94 [1995] EPOR 446. 7> See Biogen v. Medeva [1997] RPC 1 where the claim was to a DNA molecule characterized by the way it

was made (recombinant DNA) and what it did (display HBV antigen specificity). 76 For US analogues, see In re Donaldson (1994) 16 F.3d 1189; K. Adamo, “The Waiting at the Patent Bar is

Over: the Supreme Court decides Hilton Davis’ (1996) 78 JPTOS 367; R. Taylor, “The Pitfalls of Functional Claims in the US’ (June 1997) MIP 13.

77 EPO Guidelines C-III: 4.7-4.9; CIPA, para. 14.24.

78 Mycogen/Modifying plant cells T694/92 [1998] EPOR 114, 119. 79 Genetech/Polypeptide expression T292/85 [1989] EPOR i; [1989] OJEPO 275.

80 PA s. 14(2)(b), PA r. 16(2), 18; EPC Art. 78(1)(d), EPC r. 32-35. 81 PA $..125(1); 60 -NXO N= 82«O UKPO Guidelines, para. 14.27.

83 Tbid., para. 14.28. 84rs Tbid., para. 14.30.

16 PROCEDURE FOR GRANT A PATENT

OF

1 INTRODUCTION Unlike the position under copyright law where rights arise without formality, patents are only granted after a series of formal procedures have been complied with. The process of registration plays a key role in defining many aspects of patent law and practice. In this chapter we explore some of the key features of those processes. We begin by exploring some of the issues that would-be applicants ought to consider when deciding whether to take out a patent to protect their inventions in the UK. We then follow the trajectory of a patent through the administrative process from its inception as a patent application through to grant. In so doing we discuss the British

and European patent systems, the Patent Co-operation Treaty, and how they intersect.

2 PRELIMINARY 2.1

DECIDING

TO

CONSIDERATIONS

PATENT

A range of factors are taken into account when considering whether to patent an invention. A potential applicant will need to consider the benefits that may flow from patenting. Perhaps the most obvious benefit is that as a patent confers an exclusive right to make, use, and sell the patented invention for a period of up to twenty years, it provides the owner with associated monopoly profits. It should be noted that the economic value derived from a patent will vary according to the type of invention in question. For example, where competitors are able to develop new ways of achieving the same result which fall outside the scope of the monopoly (this is known as inventing around the patent), the economic benefits are reduced. Another benefit associated with patenting flows from the fact that patenting translates inventions from the world of science and technology to the world of commerce. In so doing, patenting enables inventions to be included on the balance sheets of organizations and on the research returns of publicly-funded institutions. This may be particularly important in attracting funds to pay for research.

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FOR

GRANT

OF A PATENT

341

Other less obvious benefits flow from patenting. These include the esteem or symbolic capital that flow from being recognized as an inventor. Indeed in some cases it is the romantic appeal of becoming an inventor that encourages a person to enter into the patent system in the first place.' Another benefit of patenting is that it enables manufacturers to enhance the image of their goods. By advertising that their goods are patented, sellers are able to represent to consumers that they are buying cuttingedge technologies. There is also a sense in which the mere fact that something has been patented carries with it the belief that the product has public approval: this has been particularly important in relation to the patenting of life forms. The benefits that flow from patenting need to be weighed against the associated costs. The financial costs of patenting include patent agent fees (possibly £150 per page), the administrative charges imposed by national and international institutions as a condition of grant,’ and where a patent is sought in a non-English-speaking country, the costs of translation. Non-financial costs such as the time and effort involved in transforming a practical technical idea into the form required by the patent system also need to be taken into account. Another cost associated with patenting relates to the fact that the applicant must make their invention available to the public. While competitors may not be able to copy the patented invention, the disclosure of the invention makes it easier for them to invent around the patent. Another factor to be taken into account is whether the benefits that flow from patenting can be achieved through other means with fewer of the associated costs.’ An important factor here is that an inventor (or owner) may be able to rely upon other techniques to protect their creations that do not require the invention to be disclosed to the public. These include contractual restrictions on the use or disclosure of the process, the law relating to breach of confidence, or to non-legal techniques such as secrecy. The problem with these techniques is that they carry with them the risk that if the information is disclosed to the public (even if through a breach of contract or confidentiality), in most cases the invention becomes part of the public domain, free for all to use.* Another factor that may influence the decision to seek a patent is the ease by which the details of the invention can be ascertained or reverse-engineered when the invention or the products thereof are made available to the public. Given that the decision to patent is influenced by a range of factors, it is not surprising that patenting practices vary from industry to industry. For example, in the pharmaceutical industry, where research and development costs are high and the ! G, Myers, ‘From Discovery to Invention: The Writing and Re-writing of Two Patents’ (1995) 25 Social Studies of Science 57, 59. 2 European Patent Office, ‘Cost of Patenting in Europe’ (1995) 26 IIC 650; M. Bednarek, ‘Planning a Global Patent Strategy: where to get the most “Bang for your buck”’ (1995) 77 JPTOS 381; S. Helfgott, “Why must filing in Europe be so costly?’ (1994) 76 JPTOS 787. 3 There may be a danger of another person patenting the invention. This has occasionally prompted defensive patenting which, at one time, prompted a third of all applications in the USA: W. Davis (1947) 12 Law & Contemporary Problems 796, 799-800; W. Ericson and I. Freedman (1957) 26 George Washington Law Review 78. 4 On the trade secret/patenting decision, see Munson (1996) 78 JPTOS 689.

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products are readily and cheaply copied, the patent process is commonly relied on to protect inventions. In other industries, such as in the aviation field where the expense of copying is very high, greater emphasis is placed on secrecy as a mode of protection.

2.2

ROLE

OF PATENT

AGENTS

It is common for decisions concerning patent applications to be made in consultation with a patent agent. Since emerging as a discrete profession during the nineteenth century,” patent agents have come to play a central role in the operation of the patent system. Under the EPC a new breed of expert, the European patent agent, has developed to deal with the intricacies of the European patent system.® Patent agents normally have knowledge of the law, the patent administration process, and a particular branch of science. As well as assisting in the drafting and processing of patents, patent agents also offer advice as to whether a patent should be taken out and where and how patents are best exploited. In some cases they are also able to litigate on behalf of patentees. In a sense, patent agents act as go-betweens who unite the technical-scientific domains with the legal and commercial. The patent system encourages the use of patent agents by penalizing the owners of poorly drafted patents. Por example, where a patent is found to be partially valid, relief by way of damages, costs or expenses is only available where a claimant can show that the patent was framed in good faith and with reasonable skill and knowledge:’ a matter which may be difficult for non-specialists to prove.

2.3

CHOICE

OF ROUTES

TO GRANT

Once the decision is made to protect an invention in the UK by patent, it is then necessary to decide the particular route to take to secure grant of the patent. In particular, it is necessary to decide whether to take out a British patent or a European patent (UK).* In turn, it is necessary to decide whether to apply directly to the British

> See D. Van Zyl Smit, ‘Professional Patent Agents and the Development of the English Patent System’ (1985) 13 International Journal of the Society and the Law 79; H. Dutton, The Patent System and Inventive Activity during the Industrial Revolution 1750-1852 (1984), ch. 5; F. Kittel, ‘Register of Patent Agents: A Historical Review’ (1986-7) 16 CIPAJ 195.

® See EPC Arts. 133-4; L. Osterborg, ‘The European Patent Attorney: A New Profession’ (1994) 25 IIC 313. ; 7 PA s. 63(2). See General Tire v. Firestone Tyre [1975] RPC 203, 269; Hallen v. Brabantia [1990] FSR 134,

143; Chiron v. Organon Teknika (No. 7) [1994] FSR 458. Good faith primarily depends on whether the patentee knew something detrimental to the patent, or which escaped the eye of the patent examiner. Reasonable skill and knowledge relates to the competence employed in framing the specification. See Hoechst Celanese v. BP Chemicals [1997] FSR 547.

8 Applications to the EPO and UK PO are alternatives, so a patentee cannot have patents via both mechanisms. To prevent this PA s. 73(2) requires the Comptroller to revoke a UK patent where there is a European patent (UK) for the same invention having the same priority date which was applied for by the same applicant. Before revocation the patentee is given an opportunity to justify holding two patents: PA s. 73(3), amended by CDPA, Sched. 5, para. 19.

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343

Patent Office or the EPO, or whether it would be better to make use of the application system provided by the Patent Cooperation Treaty.’ The particular route which is chosen depends on a variety of factors: perhaps the most important are the countries where protection is desired. When deciding whether to bring an application to the UK Patent Office or the EPO, commercial and strategic considerations may come into play. From a commercial point of view, the primary variable is the fees charged by the respective patent offices. As the cost of an application to the EPO is greater than to the UK office, if an applicant only wishes to file in the UK or in a few countries it would be cheaper for them to apply to the respective national offices. There comes a point, however, where the cumulative cost of applying to several national offices will exceed the cost of a European application designating those countries." Applicants may also be influenced by strategic considerations when they are considering whether to apply to the EPO or to national offices. An important factor relates to the fact that although the substantive law of the national systems and the EPC are largely the same, there are a number of other important differences.'’ In particular, while the EPC has a full examination system some national offices do not require examination at all,’ some allow for deferred examination, some require patent agents to provide the examination service, while others will only reject applications on limited grounds (such as novelty).'? Another factor that may influence the route that is taken is the relative vulnerability of the patent. In particular, while a national patent can only be challenged in national tribunals, the EPC allows for a

9 There are four alternative routes available to get a patent for the UK: directly to the UK Patent Office, indirectly to the UK Patent Office via the PCT, directly to the EPO, or indirectly to the EPO via the PCT. 10 Translation costs are a significant consideration in the decision whether to file for a European patent or a national patent. This is because the EPC allows member states to require the patent to be translated as a prerequisite for validity: EPC Art. 65. As the translation is not required until 3 months after grant, there may

be some strategic advantages in the EPC route. Whether this will remain the position under the EPC is unclear. Given the expense of translation, (estimated to be DM400 million per year in 1995), the EPO has proposed that full translation be replaced with translation of an enhanced abstract: European Patent Office, ‘Cost of Patenting’ (1995) 26 IJC 813; P. Braendli, “The Future of the European Patent System’ (1995) 26 IIC 813. This

has generated further proposals, including only requiring translation of claims or some part of the description, or allowing further delays as to when the translation must take place. B. Pretnar, ‘How to Reduce High Translation Costs to European Patents’ [1996] EIPR 665; K. Heinonen, “Translation of European Patents: Package Solution not the Answer’ [1997] EIPR 220; E. Jeneral, ‘Once More How to Reduce High Translation Costs of European Patents’ [1997] EIPR 490; C. Lees, “Translation: The Key Solution’ [1997] EIPR 594.

!l Early versions of the EPC proposed a two-stage approach: a provisional grant which was only subject to formal examination and novelty report, followed by the possibility of confirmation as a final European patent within 5 years at the behest of applicant or a third party. G. Oudemans, The Draft European Patent Convention (1963), 53-60, 164-76.

12 There is no examination in Belgium, the Netherlands, Switzerland or Ireland. On the latter see Rajan v. Minister for Industry and Commerce

[1988] 14 FSR 9; A. Parkes, “The Irish Patent Act 1992’ (1991-2) 21

CIPAJ 426. 13 e.g. the French Patent Office will not refuse on grounds oflack of inventive step: Law of 2 Jan. 1968, Art. 16, J. Schmidt-Szalewski, “Non-obviousness as a requirement of patentability in French Law (1992) 23 IC

725. For Germany, see E. Fischer, “The New German Patent Procedure: From the View of a Corporate Patent Department’ (1971) 2 IIC 277.

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central challenge to be made against a European patent (this takes the form of an ‘opposition’ to the grant which can be brought in the nine-month period after grant).'* If a would-be-patentee believes that the application is likely to be challenged, rather than risking the possibility of a successful central attack which would deprive the applicant of protection in all the designated states, an applicant might prefer to maximize the survival chances of their patent by registering in a range of national offices. Similar factors will influence inventors when they are considering whether to apply directly to the UK Patent Office or the EPC, or whether they want to make use of the international filing system provided by the Patent Cooperation Treaty (PCT).!5 While the PCT does not issue patents, it does provide an alternative starting point by which both UK and European patents (UK) can be obtained.'° Under the PCT,” an international application can be made to the Patent Office of one of the contracting states, which is called the receiving office.'!* The application must contain:!? a request, a description, at least one claim, drawings (where appropriate), an abstract, and designate the states in which protection is sought.’? Applicants can apply to designated international offices for an international search*! and an international preliminary examination to be carried out.” At this point, the applicant can shift to the designated national offices who will decide whether to grant national patents.”’ At this stage, the national office treats the application as if it has been filed in that office. Instead of going straight to the national stage, an applicant may ask for an international preliminary examination by an examining authority.” This delays entry into the national systems for a further ten months, so that entry is within thirty rather than twenty

14 EPC Arts. 99-101. 'S See above at p. 321. D. Perrott, ‘The PCT in Use’ [1982] EIPR 67; B. Bartels, ‘Patent Cooperation Treaty: The Advantages for the Applicant in the UK’ (1983) 13 CIPAJ 3; J. Cartiglia, ‘The Patent Cooperation Treaty: A Rational Approach to International Patent Filing’ (1994) 76 JPTOS 261; J. Anglehart, ‘Extending the International Phase of PCT Applications’ (1995) 77 JPTOS 101. '© This was signed in 1970 and came into operation from 1978. There are 108 contracting states as of April 2000. PA s. 89 gives statutory effect to some of the Treaty’s provisions. WOPC TrArts3:

18 The receiving office retains one copy of the application, transmits another to WIPO and another to an international Search Authority. The receiving office checks to ensure that a filing date should be granted (Art. 14) and that appropriate fees have been paid. The ISA conducts a search and reports its findings to WIPO: Art. 15 PCT. The application can then be amended within 2 months (PCT Art. 19, PCT r 46) and it and the

search report are then communicated to the Patent Offices of the designated states: PCT Art. 20. The application must be published after the expiration of 18 months from the priority date: PCT Art. 21 (2). 19 PGT's. 4-8:

20 On the need to correct failure to designate during the international phase, see Vapocure Technologies Application [1990] RPC 1. 21 There are nine International Search Authorities.

22 There are eight International Preliminary Examination Authorities. 23 At 20 months after the priority date the national stage begins, by formally initiating prosecution in the designated states, filing translations, and paying fees as necessary. 24 PCT ch. II.

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345

months of the priority date.*° The examining authority issues an international preliminary examination report indicating whether the invention appears to meet international standards of novelty, inventive step or industrial applicability.”° It should be noted that the examination is merely advisory and not binding on designated

countries.”’ The procedures are useful for countries where the patent office is not capable of carrying out its own examination. Another factor in favour of the PCT is convenience. Rather than having to apply in each individual country, a single application can be submitted to a relevant PCT body. The PCT is also attractive because of the lengthy period between the initial application to the international office and the time when the application is forwarded to the relevant national offices when the expensive process of translation must be completed.

3 FEATURES

OF THE

APPLICATION

PATENT

PROCESS

Before looking in detail at the procedures for grant of a patent, it may be helpful to highlight some of the key features of the UK and EPO patent application processes.”®

3.1

THE

REQUIREMENT

OF REGISTRATION

Registration has long been a prerequisite for grant of a patent in the UK. In modern times, this is largely explained by reference to the type of monopoly that a patent confers. The decision to make patent protection dependent upon registration is said to result from the fact that patents confer an absolute monopoly that enables the patentee to prevent all others from practising the invention. This is the case even if the infringer developed the same invention independently from the patented invention. Consequently, as a matter of fairness it is necessary to have a register open to the public. This ensures that third parties are able to ascertain whether they are infringing someone else’s rights. The process of filing also helps to establish the priority of the invention and is a prerequisite to systems of pre-grant examination such as those that operate in the UK and EPO.

2 PGE Art: 22: 26 PCT Art: 35(2): 27 PCT Art. 33. 28 The Strasbourg Agreement Concerning International Patent Classification 1971 (UK joined on 7 Oct. 1975) has led to a degree of uniformity in the presentation of patent documents. See A. Wittmann, R. Schiffels, and M. Hill, Patent Documentation (1979), 124-34.

346

3.2

PATENTS

FIRST-TO-FILE

Most patent systems, including the UK and the EPC, operate on the basis that the first person to file an (acceptable) application for an invention should be granted a patent over the invention. The fact that patents are granted via a system of registration does not necessarily mean that the patent ought to be granted to the first person to file an application. In some other patent systems, notably the USA, a patent is granted to the first person to invent, rather than to the first person to file an application.” While the first-to-file system may be incompatible with a regime of intellectual property predicated on natural rights, it avoids the need to consider difficult questions about who was the first person to have a particular idea or to reduce the idea to a working model (as occurs in first-to-invent systems).*° Instead, the first-to-file system replaces such investigations with an administrative practice that delivers rough but simple justice.*! The first-to-file system is also justified on the basis that it provides inventors with an incentive to disclose (or a reward for having disclosed) the invention: the first applicant to disclose the invention obtains the patent.** As we will see, the adoption of a first-to-file system has certain consequences that need to be taken into account later in the grant process.*?

3.3

EXAMINATION

Another notable feature of the patent application processes in the UK and the EPO is that applications are subject to a full examination.’ That is, all applications are examined to ensure that they comply with the formalities of filing, as well as the requirements of subject matter, novelty, non-obviousness, and sufficiency. For most of its long history, British patents were granted without examination. The question of whether examination as a prerequisite for grant should be introduced into the UK was considered and rejected on a number of occasions during the nineteenth 22 C. Macedo, ‘First-to-file’ (1990) 18 AIPLA Quarterly Journal 193. The USA now accepts provisional applications see s. 111(b) discussed by J. Miller, ““The same effect”: United States provisional patent applications and Paris Convention priority rights’ (1996) 78 JPTOS 716. 30 The preference for a first-to-file system does not, however, avoid all legal investigations into who was the ‘inventor’. This is because inventors are entitled to be named on the patent, even if they are not the applicant: PA s. 13; EPC Art. 62, Art. 81. If the inventor is not designated, the application is treated as having been withdrawn: EPC Art. 91. However, there is no investigation into the correctness of the designation. Where the inventor designated and the applicant are different persons the practice is to inform the inventor of the application, thereby enabling the inventor to raise any objection he may have. Procedures are also available for inventors to be omitted from published versions of the application if they wish: EPC r. 18(3). 31 T, Nicolai, ‘First-to-File vs. First-to-Invent:

A Comparative Study Based on German and United States

Patent Law’ (1972) 3 IIC 103; W. Kingston, ‘Is the United States Right about “First-to-Invent”?’ [1992] EJPR 223; T. Roberts, “Paper, Scissors, Stone’ [1998] EIPR 89. 32 For arguments for first-to-file see [no author] ‘Prior Art in Patent Law’ (1959) 73 Harvard Law Review 369, 380.

33 See below at pp. 357-61, 463-7. 34 G, Smith, ‘Why Examine?’ (1982) 12 CIPA] 9.

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347

century. One of the main arguments against examination was that it would have made the recognition of property rights subject to the discretion of government officials. Examination would also have added to the cost and time of obtaining a patent:*° changes which would have run counter to the spirit of much nineteenthcentury reform which aimed to simplify the system and to reduce the ‘taxes’ imposed on inventors. After much deliberation, a limited system of examination was introduced into the United Kingdom in 1905.°” An important factor which helped to support the case for examination was the finding of the 1901 Fry Committee that 40 per cent of the patents registered at the time were for inventions which had already been described in previous patents.** As these patents would not have withstood litigation, they were theoretically harmless. Nevertheless, it was believed that they deterred others from working in the same field. Moreover, the lack of examination brought the system into disrepute and undermined the trust placed in valid patents. For some, the prospect of an examination system sanctioned and controlled by the state was attractive because it would have created a legal (and thus a commercial) presumption that any patents which had been granted were valid. Another factor which supported the case for examination was that fears of arbitrary or self-seeking exercise of discretion on behalf of those in charge of the register had been allayed by a growing trust in bureaucracy: a trend which was cemented by the increased use of experts.°” The limited examination system established in 1905 was maintained until the passing of the 1977 Patents Act, when the current full examination system was introduced.*° While the examination system currently forms an integral part of the British patent system, there may come a time where the UK may wish to follow other countries in the EPC who in the face of falling national applications have abandoned full examination as part of national procedure. If this were to happen, it would provide applicants with greater choice: the alternatives being an unexamined national patent or an examined European patent.

3° (1864) 29 PP 321; (1871) 10 PP 603; (1872) 11 PP 395. 36 The most common criticism of examination today is delay. Many patent systems operate with time limits in an attempt to reduce such problems. In the UK, examination should occur not later than 4 years and 6 months from priority. 37 Parents Act 1902. The Office began to search British patents in 1905.

38 (1901) 23 PP. 39 Under the existing law, EPC Art. 113 gives an applicant whose patent has been refused an opportunity to comment. This is of fundamental importance for ensuring a fair procedure and reflects the generally accepted notion of a right to be heard. The examiner must give the grounds, that is, the essential reasoning, sufficient for the case to be properly understood. See NEC/Opportunity to comment T951/92 [1996] EPOR 371; [1996] OJEPO 53.

40 Prior to the 1977 Act, examination was for patentability and novelty only. Examination for inventive step was introduced by the 1977 Act.

348

3.4

PATENTS

AMENDMENT

Another notable feature of the grant system is that applicants are able to alter or amend their initial application both during and after grant of the patent. The decision to give patentees the opportunity to amend their patent recognizes that the first-tofile system may encourage applicants to register without a full understanding of the invention or complete familiarity of the relevant prior art. It is also based on the fact that subsequent examination, either by the applicant or the Patent Office, may reveal the existence of a piece of prior art which requires the application to be reformulated to ensure its validity.*’ Similarly, an applicant may wish to amend the application as filed in light of subsequent experiments carried out on the invention. Where a patent is found to be partially valid,” it is desirable that the patent be amended by the deletion of the invalid claims which otherwise might remain as a potential nuisance to industry.*? We look at the situations where applicants and patentees are able to amend and the restrictions that they operate under at the end of the chapter.

4 PROCEDURE

FOR GRANT

The basic procedure for application for a patent to the UK Patent Office is roughly the same as at the European Patent Office. In this section we provide an overview of some of the more important features of those processes. See Figure 16.1.

4.1

WHO

IS ENTITLED

TO APPLY

FOR

A PATENT?

There are virtually no restrictions on who may apply for a patent. In contrast with the rules relating to copyright and trade marks, there are no limitations as regards the nationality or residency of the applicant.“* Where appropriate, an application for a patent may be made by two or more applicants. It is important to note that while anyone may apply for a patent, there are a number of restrictions placed on those who are entitled to be granted a patent. The issue of entitlement to grant is dealt with

later? During the application process disputes over who is entitled to a patent that may ultimately be granted are dealt with differently, depending on whether it is a British or *! G. Aggus, ‘The Equities of Amendment’ (1980-1) 10 CIPAJ 389. For the history of reissues in the USA, see K. Dood, ‘Pursuing the Essence of Inventions: Reissuing Patents in the 19th Century’ 32 (1991) Technology & Culture 999. For the history of ‘intervening rights’ see P. Federico, ‘Intervening Rights in Patent Re-issues’ (1962) 30 George Washington Law Review 603. 42 PA s. 63(1). 43 Van der Lely v. Bamfords [1964] RPC 54, 73—4 (Pearson LJ). 44 PA s.7(1); EPC Art. 58. Cf. Paris Art. 2(1) which provides equal protection to nationals of any country to

the Union as nationals receive. See also PCT Art. 9. 45 See below at pp. 469-485.

PROCEDURE

FOR GRANT

OF A PATENT

File EPO or British Patent Application

File International PCT Application

Preliminary Examination & Search

Preliminary Examination & International Search

UK Examiner’s Report or European Search Report Issued

Publication of Patent Application

Substantive

349

Publication of Patent Application

International Preliminary Examination

Examination

Grant of Patent & Publication in European Patent Bulletin or the Official Journal

Fig. 16.1 Flow chart of a patent application a European application.*© For the purposes of proceedings before the EPO, it is assumed that the applicant is entitled to exercise the right to the European patent: issues about entitlement are determined elsewhere.*” The EPO will only take account of the question of entitlement if a decision is made by an appropriate national court that a person other than the applicant is entitled to the patent.” As with the EPC, an applicant for a British patent is presumed to be entitled to grant of the patent.*” However, in contrast with the EPC the comptroller is able to

46 Under EPC Art. 60 the right to a European patent belongs to the inventor or his successor in title. The

rights of employees depend on the law of the state in which he is mainly employed or, if that cannot be determined, that in which the employer has his place of business. See below at pp. 472-3. 47 EPC Art. 60(3). See G. Le Tallec, ‘The Protocol on Jurisdiction and the Recognition of Decisions in Respect of the Right to the Grant of aEuropean Patent’ (1985) 16 IIC 318; Kirin-Amgen/Erythropoietin T412/ 93 [1995] EPOR 629 (questions of entitlement could not be considered in opposition proceedings). 48 Three courses of action are available: prosecution of the application in place of the applicant; filing of a new application; or a request that the application be refused: EPC Art. 61(1). See Latchways/Unlawful applicant G3/92 [1995] EPOR 141.

4? PAG. 7(A):

350

PATENTS

consider issues of entitlement which are raised before grant.°° If a person ‘properly entitled’ to a patent decides to submit a new application, they may be able to use the wrongful applicant’s priority date.°! The comptroller of the UK British Patent Office is given similar powers to determine entitlement where a patent has already been granted.

4.2

FILING

A PATENT

APPLICATION

Applications for British patents are filed in Newport. Applications for a European patent may be filed either with the European Patent Office in Munich, The Hague or Berlin, or with national patent offices in the contracting states. European patent applications must be filed either in English, French or German: with the important qualification that it may be necessary to translate the specification into the language of the designated country within three months of grant.* Applicants at the UK Patent Office and the EPO are faced with the choice of either making a ‘full application’ or alternatively of taking advantage of the facility which allows for ‘early filing’.*’ A full application for a patent must contain a request for grant of a patent, a description of the invention, one or more claims, any drawings referred to in the description or the claims, and an abstract.* In order to provide applicants with greater flexibility, the patent systems provide that instead of filing a full application, applicants are able to make an ‘early filing’.*’ Early filing occurs where an applicant supplies an indication that a patent is sought, information identifying the applicant, and a description of the invention. In the case of a European application, the application must also include one or more claims and

list the member states in which protection is sought.°® Essentially, early filing provides applicants with a twelve-month breathing-space in which they can decide whether 50 PA s. 8. See T. Gold, ‘Entitlement Disputes: A Case Review’ [1990] EIPR 382. 51 PA s. 8(3).

>? PA s. 37, PA r. 54-6. See James Industries Patent [1987] RPC 235 (applicant’s claim for share of patent for net beds rejected in absence of contract evincing clear understanding that patent rights were to be shared); Nippon [1987] RPC 120; Norris’ Patent [1988] RPC 159. 53 EPC Art. 75(1)(2). On designation costs see O. Bossung, ‘The Return of European Patent Law to the European Union’ (1996) 27 IIC 287, 296. On the international status see Lenzing [1997] RPC 245. 54 EPC Art. 97(5); EPC r. 51(4). Art. 65 allows individual states to require the translation into their

language. Translation is required of all countries except Luxembourg and Germany. In the UK see PA s. 77(6)(9). Under PCT Art. 3 an international application can be made to the Patent Office of oneof the contracting

states, which is termed the receiving office. Rules 4-8 PCT set out the contents of a filing, i.e. a request, a description, at least one claims, drawings where appropriate, and an abstract. The application must designate the states in which protection is sought. °° Patent application fees at the UK Patent Office were abolished from 1 Oct. 2000. 56 PA s. 14(2); EPC Art. 78(1); PCT Arts. 3-7, PCT r. 3-8, 10, 11, 13, and 32; A. C. Edwards v: Acme Signs [1990] RPC 621, 642; see Xerox/Amendments T133/85 [1988] OJEPO 441, 448. Patent applications must also designate the inventor. PA s. 13, PA r. 14; EPC Art. 81, EPC r. 17, EPO Guidelines A-IIl, 5. 57 PA s. 15(1); EPC Art. 80, EPC r. 26; PCT Arts. 11 and 14(2), PCT r. 7, 14.1(b), 15.4(a), 16, and

20.2(a) (iii).

°8 EPC Arts. 79-80; PCT Art. 4(ii).

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351

they wish to pursue a patent, are able to carry out further experiments on the invention, look for investors, and further consider the countries in which they wish to seek patents. The applicant must file the claims and abstract within twelve months of the early filing (the so-called filing date) if an early application is not to lapse.*® While early filing offers a breathing-space ‘for completion of the formalities and the interim preservation of priority’, early filing was not intended ‘to provide a cover for making improvements in the disclosed invention by bringing in new material not covered by the disclosure whilst preserving for it the priority conferred by the original filing date.’ 4.3

PRIORITY

DATE

OF THE

APPLICATION

The initial application is important in that it sets in play the sequence of steps that may ultimately result in the grant of the patent. Irrespective of whether the filing is an early filing or a full application, filing is also important since it establishes the ‘priority date’ of the patent. In the absence of a claim to an earlier date, the priority date is the filing date of the application.®' As we will see, the priority date is the date at which the novelty, inventiveness, and other aspects of the invention are assessed. As such it is often of critical importance for the validity of the patent. The priority date is of practical significance in several other ways. First, because novelty is assessed as of the priority date, once the date is established an applicant is able to exploit their invention without fear of invalidating the patent. Secondly, applicants are able to use the priority date established by filing in the UK or EPO as the priority date for applications in other countries. 4.4

PRELIMINARY

EXAMINATION

AND

SEARCH

The next formal step in the process of grant is the preliminary examination and search. When the claims and abstract have been submitted, the applicant should

request a preliminary examination and search.® At the EPO the formal examination is carried out by the Receiving Section whereas substantive examination is conducted by the Examining Division.”

5° See Antiphon’s Application [1984] RPC 1, 9. On late submission of drawings see VEB Kombinat Walzlager [1987] RPC 405.

60 Asahi Kaei Kogyo [1991] RPC 485, 526 (HL) (Lord Oliver). 61 PA s. 5, PA r. 6; EPC Arts. 87-9. An application for which a date of filing has been accorded under the PCT is treated as an application for a patent under the 1977 Act. 62 PA s. 17, PA r. 28-29, 31-32; EPC Art. 90. PCT Arts. 14, 15, 17, and 18, PCT r. 26-30, 33, 37, 38, 40, and 43. ,

$3 PA s.17(1). 64 Under the revised text of the EPC, the search and examination stages of the application process will be brought together. See Art. 1, items, 4—6, of the Act Revising the Convention on the Grant of European Patents (EPC) (Munich) (29 Nov. 2000) MR/3/00 Rev le.

352

PATENTS

On preliminary examination the examiner or, at the EPO, the Receiving Section

determines whether the application complies with certain formal requirements.© These are that the application contains a request for grant, a description of the invention, one or more claims, any drawings referred to in the description or claim, and an abstract. In addition, the preliminary examination also ensures that the inventor(s)

have been identified and that the application accords with other formalities (such as payment of fees).°° In the case of the EPO, checks are also made to ensure that the application designates the countries in which the patent is to operate.” Applicants are alerted to any problems that may have been identified in the preliminary examination in a report which is issued to them.®* Applicants are then given the opportunity to respond to the report or, if necessary, amend their application to overcome the problems. If an applicant fails to change their application in a manner that satisfies the respective Patent Offices, the application may be

refused. The examiner or (at the EPO) the Search Division also carry out a limited search

of the prior literature for relevant prior art (that is, information similar to the invention in question).’”” The aim of the search is to identify the documents that may be used at the substantive examination stage when the application is examined for novelty and inventive step.’! The applicant is informed of the findings of the search by way of an examiner’s report or, as it is known at the EPO, the European search report.” As well as identifying the documents that may be relied upon when the application is examined for novelty and inventive step, the application is also examined during the search stage to ensure that it relates to one invention or to a group of inventions which form a single inventive concept.’? That is, it is examined to ensure it meets the requirement of ‘unity of invention’.”4 Where two or more inventions are claimed in the one application, the application will fail to comply with the requirement of unity of invention unless it can be shown that the inventions form a single inventive concept.” To do this it is necessary to show that the inventions share the same ‘special technical features’. Special technical features are the features that define the contribution that each of the claimed inventions,

6 The receiving office retains one copy of the application, transmits another to WIPO and another to an international search authority. The receiving office checks to ensure that a filing date should be granted and that appropriate fees have been paid. EPC Art. 14.

6° PA s. 17(2), PA r. 31; EPC Arts. 80, 90, and 91, Guid A.A-II. 67 EPC Art. 79.

68 PA s. 17(2); EPC Art. 91(2). 6 PA s. 17(3); EPC Art. 91(3). 70 PA s. 17(1)(2); EPC Art. 92, EPC r. 44-46. 71 PA s. 17(4) and (5); EPC Art. 92, EPC r. 44.

72 PAs, 17(5); EPC Art. 92(2). 73 PA ss. 14(5)(d), (6), s. 17(6), PA r. 32; EPC Art. 82, EPC r. 29(2), 30, and 46.

”* Lack of unity is not a ground for revocation. PA s. 26, PA r. 22. No EPC equivalent, but see EPC Art. 82. 75 PA s, 14(5)(d) and s. 14(6), PA r. 22; EPC Art. 82, EPC r. 29(2) and 30.

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considered as a whole, makes over the prior art.’”° There are at least two reasons for limiting patent applications to a single inventive concept. The first is that patent protection should not be available for two inventions for the price of one. Secondly, and more importantly, to allow more than one inventive concept to be included in a single patent is likely to undermine the administrative systems for locating, identifying, and searching for prior patents. If it is found that the application contains more than one invention, the search is limited to the first invention that is set out in the claims.” In the face of a finding that an application contains more than one patent, applicants may simply pursue a patent for one of the inventions. Alternatively, they may divide the initial application up into two (or more) fresh applications. So long as additional fees are paid and no new material is added, they may use the priority date for the original application for the new applications.”®

45

PUBLICATION

The next stage in the grant process is the publication of the patent application. The application will be published and made available for public inspection eighteen months from the date of filing (or ‘as soon as possible thereafter’).”? This process informs third parties that the application has been made. While third parties are not able to oppose the grant of a patent at this stage, they are able to make observations as to whether the patent should be granted.*° The documents published in the UK and the EPO include the description, claims, and drawings (if any) that have been filed. In the UK, the publication must include the original claims, any amendments that have been made to the claims, as well as any new claims. The UK Patent Office is also given power not to publish parts of the application which are offensive or disparaging,*! or which might be prejudicial to national security.** At the EPO, the abstract and (where available) the search report

are also published.**

76 PA r, 22(2); EPC r. 20. Technical features ‘are the physical features which are essential to the invention’. With respect to a product these are ‘the physical parameters of the entity’. In relation to a process, the technical features are ‘the physical steps which define such activity’. Mobil Oil/Friction Reducing Additive G2/ 88 [1990] EPOR 73; [1990] OJEPO 93, 100. See also May & Baker v. Boots [1950] 67 RPC 23, 50; Biogen v. Medeva [1995] RPC 25, 92-3; Bayer [1983] OJEPO 274; Siemens/Unity G1/91 [1992] OJEPO 253.

77 Hollister’s Application [1983] RPC 10; G2/92 [1993] OJEPO 591. 78 Failure to meet an objection of lack of unity is frequently remedied by the making of the divisional applications. EPC r. 25(1), r. 46; PA s. 17(3), s. 18(3), PA r. 100. 79 PA s. 16, PA r. 27; EPC Art. 93, EPC r. 48-50; PCT Arts. 21 and 29, PCT r. 9.1 and 48.

80 PA s. 21, PA r. 37; EPC Art. 115. 81 PA s. 16(2), PA r. 34(2). 82 PA s. 22 (no EPC equivalent). PA s. 23 provides that British residents need prior written approval from the comptroller before they file applications outside of the UK. This gives the office the opportunity to examine applications to see if the information is prejudicial to the defence of the realm or the safety of the public. If so, the office may prohibit or restrict publication.

83 EPC Art. 93(2), EPO Guidelines A-VI, 1.3, 1.5.

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Publication is important for two reasons. First, since the act of publication discloses the invention to the public, an unwanted publication may prevent the applicant from relying on other ways of protecting their invention (such as confidentiality). Similarly, once a patent application has been published, the application can no longer be resubmitted (whereas if the application is withdrawn prior to publication it is possible to make a later application).** Secondly, if the patent proceeds to grant, the date of publication is the date from which the patentee is able to sue for infringement of the patent. This is on the condition that the act would have infringed both the patent as granted and the claims in the form in which they were published.®° In these circumstances, the patentee is only entitled to damages for infringement in the period between publication and grant. As mentioned, a third party may respond to the publication of the application by submitting ‘observations’ to the Patent Office (at any time before grant).8° Such observations should relate to whether the invention is a patentable invention.®” Observations may be made by ‘any person’ and must be submitted in writing accompanied by appropriate reasons. The comptroller of the UK Patent Office is instructed to consider the observations, whereas the European Patent Office is merely required to communicate the observations to the proprietor who, in turn, is permitted to comment on them. If the EPO wishes, it can take account of such observations when

examining the application.** In both fora, the party submitting the observations does not become party to the proceedings and so will not be asked to any hearing, nor made to pay the costs of any proceedings.

4.66

SUBSTANTIVE

EXAMINATION

Once the requirements of preliminary examination and search have been satisfied, the next stage in the application process is the ‘substantive examination’.®® The applicant must request this within six months from the date of publication of the application, or at the EPO the publication of the search report.” 84 EPC Art. 128 specifies that the application prior to this point is confidential and may only be viewed by third parties with the consent of the applicant.

85 PA s. 69(2); EPC Art. 67; PCT Art. 29. 86. PAs 21 EPCsArts015, 87 That is, matters covered in PA s. 21(1), s. 1; EPC Art. 115, Art. 52.

$8 EPC Arti 14) 8° PA s. 18(1), PA r. 33; EPC Art. 94, EPC r. 33. Under the PCT, the national stage begins 20 months after the priority date by formally initiating prosecution in the designated states, filing translations, and paying fees as necessary. Instead of going straight into the national stage, an applicant may ask for an international preliminary examination by an examining authority (PCT Art. 31). This is dealt with in chapter IT of the Convention. This delays entry into the national systems for a further 10 months, so that entry is within 30 rather than 20 months of the priority date. The IPEA establishes an international preliminary examination report indicating whether the invention appears to meet international standards of novelty, inventive step or industrial applicability (PCT Art. 35(2)). Such examination is merely advisory and not binding on designated countries: PCT Art. 33.

7° PA r. 33(2); EPC r. 6. This distinction is not of great significance, given that in the UK an applicant should receive the search report before the date of ‘early’ publication.

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The purpose of the substantive examination is to ascertain whether the application complies with the requirements of the 1977 Patents Act or in the case of the EPO, the European Patent Convention.”! Unlike the preliminary examination, which is mainly concerned with ensuring the presence of certain documents, during the substantive examination the application is scrutinized to ensure that it complies with all aspects of validity. In particular, the invention is examined to ensure that it does not consist of subject matter excluded from patentability, and that the invention is novel, involves an inventive step, and is industrially applicable. The substantive examination also ensures that the application has been sufficiently disclosed, and that the claims are concise and are supported by the description. The substantive examination takes the form of a dialogue between the examiner and the applicant. After the examination has taken place the examiner draws up a report which outlines any objections to the application which have been identified. The report is supplied to the applicant who is given an opportunity to comment on the objections, often in the hope of persuading the examiner that any doubts they have about their application are ill-founded. Alternatively, the applicant may respond to the objections by amending the patent application.” If they think it necessary, the examiners may make or require further searches. Ultimately, the dialogue may lead to a hearing before the Senior Examiner in the UK or the full Examining Division of the EPO, and from there by way of appeal to the UK Patents Court or the Board of Appeal of the EPO.”

4.7

GRANT

OF THE

PATENT

If the respective Patent Office is not satisfied that the application satisfies the various requirements for grant, the application will be refused.” If the respective Patent Office is satisfied that all the necessary requirements have been satisfied, the patent will be granted.”° The decision to grant a patent does not take effect until the date on which it is mentioned in the Official Journal (for a UK patent) or the European Patent Bulletin (for a European patent).”° The protection afforded by a patent can last up to twenty years from the filing date.” Renewal fees must be paid after four years.?® As we will see, the protection may extend beyond the twenty-year period where a supplementary protection certificate is issued. The extent of protection conferred by a patent will be considered later.” The date of the grant of a European patent is alse the date of its transition from a o

Substantive examinations of EPO applications are carried out in Munich, The Hague, and Berlin.

9

PA s. 18(3); EPC Art. 96, EPC r. 86(2); PCT ch. II (preliminary examination). PA s. 97(1); EPC Art. 94(1), EPC r. 86(2). PA s. 18(3); EPC Art. 97(1), EPO Guidelines C-VI, 4.5a, 7.8.

9 9 9 9

PA s. 18(4). A dissatisfied applicant may appeal: PA s. 97(1).

PA s. 24(1); EPC Art. 97(4).

9

PA s. 25; EPC Art. 63(1).

9

The fees increase over time to ensure that the Registry does not become cluttered with useless patents. See below at pp. 487-99.

mOnN wo & DN W 9NY

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European application to a bundle of separate national rights.!°° With the exception of opposition proceedings, questions of validity and infringement are thereafter considered at a national level.'*' Once granted, a European patent (UK) is given the same level of protection as those granted by the national patent office.!° If the European patent was not published in English, an English translation must be filed at the British Patent Office, otherwise the patent is treated as void.!%

4.8

REVOCATION

While the patent examination processes at the UK and European Patent Office are relatively rigorous, they are not conclusive. As such, it possible for patents to be revoked after grant on a limited number of grounds. The grounds on which a patent may be revoked are set out in section 72 of the 1977 Act and Article 138 of the EPC. These are that: (i)

the invention is not a patentable invention;!™

(ii) the patent was granted to a person who was not entitled to that patent;!®

(iii) the specification of the patent does not disclose the invention clearly enough and completely enough for it to be performed by a person skilled in the art;!°° or (iv) the material in the patent extends beyond the material in the application as filed (impermissible amendment).!”” In addition, the British Patent Office has limited power to revoke patents on its own initiative.'°°

4.9

OPPOSITION

PROCEEDINGS

AT THE

EPO

While the grant of a European patent generally brings the European stage to an end, a central challenge can be made to the validity of the European patent in the ninemonth period following grant of the patent.’ This process, known as ‘opposition’, has a number of advantages over leaving decisions about the validity of patents exclusively to national offices or courts. The most obvious advantage is cost: it is 100 101 102 103 104 105 106 107 108 10 \o

EPC Art. 64(1); PAs. 77. BPC Art. 64(3). PA s. 77(1)(a). PAs.77(6)(a). Only Luxembourg and Germany do not have such a requirement. PAs,72(1)(a); EPC Art. 138(1); Arts. 52-7. PA s. 72(1)(b); EPC Art. 138(1)(e). PAs.72(1)(c); EPC Art. 138B. PA s, 72(1)(d)-(e); EPC Art. 138C(1)(c)-(d). PA s. 73. EPC Art. 99(2). The proportion of oppositions declined from 10.6% in 1982 to 6.5% in 1999. See O.

Bossung, ‘The Return of European Patent Law to the European Union’ (1996) 27 IIC 287, 296.

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cheaper to launch or defend a single attack in one place rather than to engage in revocation proceedings in each of the countries where the patent was issued. Any person may file a notice of opposition. For a period, it was common for the proprietor to file oppositions in order to make post-grant amendments (which otherwise would have to be made at national level).''® This practice has now been curtailed.''’ Opposition has to be filed within nine months from grant and must be based on one of three grounds.'!” These are that: (i)

the subject matter of the European patent is not patentable under EPC Articles

Cyi Pa

(ii) the European patent does not disclose the invention in a manner sufficiently clear and complete enough for it to be carried out by a person skilled in the art;'4 or (iii) the subject matter of the European patent extends beyond the content of the application as filed.!!° Any opposition to a European patent is communicated to the patent proprietor

who may contest the opposition, make observations and/or make amendments. The opposition proceedings will determine whether the patent should be revoked, maintained, or maintained in an amended form.''* If the proceedings result in revocation, the patent is deemed, from its outset, not to have had any of the effects specified in the BPC

5 AMENDMENT As we mentioned earlier, applicants are able to alter or amend their initial application both during and after grant of the patent. Prior to grant, applicants are able to amend their application where the examination reveals that the formal and substantive requirements are not complied with.''® In addition, applicants have a general power to amend their application at any time before a patent is granted.'!? The ability to amend during grant is based on a belief that it would be unreasonable to expect applicants to be fully aware of all prior art at the point when they filed their application. This is 110 Mobil Oil/Opposition by Proprietor G1/84 [1985] OJEPO 299; [1986] EPOR 39; Mobil/Admissibility 1550/88 [1992] OJEPO 117; [1990] EPOR 391. 111 Peugeot & Citroen/Opposition by patent proprietor G9/93 [1995] EPOR 260. 112 EPC Art. 100, EPC r. 55. 113 EPC Art. 100(a). 114 EPC Art. 100(b), Art. 83. 115 BPC Art. 100(c); Art. 123(2).

116 EPC Art. 102. 117 EPC Art. 68: 118 PA ss, 17(3), 18(3), PA r. 35-6; EPC Art. 123(1), EPC r. 86; PCT ch. II (preliminary examination).

119

‘Oo

PA s, 19(1), PA r. 35-6; EPC Art. 123(1), EPC r. 86; PCT Arts. 19 and 34(2)(b), PCT r. 46 and 66.

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especially the case given that the patent system provides for a search and examination at a later stage. After a patent has been granted by the British Patent Office, the owner of a patent is able to amend their patent.'”° In addition, the comptroller is able to instigate proceedings which may prompt such amendment.’*! Under the EPC (as it currently stands) post-grant amendment can only occur in opposition proceedings.!** Otherwise, such matters are for national law.'?? (Under the proposed changes to the EPC agreed to in November 2000, patents owners are to be given a general power to amend European patents after grant at the EPO.)!* Under the procedures in the UK and EPO, the application to amend is advertised so that any person may oppose it within two months. If granted, the amendment is deemed to have taken effect from the grant

of the patent. Since these provisions make no provision for circumstances where there are infringement proceedings and amendment is desired but validity is not in issue, they leave a lacuna in the legislative scheme.!*° 5.1

RESTRICTIONS

ON AMENDMENT

In order to ensure that any amendments that are made comply with the overriding aims of the patent system, "6 a number of restrictions are placed on an owner’s ability to amend their application/patent. The amended patent must comply with the requirements that have to be met by all patents. These include the requirements of subject matter, novelty, and inventive step. The amended claims must also be clear and concise, be supported by the description, and relate to one invention or group of inventions that are linked to form a single inventive concept. There are a number of other provisions that restrict an owner’s ability to amend either the application or the patent. Perhaps the most important of these, which we POPE

SATO poe os

UZMTRACS} 78: 122 Advanced Semiconductor Products/Limited Feature G1/93 [1994] OJEPO 169. Amendments in Opposition proceedings are only considered where they are appropriate and necessary, that is that they can be fairly said to arise out of the grounds of opposition: Mobil/Admissibility T550/88 [1992] OJEPO 117; [1990] EPOR 391, 397.

"3. Mobil/Admissibility T550/88 [1992] OJEPO 117; [1990] EPOR 391, 394. (Unfortunately for some

proprietors of European patents, the EPC does not contain any specific provisions enabling a European patent to be amended by a centralized procedure before the EPO.) 124 Art. 1, items 51, 62 of the Act Revising the Convention on the Grant of European Patents (EPC) (Munich) (29 Nov. 2000) MR/3/00 Rey le.

125 Norling v. Eez Away [1997] RPC 160, 165. ‘All this suggests that the sooner the whole procedure of amendment of a patent is rethought and provided for by an amended statute and rules the better. Preferably, so far as European patents are concerned, there should be one, effective and cheap, procedure.’ In Boston Scientific v. Palmaz (unreported 20 Mar. 2000), the Court of Appeal held that if the EPO had amended a patent ‘after judgment in UK patent litigation, but before an appeal of that judgment is heard, the Court of Appeal must consider the patent as amended’ [2000] EIPR N-115. 126 R. Krasser, ‘Possibilities of Amendment of Patent Claims during the Examination Procedure’ (1992) 23 IC 467, 471; Gunzel, Staking Your Claim: Claiming Options and Disclosure Requirements in European Patent Practice (1990), 29. A. Bubb, ‘Implied Added Subject Matter, A Practitioner’s View of History’ (1991) CIPAJ 444,

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deal with in Chapter 20, strike at the validity of the patent. Under these provisions, if the amendment introduces subject matter that was not in the original application, or the amendment extends the scope of protection beyond the initial application, the amended patent is liable to be revoked.'”’ In this section, we wish to focus on the situations where validity is not at stake. An important factor that limits the owner’s ability to amend their application as filed arises from the fact that post-grant amendments are at the discretion of the comptroller and the courts.'> The onus is on the patentee to establish that the amendment should be allowed.!*? The courts have tended to use their discretion to deny amendments where the owner has not acted innocently. As Jacob J noted, ‘[n]o

patent office is there for the purpose of enabling people deliberately to impose bogus monopolies on the public.’'*° There are two situations where the discretion has been exercised against the patentee. The first is where a patentee knowingly and deliberately obtained claims that were wider than justified by what was invented.!?! The second situation where discretion has not been exercised is where knowing of the doubtful validity of the patent, a patentee has been slow to take action to amend.'** In Raleigh Cycle v. Miller'*? the House of Lords emphasized that a patentee who suspects a patent is too widely drawn should amend it promptly. If they do not, the discretion to amend will be refused. Lord Normand explained that ‘the public interest is injured when invalid claims are persisted in so that inventors are illegitimately warned off an area ostensibly monopolised by the claims.’ In this situation, patentees should either litigate or amend. However, if they choose to litigate, they should not be permitted to amend later. It is reasonable for a patentee to delay where they believed on reasonable grounds that the patent was valid.'*4 Another factor that serves to regulate the way patents are amended arises from the

127 PA s. 72(1)(d) and (e), s. 76; EPC Art. 138(1)(c). 128 PA ss, 27(1); 75(1). The Court of Appeal confirmed the general discretion of the courts to refuse postgrant amendments in the public interest under PA s. 75 in Kimberly-Clark Worldwide v. Procter & Gamble [2000] RPC 422, 435. In so doing it overturned Laddie J’s decision in the Patents Courts in Kimberly-Clark Worldwide v. Procter & Gamble [2000] RPC 424. (Cf. Palmaz’s European Patent (UK) [1999] RPC 47, 63-5

which distinguished Laddie J on this point.) 129 SKF y. Evans Medical [1989] FSR 561, 569; Chevron Research Company’s Patent [1970] RPC 580.

130 Richardson-Vicks Patent [1995] RPC 568. See also Hallen v. Brabantia (1990) FSR 134, 149; KimberlyClark Worldwide v. Procter & Gamble [2000] RPC 422, 435 (Aldous LJ) (CA). 131 ICI (Whyte’s) Patent [1978] RPC 11. In Richardson-Vicks Patent [1995] RPC 561, 568, Jacob J observed

that there was little EPO jurisprudence as regards post-grant amendment in opposition proceedings. Nonetheless he assumed that if it was shown that an applicant had deliberately sought to patent an unjustifiably wide claim, the EPO would refuse leave to amend. Beyond this, however, Jacob J predicted that the EPO might allow a patent to be amended. Consequently, Jacob J held that for purposes of consistency, nothing short of really blameworthy conduct by a patentee should act as bar to amendment in the UK.

132. SKF y. Evans Medical [1989] FSR 561, 577. 133 (1950) 67 RPC 226. 134 On some occasions the courts have suggested that delay is more justified where the patentee operates outside the UK. Bristol Myers Company v. Manon Freres [1973] RPC 836, 857; Mabuchi Motor KK’s Patent

[1996] RPC 387 (not blameworthy to delay when involved in worldwide litigation in which the UK was not an important country).

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fact that the courts may limit the damages that are awarded where an amended patent is infringed. There are two situations where this may occur. The first is set out in section 73. This provides that if an amended application expands the claims beyond that which was reasonable to expect from the application as it was initially published, the courts may limit the damages that are available to the patentee. The question of whether the inference is reasonable is objective. As such, it does not matter what the

defendant (subjectively) thought.'*° It has been suggested that section 73 will apply where a defendant reasonably thought that any claim covering what they do would not be supported by the description in the specification. Apart from that, it was unlikely to have wide application.'** Another factor that regulates the way patents are amended arises from the fact that where a specification is amended, damages are only awarded prior to the date of the amendment if the court is satisfied that the specification as originally published was framed in good faith and with reasonable skill and knowledge.’”” In practice, it is rare for the courts to find that patents were not framed in these terms.

5.2

ERRORS

AND

CLERICAL

MISTAKES

Instead of amending a patent, a patentee may seek to have the patent altered to correct

errors and clerical mistakes.'** Such corrections take effect retroactively. The ability to correct mistakes does not conflict with the general policy of protecting third parties which forbids amendments that extend the patent beyond the scope of the application as filed. The reason for this is that ‘if the mistake was obvious, it cannot have misled’ .!9° If the request to correct a mistake concerns the description, claims or drawings, the correction must be obvious. A correction will be obvious where it is immediately evident that nothing else would have been intended other than what is offered as the correction.'*° If there are any doubts, a correction cannot be made. A useful example of the limits imposed on a patentee’s ability to correct mistakes can be seen in PPG Industries Patent.'*' In this case it was said that faced with the proposition ‘2 + 2=5’ a person might readily presume that this was obviously incorrect and that to correct the mistake the ‘5’ should be changed to a ‘4’. However, as Dillon and Slade LJJ pointed 135. Unilever v. Chefaro [1994] RPC 567, 592. 136 Jacob J’s reasoning, which was dependent on the assumption that there could be no revocation for broad unsupported claims, is now doubtful in the light of Biogen v, Medeva [1997] RPC 1 (HL). 137 PA s. 62(3). See General Tire & Rubber v. Firestone Tyre & Rubber [1975] RPC 270 (CA); Chiron v. Organon (No. 7) [1994] FSR 458. PA s. 62(3) does not apply to an account of profits. Codex Corporation v. Racal Milgo [1983] RPC 369 (CA).

138 PA s. 117(1), PA r. 91(2); EPC r. 88. 139 Holtite v. Jost [1979] RPC 81, 91 (Lord Diplock). In Correction Under Rule 88 G3/89 [1993] EPOR 376, it was held by the Enlarged Board of Appeal that as a matter of construction of the EPC, the correction must not extend protection contrary to EPC Art. 123(2).

140 ‘This was the position under PA 1949 s. 31(1): Holtite v. Jost [1979] RPC 81. 141 [1987] RPC 469, 478, 483.

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out, since an alternative solution was to change one of the ‘2’s to a ‘3’, in the absence of an indication as to where the mistake lay, the correction was not obvious within the

meaning of the Act.

siogh PATENTABLE SUBJECT MATTER 1 INTRODUCTION In the previous two chapters, we looked at the nature of the patent and the processes by which patents are granted. In this and the following three chapters we look at the factors that an invention must comply with to be patentable. These are that the invention: (i)

consists of subject matter that is patentable (this chapter),

(ii) is new (Chapter 18), (ili) involves an inventive step (Chapter 19), and

(iv) complies with the internal requirements of patentability (Chapter 20).

If an application fails to comply with any of these criteria, a patent will not be granted. If a patent has already been granted, non-compliance may mean that the patent is revoked. With these general points in mind, we now turn to look at the subject matter that is able to be patented.

2 PATENTABLE

SUBJECT

MATTER

The task of having to decide the types of subject matter that ought to be patentable invariably generates conflict and uncertainty. This is because patent law inevitably finds itself dealing with technologies that it may not yet understand. It is also because the task of having to decide whether to grant property rights in a particular type of invention raises a complex mix of legal, cultural, political, and social questions. Over time a range of different factors has restricted the subject matter protected by patents. Perhaps the most important is the image of the invention as something concrete and physical, which results from human intervention into nature.! A range of other more explicit policy factors has also limited the type of subject matter that is protected by patents. ' Sherman and Bently, 46, 150-7.

PATENTABLE SUBJECT MATTER

363

The subject matter that is potentially patentable under the 1977 Patents Act and the EPC is regulated in four ways. (i) The first limitation is that to be patentable an invention must be capable of ‘industrial application’: section 1(1)(c), section 4/Article 52(1)(4). While this is probably the least important of the four requirements, it has been important in relation to

inventions involving naturally occurring substances as well as medical and veterinary inventions.

(ii) The second restriction on the subject matter protected by patents is set out in section 1(2)/Article 52(2)(3). In essence this provides a non-exhaustive list of things

which are not regarded as inventions. If the subject matter of an application falls within the scope of these provisions, it will not be patentable. (iii) The third general restriction on the subject matter excluded from patent protection is in paragraph 3(f) of Schedule A2 to the 1977 Patents Act?/Article 53(b). This provides that a patent shall not be granted for ‘any variety of animal or plant or any essentially biological process for the production of animals or plants, not being a microbiological process or the product of such a process.’ (iv) The fourth factor which restricts the subject matter protected by patent law is that patents are not granted for immoral inventions or inventions which are contrary to public policy: section 1(3)*/Article 53(a). While rarely used in the past, this exclusion has taken on a new significance in light of recent developments in genetic engineering. A number of specific exclusions relating to immoral biological inventions are now contained in paragraph 3 of Schedule A2 to the 1977 Act. We will look at each of these in turn.

3 INDUSTRIAL

APPLICATION

In order for an invention to be patentable it must be capable of ‘industrial application’.* This reflects the long-held view that patent protection should not be available for purely abstract or intellectual creations. The need to show industrial applicability also reflects the image of the patentable invention as having a concrete and technical character. The decision to include a requirement of industrial applicability in the EPC was also used to give effect to the policy goal that sought to exclude methods of medical and veterinary treatment from the remit of the scope of what may be patented.” 2 This provision, which replaced PA s. 1(3)(b) (as enacted), was introduced by the Patents Regulations 2000 (SI 2000/2037) (in force 28 July 2000).

3 This provision, which replaced PA s. 1(3)(a) (as enacted), was introduced by the Patents Regulations 2000 (SI 2000/2037).

4 PAs. 1(1)(c); EPC Art. 52(1). > Under the proposed revision of the EPC, Art. 52(1) will be amended to read: 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’. Art. 1, item 17 of the Act Revising the Convention on the Grant of European Patents (EPC) (Munich) (29 Nov. 2000) MR/3/00 Rev. le. See also Base Proposal for the Revision of the European Patent Convention, CA/100/00 e (2000), 38.

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PATENTS

An invention is capable of industrial application if it can be used or made in ‘any kind of industry’.° Industry is construed in its widest sense, including activities whether or not they are made for profit,’ and expressly extends to include agriculture.® As such, the requirement that an invention be made or used in industry presents few problems. In a controversial decision, however, it was held that a private

and personal activity (the application of a contraceptive composition to the cervix) was not industrial in character and thus not patentable.’ As well as being used or made in any kind of industry, for an invention to be industrially applicable, it is also necessary to show that it has a ‘useful purpose’.’° As the 1977 Patents Act and the EPC provide that inventions only need to be susceptible or capable of industrial application, this implies that there is no need to show actual use: it is enough to show that the invention has the potential to be used or made in industry. The requirement that inventions need to exhibit a useful purpose is particularly important in relation to biological research. The reason for this is that, although researchers have been successful in locating and identifying new gene structures, so far they have been much less successful in ascertaining what many of these genes do. This is the case, for example, in relation to the human genome project: the attempt to identify the thousands of genes that comprise the human genetic blueprint.'’ While researchers have been able to identify the genes that make up the human genome, the role that many of these genes play remains unknown. Unless a useful purpose can be found for these genes, they will not be industrially applicable and, as such, not patentable. This position is reinforced by the Biotechnology Directive in so far as it attempts to clarify the industrial applicability requirement in relation to biological inventions. As the Recitals to the Directive explain, a mere DNA sequence without any indication of a function does not contain any technical information and is therefore not a patentable invention.’ In relation to gene sequencing, the Directive and the Patents Act (as amended) specify that the industrial application of a sequenced or a partial sequence

6 PA s. 4(1); EPC Art. 57. But not when the invention contravenes well-established natural laws (such as

Newton’s Law of Gravity): Ward v. Comptroller-General (unreported) (19 May 2000) (CA). Application for perpetual motion machine was rejected. 7 Chiron v. Murex [1996] RPC 535, 607 (Morritt LJ).

8 PA s. 4(1); EPC Art. 57. ' 9 British Technology Group/Contraceptive Method T74/93 [1995] EPOR 279, 284. For criticisms of the decision see J. Pagenberg, ‘Comment’ (1996) 27 IIC 104. 10 Chiron v. Murex [1996] RPC 535, 607 (Morritt LJ). 11 On which see T. Wilkie, Perilous Knowledge (1993); BMA, Our Genetic Future: the Science and Ethics of Genetic Technology (1992); P. Gannon, T. Guthrie, and G. Laurie, ‘Patents, Morality and DNA: Should there be

Intellectual Property Protection of the Human Genome Project’ (1995) 1 Medical Law International 321; J. Straus, ‘Patenting Human Genes in Europe’ (1995) 26 IIC 920. 12 On the proposal for a probationary or interim patent pending discovery of the function of a gene sequence see M. Llewellyn, ‘Industrial Applicability/Utility and Genetic Engineering: Current Practices in Europe and the United States’ (1994) EIPR 473, 480. 13 Biotech. Directive, Recital 23.

PATENTABLE

SUBJECT

MATTER

365

of a gene must be disclosed in the application.'* Where a sequence or partial sequence of a gene is used to produce a protein or part of a protein, the subject matter will only satisfy the requirement of industrial applicability if the application specifies which protein is produced or the function that it performs.'®

3.1

METHODS

OF MEDICAL

AND

VETERINARY

TREATMENT

While the meaning to be given to ‘industrial applicability’ is largely left to the relevant tribunals, a notable exception is found in section 4(2)/Article 52(4).!° This provides

that an ‘invention of a method of treatment of the human or animal body by surgery or therapy or of diagnosis practised on the human or animal body shall not be taken to be capable of industrial application.’ The provisions attempt to ensure that people who carry out medical or veterinary treatment should not be inhibited by patents.'* There are a number of important points to bear in mind when thinking about these provisions.'? 3.1.1 Methods

The first point to bear in mind is that the exclusion is confined to methods of medical and veterinary treatment.” As such, it does not prevent the patenting of surgical, therapeutic or diagnostic substances and compositions (such as drugs), or appar-

atuses or products (such as ECG machines, prosthetic ball and socket joints, or pacemakers.)*!

14 Tbid., Art. 5(3), Recital 22. PA s. 76A, and Sched. A2, para. 6 (Patent Regulations 2000 (SI 2000/2037)).

See also Administrative Council of the EPO 16 June 1999 amending the Implementing Regulations of the EPC, rule 23e(3) (1999) 7 OJEPO 437 (which introduces Biotech. Directive, Art. 5(3) into the EPC). See S.

Bostyn, “The Patentability of Genetic Information Carriers’ [1999] IPQ 1, 7-8; J. Straus, ‘Patenting Human Genes in Europe: Past Developments and Prospects for the Future’ (1995) 26 IIC 920, 934-5; O. Gandy, ‘The EC Biotechnology Patent Directive: A More Ethical European Patent System?’ (1998) 12 World Intellectual Property Reports 239.

!9 Biotech. Directive, Recital 24. See Chiron v. Murex because the claim covered ‘an almost infinite number purpose’). 16 See also PA s. 4(1); EPC Art. 57. Under the proposed into (a revised) Art. 53 (as an exception to patentability): on the Grant of European

Patents (EPC) (Munich)

[1996] FSR 153, 177 (claim to polypeptides invalid of polypeptides which are useless for any known revision of the EPC, Art. 52(4) will be incorporated Art. 1, item 18 of the Act Revising the Convention

(29 Nov. 2000) MR/3/00

for the Revision of the European Patent Convention, CA/100/00

Rev. le. See also Base Proposal

e (2000), 42, Otherwise, the exclusion

remains the same. 17 TRIPs Art. 27(3) allows members to exclude from patentability diagnostic, therapeutic, and surgical methods for the treatment of humans or animals. 18 Wellcome/Pigs IT 116/85 [1989] EPOR 1; [1989] OJEPO 13; Telectronics/Pacer T82/93 [1996] EPOR 409; See—Shell/Blood Flow 1182/90 [1994] EPOR 320. A technique that results in death of the animal does not fall within the exception. 19 See generally, D. Thums, ‘Patent Protection for Medical Treatment: A Distinction between Patent and Medical Law’ (1996) 27 IIC 423; G. Burch, ‘Ethical Considerations in the Patenting of Medical Processes’ (1987) 65 Texas Law Review 1139 (under US law, methods of medical treatment are patentable).

20 PA s. 4(3); EPC Art. 52(4). 21 1712/93 (1998) OJEPO (special edn.) 12; Visx v. Nidek [1999] FSR 405, 465.

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PATENTS

3.1.2 Surgery, therapy, or diagnosis The second point to note is that for an invention to be caught by section 4(2)/Article 52(4), it must consist of a method of surgery, therapy, or diagnosis. When deciding whether an invention is for method of surgery, therapy, or diagnosis the tribunals have focused on the skill and knowledge that is needed for a person to use the method in question. Thus, if an activity needs to be carried out by or under the supervision of a doctor or a vet,” it is more likely to fall within the exclusion. If the invention can be

used by someone such as an engineer” or a farmer,” it is more likely to fall outside the scope of the exclusion. While the skill and knowledge needed to perform the invention in question may provide a useful indication as to whether it is excluded, it is not a definitive factor.’° Instead, it is necessary to look at the overall effect or purpose of the invention and ask whether it was for surgery, therapy or diagnosis.*° Thus, the purpose and inevitable effect of an invention are more important than the question of who is the practitioner of the method.” ‘Surgery’ has been defined as the branch ‘of medicine concerned with the healing of disease, accidental injury or bodily defects by operating on the living body’. It is said to include both ‘conservative (non-invasive) procedures such as repositioning and the far more numerous operative (invasive) procedures using instruments’.”8 On the basis that surgery is limited to processes that give ‘priority to maintaining life or health of the human or animal body on which they are performed’, it does not include processes whose end result is the death of living beings under treatment, either deliberately or incidentally.” ‘Therapy’ has also been interpreted broadly to include prophylactic treatments with a view to maintaining health by preventing ill effects that would otherwise arise.*° It has also been held to include curative treatments that aim to cure diseases or bodily malfunctions that have already arisen?! On the basis that pregnancy and lice infestation are not diseases, inventions for methods of treatment that prevented

22 Thompson/Cornea 24/91 [1995] OJEPO 512. 23 Siemens/Flow Measurement T2245/87 [1989] OJEPO 171.

4 Wellcome/Pigs IT116/85 [1988] EPOR 1; [1998] OJEPO 13. 25 Baxter/Blood Extraction Method 1329/94 [1998] EPOR 363, 366-7.

;

26 Tbid., 367-8 (an invention of performing a method with the technical aim of facilitating blood flow towards a blood extraction point, was held to have no therapeutic purpose or effect and was thus not excluded).

27 Tbid., 366-7. 28 See—Shell/Blood Flow T182/90 [1994] EPOR 320, 323. 29

Georgetown

University/Pericardial access T35/99 [2000] OJEPO 447, 451. This is in contrast to processes

whose end result is the death of living things ‘under treatment’ either deliberately or incidentally. 30 Duphar/Pigs II T19/86 [1988] EPOR 241, [1989] OJEPO 24. 31 Duphar/Pigs II T19/86 [1988] EPOR 241; [1989] OJEPO 24; Unilever’s (Davis) Application [1983] RPC 219; Salimen/Pigs III T58/87 [1989] EPOR 125; Keith Thompson/ Cornea T24/91 (1996) 27 IIC 530; Eisai/ Second Medical Indication G5/83 [1979-85] B EPOR 241.

PATENTABLE SUBJECT MATTER

367

pregnancies*’ and removed lice were not caught by the exclusion.*? However, a method of immunizing against coccidiosis** and a method of controlling mange in pigs were held to relate to diseases and, as such, were excluded as methods of treatment by therapy.*° The exclusion of therapeutic methods applies irrespective of whether the disease or bodily malfunction that the invention seeks to prevent or cure is internal or external, and whether or not it is a temporary or a permanent infliction.*° It also applies irrespective of the origin of the pain, discomfort or incapacity that the therapy seeks to remedy.*” Therapeutic methods (which are seen as being carried out for noble purposes) are often contrasted with cosmetic methods (which are carried out for less important reasons). As such, a method that leads to weight loss for the purpose of curing or preventing obesity would fall within the exclusion.** In contrast, a method for weight loss that is undertaken for cosmetic purposes would not and, as such may be patentable.*® While surgery and therapy have been defined broadly, diagnosis has been construed more narrowly. In particular, it has been held that the exclusion only applies to those methods whose results immediately make it possible to decide on a particular course of medical treatment. As such, methods that only provide interim or preliminary results are not excluded.” 3.1.3 Treatment on or in the body The third point to note is that the exclusion of inventions for methods of medical or veterinary treatment only applies to methods of treatment that are practised on*! or in** the human or animal body. The exclusion does not apply to methods practised on substances that are removed from the body.*’ Thus, the treatment of blood for storage in a blood bank or diagnostic testing of blood samples is not excluded. In contrast, a treatment of blood by dialysis with the blood being returned to the same body would 32 Schering’s Application [1971] RPC 337; British Technology Group/Contraceptive Method T74/93 [1995] EPOR 279. But a method of contraception which includes a therapeutic method will be unpatentable even where that therapy is only present to counteract the side-effects of the contraceptive method: General Hospital/Contraceptive Methods T820/92 [1995] EPOR 446.

33 Salimen/Pigs III T58/87 [1989] EPOR 125. 34 Unilever’s (Davis) Application [1983] RPC 219.

35 Wellcome/Pigs I'T116/85 [1988] EPOR 1; [1989] OJEPO 13. Nor is fatigue a disease: T469/94 (1998) OJEPO 12.

36 Wellcome/Pigs IT 116/85 [1988] EPOR 1; [1989] OJEPO 13. 37 Rorer/Dysmenorrhea T81/84 [1988] EPOR 297; [1988] OJEPO 207. 38 A method of treating plaque, since it inevitably had a beneficial effect, was held not patentable: [CI/

Cleaning plaque T290/86 [1991] EPOR 157. 39 A cosmetic method is patentable unless it inevitably has a therapeutic effect. It was therefore possible to patent a method of dieting involving suppression of appetite, since the effect would not necessarily have been positive: Du Pont/Appetite suppressant T144/83 [1987] EPOR 6; [1986] OJEPO 301. 40 Bruker/Non-invasive

measurement 1385/86 [1988] EPOR 357.

41 Salminen/Pigs III T58/87 [1989] EPOR 125. 42 Siemens/Flow measurement [1989] EPOR 241; 1254/87 OJEPO (1989) 171.

43 The treatment of body tissues or fluids after removal from the body is not excluded: EPO Guidelines CIV, 4.3.

368

PATENTS

be excluded.** While an invention may interact with or relate to a human or animal body, it will only be excluded if it is classed as a form of treatment on the body. In line with this, the Technical Board of Appeal held that ‘a method and apparatus for preventing piglets from suffocating’ by blowing hot air under a mother pig to discourage piglets from going under her was patentable. While the invention protected the body, it was still patentable because the method was not practised on the body of the piglet.* 3.1.4 Two or more uses

So long as an application has a use which falls within the scope of section 4(2)/Article 52(4) it will be excluded. This is the case even if the invention has other uses that do

not fall within the exclusion.*® Thus, an application for a method of cleaning plaque from human

teeth which had both an (excluded) therapeutic effect and a (non-

excluded) cosmetic effect was excluded from patentability by Article 52(4) on the basis that the application claimed a therapeutic treatment.*” While the presence of a surgical step in a multi-step method of the treatment of the human or animal body normally confers a surgical character on the method, there may be some cases where this is not the case.** On the basis that methods that have a destructive purpose do not fall within the aim of section 4(2)/Article 52(4), surgery is limited to processes

that give ‘priority to maintaining life or heal of the human or animal body on which they are performed.” As such, a process that has as its end result the death of a living thing (either deliberately or incidentally) will not be caught by the exclusion: even if the process involves a surgical step. 3.1.5 Limits

While section 4(2)/Article 52(4) imposes important limits on the types of medical and veterinary inventions that may be patented, it would be wrong to assume from this that all medical and veterinary inventions are excluded from the scope of patent protection. The reason for this is that the potential scope of the exclusion is restricted by the fact that it must be read in light of section 2(6)/Article 54(5). While we deal

with this in more detail later,” it is enough to note that these provisions have been construed in such a way that they permit the patenting of uses of known substances for

“4 EPO Guidelines C-IV, 4.3. See Baxter/Blood Extraction Method T329/94 [1998] EPOR 363, 367.

45 Salimen/Pigs III T58/87 [1989] EPOR 125; Thompson/Cornea 124/91 [1996] EPOR 19. 46 Unlike PA s. 1(2)/EPC Art. 52, the exclusion is not confined to methods of treatment ‘as such’. 47 ICl/Cleaning plaque T209/86 [1991] EPOR 157; [1992] OJEPO 414; Du Pont/Appettite supressant T144/

83 [1986] OJEPO 30; General Hospital/Contraceptive Methods T820/92 [1995] EPOR 446; Meiji/Feeds T438/91 [1999] EPOR 452; Telectronics/Pacer T82/93 [1996] EPOR 409 (if hybrid claims include a feature within the

exception, the whole is unpatentable). 48. See—Shell/Bloodflow T182/90 [1994] EPOR 320; EPO Guidelines C-IV, 4.3.

49 Georgetown University/Pericardial access T35/99 [2000] OJEPO 447, 451. This is in contrast to processes

whose end result is the death of living things ‘under treatment’ either deliberately or incidentally.

50 See below at pp. 427-33.

PATENTABLE

SUBJECT

MATTER

369

the manufacture of a medicament for the treatment of a particular disease.*! As we will see, while the so-called second medical use patents continue to undermine the scope of the methods of medical and veterinary treatment exception, recent cases suggest (at least in relation to dosage regimes) that this situation has changed. As section 2(6)/Article 54(5) only apply to medical methods which use substances or compositions, the exclusion of methods of medical and veterinary treatment still applies where apparatuses and objects are used. The residual scope of the exclusion was reaffirmed by the Appeal Board of the EPO when it resisted attempts to extend the scope of Article 54(5) beyond the use of substances and compositions to include the surgical use of an instrument.”

4 EXCLUDED

SUBJECT

MATTER

Up until 1977, for a patent to be valid it was necessary to show a ‘manner of new manufacture’. This phrase, which was first used in the 1624 Statute of Monopolies, proved to be a remarkably versatile and flexible tool which enabled patent law to adapt to and accommodate many of the technological and scientific changes that have taken place over the last two and a half centuries. The passage of the 1977 Patents Act saw a dramatic change in the way in which British patent law determined what was patentable subject matter. The reason for this was that unlike previous legislation,

neither the 1977 Patents Act nor the EPC upon which it is based contains a definition of the invention.’ Nor do they expressly require that applicants disclose an invention in order to be patentable. Instead, the 1977 Patents Act and the EPC contain a nonexhaustive list** of creations which were deemed not to be inventions.» To this end section 1(2) (which is the equivalent of Article 52) provides: It is hereby declared that the following (among other things) are not inventions for the purposes of this Act, that is to say, anything that consists of: (a) a discovery, scientific theory or mathematical method;

(b) a literary, dramatic, whatsoever;

musical

or artistic work

or any other aesthetic

creation

51 [Cl/Cleaning plaque T290/86 [1991] EPOR 157. For PA s. 2(6)/Art. 54(3) to operate, the use must fall

within PA s. 4(2)/Art. 52(4): Nycomed/Contrast agent forNMR Imaging 1655/92 [1988] EPOR 206. °2 In response to an attempt to patent a second use of a surgical instrument, the Appeal Board said ‘a surgical use of an instrument is not analogous to a therapeutic use (of amedicament) . . . since the former is not consumed in the application and could be repeatedly used for the same or even other purposes as well... medicaments on the other hand are expended in the process of use and thus have a once for all utility’. Codman/Second Surgical Use T227/91 [1994] OJEPO 491; [1995] EPOR 82.

>3 Under s. 101 of the 1949 Patents Act inventions were defined by the phrase ‘manner of manufacture’. 54 See Lux Traffic v. Pike Signals [1993] RPC 107, 137ff.; Christian Franceries/Traffic regulations T16/83

[1988] EPOR 65.

5° G. Kolle, ‘The Patentable Invention in the EPC’ (1974) 5 IIC 140, 144.

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PATENTS

(c) a scheme, rule or method for performing a mental act, playing a game or doing

business, or a program for a computer; (d) the presentation of information; but the foregoing provisions shall not prevent anything from being treated as an invention for the purposes of this Act only to the extent that a patent or application for a patent relates to that thing as such.

While the decision not to require the existence of an invention as an express requirement for patentability marked an important change in British patent practice, section 1(2) (and Article 52) effectively codified the picture of the invention which had built up in Britain (and most other EPC countries) prior to 1977.°°

With the exception of the exclusion of computer programs, what the various factors excluded from protection share in common

is that they are abstract, intel-

lectual, and non-technical in nature.” Lurking behind the categories of subject matter excluded from protection is an image of the invention as something that is concrete and technical in character. Whereas an invention leads to a practical concrete result, this is not the case with a discovery, a mathematical method or a scientific theory. Neither is it the case with a scheme, rule or method for performing a mental act, playing a game or doing business, or the presentation of information: activities that are seen to be abstract and intellectual in nature and thus not patentable. While most of the material listed in section 1(2)/Article 52(2) is excluded because it

is abstract and non-technical, this is not the case with computer programs which were excluded because it was thought at the time the EPC was drafted that they were better protected by copyright law.°* As we will see, a lot of time and effort has subsequently been expended attempting to undo this decision. 4.1 AN INVENTION AS A POSITIVE REQUIREMENT OF PATENTABILITY?

Despite the absence of any formal requirement to show the existence of an invention as a precondition for patentability, a number of recent decisions in the UK and the EPO have suggested that for an invention to be patentable it is necessary to show that the application discloses an invention.* In the UK, support for this view comes from the decision of Genentech v. Wellcome where the Court of Appeal said that it was an essential requirement which ‘must be satisfied before a patent can properly be granted

56 Because the exceptions were intended to harmonize existing laws, pre-1977 case law has been treated as

of persuasive value when interpreting the exclusions: Gale’s Application [1991] RPC 305. Over time pre-1977 decisions have been replaced by decisions of the EPO and other member states. >” The exclusion of literary, dramatic, musical, and artistic works under PA s. 1(2)(b) is also explained by the fact that the subject matter is protected by copyright and designs law.

°8 G. Kolle, ‘The Patentable Invention in the EPC’, (1974) 5 IIC 140, 147-8. 59 EPO Guidelines C-IV, 1.1, 2.2; EPC r. 27 and 29.

PATENTABLE

SUBJECT

MATTER

37a

... that the applicant has made an “invention”. More recently, the question of whether the existence of an invention was a prerequisite for patentability was touched upon in the House of Lords decision of Biogen v. Medeva. While Lord Mustill suggested that the requirement that there be an invention may be of relevance in the future, the question was left unanswered.*! As such, the only issue that applicants currently need to concern themselves with in this context is whether their invention falls within the scope of the subject matter excluded by section 1(2) and Article 52(2)

5 IS THE INVENTION EXCLUDED 1(2)/ ARTICLE 52?

BY SECTION

In considering whether an invention falls within the scope of section 1(2)/Article 52 two separate questions need to be asked. First, what is the subject matter of the application? Secondly, does the subject matter as characterized fall within one of the excluded categories? We will deal with each of these questions in turn.

5.1

HOW

IS THE

INVENTION

TO

BE CHARACTERIZED?

The first question that needs to be asked when considering whether an invention falls within the scope of section 1(2)/Article 52 is what is the subject matter of the application. That is, what is the invention? While this may appear to be a relatively inconsequential question, it has proved to be crucially important in determining the validity of many patents.

5.1.1 A mixture of patentable and non-patentable elements One of the first questions that arose in relation to section 1(2)/Article 52 was what

happens if an application contains a mixture of both excluded and permitted features? What should be done, for example, if an invention includes as one of its elements a

discovery or a computer program which is expressly excluded under section 1(2)/ Article 52 as well as other non-excluded elements? Initially, discussions in this area focused on the meaning that should be given to the proviso to section 1(2)/Article 52 which states that the listed exclusions only apply to the extent that the alleged invention relates to that thing as such. Given the ambiguous nature of the proviso, it is not

60 Genentech’s Patent [1989] RPC 147, 262 (Mustill LJ). Mustill LJ based his arguments on the wording of PA s. 1(2), EPC Art. 52 and the EPO Guidelines C-IV, 1.1, and 2.2.

61 Biogen v. Medeva [1997] RPC 1, 31 (Lord Mustill), cf. Lord Hoffmann, 42. 62 Under the revised text to the EPC, Art. 53 will be placed into Art. 52. There are no substantive changes to the patentable subject matter: Art. 1, item 17 of the Act Revising the Convention on the Grant of European Patents (EPC)(Munich) (29 Nov. 2000) MR/3/00 Rev. le.

372

PATENTS

surprising that it lent itself to a number of different and sometimes conflicting styles of interpretation.© Despite initial doubts, courts in the UK and at the EPO have come down in favour

of what is known as the whole-contents approach to interpretation.“ This means that when considering whether an invention falls foul of section 1(2)/Article 52, the courts

disregard the fact that the invention has as one of its elements say a computer program or a discovery and focus instead on the invention as a whole. In so doing the courts have reinforced the fact when determining whether an invention is patentable it is not necessary to compare the non-technical and the technical elements of the invention. That is, it is irrelevant that an invention is made up of a mixture of

technical and non-technical elements. 5.1.2 Characterizing the invention While the whole-contents approach offers guidance in situations where a patent is made up of a mixture of excluded and non-excluded elements, it offers little assistance

on the more general question as to how the invention ought to be interpreted. In thinking about the nature of the invention a number of different approaches could have been adopted. The courts could, for example, have attempted to distil the essence or kernel of the invention from the claims themselves. Alternatively, they could have

focused on the novel elements of the invention. One of the interesting features of the way the invention has been interpreted by courts in the UK and the EPO is that rather than attempting to identify the essential nature of the invention, they have focused on what the invention does. That is, when determining whether an invention falls within section 1(2)/Article 52 the courts have concentrated upon the contribution or effect that the invention has upon the known art (or knowledge in the area in question). 5.2 DOES THE INVENTION 1(2)/ARTICLE 52?

FALL WITHIN

THE SCOPE OF SECTION

Once the invention has been interpreted, it is then possible to turn to the question of whether it falls within the scope of section 1(2)/Article 52. In situations where the invention clearly falls within one of the excluded categories set out in section 1(2)/Article 52, it will not be patentable. This can be seen, for

example, in Merrill Lynch’s Application’ where the Court of Appeal was called upon 63 It was initially suggested that when determining whether an invention falls within PA s. 1(2)/EPC Art. 52, the courts should separate the excluded and non-excluded elements of the application and focus only upon the non-excluded components. Merrill Lynch’s Application [1988] RPC 1. 64 Tn the UK see Merrill Lynch Application [1989] RPC 561 (CA); Genentech v. Wellcome [1989] RPC 147, 204-14, 224 ff. At the EPO see Vicom/Computer-related invention T208/84 [1987] OJEPO 14; [1987] EPOR74; Kock & Sterzel/X-ray apparatus T26/86 [1988] EPOR 72; [1988] OJEPO 19.

© Kock & Sterzel/X-ray apparatus T26/86 [1988] EPOR 72. [1988] OJEPO 19. Cf. IBM/Text clarity processing [38/86 [1990] EPOR 606.

66 [1989] RPC 561 (CA).

PATENTABLE

SUBJECT

MATTER

373

to consider whether an automatic share-trading system, operated using a computer program, fell within the scope of section 1(2)(c). While the invention had a computer

program as one of its elements, the court said that as the invention needed to be looked at as a whole, this did not necessarily mean that the patent was invalid. Rather what the court needed to ask was whether the invention viewed as a whole made a contribution in a field not excluded from patentability. Unfortunately for the applicants, the Court of Appeal found that the contribution made by the invention was limited to the field of business (explicitly excluded by section 1(2)(c) )and, as such,

was unpatentable.” Although in many situations it will be relatively easy to determine whether an invention falls within the scope of section 1(2)/Article 52, in some circumstances this

is not the case. One reason why it is often difficult to determine whether an invention falls within the scope of section 1(2)/Article 52 is that applicants may attempt to describe an invention which falls foul of section 1(2)/Article 52 in such a way that it

appears to fall outside the scope of the excluded categories. Faced with the possibility of applicants dressing non-patentable inventions up in a way that makes them appear as if they are patentable, the courts have responded by ignoring the form of the claims and focusing instead on the substance of the invention. In the twenty or so years in which tribunals in the UK and the EPO have been thinking about how applications which are only made up of excluded subject matter are to be distinguished from inventions which only happen to include as one of their components something such as a computer program and are therefore prima facie patentable, a somewhat surprising situation has developed. This is that in determining whether an invention falls within the scope of section 1(2)/Article 52(2) the courts

have ignored the often difficult question of whether the invention is, for example, a computer program or a mathematical method. Instead, they have asked whether the invention-as-claimed is ‘technical’. If the invention exhibits technical character, or the problem that the invention solves is technical,” this is taken to mean that it falls outside the scope of section 1(2)/Article 52(2).”° Conversely, the absence of technical

character is treated as virtual proof that the invention falls within the scope of section 1(2)/Article 52(2) and that it is therefore unpatentable. In a sense what has happened, at least in difficult border-line cases, is that the negative criteria set out in section 1(2)/

Article 52(2) have been recast in more positive terms. These specify that for an

67 Merrill Lynch’s Application [1989] RPC 561, 569. 68 Ibid. (Fox LJ); [BM/Document

abstracting and retrieving T22/85

[1990]

OJEPO

12; [1990]

EPOR

98, 105. 6° TBM/Data processor network T6/83 [1990] OJEPO 5; [1990] EPOR 91; IBM/Computer-related invention

T115/85 [1990] EPOR 107. The feature of using technica] means for a purely non-technical purpose and/or for processing purely non-technical information does not necessarily confer technical character to any such individual steps of use or to the method as a whole: in fact, any activity in the non-technical branch of human culture involves physical entities and uses, to a greater or lesser extent, technical means.

70 The mere occurrence of technical features in a claim is not enough: Pension Benefit Systems Partnership T931/95 (8 Sept. 2000) (TBA), 10-11.

374

PATENTS

invention to be patentable it is necessary to show that it exhibits technical character or, in other words, that it provides a technical contribution to the art.

The introduction of technical character as a de facto non-statutory requirement for patentability owes its origin to an imaginative interpretation of Article 52 of the EPC. All the categories in Article 52(2) have in common is that they are non-technical, either because they are abstract (discoveries, scientific theories) or because they are clearly non-technical (aesthetic creations or presentations of information).’! As Article 52(1) and (2) only exclude from protection those inventions which are non-

technical, it is a short inductive leap to conclude from this that the term ‘invention’ relates to inventions of a technical nature. This conclusion was reinforced by the Rules and Guidelines of the EPC that clearly state that in order for an invention to be patentable it must be technical.” The use of technical character as a way of determining whether an invention falls within the scope of the excluded subject matter is set out in the leading EPO decision of Vicom.’’ In deciding that an application which related to a method of digitally filtering images using a device called an operator matrix which aimed at producing enhanced images was patentable, the Board stressed that even if the idea underlying an invention was a mathematical method it could still be patentable if the invention as a whole made a technical contribution to the known art. While some doubts have been raised in the UK about the use of technical character as a way of distinguishing between inventions which are ‘in reality’ or ‘in truth’ patentable from those which are made up solely of excluded subject matter,” British courts have followed the lead of the EPO and adopted technical character as a way of determining whether an invention falls within section 1(2).’”° This was highlighted in the Court of Appeal in Merrill Lynch when Fox LJ said: [I]t cannot be permissible to patent an item excluded by section 1(2) under the guise of an

article which contains that item—that is to say, in the case of a computer program, the patenting of a conventional computer containing that program. Something further is necessary. The nature of that addition is, I think, to be found in the Vicom case where it was stated “Decisive is what technical contribution the invention makes to the known art’. There must, I think, be some technical advance on the prior art in the form of a new

result.’° 71 Sternmheimer/Harmonic vibrations T366/87 [1989] EPOR 131. 72 A patentable invention must relate to a technical field: EPC r. 27(1)(b); it must be concerned with a technical problem: EPC r. 27(1)(d), and it must be characterized in the claims by means of technical features: EPC r. 29(1). EPO Guidelines C-IV, 1.2(ii). 73 Vicom/Computer-related invention T208/84 [1987] EPOR 74; [1987] OJEPO 14. Beyer “Der Begriff der

Information als Grundlage fur die Beeurteilung des technischen Charakters von programmbezogenen Erfindungen’ [1990] GRUR 399. 74 Wang Laboratories [1991] RPC 463, 470; Fujitsu’s Application [1996] RPC 511, 521. The Munich Diplomatic Conference on the establishment of the EPC abstained from limiting the concept of the invention by use of ‘technical’ as was earlier proposed: G. Kolle ‘Patentable Inventions in the EPC’ (1973) 5 IIC 140, 145.

7° Technical character has become decisive in determining whether or not a patent falls within the scope of s. 1(2). CIPA, para. 1.09.

76 [1989] RPC 561, 569.

PATENTABLE

SUBJECT

MATTER

375

While Fox L]’s language differed at times from the language of the Technical Board of Appeal, the Court of Appeal accepted that the presence of technical character was sufficient to show that an invention did not relate to a disqualified matter and, as such, that it was prima facie patentable.”” The convergence that has been taking place between Britain and the EPO in this area received great support from the House of Lords decision of Biogen v. Medeva that embodies the spirit and language of the approach adopted at the EPO.”® One of the main advantages of shifting attention towards the idea of technical character is that the courts are able to avoid the difficult task of having to define the subject matter listed in section 1(2)/Article 52(2), a task which is not only technically

problematic but also one that changes in technology are likely to render obsolete. Indeed, one of the major problems with specific formulations such as section 1(2) and Article 52(2) is that because they are drafted in light of contemporary technologies they are prone to obsolescence or, at least, convoluted interpretations. Whatever advantages there may be in using technical character as a de facto requirement for determining whether an invention falls within the ambit of section 1(2)/Article 52(2),

it still leaves us with the difficult task of having to formulate and understand what is meant by the term ‘technical’. It is to this question that we now turn. 5.2.1 Determining whether an invention is technical: physical change In the vast bulk of cases it is very easy to ascertain whether an invention is technical. This is because it is generally accepted that certain types of creations, such as those in the fields of mechanical engineering or organic chemistry, are technical and as such belong within the remit of patent law. This is made all the easier by the fact that applicants are required to specify the technical field into which their applications fall. While in most circumstances it may be easy to determine whether an invention is technical, in some situations this is not the case.” Typically this arises in relation to creations which fall outside the currently accepted legal limits. This is presently the case with inventions in relation to financial systems, software-generating software, language-processing, text-editing, and computer programs. In these borderline cases, determining whether an invention is technical is often a difficult task. This problem was recently highlighted by the British Comptroller of Patents who complained that ‘in practice it is often very difficult to determine whether a particular invention does as a matter of fact involve the sort of technical contribution or result alluded to in the cases.’*° The difficulty of this task was borne out by the fact that while the legal studies which prompted the revision of the EPO guidelines were able to propose ‘technical character’ as one of the ways of determining whether subject matter was excluded from patentability, they were unable to provide a precise definition of what was meant 77 IBM/Document abstracting and retrieving 122/85 [1990] OJEPO 12; [1990] EPOR 98, 103. 78 Biogen v. Medeva [1997] RPC 1, 34. See also Fugitsu’s Application {1997} RPC 608 (CA).

79 See J. Thomas, ‘An Epistemology of Appropriation: Patentable Subject Matter after State Street Bank’ [2000] IPQ 27, 49 ff.

80 Fyjitsu’s Application [1996] RPC 511, 521.

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PATENTS

by the term ‘technical’.*’ Instead, they left the task of defining technology to the jurisprudence of the courts. While the task of having to define what is meant by a technical creation may have been left to the respective courts, so far they have provided little direct guidance in this matter. In many cases where this issue has arisen, no indication is given as to how a decision was reached as to whether something was technical. In other cases, the

tribunals have offered the equally unhelpful ‘it depends on the facts of the case’.* Given that the fate of many inventions depends on the way technology is defined, it may be helpful to provide some guidance in this matter. In determining whether an invention is technical, the courts have fallen back on the model of the invention that has long been employed in patent law.** This is one that sees the process of invention as the reduction of the abstract to the specific, or as a

transformation from the general to the concrete, processes which are mediated by the inventor. In turn, this model distinguishes between creations that are abstract, intellectual, mental, undefined, and unpatentable, and those that are concrete, physical, tangible, and patentable.** Drawing upon this model of the invention, it has been held that an invention is technical and patentable if it provides or leads to a concrete, causal or non-abstract result or change in things. When translated into the context of section 1(2)/Article 52, this means that if it can be shown that the invention brought about a tangible physical change, this is taken as virtual proof that the invention is technical and that it therefore falls outside the scope of the excluded categories.* The use of physical change to determine whether an invention is technical can be seen in Vicom where the Board of Appeal explained how unpatentable mathematical methods could be distinguished from patentable inventions: the fact that a mathematical method or a mathematical algorithm is carried out on numbers ... and provides a result also in numerical form, the mathematical method or algorithm being only an abstract concept prescribing how to operate on numbers. No direct technical result is produced by the mathematical method as such.

While abstract creations are not patentable, the Board of Appeal added that: if a mathematical method is used in a technical process, that process is carried out on a physical entity (which may be a material object but equally an image stored as an electrical

81 WG/CP/I/1.

:

82 Wang Laboratories [1991] RPC 463, 473. See also Fujitsu’s Application [1997] RPC 608 (CA).

83 See NRDC’s Application [1961] RPC 134, 142; Rote Taube (1970) 1 IIC 136, 137-8.

84 The ‘invention must belong not to the field of abstractions or speculations, but to that of practical achievement. It must concern not an abstract principle but a conception which is implemented in industry’. Christian Franceries/Traffic regulations T16/83 [1988] EPOR 65, 70; [1990] OJEPO 379.

85 The following inventions were held to be unpatentable because they did not bring about a physical change: inventions for document-abstracting (IBM/Document Abstracting and Retrieving T22/85 [1990] EPOR 98); linguistic expression processing (IBM/Text clarity processing T38/86 [1990] EPOR 606); a system for listing semantically related linguistic expressions (IBM/Semantically related expressions T52/85 [1989] EPOR 454); method for automatically detecting and correcting contextual homophone errors in a text document (IBM/Text processing T65/86 [1990] EPOR 181).

PATENTABLE

SUBJECT

MATTER

377

signal) by some technical means implementing the method and provides as its result a

certain change in that entity.*° In a move that has important ramifications for many inventions, particularly in the field of information technology, the physicalist conception of technology has been interpreted very broadly. This can be seen in the comment that ‘physical entities’ includes ‘a real thing, i.e. an image, even if that thing was represented by anelectrical signal’.*’ The wide definition given to physical entity can also be seen in the EPO decision of Kock ¢& Sterzel. In this case, it was held that the fact that the invention

controlled X-ray tubes in such a way as to ensure optimum exposure while at the same time minimising against the danger of overloading of the tube was sufficient change for the application to be deemed technical.** Perhaps the best example of the way in which the meaning of ‘physical entity’ has been extended can be seen in BBC/Colour Television Signal where it was said that despite its transient character, as a TV signal could be detected by technical means it had a physical reality and therefore could not be considered to be an abstract entity.® As such, it was prima facie patentable. Although the approach being followed in the United Kingdom is less consistent than at the EPO, there are a number of cases where the physicalist model of the invention has been used to determine whether a patent falls within the scope of section 1(2).”° It would be premature, however, on the basis of these decisions to make any definitive comments as to the way technology is being defined in the UK. This is particularly the case in light of recent lower-court decisions which seem to be following a different agenda from that which is well established at the EPO. We must await further decisions to see if the general trend is in favour of the approach of the Technical Board of Appeal.

5.3

SUMMARY

While there are some unsettled issues in relation to the operation of section 1(2)/ Article 52 (notably in relation to the meaning of technology), for the most part the law in this area is relatively clear. The task of determining whether an invention falls within the scope of section 1(2)/Article 52 can be broken down into two steps.

(1) It is first necessary to determine what is being claimed. This is done by: (a) looking at the invention as a whole; (b) disregarding the form or kind of claim and concentrating on its content, and 86 Vicom/Computer-related inventions T208/84 [1987] EPOR 74, 79. 87 IBM/Document abstracting and retrieving T22/85 [1990] EPOR 98, 105.

88 Kock & Sterzel/X-ray apparatus T26/86 [1988] EPOR 72; [1988] OJEPO 14. See also IBM/Computerrelated invention T115/85 [1990] EPOR 107; [1990] OJEPO 30 (an invention which automatically gave visual

indications about conditions prevailing in an apparatus or system was said to resolve a technical problem). 89 BBC/Colour Television Signal T163/85 [1990] EPOR 599; [1990] OJEPO (Suppl.) 19. On this basis the invention did not fall within EPC Art. 52(2)(d), Art. 53.

90 Gale’s Application [1991] RPC 305 (CA).

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PATENTS

(c) identifying the contribution that the invention provides or the problem that it solves. (2) Once the invention has been characterized, it is then possible to determine whether it falls within the scope of section 1(2)/Article 52(2). (a) If the invention

clearly falls within

section

1(2)/Article

52(2), it is not

patentable. (b) Where it is difficult to determine whether an invention falls within the scope of section 1(2)/Article 52(2), it is necessary to consider whether the invention is

technical. If the invention is technical, this will be taken as showing that the invention falls outside the scope of section 1(2)/Article 52(2). The absence of technical character, however, means that the invention is not patentable.

(c) While no clear guidance has been given as to what the tribunals mean by a ‘technical’ invention, the fate of a patent is improved if it can be shown that it

leads to or produces a physical change in things.

6 SPECIFIC

APPLICATIONS

Having looked at the general approach that is taken to the question of whether an invention falls within the scope of section 1(2)/Article 52(2), we now move to focus

on a number of more specific problems that arise in relation to the scope of the protected subject matter. In particular, we look at patent protection available for naturally occurring substances and for computer-related inventions.

6.1

DISCOVERIES

AND

NATURAL

SUBSTANCES

Advances in genetic engineering over the last few decades have enabled scientists to isolate and replicate a host of naturally occurring substances. Given the considerable investment that has been made in this research, it is not surprising that attempts have been made to patent the results of that research. In part, the extent to which this biological research is patentable depends on whether the resulting products and processes are treated as discoveries or inventions. The reason for this is that discoveries as such are excluded from the remit of patentable subject matter.?! However, if it can be shown that when viewed as a whole, an application that incorporates a discovery

brings about a technical change, it may be patentable. This means that if a person finds a new property of a known material or article, this will be treated as an unpatentable discovery. However, if that person puts the property to a practical use, the 91 PA s. 1(2)(a); EPC Art. 52(2)(a). On attempts to protect discoveries see F. Neumeyer, ‘Legal Protection of Scientific Discoveries’ [1975] Industrial Property 348; K. Beier, ‘Scientific Research, Patent Protection and

Innovation’ [1975] 6 IJC 367; E. Kitch, ‘The Nature and Function ofthe Patent System’ (1977) 20 Journal Law e& Econ 265, 288.

PATENTABLE

SUBJECT

MATTER

379

invention may be patentable. For example, the discovery that a known material is able to withstand mechanical shock would not be patentable. However, a railway sleeper made from that material could well be patentable.” In thinking about the extent to which biological products and processes are patentable, it is important to bear in mind that patent law distinguishes between naturally occurring substances (unpatentable discoveries) and the products and processes which result from the human effort in isolating those substances from their natural environment (patentable inventions).*’ That is, a distinction is drawn between things

which freely exist in nature (and can only be unearthed or discovered) and things which are artificial (and which contain the necessary degree of human intervention for the resulting product to be called an invention). Given this, the important question that we need to consider is: what is the difference between something that is ‘natural’ and thus unpatentable, and something that is ‘artificial’ and thus potentially patentable? More specifically, given that the act of discovery and the act of invention often both involve a considerable amount of time, effort, skill, and labour, we need to ask: what type of effort is needed for an activity to be described as an artificial invention as distinct from a natural unpatentable discovery? In answering these questions, it becomes apparent that the borders between discovery and invention are far more vague and problematic than they might seem at first glance. Perhaps the best way to think about the extent to which biological inventions are patentable is to look at the different types of patents that may be granted.” (i) Ifa process is developed that enables a substance found in nature to be isolated and obtained from its surroundings, the process may be patentable.”° (ii) The finding of a substance freely occurring in nature is a mere discovery and, as such, is unpatentable. As the Opposition Division at the EPO explained this means that the ‘discovery’ of the moon (when the Americans landed on it in 1969), the finding of a 5,000-year-old mummy in the Italian/Austrian Alps, or a new animal would not be patentable.*° This is reflected in Article 5(1) of the Biotechnology Directive which says that the ‘human body, at the various stages of its formation and development, and the simple discovery of one of its elements, including the sequence or partial sequence of a gene, cannot constitute a patentable discovery.’ Similar provisions exist in the 1977 Patents Act and the EPC.” 92 EPO Guidelines C-IV, 2.3. 93 See R. Whaite and N. Jones, ‘Biotechnological Patents in Europe: The Draft Directive’ [1989] EIPR 145, 149; A. White, “The Patentability of Naturally Occurring Products’ [1980] EIPR 37. 4 As yet there has been no case directly on this point in the UK. There is little reason to doubt that the position in the UK will be the same as that at the EPO. Cf. Chiron v. Murex Diagnostics (1996) FSR 153, 177. 99 EPO Guidelines C-IV, 2.3.

°6 Howard Florey/Relaxin 1741/91 [1995] EPOR 541, 549. It is interesting to note that plant breeder’s rights are available to those who ‘discover’ varieties, whether growing in the wild or occurring as a genetic variant, whether artificially induced or not: PVA, s. 4(3) and 4(6). Apparently the Braeburn apple was found in this way in 1952. See T. Boswell, Hansard (HC) (24 June 1997) col. 717.

97 See PA Sched. A2, para. 3(a) (introduced by Patents Regulations 2000 SI 2000/2037); Rule 23(e)(1), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437).

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PATENTS

(ii) If a natural substance that has been isolated from its surroundings can be

properly characterized either by its structure, by the processes by which it is obtained, or by other parameters, the substance per se may be patentable. This means that as long as ‘something’ is inside a human or animal body or a plant, it is a natural element and cannot be considered to be patentable. However, once this ‘something’ is isolated

from the human or animal body or a plant by means of a technical process, it becomes eligible for patent protection.”* This is the case even if its structure is identical to that of a natural element, since the processes used to isolate the element are technical processes.” This can be seen in the Relaxin decision, which concerned claims relating to DNA sequences of a naturally occurring substance that relaxes the uterus during childbirth, which was obtained from the human ovary.!°° The Opposition Division of the EPO held that the invention was not a discovery and as such was not excluded from patentability. Following the EPO Guidelines, the Opposition Division said that as the substance Relaxin had not previously been recognized, that a process had been developed to obtain Relaxin and the DNA which encoded it, that the products were characterized by their chemical structure, and that the products had a use, the claims were patentable under Article 52(2).

This position is affirmed by Article 3(2) of the Biotechnology Directive (and by paragraph 2 of Schedule A2, to the 1977 Patents Act)!°! which provides that ‘biological material that is isolated from its natural environment or produced by means of a technical process may be the subject of an invention even if it previously occurred in nature.’!°? More specifically, Article 5(2) of the Biotechnology Directive states that an element isolated from the human body or otherwise produced by means of a technical process, including the sequence or partial sequence of a gene, may constitute a patentable invention even if the structure of that element is identical to that of a natural element. Equivalent provisions have now been introduced in the UK! and in the Implementing Regulations to the EPC.!™ This means that ‘raw data’ on the human genome (including the human DNA sequence and its variations:'* human genes, partial gene sequences, the human body at various stages of it development) that are not isolated, purified or somehow

°8 See Biotech. Directive Recitals 21-2. Similar arguments apply for the purification of a naturally occurring substance.

% S. Sterrckx, ‘Some Ethically Problematic Aspects of the Proposal for a Directive on the Legal Protection

of Biotechnological Inventions’ [1998] EIPR 123, 124-5; cf. S. Crespi, “Biotechnology Patents: the Wicked Animal Must Defend Itself [1995] EIPR 431, 432-3.

100 (1996) 27 IIC 704, 705-6. 'l Introduced by Patents Regulations 2000 (SI 2000/2037), in force 28 July 2000. 102 Biotechnology Directive Art. 3(2); PA Sched. A2, para. 2 (introduced by Patents Regulations 2000) Rule 23c(a) Implementing Regulations to the EPC (introduced by (1999) OJEPO 437).

>

103 See PA Sched. A2, para. 5 (introduced by Patents Regulations 2000).

104

Rule 23e(2), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437).

105 This was confirmed by the joint statement by Tony Blair and Bill Clinton, ‘Joint Statement to ensure that discoveries for the human genome are used to advance human health’, 14 Mar. 2000.

PATENTABLE

SUBJECT

MATTER

381

produced by a technical process are not patentable.'°° However, if the genetic information (including the sequence or partial sequence of a gene) has been isolated from the human body or somehow produced by a technical process, it will be potentially patentable. For example, if we take the situation where a research team successfully isolates the gene responsible for migraines. While the underlying genetic information would be in the public domain, the technique used to isolate the gene (which may include complicated processes of identification, purification, and classification) would be patentable. On the basis that the isolated gene would not have been identified without the human intervention (techne), the isolated gene may be patented. While the patenting of processes used to isolate natural substances is relatively uncontroversial, the same cannot be said about the patenting of the substances that are isolated using those processes. In particular, doubts have been raised as to whether the act of isolation and characterization of a naturally occurring substance is really that different from the mere finding of the substance. As one commentator has noted ‘even if a natural element is isolated from the body by technical means, this does not change the “naturalness” of the element (neither does a purification of the element).’'"” However valid these arguments may be, they have been outweighed by the policy goal outlined in the Biotechnology Directive that research aimed at obtaining and isolating elements valuable to medicinal production should be encouraged by the patent system.!%

6.2

PATENTS

AND

COMPUTER-RELATED

INVENTIONS

Given that computer programs are expressly excluded from patentability by section 1(2)(c)/Article 52(2)(c), it may come as a surprise to learn that many patents have

already been granted for computer-related inventions.’ Moreover, while when the EPC was first drafted it may have been thought that copyright rather than patent law would regulate information-technology-based creations, since 1977 the trend has been towards more and more patent protection for computer-related inventions. One

of the most important changes that led to the liberalization of the protection offered by patents to computer-related inventions was the decision that an invention which included a computer program could be patentable so long as the invention as a whole

106 See S. Bostyn, ‘The Patentability of Genetic Information Carriers’ [1999] IPQ 1. 107 Sterrckx, ‘Some Ethically Problematic Aspects of the Proposal for a Directive on the Legal Protection of Biotechnological Inventions’, 123, 124—5. See also M. Davis, ‘The Patenting of the Products of Nature’ [1995]

Rutgers Computer and Technology Law Journal 331; cf. S. Bostyn, “The Patentability of Genetic Information Carriers’ [1999] IPQ 1, 3-4.

108 Biotech. Directive, Recital 17. 109 The Comptroller ofthe British Office reported on 2 Nov. 2000 that over 15% of the patents granted by the British Patent Office have a software element. Interview with Alison Brimelow, Patent Office News and

Notices, . The EPO has granted over 20,000 software-related patents, and it is said that objections are made in relation to less that 1% of software-related applications. See I. Kober, ‘Software Patents: An Essential Element of the European Patent System’, The Patent Office Conference on Software Patents (http://www/patent.gov.uk/softpat/en/index.html).

382

PATENTS

was technical. The upshot of the acceptance of the whole contents approach was, as the Board of Appeal said in Vicom, that ‘an invention which would be patentable in accordance with conventional patentability criteria should not be excluded from protection by the mere fact that for its implementation modern technical means in the form of a computer program are used.”!!° While a computer program per se remains unpatentable, following the acceptance of the whole contents approach, it is clear that applications which contain a computer program are prima facie patentable, so long as the invention as a whole makes a technical contribution to the art.''! This can be seen, for example, in Kearney!!* where the Technical Board of Appeal held that a computer program that alerted machine operators when their machines needed to be repaired or a worn tool needed to be replaced solved a technical problem and as such was patentable subject matter. Similarly, in Bosch the Board of Appeal said that a device for monitoring computer components was technical because it considerably reduced ‘the operating time of the computer component and thus undoubtedly improved the effectiveness of the device*s!? In contrast, if it cannot be shown that an application that contains a computer program is technical, then it will not be patentable. This was the case, for example, in

Gale’s Application where the Court of Appeal decided that a ROM carrying a particular program was not distinguishable from the program itself and, as such, was unpatentable.''* This was reinforced in Fujitsu’s Application'!> where the Court of Appeal held that a computer-related invention that enabled chemists to produce digital models of hybrid chemicals was not patentable. The reason for this was that while the invention saved chemists a considerable amount of time and effort (in that they did not have to undergo the laborious task of building models by hand), it did not produce a technical result. More specifically the Court of Appeal said that the invention only achieved something that had previously been possible albeit at a much faster speed and more conveniently than had previously been the case. On this basis, the Court of Appeal held that the invention was for a conventional computer operating in a conventional way and as such was not patentable.!!° While the extent to which computer-related inventions will be patentable always depends on the particular application in question, it can safely be said that an ordinary computer program used in a general-purpose computer would normally be unpatentable. The reason for this is that while the implementation of the program in the computer transforms mathematical values into electrical signals, the electrical 110 Vicom/Computer-related invention T208/84 [1987] EPOR 74; [1987] OJEPO 14. 'Il This means that if it can be shown that the subject matter makes a technical contribution to the known art, patentability would not be denied merely on the ground that a computer program is involved in its implementation. 112 Kearney/Computer-related invention T42/87 [1997] EPOR 236, 241. 3pe Bosch/Electronic computer components T164/92 [1995] EPOR 585, 592. 114 Gale’s Application [1991] RPC 305 (CA). 15 Fujitsu’s Application [1997] RPC 608.

116— Gale’s Application [1991] RPC 305, 333.

PATENTABLE SUBJECT MATTER

383

signals amount to no more than a reproduction of information which would not be regarded as bringing about a technical effect.!!” As well as leading to greater protection for computer-related inventions, the approach outlined in Vicom shifted attention away from the exclusion of computer programs per se towards the other heads of section 1(2)/Article 52(2); notably to

methods of doing business, the presentation of information, and methods of performing mental acts. After looking at these issues, we will look at the protection offered to computer programs. 6.2.1 Methods of doing business The approach which has been used to determine whether an application is excluded on the basis that it consists of ‘a method of doing business’ under section 1(2)(c)/ Article 52(2)(c) is much the same as has been used with the other areas of section

1(2)/Article 52.''® This can be seen in Merrill Lynch’s Application'!? where the Court of Appeal held that an automatic share-trading system operated by a computer program was unpatentable because it merely amounted to a method of doing business. A similar approach was followed in Petterson/Queueing system,'*° which concerned a patent for a system for handling customers queuing at a number of service points. The patent consisted of a turn-number allocating unit, an information unit, a selection unit, and a computer program that decided which particular turn-number was to be served at a particular service point. While the patent was rejected in Sweden, the

Board of Appeal at the EPO held that the claimed apparatus was clearly technical in nature and thus patentable. Although the invention was used in a business context, a telling factor in the Board’s decision to uphold the validity of the patent was that their finding that the essence of the invention lay in the way the elements of the system were combined.'”! More specifically, the validity of the patent was upheld because the problem that the invention solved related to the way the components of the system interacted: which was seen as a technical rather than a business problem.!” 7

Kock & Sterzel/X-ray apparatus T26/86 [1988] EPOR 72.

'18 See Trilateral Report on Comparative Study on Business Method Related Inventions (14 June 2000): for

summary of approaches at EPO and US and Japanese Patent Offices. H.Hanneman, “The patentability of “methods of doing business” [2000] epi Information 16. "9 [1989] RPC 561; Maghsordi’s Application (SRIS 0/86/96); Stockburger/Coded distinctive mark 'T51/84 [1986] EPOR 229. 120 1002/92 [1995] OJEPO 605; [1996] EPOR

1; See also Texas Instruments/Language-understanding

system T236/91 [2000] EPOR 156; Fujitsu’s Application (23 Aug. 2000) (O/317/00) (re computerized system for resolution of conflicting database entries (room or flight bookings) according to predetermined priorities). 21 NAT/Bagging plant [1993] EPOR 517 (claims were allowed to a computer method which involved weighing and bagging on the quayside material transported in bulk by ship, because it used technical equipment to achieve a technical end (the production of sealed weighed bags of materials)). See also Pension Benefit Systems Partnership T931/95 (8 Sept. 2000) (TBA) (claim for method ofcontrolling a pension benefits program was rejected on the basis that all the features were for processing and producing information having purely administrative, actuarial and/or financial character). 122 Tn the USA, see State Street Bank & Trust v. Signature Financial Group. The Federal Circuit Court of Appeals (23 July 1998) said that ‘since the 1952 Patent Act, business methods have been, and should have

384

PATENTS

The protection available for computer-related inventions in the field of business at the EPO was enhanced by the Sohei decision where the Technical Board of Appeal suggested that ‘business’ ought to be construed narrowly.'” In particular, while the Board accepted that inventions that related to personnel management would be caught by the exclusion, they suggested that the management of manufacturing processes might not fall within the excluded category. If followed, this would further limit the scope of the exclusion. The Board of Appeal also suggested that the technical element of an invention might be implicit within the invention. !”4 6.2.2 The presentation of information

The approach that has been used to determine whether an invention consists of the presentation of information and thus falls foul of section 1(2)(d)/Article 52(2)(d) is

similar to the approach that has been used in relation to the other categories of subject matter excluded from protection.'*° This can seen, for example in Broselow/ Measuring tape, where the invention was for a method of ascertaining information about accident victims (such as drug dosage or defibrillation techniques). More specifically, the method involved an ambulance officer measuring the body length of the emergency victim using a particular tape, which provided information about how the patient was to be treated. Importantly this was done without the need for clinical expertise or reference to other sources. Highlighting the importance of the way the invention is construed, the Board of Appeal held that the ‘co-relation between the measured length and the information on the tape measure results in the tape ... becoming a new gauge for directly measuring the patient treatment values’. Such a new gauge “for directly measuring the patient values, is clearly technical in character.’!76 In applying the basic principles used when considering whether a patent is excluded under Article 52(2) and (3), the EPO has drawn a distinction between ordinary (cognitive) information which is excluded by section 1(2)(d)/Article 52(2)(d) and special (functional) information (which is not excluded).!2”

been, subject to the same legal requirements (utility, novelty, non-obviousness, disclosure) for patentability as applied to any other process or method’ so that a patent application relating to the transformation of data, representing discrete dollar amounts, by a machine, through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula or calculation, and is thus patentable subject matter. There is no exception for ‘methods of doing business’. 123 Sohei/General-purpose management system T769/92 [1996] EPOR 253, 258. Sohei ‘is generally acknowledged to have adopted an even more software-friendly approach in assessing patentability.’ I. Kober (President of the EPO), ‘Software Patents: An Essential Element of the European Patent System’, Patent Office, Conference on Software Patents (http://www/patent.gov.uk/softpat/en/index.html).

124 125 126 whole

Sohei/General-purpose management system T769/92 [1996] EPOR 253. e.g. see Texas Instruments/Language-understanding system T236/91 [2000] EPOR 156. Broselow/Measuring tape 177/92 [1998] EPOR 266, 270. The Board added that ‘the subject matter as a of a claim consisting of a mix of known technical elements and non-technical elements is not excluded

from patentability under Art. 52(2) and (3) when the non-technical elements interact with the known

technical elements in order to produce a technical effect’. 127 The Board said that with the growth of information technology in the last half-century, information in

its “special sense had become much more important’. Nonetheless, the Board noted that the information

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Ordinary cognitive information, which is the type of information excluded under section 1(2)(d)/Article 52(2)(d) as a presentation of information, includes subject

matter that merely conveys cognitive or aesthetic content directly to a human.'?* In essence ordinary cognitive information includes any representation of information which is characterized solely by the content of the information. This would include, for example, a TV signal solely characterized by the information per se (e.g. moving pictures, modulated upon a standard TV signal). Similarly, digital data that encode cognitive content (such as a picture) in a standard manner would also be excluded.!”? As the EPO Guidelines explain, a claim will be excluded where it is directed to the

presentation of information per se (e.g. acoustic signals, spoken words), to information recorded on a carrier where the carrier (i.e. the book, the gramophone record, or

magnetic computer tapes) is characterized solely by the content being carried (the subject of the book, musical content, or data or programs), or to processes and apparatus for the presentation of information.’* In all these cases, the key aspect of the invention is the content of the message. In contrast, a patent for functional information (or data) does not fall within the scope of Article 52(2)(d). As with all inquiries into excluded subject matter, if it can be shown that the information carrier, or the process or apparatus for presenting the information has a technical feature, the invention may be patentable. It is also possible that the arrangement or manner of representation, as compared to the content of the information itself, may be patentable. This would include instruments designed to measure information, or the use of a code to represent characters. In explaining what is meant by functional information, the EPO supported the view that information (in its special sense) must not be confused with meaning. In fact, two messages, one of which is heavily loaded with meaning and the other of which is pure nonsense, can be exactly equivalent from the information technology point of view. Information in communication theory relates not so much to what you do say, as to what you could say. That is, information is a measure of one’s freedom of choice when one selects a message.!*!

Using this definition the Board of Appeal said that information in the special (nonexcluded) sense includes physical interactions within and between machines that do mentioned in Art. 52(2)(d) was limited to information in the ordinary (cognitive sense): Koninklijke Philip’s Electronics/Picture retrieval system T1194/97 (15 Mar. 2000), para. 3.7.2.

128 Ibid. The Board said that the only decision that appeared to have construed ‘presentation of information’ to include an aspect of the special sense of information was Kock & Sterzal/X-ray apparatus T26/86 [1988] EPOR 72. The Board noted that Kock & Sterzal dealt with the exclusion of computer program and as such was ‘strictly obiter as far as Article 52(2)(d) is concerned’: para. 3.7.4.

129 Tn rejecting an application for a configuration for simultaneously displaying several images on a computer screen, the Technical Board of Appeal said that imparting information on events in a screen window merely drew attention to the content of the images and, as such, was not technical: 'T599/93 [1997] OJEPO (special edn.) 14.

130 EPO Guidelines C-IV, 2. 131 Koninklijke Philip’s Electronics/Picture retrieval system T1194/97 (15 Mar. 2000), para. 3.7.1, quoting from C. Shannon and W. Weaver, The Mathematical Theory of Communication (1949) [no page].

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not convey any humanly understandable meaning. They have also said that a TV signal solely characterized by the information per se (e.g. moving pictures, modulated upon a standard TV signal) would be an excluded presentation of information. In contrast, a TV signal defined in terms that included the technical features of the TV

system in which it occurs has been held not to be a presentation of information.!* In a similar fashion, the Board held that an invention that was defined in terms that inherently included the technical features of the system in which the record carrier operated was not excluded as a presentation of information.!* In Koninklijke the Board said that the difference between (excluded) cognitive information and (non-excluded) functional data was illustrated by the fact that if the

cognitive data or content were lost, the result would be a humanly meaningless picture, like snow on a TV screen. This would not have any effect whatsoever on the

technical working of the system. In contrast, the loss of functional data would impair the technical operation of the system and may indeed bring the system to a halt.'*4 6.2.3 Methods for performing a mental act Section 1(2)(c)/Article 52(2)(c), which excludes methods for performing mental acts

from the scope of patentable subject matter, has played an important role in regulating the property rights granted in information-technology-based inventions. This is particularly the case in relation to inventions in the field of text-editing, artificial intelligence, and expert systems. While there is agreement between courts in the UK and the EPO in relation to most aspects of section 1(2)/Article 52(2), there are a

number of differences in the way they have approached the exclusion of mental acts.

(1) Text-editing. In considering whether text-editing-based inventions are patentable, the EPO has largely followed the line of thought used in relation to other areas of Article 52(2). This means that if an application only relates to the internal, linguistic elements of the text (which are seen as being non-technical), it will fall foul of Article

52(2) and thus be unpatentable. This can be seen in IBM/Text-clarity processing'*> where the Technical Board of Appeal was called upon to decide whether an application for improving the clarity of texts was patentable. The invention in question was made up of a program that identified linguistic expressions that were difficult to understand. The program then offered alternative expressions that were easier to understand. An important factor in the decision that the invention was directed to

text-editing and as such that it was not patentable was that the inventive element of 132 BBC/Colour television signal T163/85 [1990] EPOR 599, 603; OJEPO 379, 133 On the facts the Board held that the claim in question was not a presentation of information since it had functional data recorded thereon (in particular a data structure of picture line syntonization, line numbers, and addressees): Koninklijke Philip’s Electronics/Picture retrieval system T1194/97 (15 Mar. 2000) The Board followed IBM/Computer program product T1173/97 [1999] OJEPO, 609, 134 Koninklijke Philip’s Electronics/Picture retrieval system T1194/97 (15 Mar. 2000), para. 3.3.

135 [38/86 [1990] EPOR 606 (application for a method for detecting and replacing incomprehensible expressions using conventional hardware and a dictionary); IBM/External interface simulation T833/91 [1998] EPOR 431 (method of designing external interfaces for a computer application program excluded).

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the application lay in the mental elements of the process: viz. in the process of identifying parts of texts that were difficult to understand and offering alternatives. Unfortunately for the applicants, the Board of Appeal found that the process by which these mental acts were placed in a format where they could be performed automatically by a computer only involved the routine straightforward application of conventional techniques. Given that the only contribution made by the application was in relation to the mental steps of the process and not (for example) in the way these steps were automatically carried out by computer, the Board declared that the application was invalid. A number of other text-editing applications have been rejected on the basis that they use the same steps as mental processes and when automated merely employ conventional equipment ordinarily programmed.!°¢ In contrast, if it can be shown that the contribution made by the application is technical and not merely linguistic in nature, then it will be prima facie patentable. That is, if it can be shown that the application extends beyond text-processing to provide a technical contribution or resolve some technical problem, then it will be

patentable. A helpful example of this is provided by IBM/Editable document form,'*’ which concerned an application for a method for transforming printer control items in word-processing documents from one format to another (which in turn allowed documents to be transferred from one text-processing format to another). Using the

same logic that is used in relation to the other parts of Article 52(2), the Board of Appeal said that in considering whether the application was valid, they needed to ‘investigate whether the claim seen as a whole constitutes nothing more than a method for performing mental acts as such, albeit performed on a computer’. After reviewing the nature of the invention in question, the Board found that the application could not be described as a method for performing a mental act (nor as a computer program). The reason for this was that the invention was concerned above all with (printer) control items in the source document. Given that the ultimate

purpose of these control items was the control of hardware, the Board said that the application had nothing to do with the linguistic meaning of the texts being processed. Rather, it represented features of the technical, internal working of that system.!** As such, the application did not fall foul of Article 52(2)(c).

136 Siemens/Character form T158/88 [1992] EPOR 69 (methods for representing letters on a VDU was non-technical); Beattie/Marker T603/89 [1992] EPOR 221 (apparatus for a method for learning how to play a keyboard instrument was non-technical). Abstracting a document (IBM/Document abstracting & retrieving T22/85 [1990] EPOR 98); processing data set out in table form (T95/86); detecting linguistic expressions (IBM/Text clarity processing 138/86 [1990] EPOR 606); detecting contextual homophone errors (‘there’ for ‘their’) (IBM/Text processing T65/86

[1990] EPOR

181): were all held not patentable because they were

‘mental acts’. 137 110/90 [1995] EPOR 185. 138 They were said to be akin to the technical functions carried out in mechanical typewriters, such as carriage return, new page, and new paragraph.

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While there is a consistent line of authority in relation to text-editing-based inventions at the EPO, as yet no decisions in this field have been heard in the UK. However, on the basis of the approach that has been adopted by British courts in relation to the patenting of expert systems (discussed below), there is good reason to doubt whether UK courts will follow the approach adopted at the EPO towards text-editing inventions. (ii) Expert systems. Although courts in the UK and at the EPO are largely in agreement that a patent will not be granted if the only contribution that the invention offers is mental (or intellectual), there is disagreement as to what is meant by a ‘mental act’.!°? More specifically there is disagreement as to whether or not and, if so, in what circumstances a process which automatically performs a mental act will fall within the scope of section 1(2)(c)/Article 52(2)(c). This difference is most notable

when the respective tribunals have considered the nature of patent protection available for expert systems. While methods of performing mental acts per se remain unpatentable at the EPO, where technical means are used to carry out a method for performing a mental act, such a process may be patentable. Although these inventions may face difficulties in relation to obviousness and novelty, the EPO has accepted that patents will not fall foul of Article 52(2)(c) if the invention viewed as a whole is technical.4° Many of the activities which are carried out by a computer, such as object recognition or the checking of text for spelling mistakes, are tasks that can also be performed by humans. Nonetheless, the EPO has been willing to accept that activities carried out automatically by machine may be qualitatively different to similar activities carried out by humans. That is, while a computer and a human may perform the same task, when

this task is carried out automatically by computer it may be done with such speed or accuracy that it is not the same as a functionally equivalent task performed by a human."*! In contrast, courts in the United Kingdom have consistently refused applications that amount to the automation of operations that could otherwise be performed by humans.'** This means that inventions in the fields of expert systems,'? pattern

139 See D. Wells, ‘Expert Systems, Mental Acts and Technical Effects’ (1995) CIPAJ 129; C. Muse, ‘Patented

Personality (1988) 4 Computer High Technology Law Journal 285. 140. Stockburger/Coded distinctive mark T51/84 [1986] EPOR 229. 141 See above p. 381. \42 Claims to an inference processor forming the core of an expert system have been allowed in a

hearing at the Patent Office. D. Wells, ‘Expert Systems, Mental Acts and Technical Effects’ (1995) CIPAJ 19:

\43 Wang Laboratorie’s Application [1991] RPC 463 (expert system comprising a conventional computer

operating in the normal way with an expert system program the knowledge base of which was in the form of hierarchically defined terms and their definitions was a mental act and that it was therefore excluded from protection).

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recognition systems,'** or systems for rearranging conflicting demands for resources (such as room bookings)'*° will not be patentable in the UK. Somewhat bizarrely, this is the case even if the invention could not be carried out by the unaided human mind.'*° While the EPO has accepted that where a mental act is automatically performed by a computer the activity may change in such a way that it can no longer be seen as the performance of a mental act, in the UK such activities remain a method for performing a mental act. This is the case even when the computer carries out the process in a way that could not be mimicked by the human mind.!*” This point was reinforced by the Court of Appeal in Fujitsu’s Application where it was held that the concept for performing a mental act should be construed widely to include all methods of the type performed mentally, even if the particular method in question would not be carried out by the human mind."® This was because a method ‘remains a method for performing a mental act, whether a computer is used or not’. As Aldous LJ said, ‘a method of solving a problem, such as advising a person whether he has acted tortiously, can be set out on paper or incorporated into a computer program. The purpose is the same, to enable advice to be given, which appears to me to be a mental act’. Aldous LJ added that the ‘method may well be different when a computer is used, but to my mind it still remains a method for performing a mental act, whether or not the computer program adopts steps that would not ordinarily be used by the human mind.’!”? The current position in the UK is not only out of step with the approach at the EPO, it is also out of step with the image of technology as the process of artificially reproducing that which already exists in nature. In part this can be attributed to a failure to recognize that while activities carried out by machines may be functionally equivalent to similar tasks performed by the human mind, this does not mean that the two are therefore necessarily equivalent. While computer-related inventions may perform analogous tasks to those carried out by humans, there must come a time when '44 Raytheon’ Application [1993] RPC 427 (patent for a method of ‘pattern recognition and the matching of silhouettes, particularly those of ships’ was rejected. In Fujitsu’s Application [1996] RPC 511, the Court of Appeal refused an application directed to methods for modelling a synthetic crystal structure by combining images of two structures to display a third image representing a further crystal structure. In rejecting the application, the court focused on the method claimed which ‘left it to the operator to select what data to work on, how to work on it, and which results, if ary, results to use’. The control left to the operator was such that the end product was largely determined by the personal skill of the operator. To have granted a patent over this would have meant that property rights were being granted (in substance) of a scheme or method of performing a mental act. 145 Fujitsu’s Application (23 Aug. 2000), O/317/00. 146 KK Toshiba [1993] IPD 160 (19 Feb. 1993). \47 Fujitsu’s Application [1996] RPC 511, 518-19 (Examiner). 148 [1997] RPC 608. The suggestion that the provision be limited to those acts that can be carried out by the human mind. This was rejected on the basis it would require the courts to engage in the extremely difficult task as to how the human mind actually works: [1997] RPC 608, 619-20.

149 Wang Laboratories’ Application [1991] RPC 463, 473; Fujitsu’s Application [1997] RPC 620, 621 (CA). The comptroller adopted a similar approach to reject an application for a computerized system for resolving disputes for resources (such as room or flight bookings) according to certain priorities more easily accessible to users: Fujitsu’s Application (23 Aug. 2000), (O/317/00), 11.

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the analogy breaks down. That is, there is a point when a process which is carried out by a computer is so qualitatively different to a functionally equivalent process carried out by the human mind that the two events cannot be equated with each other: the question that is yet to be determined in the UK is where and how this line is to be drawn. 6.2.4 The patenting of computer programs? When the 1977 Patents Act and the EPC were enacted it was commonly thought that copyright law rather than patents would be the area of intellectual property law which regulated the creation and use of computer programs. While copyright has been important in this process, one of the most notable changes that has taken place since 1977 is the growing role played by patent law in relation to computerrelated inventions. One of the last hurdles facing those who favour greater use of patents in the field of information technology is the fact that computer programs as such are expressly excluded from the scope of patentable subject matter.!*° As a result of recent decisions at the EPO and corresponding changes in UK Patent Office practice, programs for computer programs are patentable if they have a technical character. As a result, it seems

as if this last hurdle has nearly been

overcome. The question of the scope of the exclusion of computer programs as such was considered in two decisions by the Technical Board of Appeal, both involving applications by IBM. The invention in the first decision IBM/Computer programs (T935/97) was for a method for allowing information in a data-processing system that was displayed in one window to be altered if that window was obscured by another window. The application included claims for software in itself, and for software recorded in a computer-readable medium.'*! While some of the claims were accepted, the Examining Division refused the application in so far as it was directed to a computer-program product. The second IBM decision (T1173/97) related to ‘resource recovery in a computer system’.!** Again, the Examining Division rejected the application in so far as it claimed a computer-program product. In both cases the question for consideration related to the scope of the exclusion of computer program as such. The reasoning in both cases was identical. The Board of Appeal began by noting that the language of Articles 52(2) and (3) showed that the legislators did not want to exclude all computer programs from patentability.'** Instead, all that was excluded were computer programs as such. Drawing upon the logic that has been applied to Article 52(2) and (3) generally, the Board said that when the EPC referred to computer programs as such, it meant mere abstract creations, lacking in technical character. In more positive terms this meant that

150 PA s. 1(2)(c); EPC Art. 52(2)(c).

151 [BM/Computer programs T935/97 [1999] EPOR 301. 152 Thid. T1173/97 [2000] EPOR 219.

153 Tbid. T935/97 [1999] EPOR 301, 309; T1173/97 [2000] EPOR 219, 226.

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computer programs that had a technical character were potentially patentable.!*4 In so doing, the Board distinguished between computer programs as such (which are not patentable) and computer programs that had a technical character (which are patentable).!° This gives rise to the question: when does a computer program have a technical character? As with all inventions, the requisite technical character may exist either in technical effects or in the solution to a technical problem. In addressing this question, the Board began by noting that a computer program cannot be assumed to have a technical character merely for the reason that it is a program for a computer. This means that normal ‘physical modifications of the hardware (causing, for instance, the generation of electrical currents) deriving from the execution of the instructions given by programs for computers cannot per se constitute the technical character required for avoiding the exclusion of those programs.’!*° The Board added that such modifications were a common feature of all computer programs and therefore could not be used to distinguish programs with a technical character from programs ‘as such’. Instead, the Board said that the technical character must be found elsewhere in the effects caused by the execution of the computer program by the hardware. That is, a computer program product could be patentable if it resulted in additional technical effects that went beyond the ‘normal’ physical interaction between the program (software) and the computer (hardware) on which it was run.

The Board also noted that computer program products only produced and showed an effect when the program concerned was made to run on a computer. The effect only shows in physical reality when the program is being run. On the basis that there was no good reason to distinguish between a direct technical effect and the potential to produce a technical effect, the Board accepted that a computer program that had the potential to cause a predetermined further technical effect was in principle not excluded from patentability under Article 52(2) and (3).!%”

After reviewing the scope of protection for computer programs, the Board remitted both cases back to the Examining Division to determine whether the applications complied with this reading of Article 52(2)(c). While it is clear that the IBM decisions mark a victory for the proponents of greater protection for information-technology-

related inventions, ultimately the extent to which computer programs are patentable depends on how ‘technical character’ is construed. One factor that suggests that the exclusion will be read narrowly flows from the Board’s comment that it does not make any difference for the purpose of the exclusion whether a computer program is claimed by itself or as a record on a carrier.'** This means that so long as a computer !54 They did so on the basis of EPC r. 27, 29. IBM/Computer programs T1173/97 [2000] EPOR 219, 226. 155 Tn so doing, the Board overturned EPO Guidelines C-IV 2.3 which state that a ‘computer program by itself or as a record on a carrier is not patentable, irrespective of its content’. The Board also distinguished ATT/System for generating code 1204/93 (unreported). IBM/Computer programs 1935/97 [1999] EPOR 301, 308.

156 Thid. T935/97 [1999] EPOR 301, 310; T1173/97 [2000] EPOR 219, 227. 157 Thid. T935/97 [1999] EPOR 301, 313; T1173/97 [2000] EPOR 219, 230. 158 Tbid. T935/97 [1999] EPOR 301, 317; T1173/97 [2000] EPOR 219, 234.

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program is technical, the medium in which it is recorded (the carrier) is irrelevant.”

This would allow, for example, patents to be granted for software-implemented inventions distributed online over the Internet'® and to computer-program products directly loadable into the internal memory of a digital computer.'*! In order to ensure that practice at the UK Patent Office is consistent with that of the European Patent Office, the UK Patent Office has amended its practice guidelines to follow the IBM decisions.'® The UK Patent Office Practice Notice provides that the British Patent Office will now ‘accept claims to computer programs, either in themselves or on a computer, provided that the program is such that when it is run on a computer it produces a technical effect which is more than would necessarily follow merely from the running of any program on a computer.”!® As a result, British law in relation to the patenting of computer programs is the same as at the EPO. 6.2.5 Reform

For many years computer programs were considered to be non-technical and thus outside the scope of patent law. In recent years this way of thinking about computer

programs has been questioned. In particular, a number of decisions at the EPO have recast computer programs as technical creations.'* This reconfiguration of computer programs as technical creations has been particularly important in light of Article 27 of TRIPs which states that ‘patents shall be available for any inventions, whether products or processes, in all fields of technology and that ‘patents shall be . . . enjoyable without discrimination as to ... field of technology’.'© These factors have prompted calls for the reform of the scope and nature of protection available for computer programs and computer-related inventions in Europe. The pressure for the patenting of computer programs in Europe has been reinforced by the fact that US and Japanese law already offers patent protection to computer programs (a position which has been enhanced by changes in US Patent Office guidelines which 'S9 The Board said that if the ‘computer program product comprises a computer-readable medium on which the program is stored, this medium only constitutes the physical support on which the program is saved and thus constitutes hardware’. IBM/Computer programs T935/97 [1999] EPOR 301, 312; T1173/97 [2000] EPOR 219, 229.

'60 R. Hart, P. Holmes, and J. Reid, The Economic Impact of Patentability of Computer Programs (2000), 13. 161 J. Lang, ‘Patent Protection for e-Commerce Methods in Europe’ [2000] Computer and Telecommunications Law Review 117, 119 (contrasting the IBM decisions with the US decision of Re Beauregard, which held that computer programs embodied in a tangible medium, such as floppy discs, are patentable). R. Hart, ‘Computer Program-Related Patents’ (1999) 15:3 Computer Law and Security Report 188, 189. 162 PA gs, 130(7); Merrel Dow Pharmaceuticals v. Norton

[1996] RPC 76 (HL) (on the importance of

unity of practice between UK Patent Office and EPO). 163 “Patent Office Practice Notice’ [1999] RPC 563. 164 Bosch/Electronic computer components T164/92 [1995] EPOR 585, 592. 165 TRIPs Art. 9(2) states that copyright protection shall not apply to ‘methods of operations or mathematical concepts as such’. The Board of Appeal noted that as the EPO was not a signatory to TRIPs, they were not bound by it. However, on the basis that TRIPs aimed at ‘setting common standards and it acted as an indicator of modern trends, the Board noted that it was the clear intention of TRIPs not to exclude from patentability any inventions, in particular, not to exclude programs for computers’: IBM/Computer programs T1173/97 [2000] EPOR 224-5.

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expanded the scope of protection offered to computer programs in America).! Another reason given as to why the law in this area needs to be reformed is because of the lack of clarity in the existing law. The pressure for reform of patent protection for computer programs has manifested itself in two ways in Europe. The first is that on 19 October 2000 the European Commission launched a consultation paper on the patentability of computer-related inventions.'*’ As we mentioned earlier, this is intended to help the Commission to

strike the right balance between promoting innovation and ensuring adequate competition in the marketplace.'®* The consultation paper raises a number of questions about the scope, nature, and impact of patents for computer-related inventions. The second area of possible reform relates to the proposed revision of the EPC. The Base Proposal for the Revision of the European Patent Convention proposed the deletion of ‘computer programs as such’ from Article 52(2)(c).'° As the explanatory remarks to the Base Proposal explain, this is because as a result of Board of Appeal decisions that computer programs producing a technical effect are patentable subject matter, the ‘current exception has become de facto obsolete.’!”? Despite suggestions that there was widespread support for this proposal, delegates to the Diplomatic Conference held in Munich from 20 to 29 November 2000 voted against the proposal to delete ‘computer programs as such from the subject matter excluded from patentable subject matter.'”’ It has been suggested that members have decided to defer decisions on this issue until the results of the investigation by the European Commission have been determined. As a result, the debate on software patents will move to the European Commission and the European Parliament. In so doing we can expect members of the open-source community, who favour open interfaces, open-source software, and freely available information will be campaigning against greater protection.'”” At the other extreme, proponents of greater protection for computer

166 USPTO Guidelines, Jan. 1997. As long as it is novel, a computer program that causes a computer to

function in a particular fashion would be protected. This is not the case in Europe. 167 “The Patentability of Computer-Implemented Inventions’, Consultation Paper by EC (19 Oct. 2000). The EU Green Paper on the Community Patent Promoting Innovation through Patents: Green Paper on the Community Patent System in Europe COM

(97) 314 final, para. 4.2. The Economic and Social Committee

responded that the provision should be amended to make possible the patenting of programs (1998) (OJ C-129), 8; CIPA, Green Paper on the Community Patent. Comments and Responses (http://www.cipa.org.uk/ cipa/notices/gp-resp.htm). 168 See R. Hart, P. Holmes, and J. Reid, The Economic Impact of Patentability of Computer Programs: A Report to the EC (2000) (Study Contract ETD/99/B5—3000/E/106).

169 Distributed by the German Federal Ministry of Justice on 26 June 2000 CA/1000/00. 170 Base Proposal for the Revision of the European Patent Convention, CA/100/00 e (2000), 37. It was also

suggested that Art. 52(2) ought to be abolished altogether. This was not put forward to the Diplomatic Conference for Nov. 2000. 171 M. Delio, ‘Europe Nixes Software Patents’ (23 Nov. 2000) Wired News www.wired.com.news. Art. 1, item 17 of the Act Revising the Convention on the Grant of European Patents (EPC) (Munich) (29 Nov. 2000)

MR/3/00 Rev le.

72 These include EuroLinux and the Association for the Promotion of Free Information Infrastructure (FFI).

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programs will underscore the need for protection in Europe to be the same as in the USA and the economic consequences of more liberal protection. Some of the arguments against patent protection for computer programs, such as that the patent examiners lack the relevant expertise, are difficult to sustain.'7? Other arguments,

however, particularly those which focus on the impact that the patenting of computer programs may have upon the users and creators of software need to be taken more seriously.

7 BIOLOGICAL

SUBJECT

MATTER

The third category of subject matter excluded from patent protection is set out in paragraph 3(f) of Schedule A2 of the Patents Act 1977'74/Article 53(b). As we pointed out earlier, these provisions were amended as a result of the Biotechnology Directive. Paragraph 3(f) which is in similar terms to Article 53(b) of the EPC, provides that a

patent shall not be granted for ‘any variety of animal or plant or any essentially biological process for the production of animals or plants, not being a microbiological process or other technical process or the product of such a process.’!”° These provisions fall into two parts. First, they declare that patents should not be granted for ‘animal varieties’, ‘plant varieties’, and ‘essentially biological processes’. The second part of paragraph 3(f)/Article 53(b) goes on to qualify and limit the subject matter which is excluded from patentability. As an exception to the exception, it provides that if an invention is ‘a microbiological process or other technical process or the product of such a process’, the invention may be patented. Before looking at the exceptions, it might be useful to point out there is no general bar on the patenting of biological material or biotechnological inventions.'”° Indeed as the EPC and the 1977 Act (as revised) make clear, an invention shall not be '73 For problems associated with software patents see D. Haselden, “The Practical Issues: A View from a Patent Office’, The Patent Office Conference on Software Patents (http://www/patent.gov.uk/softpat/en/ index.html). These include (i) practical problems of searching ‘prior art’ given that there is no tradition of patenting software, (ii) lack of expertise, (iii) problems of breadth, and (iv) the problem of description. 174 Formerly section 1(3)(b).

\79 This saw the introduction ofthe phrase ‘or other technical process’; Biotech. Directive, Art. 4(1); Rule 23(b)(c), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437). TRIPs Art. 27(3) permits members to exclude ‘plant and animals other than micro-organisms, and essentially biological processes for the production of plants or animals other than non-biological and microbiological processes’. The revised text of the EPC agreed on at Munich in Noy. 2000 provides that European patents shall not be granted in

respect of ‘plant or animal varieties or essentially biological processes for the production of plants or animal: this provision shall not apply to microbiological processes or the products thereof: Art. 1, item 18 of the Act

Revising the Convention on the Grant of European Patents (EPC) (Munich) (29 Noy. 2000) MR/3/00 Rev le.

176 The Technical Board of Appeal said that when Art. 53(b) was drafted, ‘the knowledge of the potential development in the field of biotechnology was rather limited’. Lubrizol/Hybrid plants 1320/87 [1990] OJEPO 71. For a comparative study on the patentabilty of DNA fragments see Trilateral Project B3b: Comparative

Study on Biotechnology Patents (1998). See also J. Funder ‘Rethinking Patents for Plant Innovation’ [1999] EJPR 551,

PATENTABLE SUBJECT MATTER

:

395

considered unpatentable solely on the ground that it concerns a product consisting of or containing biological material or a process which by which biological material is produced.'”” More specifically, the EPC and the 1977 Act explicitly state that it is possible to patent inventions for plants and animals, so long as they comply with the

general requirements of patentability.!”* 7.1

ANIMAL

VARIETY

The first form of subject matter excluded from protection by paragraph 3(f) of Schedule A2 to the 1977 Patent Act/Article 53(b) are ‘animal varieties’.!”? The simple explanation given for the exclusion of animal varieties is that they are ‘not an appropriate subject matter’.'*° When Article 53(b) was first drafted the potential scope of the animal variety exclusion was straightforward and uncontroversial. This has changed, however, as patent law has been forced to confront the developments in biotechnology that have taken place since then. The meaning of ‘animal variety’ was considered in the Onco-mouse decision. Here the claims related to a genetically modified non-human mammal (in particular a mouse), which had been modified so that it would be susceptible to cancer. The resulting products (the mice with cancer) were used in cancer research. At first

instance, the Examining Division held that the exclusion not only covered groups of animals but animals in general. As such, the invention was for an unpatentable animal variety.'*! On appeal, the Technical Board of Appeal held that the Examining Division had misconstrued the exclusion, which being an exception to patentability, ought to be construed narrowly.'®’ Importantly, the Board of Appeal said that Article 53(b) did not exclude animals in general. On this basis, the Board of Appeal remitted the matter to the Examining Division for reconsideration. The Examining Division said that animal variety either meant a species or a subunit of a species. The Examining Division acknowledged that while the terms of the Convention were not consistent—the English and French terms (animal varieties and races animales) meaning subunit of a species and the German term (Tierarten) mean-

ing species—it was not necessary to decide which was the authoritative meaning for the Convention.'*’ This was because the claims in question related to non-human mammals, a category that was neither a species nor a subunit of a species. (In zoological terms, mammals are of a higher taxonomic classification than species.) Consequently, the subject matter did not relate to an animal variety and as such was not excluded by Article 53(b). 177 PA Sched. A2, paras. 1(a)—(b); Biotech. Directive Art. 3. 178 PA Sched. A2, para. 4, Rule 23c(b); Biotech. Directive Art. 4(2). 179 Biotech. Directive Art. 4(1)(a). V. Di Cerbo, ‘Patentability of Animals’ (1993) 24 IIC 788; U. Kinkeldey,

‘The Patenting of Animals’ (1993) 24 IIC 777. 180 Harvard/Onco-mouse [1990] EPOR 4; [1989] OJEPO 451 (Exam). 181 Thid. T19/90 [1990] EPOR 501 (TBA). 182 Tbid. [1991] EPOR 525 (Exam). 183 BPC Art. 177 (1) says that the English, French, and German versions of the EPC are equally authentic.

396

PATENTS

The Biotechnology Directive and the subsequent changes to the EPC and the 1977 Act, appear to confirm the current jurisprudence in relation to animal varieties. Article 4 states that ‘animal varieties’ are not patentable. Article 4(2) of the Dircetive

explains that inventions that concern animals shall be patentable if the technical feasibility of the invention is not confined to a particular animal variety. Article 4(2) (which we look at below) has been introduced in the UK'™ and in the Implementing Regulations to the EPC.'®° This makes clear that animals are potentially patentable, so long as the applicant does not attempt to patent an animal variety. That is, an invention relating to an ‘animal’ may be patentable, so long as the technical aspect of the invention does not reside in a particular animal variety.

7.2

PLANT

VARIETIES

The second form of biological subject matter that is excluded from the scope of protection is ‘plant varieties’.'°° The reason for the exclusion can be traced to the fact that the EPC was drafted in light of the International Convention for the Protection of New Varieties of Plants (UPOV): a regime established in 1961 to grant property rights in new plant varieties. In order to ensure that plant breeders were not able to obtain patent protection and plant variety protection, it was decided that the two conventions should be mutually exclusive: a person could be given either a sui generis plant breeder’s right or patent protection, but not both.!*” Article 53(b) and section 1(3)(b)

were drafted to give effect to this policy decision.'** While the principle that the scope of the two regimes should be mutually exclusive was removed when UPOV was revised in 1991, nonetheless the exclusion of plant varieties still exists in both the EPC

and the 1977 Patents Act. Article 4(1) of the Biotechnology Directive confirms that plant varieties are not patentable. It also provides, as do the resulting changes to the 1977 Act and the changes to the Implementing Regulations to the EPC, that the concept of plant variety is to correspond to the definition used in Article 5 of the Community Plant Variety Regulation.!* 184 PA Sched. A2, para. 4. 185 Rule 23c(b), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437). 186 PA Sched. A2, para. 3(f); EPC Art. 53(b); Biotech. Directive Art. 4(1)(a). For the position before the 1977 Patents Act’see Rau Gesellschaft (1935) 52 RPC 362; Lenard’s Application (1954) 71 RPC 190; Commercial Solvent’s Case (1926) 43 RPC 185; Szuec’s Case [1956] RPC 25; NRDC’s Application [1961] RPC 134; Swift’s

Application [1962] RPC 37. For an international overview see T. Roberts, ‘Patenting Plants around the World’ [1996] EIPR 531.

187 UPOV Art. 2(1). 188 Art. 53(b) was intended to express a general intention to exclude patent protection for subject matter capable of protection within the UPOV convention. Ciba-Geigy/Propagating material application T49/83 [1979-85] C EPOR 758; [1984] OJEPO 112; Plant Genetic Systems/Glutamine synthetase inhibitors (1993) 24 TIC 618.

189 A ‘plant variety’ has been defined to mean a plant grouping within a single botanical taxon of the lowest known rank. This is subject to the proviso that the grouping can be (a) defined by the expression of the characteristics that result from the given genotype of combination of genotypes, and (b) can be distinguished from other plant groupings by the expression of at least

PATENTABLE

SUBJECT

MATTER

397

One of the earliest decisions to consider the scope of the plant variety exclusion was Ciba-Geigy’s Application.'’”° The application in question claimed any plant propagating material which had been chemically treated in a certain way so as to make the material resistant to other agricultural chemicals. In deciding that the invention was not a ‘plant variety’, the Technical Board of Appeal held that plant varieties were ‘limited to claims to individually characterized plants which would have the detailed taxonomy and the reproductive capacity which is required in general for a plant variety right’. The Board of Appeal also stressed that a defining feature of a plant variety was that it contained certain features that distinguished the variety in question from other varieties. These distinguishing features needed to be stable enough so that the essential characteristics were passed on through subsequent generations. In so doing the Technical Board of Appeal highlighted the need for homogeneity between different generations. They also added that ‘it is perfectly sufficient for the exclusion to be ... restricted ... to cases in which plants are characterized precisely by the genetically determined peculiarities of their natural phenotype.’!”! On the facts, the Technical Board of Appeal held that claims for plant-propagating materials that had been chemically treated so as to make the material resistant to other agricultural chemicals were not claims to a ‘plant variety’. The reason for this was that while plant breeding (which is a form of genetic modification) introduced a trait to plants that reappeared in subsequent generations, this did not occur with chemical treatment. As such, the Technical Board of Appeal held that the claims were not for plant varieties and thus not excluded from the scope of protection. The next decision to consider the plant varieties exclusion was Plant Genetic Systems.'** The claims in dispute related to plants, plant cells, and seeds that possessed a foreign gene which made them resistant to a type of herbicide. Given that modified plants were immune to the application of the weedkiller, farmers were able to spray (modified) crops safe in the knowledge that the weedkiller would only affect the unmodified weeds. Greenpeace objected to the application arguing, inter alia, that the material claimed was a plant variety and thus excluded by Article 53(b).

one of the said characteristics, and (c) considered as a unit with regard to its suitability for being propagated unchanged.

PA Sched. A2, para. 11; Biotech. Directive Art. 2(3); Rule 23b(4)(a)-(c), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437).

190 Ciba-Geigy/Propagating material application 49/83 [1979-85] C EPOR 758; [1984] OJEPO 112. Followed in Lubrizol/Hybrid plants T320/87 [1990] EPOR 173; [1990] OJEPO 71 (‘the present hybrid seed and plants from such seed, lacking stability in some trait of the whole generation population, cannot be classified as plant varieties’); and Plant Genetic Systems/Glutamine synthetase inhibitors 1356/93

[1995] EPOR 357

(practice is to allow claims directed to groups of plants larger than plant varieties if the invention is applicable to such larger plant groups). 191 Ciba Geigy/Propagating material application T49/83 [1979-85] CEPOR 758; [1984] OJEPO 112, para. 4 (our emphasis). 192 Plant Genetic Systems/Glutamine synthetase inhibitors (1993) 24 IIC 618 (Opposition Division); T356/ 93 [1995] EPOR 357; [1995] OJEPO 545 (Board of Appeal).

398

PATENTS

At first instance, the Opposition Division held that the claims were not restricted to a specifically defined narrow group of plants (such as a variety), but related to a much broader group of plants. As such, the claims were unobjectionable. In overturning this decision, the Board of Appeal acknowledged that ‘the concept of plant variety under Article 53(b) refers to any plant grouping within a single botanical taxon [or classification] of the lowest known rank.’ On this basis the Board said that plant cells as such, which modern technology allows to culture much like bacteria and yeasts, ‘cannot be considered to fall under the definition of plant or of plant variety.’'”? Following Ciba-Geigy the Board stressed that stability and homogeneity were important factors in determining whether something was a plant variety. More specifically, the Board noted that a plant variety ‘is characterized by at least one single transmissible characteristic distinguishing it from other plant groupings and which is sufficiently homogeneous and stable in its relevant characteristics.’!%4 While the Board of Appeal in Plant Genetic Systems agreed with much of the reasoning in Ciba-Geigy, it disagreed with the way the ambit of the exclusion had been interpreted. More specifically, while in Ciba-Geigy plant varieties were restricted ‘to cases in which plants are characterized precisely by the genetically determined peculiarities of their natural phenotype’, the Board of Appeal in Plant Genetic Systems adopted a more expansive reading of the exclusion. In particular, they were willing to extend the exclusion beyond claims that were specifically directed to or characterized as plant varieties, to include claims that encompassed or included a plant variety within their scope. On the facts, the Board of Appeal held that what was being claimed was based upon or derived from genetically engineered cells (and that the application required the production of plant varieties to exemplify them). This meant that they were claiming rights over the plant varieties formed by those plants and seeds. As such, they were not patentable. In summary, the TBA held that while claims relating to plant cells are potentially patentable, claims which ‘encompass’ or are ‘based on’ a plant variety are not.!°> (This is subject to the rider that the resulting plants have a distinguishable characteristic that is stable and homogeneous.) Given that plant varieties are frequently used as the starting point for the production of genetically engineered plants,!® this meant that in most cases plants produced as a result of genetic engineering would not have been patentable:!*’ a decision which, if followed, would have had important ramifications

193, Plant Genetic Systems/Glutamine synthetase inhibitors. 7356/93 [1995] EPOR 357, 375. 194 Tbid. 195 On ‘essentially derived variety’, see Art. 14(5) UPOV.

196 Most of the reaction was negative: U. Schatz, ‘Patentability of Genetic Engineering Inventions in EPO

Practice’ (1998) 29 IIC 2; T. Roberts, ‘Patenting Plants around the World’ [1996] EIPR 531, 534; A. Schrell, ‘Are plants still patentable?’ [1996] EIPR 242; M. Llewellyn, ‘The Legal Protection of Biotechnological Inventions: An Alternative Approach’ [1997] EIPR 115. Cf. M. Llewellyn, ‘Article 53 Revisited: Greenpeace v. Plant Genetic Systems NV [1995] EIPR 506.

197 A. Schrell, ‘Are plants still patentable?’ [1996] EIPR 242, 243.

PATENTABLE

SUBJECT

MATTER

399

for the plant-breeding industry.'** Given this, it is not surprising that the PGS decision was subject to a considerable amount of criticism.'” Much of the case for concern about the impact of the PGS decision of plant genetics has now been alleviated. This is because two subsequent events have effectively overturned the PGS decision. These are the Biotechnology Directive and the decision of the Enlarged Board of Appeal in Novartis. Article 4(2) of the Biotechnology Directive provides that ‘inventions which concern

plants ... shall be patentable if the technical feasibility of the invention is not confined to a particular plant . . . variety.’”°° Similar provisions have been introduced in the 1977 Act and the EPC.”"! So long as a claim encompasses more than one variety it is potentially patentable. The upshot of the Biotechnology Directive is that claims to plants will be allowed even if they encompass a plant variety. However, claims specifically directed to particular plant varieties (which are protected by a separate regime) will not be protected. This would appear to require member states to accept claims to genetically modified plants (such as those in Plant Genetic Systems) as being as patentable. A similar position was reached by the Enlarged Board of Appeal of the EPO in Novartis (which related to plants that were genetically modified to render them resistant to fungi). In relation to the plant variety exclusion, the EBA found that ‘a claim wherein specific plant varieties are not individually claimed is not excluded

from patentability under Article 53(b), even though it may embrace plant varieties. ’?°° Importantly in reaching this conclusion the EBA did not rely upon the Biotechnology Directive (or the Implementing Regulations). Given the challenge to the Directive before the ECJ, this may prove to be important. 198 The President of the EPO, believing there to be a contradiction between PGS and Ciba Geigy (and also with the Onco-mouse decision), referred the matter to the Enlarged Board of Appeal. The Enlarged Board of Appeal refused to answer the question, which it ruled was improper because there was no conflict between the decisions. Inadmissible referral G3/95 [1996] EPOR 505; [1996] OJEPO 169 (EBA).

199s Bostyn explained, [There] is a difference between a claim embracing a plant variety and a claim to a variety. Every claim to plants will embrace plant varieties, since a plant variety is a plant grouping ofthe lowest possible rank. When claiming a species, or even a higher rank, it will always embrace plant varieties: all Golden Delicious Apples (variety) are apples (species), but not all apples are Golden Delicious.

S. Bostyn, ‘The Patentability of Genetic Information Carriers’ [1999] IPQ 1, 18. See also R. Crespi, ‘Patents and Plant Variety Rights: Is there an Interface Problem?’ (1992) 23 IC 173. 200 Biotech. Directive Recital 29-32. Recital 31 states that ‘a plant grouping which is characterized by a particular gene (and not its whole genome) is not covered by the protection of new varieties and is therefore not excluded from patentability even if it comprises new varieties of plants.’ 201 PA Sched. A2, para. 4; Rule 23c(b), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437).

202 Novartis/Transgenic plant T1054/96 [1999] EPOR 123; [1998] OJEPO (special edn.) 149; R. Nott, ‘You Did It: The European Biotechnology Directive At Last’ [1998] EIPR 347, 351.

203 Novartis/Transgenic plant G1/98 [2000] EPOR 303, 319 (EBA). The EBA gave the analogy with Art. 53(b) (morality) of a patent for a copying machine. The fact that the machine could be used for copying counterfeit notes would not mean that the machine was excluded since the improved properties could be used for other purposes. As we will see, this suggests a particular approach to morality that is not universally accepted (p. 314).

400

PATENTS

The EBA noted that Article 53(b) serves to define the borderline between patent

and plant variety protection. They also noted that the extent of the exclusion for patents is the obverse of the availability of plant variety rights*** and that plant varieties are only granted for specific plant varieties (and not for technical teachings). On this basis the EBA held that in ‘the absence of the identification of a specific plant variety in a product claim, the subject matter of the claimed invention is not directed to a plant variety or varieties within the meaning of Article 53(b) EPC.” In short, the EBA overturned the PGS decision and held that a claim that encompasses more than one variety is not excluded under Article 53(b). That is, the mere fact that a patent

encompasses a plant variety will not be mean that the invention falls within the exclusion. Instead the exclusion will operate only where the patent claims a plant variety per se (which should be protected by plant variety protection). While the proponents of patent protection for plants will welcome the Novartis decision, it gives rise to a potential problem, similar to the problems which arose when the whole contents approach was first adopted in relation to the patenting of computer programs. This is the problem that patent claims will be dressed up to appear as if they do not fall within the exception.*°° While the jurisprudence on the patentability of computer programs may provide guidance in this area, the different rationales behind the exclusions means that the whole contents-technical effect approach cannot be directly imported into paragraph 3(f) of Schedule A2 to the 1977 Patents Act/Article 53(b). It may, however, provide some useful insights into the potential problems that may arise.

7.3

ESSENTIALLY

BIOLOGICAL

PROCESS

The third type of invention excluded from protection by paragraph 3(f) of Schedule A2 to the 1977 Patents Act /Article 53(b) are those inventions which are regarded as

‘essentially biological processes for the production of animals and plants.’°’ As with the exclusion of animal and plant varieties, the exclusion of essentially biological processes has been reconfirmed in the Biotechnology Directive,*”* and by corresponding changes made to the 1977 Act and to the EPC.” Three aspects of this exclusion are worth emphasizing.

204 This was because ‘inventions ineligible for protection under the plant-breeder’s rights systems were intended to be patentable under the EPC provided they fulfilled the other requirements for patentability’. 205 Novartis/Transgenic plant G1/98 [2000] EPOR 303, 319 (EBA).

206 Tbid. T1054/96 [1999] EPOR 123, 137 (TBA). 207 The Biotech. Directive affirms that essentially biological processes for the production of plants or animals are not patentable. The revised text of the EPC agreed on at Munich in Nov. 2000 provides that European patents shall not be granted in respect of ‘plant or animal varieties or essentially biological processes for the production of plants or animal: this provision shall not apply to microbiological processes or the products thereof’: Article 1, item 18 of the Act Revising the Convention on the Grant of European Patents (EPC) (Munich) (29 Nov. 2000) MR/3/00 Rev. le.

208 Biotech. Directive Art. 4(1)(b). 209 PA Sched. A2, para. 3(f).

PATENTABLE

SUBJECT

MATTER

401

First, as the exclusion only applies to processes, it has no application to a product claim or a product-by-process claim. Consequently, in the Onco-mouse litigation it was irrelevant to the patentability of the invention that the claims included circumstances where genetically modified rodents reproduced. The offspring of such an ‘essentially biological process’ (if sexual reproduction is such a process) were products

and hence fell outside the exclusion.?!° Secondly, the exclusion only applies where the process is for the ‘production of animals or plants’. As such, the exclusion may not apply if the process results in the death or destruction of animals or plants.”!! Thirdly, the exclusion only applies where the process is ‘essentially biological’. According to the Biotechnology Directive, a process for the production of plants and animals is said to be essentially biological if ‘it consists entirely of natural phenomena such as crossing or selection.”!* The key question that has arisen in this context is— how much human intervention is needed for a process that involves biological steps not to be classified as an essentially biological process??!? This question was considered in Lubrizol,*'* where the Technical Board of Appeal had to decide whether a process of producing high-quality hybrids was excluded from patentability on the ground that it was “essentially biological’. Drawing upon the image of the invention widely used in patent law, the Board of Appeal said the question of whether a claim was for an essentially biological process had to be ‘judged on the basis of the essence of the invention taking into account the totality of human intervention and its impact on the result achieved.””!” Turning to the facts of the case, the Board noted that the process in question was divided into a number of steps. First, parent plants were selected and crossed. The resulting hybrids were then evaluated and suitable hybrids selected. The parent plants of the chosen hybrids were then cloned. The crossing was then repeated. The Board held that while each step might be characterized as biological, the arrangement of steps as a whole represented an essential modification of known biological processes. On this basis, the Board of Appeal held that 210 [1990] OJEPO 476, 488. 211 Cf. NRDC’s Application [1961] RPC 134; Swift’s Application [1962] RPC 37. 212 Biotech. Directive Art. 2(2). 213 Earlier drafts of the Directive defined ‘essentially biological’ as ‘a process in which human intervention consists in more than selecting an available biological material and letting it perform an inherent biological function under natural conditions’; “a process which, taken as a whole, does not exist in nature and is more than a mere production process shall be patentable’; and ‘a process which, taken as a whole, does not exist in nature and is more than mere breeding process.’ 214 Lubrizol/Hybrid plant 1320/87 [1990] EPOR 173; [1990] OJEPO 71. (These were prior to the introduction of the definition.) See also Ciba-Geigy/Propagating Material Application 'T49/83 [1984] OJEPO 112 (propagating material not the result of essentially biological process where the process involved treatment with chemical agents); Harvard/Onco-mouse [1989] OJEPO 451 (Exam) (process for producing transgenic

mouse not essentially biological because it involved micro-injection); Harvard/Onco-mouse T19/90 [1990] EPOR 501; [1990] OJEPO 476, 488 (agreeing that micro-injection is not essentially biological and noting also that sexual reproduction is not necessarily essentially biological). 215 Plant Genetic Systems/Glutamine synthetase inhibitors 7356/93 [1995] EPOR 357. (‘In the present case

the impact of human intervention is decisive since the claimed plants and plant material only exist as a result of the process of the invention’.)

402

PATENTS

the process was not an essentially biological process and, as such, not excluded by Article 53(b).

The question of the degree of technical intervention needed for a process to fall outside the scope of the exclusion was also considered in the Novartis decisions. The Technical Board of Appeal said that to decide whether a process was ‘essentially biological’, the tribunal must make a value judgement about the extent to which a process should be non-biological before it loses the status of ‘essentially biological’.”!° The Board added that there were three possible approaches that could be taken when answering this question.

(1) Under the first approach, an invention would be excluded if it included an aspect or step that was biological. To fall outside the exclusion, the claimed processes would have to be exclusively made up of non-biological process steps.7!” (2) The second approach, which was taken from Lubrizol, requires the tribunal to weigh up the overall degree of human intervention in the process.7!* Under this approach, the decision as to whether an invention was essentially biological would be judged on the basis of the essence of the invention, taking into account the totality of human invention and its impact on the result received. (3) The third option, which was the most liberal, provides that the mere presence of a single artificial (or technical) element in the process might be enough to prevent its being classified as an essentially biological process.*!? The Technical Board of Appeal said that the third approach was reflected in Article 2(2) of the Biotechnology Directive.

Neither the Technical Board of Appeal nor the Enlarged Board of Appeal in Novartis provided any direct guidance as to which of these approaches was to be adopted.” Despite this, there is little doubt that purely biological processes—that is, processes where there is no human intervention—are essentially biological. Article 2(2) of the Biotechnology Directive offers a useful example of this, in so far as it provides that “a process for the production of plants or animals is essentially biological if it consists entirely of natural phenomena, such as crossing or selection.’??! This means that conventional breeding procedures would not be patentable. ‘In contrast, where (human) technical intervention plays a significant part in determining or controlling the result it is desired to achieve, the process would not be excluded.”?**

216 Novartis/Transgenic plant T1054/96 [1999] EPOR 123, 134 (TBA). 217 Tbid. This was drawn from EPC Art. 52(4) re methods oftreatment by surgery and therapy. See General Hospital/Contraceptive method T820/94 [1995] EPOR 446. 218 [ubrizol/Hybrid plants 7320/87 [1990] EPOR 173. 219 Novartis/Transgenic plant T1054/96 [1999] EPOR 123, 135 (TBA).

220 Thid. GO1/98 [2000] EPOR 303, 321 (EBA). 221 Similar provision are found in Rule 23b(5), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437): PA Sched. A2, para. 11.

222 EPO Guidelines C-V, 3.4.

PATENTABLE

SUBJECT

MATTER

403

While these two extremes may be clear, one question that remains is whether processes that only have a trivial or minimal amount of human intervention will also be classified as essentially biological processes. In Lubrizol, the Board of Appeal said that while trivial interventions may mean that a process is not ‘purely’ biological, it

does not mean that it is not essentially biological.’”? Such a process may therefore still be excluded. In contrast it seems, that the changes made to the EPC and the UK Patents Act in light of the Biotechnology Directive may suggest a different conclusion. This is because a process is defined as essentially biological if ‘it consists entirely of natural phenomena such as crossing or selection.”** Given that the definition of ‘essentially biological process’ contained in paragraph 11 of Schedule A2 does not say ‘includes’, but instead uses the word ‘means’, we can deduce that if a process involves

any technical intervention then it falls outside the exclusion from patentability in Article 53(b) and paragraph 3(f) of Schedule A2. This reading of the provision was supported by the Technical Board of Appeal in Novartis, when it said that the third approach (outlined above) was reflected in Article 2(2) of the Biotechnology Directive. 7.4

MICROBIOLOGICAL

OR TECHNICAL

PROCESSES

As we saw earlier, the exclusion of animal varieties, plant varieties, and essentially

biological processes from the scope of patentable subject matter is subject to the general qualification that the invention is not ‘a microbiological process or other technical process or the product of such a process.”* If an invention is for a microbiological or technical process,””° it will not be caught by the exclusion. In essence, the qualification restricts the subject matter excluded by paragraph 3(f) of Schedule A2/ Article 53(b) to non-microbiological and non-technical processes. Given that the

qualification restricts the scope of the subject matter excluded by paragraph 3(f)/ Article 53(b), this means that if it was interpreted broadly it would greatly undermine the impact of the provision as a whole. If this were the case, it would increase the scope of biological subject matter that is patentable. 223 The Board said that ‘the necessity for human intervention alone is not yet sufficient criterion for its not being “essentially biological”. Human interference may only mean that the process is not “purely” biological process, without contributing anything beyond a trivial evel’. Lubrizol/Hybrid plants T320/87 [1990] EPOR 173, 178.

224

Biotech. Directive Art. 2(2); Rule 23(b)(5) Implementing Regulations to the EPC (introduced by

(1999) OJEPO 437); PA Sched. A2, para. 11.

225 PA Sched. A2, para. 3(f); EPC Rule 23c(c), Implementing Regulations to the EPC (introduced by (1999)

OJEPO 437). The revised text of the EPC agreed on at Munich

in Nov. 2000 only refers ‘to micro-

biological processes or the products thereof’: Art. 1, item 18 of the Act Revising the Convention on the Grant of European Patents (EPC) (Munich)

(29 Nov. 2000) MR/3/00

Rev. le. TRIPs only requires that micro-

organisms, non-biological, and microbiological processes be patentable. It does not require that products of micro-biological processes be patentable. See also Teschemacher, ‘Patentability of Micro-organisms per se’ (1982) 13 IC 27; Cadman, “The Protection of Micro-organisms under European Patent Law’ (1985)16 IIC

311; Marterer, “The Patentability of Micro Organisms per se’ (1987) 18 IIC 666. 226 A microbiological process is defined as ‘any process involving or performed upon or resulting in microbiological material’. Biotech. Directive Art. 2(2). EPC Rule 23b(6); PA Sched. A2, para. 11.

404

PATENTS

It should be noted that when section 1(3)(b)/Article 53(b) was first enacted, the

qualification was limited to ‘a microbiological process or the product of such a process’. This was changed as a result of the Biotechnology Directive to apply to ‘a microbiological process or other technical process or the product of such a process’. The issue of what is meant by a ‘microbiological process’ was considered in Plant Genetic Systems’ where the Board of Appeal said that microbiological processes refers to processes in which micro-organisms or their parts are used to make or to modify products. They also said that it refers to processes where new micro-organisms are developed for specific uses. Products of microbiological processes encompass ‘products which are made or modified by micro-organisms as well as new microorganisms as such’. While cells and parts thereof were said to be microbiological, processes of genetic engineering were not.’”® The extension of the provision to include technical processes largely renders these issues obsolete. When construing the qualification in section 1(3)(b)/Article 53(b) as enacted (that is, when it was limited to microbiological processes), most of the discussions focused

on whether a process that was made up of a mixture of microbiological and technical steps fell within the qualification.” For example, in PGS where the Board of Appeal was contemplating when a process that involves a number of different steps is a microbiological process, the Board said that a process was not a microbiological process simply because a microbiological step was involved. Instead the process had to be judged as a whole. On the facts of the case, the Board said that while the introduc-

tory step of transforming plant cells or tissues with recombinant DNA was microbiological, subsequent steps of regeneration and transformation that played an important role in bringing about the final product were not microbiological processes. When viewed as a whole, the process was best described as a technical process that included a microbiological step, rather than a microbiological process (which would have justified the patenting of the process or a product of the process). As a consequence, the resulting plants were held not to be the product of a microbiological process within the meaning of Article 53(b) (as enacted).”*° While Plant Genetics Systems provides us with some guidance as to the limits of the qualification, its precise scope remains unclear. It seems, however, that this may not matter too much. This is because the changes introduced to section 1(3)(b)/Article

53(b) so that they also include ‘technical processes’ means that the problems of the type discussed in PGS have largely been overcome. Given that genetic manipulation is

227 (1993) 24 IIC 618 (Opposition Division); [1995] OJEPO 545 (Board of Appeal). 228 Plant Genetics Systems/Glutamine synthetase inhibitors [1995] OJEPO 545. 229 The issue of how you ascertain whether a process with a number of steps is a microbiological process is similar to the question of whether a process is ‘essentially biological’. 230 While the point was not discussed at length, it was suggested in Plant Genetics Systems/Glutamine synthetase inhibitors [1995] OJEPO 545, that a microbiological process was a purer process (with less human intervention) than a process which was essentially biological.

PATENTABLE

SUBJECT

MATTER

405

undoubtedly a technical process, this appears to demand the patentability of genetically modified plants and animals.”*! As much of the research carried out in relation to biological subject matter involves a degree of human intervention, most of the processes will be captured by the qualification and thus fall outside the scope of the

exclusions.**” By increasing the scope of the qualification to section 1(3)(b)/Article 53(b), the changes initiated by the Biotechnology Directive will minimize the impact that the exclusion has upon the scope of patentable subject matter. The scope of the subject matter excluded by paragraph 3(f) of Schedule A2 to the 1977 Patents Act/Article 53(b) would have been further undermined if the approach suggested by the Technical Board of Appeal in PGS had been followed. In that case, the Board suggested that a plant variety that was a product of a microbiological process would not have been caught by the exclusion and thus would have been patentable. This approach was rejected in Novartis when the Enlarged Board of Appeal said that the plant variety exclusion applied irrespective of how the plant varieties were produced. The mere fact that a plant variety was obtained by means of genetic engineering does not give the producers of such plant varieties a privileged position.**’ This reflects the position set out in Recital 32 of the Biotechnology Directive which says that ‘if an invention consists only in genetically modifying a particular plant variety, and if a new plant variety is bred, it will still be excluded from patentability even if the genetic modification is the result not of an essentially biological process but of a biotechnological process’.

8 IMMORAL

INVENTIONS

It is a longstanding principle of patent law that patents should not be granted for immoral inventions. Until recently, the principle was rarely used. However, as a result of developments in genetic engineering and related attempts to patent the products of that research, in recent years ethical considerations have played a more prominent role in patent law. While these provisions are potentially applicabie to all patentable subject matter, more detailed provisions have also been introduced in relation to biotechnological inventions. What is most striking about the interaction of patent law and ethics is how uncomfortable the relationship has been and the difficulties that it has produced.*** 231 Earlier drafts of the Directive defined microbiological to mean ‘a process carried out with the use ofor performed upon or resulting in a micro-organism’; as ‘a process consisting of asuccession of steps’ including

‘at least one essential step of the process’ which is microbiological; and as meaning ‘a process involving or performed upon or resulting in microbiological material’. All were abandoned. See M. Llewelyn, “The Patentability of Biological Material: Continuing Contradiction and Confusion’ [2000] EIPR 191. 232 A. Schrell, ‘Are plants still patentable?’ [1996] EIPR 242, 243. 233 Novartis/Transgenic plant G1/98 [2000] EPOR 303, 321 (EBA). This is supported by Recital 32 of the Biotech. Directive.

234 |. Bently and B. Sherman, ‘The ethics of patenting: towards a transgenic patent system’ (1995) 3 Medical Law Review 275.

406

PATENTS

When the EPC and the 1977 Act were first drafted, the relevant statutory provisions in relation to immoral inventions were set out in section 1(3)(a) of the 1977 Patents Act

and Article 53(a) of the EPC.** As a result of the Biotechnology Directive and TRIPs, two important changes have been made to these provisions as they were first enacted. The first change is that section 1(3)(a) (as enacted) of the 1977 Act has been

replaced by a new section 1(3).”°° The old section 1(3)(a) provided that a patent should not be granted for ‘an invention the publication or exploitation of which would be generally expected to encourage offensive, immoral or anti-social behaviour’. In contrast, the new section 1(3) provides that a ‘patent shall not be granted for an invention the commercial exploitation of which would be contrary to public policy or morality.’?’? The new section 1(3) is closer to Article 53(a), which

refers to ‘inventions the publication or exploitation of which would be contrary to ordre public or morality.’ (Article 53 remains unchanged.) It is unlikely that the new section 1(3) will make any substantial changes to the law. The second change that has taken place in light of the Biotechnology Directive is that the 1977 Act and the EPC have been amended so as to give specific guidance as to the types of biotechnological inventions (such as human cloning) that fall within the scope of section 1(3)/Article 53(a).*?? We will deal with these provisions later.

It has been suggested that the reforms to the 1977 Act and the EPC do not bring about any substantive change in the law.*“° While there may be some doubts about the accuracy of such claims, it is clear that the decisions under the ‘old’ regime are still important. As well as providing an important insight into the way patent law and ethics interact, the jurisprudence developed prior to the Biotechnology Directive will still be used to determine whether inventions are caught by the exclusion. Given this, we will first look to the approach adopted by the tribunals to the EPC and the 1977 Act as enacted. We will then look at the changes initiated by the Biotechnology Directive. 235 These are permitted by Art. 27(2) TRIPs which says that members may exclude: inventions, the prevention within their territory of the commercial exploitation of which is necessary to protect order public or morality, including to protect human, animal or plant life or health or to avoid serious prejudice to the environment, provided that such exclusion is not made merely because the exploitation is prohibited by domestic law. 236 Patents Regulations 2000 (SI 2000/2037) (in force 28 July 2000). PA s. 1(4) states that for the purpose

of section 1(3) exploitation shall not be regarded as contrary to public policy or morality only because it is prohibited by law in force in the UK. 237 This replicates the language in Biotech. Directive Art. 6(1). Similar language was-used in the proposed revision of the EPC. The revised text of the EPC agreed on at Munich in Nov. 2000 provides that European patents is in similar terms: Art. 1, item 18 of the Act Revising the Convention on the Grant of European Patents (EPC) (Munich) (29 Nov. 2000) MR/3/00 Rev. le; see also Base Proposal for the Revision of the European Patent Convention CA/100/00 e (2000), 42.

238 Biotech. Directive Art. 6(1). 239 PA Sched. A2, para. 3(b)—(c); EPC Rule 23d (a)—(d); Biotech. Directive Art. 6(1). 240 Tt has been said that the Regulations that implement the Biotech. Directive do not lead to anything being patentable that was not already patentable, UK Patent Office: Patents Regulations 2000 (in relation to Arts. 1-11 of the Biotech. Directive).

PATENTABLE

8.1

THE

EPC

AND

THE

1977 ACT

SUBJECT

MATTER

407

AS ENACTED

The role and meaning of the morality exclusion under the EPC (as enacted) was first considered in the 1989 Onco-mouse decision.**! As we have already seen, the case concerned the patentability of mice that had been genetically modified so that they would develop cancer: a result that the applicants hoped would be useful in cancer research,” Initially, the Examining Division declined to consider Article 53(a), taking the view that it was inappropriate for people who were essentially qualified as technicians to consider such an issue.”4? On appeal, the Technical Board of Appeal took a very different view. It observed that the genetic manipulation of mammalian animals is ‘undeniably problematical in various respects’, particularly in circumstances where the modifications ‘necessarily cause suffering’.““4 Moreover, the release of the mice into the environment might ‘entail unforeseeable and irreversible adverse effects’. Consequently, it was necessary to consider the application of Article 53(a). The Board of Appeal, remitting the case to the Examining Division for reconsideration, explained that the application of Article 53(a) ‘would seem to depend mainly on a careful weighing up of the suffering of animals and possible risks to the environment on the one hand, and the invention’s usefulness to mankind on the

other’. Applying this utilitarian balancing test, the Examining Division held that the subject matter was patentable. It reasoned that finding a cure for cancer was a highly desirable end, and that the mouse would assist in achieving that end. In contrast, the Examining Division played down the harm caused by the invention. The Examining Division suggested that given that the research would take place anyway, and that it would require vast numbers of mice to locate some which had ‘naturally’ developed cancer, the invention produced a benefit to mouse-kind in that large numbers of healthy mice would no longer need to be bred and then destroyed. The utilitarian approach adopted in Onco-mouse was applied in 1991 when the EPO warned the pharmaceutical company Upjohn that it would not accept an application to patent a mouse into which a gene had been introduced such that the mouse would lose its hair. In weighing up the benefit that flowed from the invention (the usefulness of the mice in experiments to cure hair loss) as against the harm suffered by the mice, the EPO asserted that the invention was immoral and thus would not be patentable.**° 241 Harvard/Onco-mouse [1990] EPOR 4; [1989] OJEPO 451 (Exam); T19/90 [1990] EPOR 501; [1990] OJEPO 490 (TBA); [1991] EPOR 525 (Exam). See V. Vossius, “Patent Protection for Animals’ [1990] EIPR

250; Dresser, “Ethical and Legal Issues in Patenting New Animal Life’, [1988] Jurimetrics Journal 399; U. Schatz, ‘Patentability of Genetic Engineering Invention’ (1998) 29 I[C 2; Manspeizer, “The Cheshire Cat, the March Hare and the Harvard Mouse’ (1991) 43 Rurgers Law Review 417.

242 More accurately, of amammal into which malignancy-creating genes had been introduced so that the mammal had an increased probability of developing tumours.

243 [1989] OJEPO 451 (Exam). 244 Tbid. [1990] EPOR 501, 513 (para. 5). It has been suggested that the EPO was awaiting the outcome of the Directive before issuing a decision. See CIPA, Briefing Paper Patentability of Animals (May 1998) http:// www.cipa.org.uk/cipa/briefs/animals/htm. 245 Independent (2 Feb. 1992).

408

PATENTS

The next occasion on which the application of Article 53(a) was considered was by the Opposition Division in Plant Genetic Systems.**° In this case, the opponents (Greenpeace) objected to the patent that had been granted for a genetically engineered plant (which rendered the plants resistant to herbicide) on the grounds that it was inherently immoral and that it created risks to the environment. Following the cost/benefit test suggested in Onco-mouse, the opponents argued that these risks should be balanced against the benefits likely to accrue from the invention. The Opposition Division refused to apply the utilitarian cost/benefit analysis. On the basis that the patent system was primarily concerned with technical considerations and that they were not competent or qualified to decide ethical issues, the Opposition Division believed that it should not be routinely involved in considering ethical questions. Instead, the Opposition Division said that it was only necessary to consider the exclusion where the invention would be universally regarded as outrageous and where there was an overwhelming consensus that no patent should be granted. That is, it was only necessary to consider ethical questions once a certain ethical threshold had been crossed. The upshot of this is that in most cases it would not be necessary to consider the morality of patents.

The Plants Genetic Systems decision highlights a further difficulty in relation to the immorality examination. In an attempt to apply the utilitarian examination outlined in Onco-mouse, the Opposition Division was faced with the problem that it was unable to quantify the objections raised against the patent. This was compounded by the fact that no evidence was submitted to support these claims. Instead, the examiners were asked to determine the opposition on the basis of personal philosophy or conviction. The Opposition Division rejected such an approach on the basis that it would produce ‘individualistic’ or ‘arbitrary’ decisions. Moreover, even if it were possible to convert abstractly formulated objections into a more concrete format (for example, through the use of opinion poll evidence), the Opposition Division clung to the view that patent law should not be the forum in which such an opinion should play a role. The approach advocated in the Greenpeace decision was adopted by the Opposition Division in the Relaxin case.”’ This decision concerned an opposition by the Green Party to the Howard Florey Institute’s patent for the DNA sequences of a naturally occurring substance, that relaxes the uterus during childbirth, which is obtained from the human ovary. The Green Party objected to the patent on three grounds. First, they argued that the use of pregnancy for profit was offensive to human dignity; secondly, that the applicant was involved in patenting life, an activity that was intrinsically immoral; and thirdly that such patenting was equivalent to slavery. In rejecting the Green Party’s objections, the EPO noted that the tissue used in the research was donated during the course of necessary gynaecological operations and thus had not offended ‘human dignity’. Moreover, the Opposition Division said that DNA was not ‘life’. Rather, it was a ‘chemical substance which carries genetic 246 [1993] 24 IIC 618.

247 356/93 [1995] EPOR 357, 366 ff; [1995] OJEPO 388.

PATENTABLE

SUBJECT

MATTER

409

code’. The argument that the applicant was ‘patenting life’ was thus misconceived. Finally, the Opposition Division rejected the Green Party’s assertion that such patenting was equivalent to slavery on the ground that such an assertion misunderstood the nature of a patent. This was because, according to the Opposition Division, a patent does not give the proprietor any rights over a human being: all a patent monopoly provides is the right to prevent someone from practising the same invention. As with the Plant Genetics decision, the Opposition Division’s decision in Relaxin further highlights the problems that confront patent law in accommodating ethical considerations. This was explicitly acknowledged in Relaxin when the Opposition Division said the question of whether ‘human genes should be patented is a controversial issue on which many persons have strong opinions . . . the EPO is not the right institution to decide on fundamental ethical questions.’** The case also reveals the difficulties involved in translating the ethical concerns of the objectors into the language of patent law. Faced with a choice between a scientific understanding of DNA as a chemical substance and the social understanding of DNA as life, the former interpretation was preferred by the Opposition Division. This prioritization of the scien-

tific view of genetic process over the Green Party’s approach illustrates the depth of the conflict between the logic of ethical objections and those of patenting, at least as it is currently understood. The latest development in this area came with the decision of the Board of Appeal in Plant Genetic Systems’? where the Board concluded that claims for genetically modified seeds did not contravene Article 53(a). Although this decision, which has

attracted many critics,’ represents a more flexible approach to the incorporation of ethics into patent law, it still highlights the uncertainty and ambiguity that exist in this relationship. The Board of Appeal said that the concept of morality under the EPC was built upon the belief that some behaviour is right and acceptable whereas other behaviour is wrong; a belief that was founded on norms deeply rooted in European society and civilization. Noting that patent offices exist ‘at the crossroads between science and public policy’, the Board of Appeal said that ordre public in Article 53(a) covers the protection of public security, the physical integrity of individuals as part of society, and protection of the environment. On this basis, the Board of Appeal said that where the exploitation of an invention was likely to breach public peace or social order (for example, through acts of terrorism) or seriously prejudice the environment, the invention would be excluded from patentability under Article 53(a).?*! The Board of Appeal then attempted to clarify the way Article 53(a) was to be interpreted. As well as casting doubts on the value of opinion poll evidence, the Board also said that the mere fact that the exploitation of a particular type of subject matter was permitted in some or all of the contracting states would not automatically

248 Howard Florey/Relaxin T74/91 [1995] EPOR 541, 552.

249 [1995] OJEPO 545. 250 J. Strauss, ‘Patenting Human Genes in Europe’ (1995) 26 IIC 920.

251 The EPO Guidelines C-V, 3.1, gives the example of a letter-bomb.

410

PATENTS

influence the ethical status of that subject, at least in relation to its patentability. The Board observed that a balancing exercise was not the only way of assessing patentability, although it was useful in situations where actual damage and/or disadvantage existed. The Board added that although the morality provision is to be construed narrowly, it should not be disregarded. This is the case even if it is difficult to judge whether the claimed subject matter is contrary to ordre public or morality. Given the explicit wording of Article 53(a), it is difficult to see how they could have concluded otherwise.

8.2

MORALITY

AFTER

THE

BIOTECHNOLOGY

DIRECTIVE

As we mentioned above, the ethical status of biotechnological inventions was addressed in the Biotechnology Directive. This has led to the introduction of a new section 1(3) in the 1977 Act.*>? More importantly, it led to the 1977 Act and the EPC being amended so that they now list certain types of inventions that are excluded on the basis that they are immoral. When the Directive was first proposed, it made no reference to the morality of patenting. Over time, however, the Directive became a focal point for public concerns about the ethical and social dimensions of biotechnology generally, as well as specific concerns about the patenting of the products of such activities. In response, the proponents of patenting argued that the patent system was an inappropriate vehicle to deal with concerns over morality. The reason for this was the uses that were to be made of an invention are not clear at the application stage, that patent examiners are not qualified to deal with ethical questions, and most importantly because patents do not control whether or how an invention is exploited. Instead it was said that exploitation of biotechnological inventions was best controlled through other regulatory systems.” In the end, the Biotechnology Directive took a middle ground. Article 6(1) affirms the relevance of ethical considerations in so far as it provides that that inventions shall be unpatentable where their commercial exploitation would be contrary to ordre public or morality. This is mirrored in the new section 1(3) and, in turn, reflects Article 53 EPC (as enacted). Article 6(1) goes on to say that exploitation shall not be considered to be contrary to morality simply because it is prohibited by law or regulation. Similar provisions exist in the 1977 Act and the EPC. Importantly, Article 6(2) of the Biotechnology Directive provides some specific examples of types of inventions that are unpatentable. These are now mirrored in the 1977 Act?” and in the Implementing Regulations to the EPC.?°> The inventions excluded are: 252 And to conform with TRIPs Art. 27(2). 253 For an overview of some of the regulatory regimes see J. Black, ‘Regulation as Facilitation: Negotiating the Genetic Revolution’ (1998) 61 Modern Law Review 621.

254 PA Sched. A2, paras. 3(b)—(e). 255 Rule 23d, Implementing Regulations to the EPC (introduced by (1999) OJEPO 437).

PATENTABLE

SUBJECT

MATTER

411

(a) processes for cloning human beings;?°° (b) processes for modifying the germ line genetic identity of human beings;”*” (c) uses of human embryos purposes;?** y for industrial or commercial purp (d) processes for modifying the genetic identity of animals which are likely to cause them suffering without any substantial medical benefit to man or animal,

and also animals resulting from such processes.?°? The exclusion of processes for human cloning reflects concerns about eugenics. Human cloning is defined in Recital 41 as ‘any process, including techniques of embryo splitting, designed to create a human being with the same nuclear genetic information as another living or deceased human being.’® It has been suggested that the scope of the exclusion will depend on how ‘human being’ is defined.?*! In particular, ‘human being’ may be defined in such a way as not to include human embryos and embryonic tissue. It should be noted that the EPO declared (on the basis of the ‘old’ law) that methods in a cloning process which fused human and pig cells were contrary to morality. As a consequence the applicants did not pursue the application any further.” As such, it seems that even if the cloning of human embryos was not caught by Article 6(2)(a) it would fall under the general prohibition in Article 52(a).*° The exclusion of processes that modify the germ line genetic identity of human beings (a process that could alter the reproductive cells that are capable of transmitting genetic material to our descendants) also reflects concerns about eugenics. While somatic cell gene therapy is not caught by the provisions, germ cell line therapy inventions are.’ It has been suggested that the exclusion of all forms of germ line therapy is an overreaction. More specifically it has been said that as it is conceivable that morally unobjectionable applications of germ line therapy (for example, for inheritable diseases like cystic fibrosis) may arise in the future, the exclusion is 256 Rule 23d(a), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437); PA Sched. A2, para. 3(b); Biotech. Directive Art. 6(2)(a).

257 Rule 23d(b), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437); PA Sched. A2, para. 3(c); Biotech. Directive Art. 6(2)(b).

258 Rule 23(c), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437); PA Sched. A2, para. 3(d); Biotech. Directive Art. 6(2)(c).

259 Rule 23(d), Implementing Regulations to the EPC (introduced by (1999) OJEPO 437); PA Sched. A2, para. 3(e); Biotech. Directive Art. 6(2)(d).

260 See also Biotech. Directive, Recital 40. 261 S. Bostyn, “The Patentability of Genetic Information Carriers’ [1999] IPQ 1, 11. 262 Patent applications for the cloning of embryos (including human embryos) as well as mixed-species embryos from pigs and humans 27 Oct. 2000.

263 Such activities may also be caught by Biotech. Directive Art. 5; Rule 23e(1); PA Sched. A2, para. 3(a). 264 Bostyn, ‘The Patentability of Genetic Information Carriers’, [1999] IPQ 1, 8. Bostyn offers the following definitions: ‘somatic cell gene therapy applies to differentiated cells of the foetus, the child or the adult, such as cells of the liver, blood or other organs’ (8, n. 36); ‘germ line therapy applies to non-differentiated cells, such as gametes or the fertile egg, and implies that the genetic modification will be transmitted to the individual’s offspring’ (8, n. 37).

412

PATENTS

‘retrograde and short-sighted.*® As Recital 42 points out, the exclusion does not affect inventions for therapeutic or diagnostic purposes which are applied to the human embryo and are useful to it. The exclusion of uses of human embryos for industrial or commercial purposes in Article 6(c) is relatively straightforward.” To a large extent, the scope of the exclusion will depend on what is meant by ‘industrial’ or ‘commercial’ purposes. For the most part, Article 6(2)(d) replicates questions already discussed by the EPO.

It is also likely to give rise to similar problems: how is suffering to animals to be calculated and what is meant by substantial medical benefit??*? One important difference, however, is that it seems to do away with the need to balance harm and benefit.’** It seems that if an applicant can show a ‘substantial medical benefit to man or animal’, the invention will not be excluded. This is the case irrespective of the suffering that the invention causes to animals. It is too early to determine what impact these changes will have upon the patenting of biological inventions. Despite claims that the changes will not impact upon the scope of patentable subject matter, it seems that the new regime will lead to some changes. In particular, the apparent move away from the balancing of interests may liberalize the patent process. In other respects, the new regime may impose higher thresholds. For example, it has been suggested that Article 6 of the Directive would mean that patents, such as the University of Edinburgh’s controversial human embryo patent, would not be valid.*® (The patent ‘involved removing stem cells from human embryos, genetically manipulating these cells and cultivating genetically manipulated embryos from them..) It is likely that the Directive will bring about other changes. For example, Article 7 of the Directive states that the Commission’s European Group on Ethics in Science and New Technologies is to evaluate all ethical aspects of biotechnology.*”” While this has no direct impact on the patenting, there is a possibility that it may influence attitudes towards ethical issues. This is reinforced by the fact that the Commission is obliged under the Biotechnology Directive to report annually to the European Parliament and Council on the implications of patent law in the field of biotechnology and genetic engineering.’”! 265 R. Nott, ‘You Did It. The European Biotechnology Directive at Last’ [1998] M. Llewellyn, “The Legal Protection of Biotechnological Inventions’ [1997] EIPR 115, 122.

EIPR 347, 349:

266 Rule 23(c) Implementing Regulations to the EPC (introduced by (1999) OJEPO 437); PA Sched. A2, para. 3(d); Biotech. Directive Art. 6(2)(c).

267 Nott, ‘You Did It! The European Biotechnology Directive at Last’, [1998] EIPR 347, 349. 268 Bostyn, ‘The Patentability of Genetic Information Carriers’, [1999] IPQ 1, 24. 269 Patent EP 695351, granted by EPO Dec. 1999. Legal Protection of Biotechnological inventions, 3 ” 3.1

THE

STATE

OF THE

ART

In considering whether an invention is obvious, the person skilled in the art has regard to any matter that forms part of the state of the art at the priority date of the 29 Technograph Printed Circuits v. Mills & Rockley (Electronics) [1972] RPC 346, 355 (Lord Reid); Polymer Powders/Allied Colloids T39/93 [1997] OJEPO 134, 149; Pakuscher (1981) 12 IIC 816. 30 Hoechst Celanese v. BP Chemicals [1997] FSR 547, 565; BASE/Metal Refining T24/81 [1979-85] B EPOR 354.

31 Genentech’s Patents [1989] RPC 147, 278 (Mustill LJ).

;

32 EPC r. 27(1)(a), r. 33(2); Luminescent Security Fibres/Jalon 422/93 [1997] OJEPO 24.

33, Genentech’s Patent [1989] RPC 147, 241 (Dillon LJ). 34 Dredge v. Parnell (1899) 16 RPC 625, 628 (Lord Halsbury); cf. Genentech’s Patent [1989] RPC 147, 214 (Purchas LJ).

°° Genentech’s Patent [1989] RPC 147, 278 (Mustill LJ); Adolf Schindling/Illuminating Device 7324/94

[1997] EPOR 146.

°° This has been questioned in relation to the field of biotechnology. Genentech’s Patent [1989] RPC 147,

214 (Purchas LJ) and 279-280 (Mustill LJ). See also Technograph Printed Circuit v. Mills & Rockley [1972] RPC 346 (Lord Morris); Polymer Powders/Allied Colloids T39/93 [1997] OJEPO 134, 149.

37 Genentech/Expression in Yeast T455/91 [1995] OJEPO 684.

INVENTIVE

STEP

445

invention.** With two notable exceptions, the state of the art in an obviousness exam-

ination is the same broad concept as is used in a novelty examination (which was discussed above).*?

The first difference is that patent applications that have priority over the application in suit, but have not yet been published, are not included in the state of the art for the purposes of assessing inventive step.*? The second difference is that when considering whether an invention is non-obvious

(but not whether it is novel), it is

possible to combine together (or mosaic) information from different sources. The act of combining documents must be ‘natural and logical’.*! It must also be a process

which an unimaginative skilled person would (as opposed to could) make.” Documents that conflict or are unrelated cannot be combined to demonstrate obviousness.** The state of the art is made up of everything that is made available to the public before the date of filing: irrespective of the language of publication or how widely it has been circulated.“ The potentially broad nature of the state of the art is restricted by the fact that the prior art is judged through the eyes of a person skilled in the art. On this basis the courts have accepted that a person skilled in a particular art may place greater emphasis on certain types of information than on others.* In more

extreme cases, the fact that the person skilled in the art is able to evaluate the prior art may mean that certain types of information are discarded.” The potentially broad nature of the state of the art is further restricted by the fact that the skilled person is only expected to have scrutinized the information available in their own or closely related fields. The impact that this has on the material available to the person skilled in the art can be seen in Mobius/Pencil Sharpener,” which concerned an application for a patent over a hand-operated pencil sharpener with a

device that prevented pencil shavings from escaping. The application survived an obviousness attack on the basis of two pieces of prior art: one concerned with pencil sharpeners, the other with savings boxes. The Technical Board of Appeal held that 38 This date might be critical. For example, in Biogen v. Medeva [1995] RPC 25 (CA) it was acknowledged that because recombinant DNA technology had developed so quickly, the invention would have been obvious by Dec. 1979. As such, it was critical whether Biogen could take advantage of an earlier priority date from Dec. 1978.

39 See above at pp. 415-18. 40 BASF/Metal Refining 724/81 [1979-85] B EPOR 354. 41 Phillip Morris/Tobacco Lamina Filler 1323/90 [1996] EPOR 422, 430.

42 Technograph v. Mills & Rockley [1972] RPC 346, 355. 43 Mobay/Nethylenebis T2/81 [1982] OJEPO 394; [1979-85] B EPOR 265. See also Discovision/Optical Recording 7239/85 [1997] EPOR 171. 44 Blaschim/Rearrangement Reaction 1597/92 [1996] EPOR 456; Mitsoboshi/Endless Power Transmission T169/84 [1979-85] B EPOR 354; Hoechst Celanese v. BP Chemicals [1997] FSR 547, 563. 45 PLG Research v. Ardon International [1994] FSR 116, 137: ‘[k]nowing of a piece of prior art is one thing; appreciating its significance to the solution to the problem in hand is another.’

46 Cf. Brugger v. Medic Aid [1996] RPC 635, 653. The ‘court should be wary of uncritical ageism in relation to prior art ...,The fact that a document is old does not, per se, mean that it cannot be a basis for an

obviousness attack’. 47 7176/84 [1986] OJEPO 50; [1986] EPOR 117.

446

PATENTS

while the prior art concerning the pencil sharpener represented the closest prior art, it failed to suggest the answer employed in the invention and was thus of no relevance. Given the technological differences between the two fields, the prior art in relation to savings boxes was also of no relevance because it was not in a closely related or neighbouring field. Consequently, the person skilled in the art would not have utilized the solution set out in the prior art relating to the savings box.*® In addition to being confronted with relevant material from the state of the art, the person skilled in the art is also presumed to have the benefit of the ‘common general knowledge’ of the particular art or technical field in question.*? As well as being a valuable source of information in its own right,°° the common general knowledge is also important because it enables the notional interpreter to combine different pieces of prior art together and to develop and build upon existing pieces of prior art (so long as they do not do anything inventive). The common general knowledge is also important because it acts as the basis from which documents are interpreted. The sources from which the notional skilled addressee acquires their general knowledge varies depending on the nature of the technical field in question.>! Frequently, the tribunal assumes that the common general knowledge is that which can be found in encyclopedias and standard dictionaries. Where this is the case, care

must be taken to avoid a logical fallacy: common general knowledge will be in encyclopedias, but that does not mean that everything in such works is common general knowledge.” Individual patent specifications are not normally regarded as forming part of the common general knowledge.» Scientific papers only become part of the general knowledge ‘when it is generally known and accepted without question by the bulk of those who are engaged in the particular art.’ Usually, information that is common general knowledge will have been used in some capacity or other. The fact that a concept has not been used does not mean that it is necessarily excluded: only that it is unlikely to form part of the common general knowledge.*°

48 Kereber/Wire Link Bands T28/87 [1989] OJEPO 383; [1989] EPOR 377. Mobius was distinguished in

Boeing/General Technical Knowledge T195/84 [1986] OJEPO 121; [1986] EPOR 190. 49 Hoechst Celanese v. BP Chemicals [1997] FSR 547, 563; British Ore Concentration Syndicate v. Mineral Separation (1909) 26 RPC 124, 138.

°° Sometimes information may fail to ground an invalidity attack when viewed as part of the prior art but succeed in so doing once categorized as common general knowledge. See Boeing/General Technical Knowledge 1195/84 [1986] OJEPO 121; [1986] EPOR 190.

51 Beloit v. Valmet [1997] RPC 489, 494 (Aldous LJ). 52 Mars I/Glucomannan 1112/92 [1994] EPOR 249. 53 See General Tire and Rubber v. Firestone Tyre & Rubber [1972] RPC 457, 482.

>4 British Acoustic Films v. Nettlefordfold Productions (1936) 53 RPC 221, 250. °° Beloit v. Valmet [1997] RPC 489, 494 (Aldous LJ).

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STEP

447

4 WHAT IS THE ‘INVENTION? As the Court of Appeal pointed out in the Windsurfer decision, when considering whether an invention is non-obvious the court must identify the inventive concept embodied in the patent.°° As we saw in relation to patentable subject matter and novelty, the way an invention is interpreted may play an important role in determining whether it is patentable. This is also the case with inventive step. At the EPO, the task of identifying the invention is achieved via the problem and solution approach. More specifically, based on an image of the invention as a solution to a problem, to identify the ‘thing’ that must be non-obvious, it is necessary to identify the particular problem that the invention addresses. As with most aspects of the obviousness inquiry, this is understood from an objective point of view at the priority date of the invention.” The task of having to identify the problem that the invention solves is made easier by the fact that the rules to the EPC provide that ‘the description should disclose the invention as claimed in such terms that the technical problem (even if not expressly stated as such) and its solution can be understood’.** While in many cases it is possible to rely upon the problem that is disclosed in the patent application, in some cases the patent application cannot be used to provide an objective statement of the problem.” In situations where the problem is not properly set out in the application, the problem may be reformulated by the EPO. In these circumstances, the nature of the problem is determined from the differences between the closest prior art®' and the invention (which is seen in terms of its effects rather than its structure). This may refer to the need to achieve the same kind of result, an improved result (for example, a quicker, stronger, or cheaper result), or a different result than is achieved by the existing art.°° 56 Windsurfing International v. Tabur Marine [1985] RPC 59 (CA). The importance ofthe way an invention is interpreted is illustrated in Genentech’s Patent [1989] RPC 147 (CA). See also B. Reid, “Biogen in the EPO: The Advantage of Scientific Understanding’ [1995] 2 EIPR 98. 57 The problem that the applicant is required to specify should be a technical as opposed to a commercial one: Esswein/Automatic Programmer T579/88 [1991] EPOR 120.

70° EPC t. 27( Vc),

332).

59 The reason why the problem might need to be reformulated is in view of the search documents relied upon in opposition or appeal proceedings, if these represent a closer state that originally mentioned. Similarly the technical problem may need to be reformulated experiments which reveal that the claim is too broad. Polymer Powders/Allied Colloids T39/93

report, or the of the art than in the light of [1997] OJEPO

134, 144 ff.

60 Phillips Petroleum/Passivation of Catalyst T155/85 [1988] EPOR 164, 169; Sperry/Reformulation of the Problem T13/84 [1986] EPOR 289.

61 [BM/Enclosure for data-processing apparatus T9/82 [1997] EPOR 303. Bayer/Thermoplastic moulding composition T68/83 [1979-85] C EPOR 71; G. Knesch “Assesing Inventive Step in Examination and Opposition Proceedings at the EPO’ (1994) epi-Information 95 (‘the crucial question is whether the man skilled in the art would really have chosen that document as the starting point’).

62 Pegulan/Surface finish T495/91 [1995] EPOR 517. 63 Tt seems this was derived from practices in Germany, but differs in that the EPO problem and solution approach is ‘effects centred’: CIPA, para. 3.21. On the approach in Germany see J. Pagenberg, ‘Examination for Non-obviousness: A Critical Comment on German Patent Practice’ (1981) 12 IIC 1.

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As we explained earlier, English courts have largely remained resistant to the problem and solution approach. While there has been criticism of the problem and solution approach in the UK, there has been little discussion as to the alternative approach that ought to be adopted. It seems that British tribunals distil the ‘invention’ from the specification (presumably read purposively from the perspective of the relevant person skilled in the art). It is important to recall that in Biogen v. Medeva Lord Hoffmann said that a ‘proper statement of the inventive concept needs to include some express or implied reference to the problem which it required invention to overcome’.® Given the importance of this issue, it warrants more attention.

5 IS THE INVENTION ‘OBVIOUS’? Once the person skilled in the art and the invention have been identified, it is then

possible to consider whether the invention is non-obvious.® While the question of whether an invention is non-obvious is widely regarded as one of the most difficult questions in a difficult area of law, it is not that different from other questions the courts are required to consider, such as whether a contractual term is fair, or whether

evidence is relevant to an issue. In another sense, however, the task of determining

whether a particular invention is non-obvious is not only different but also more problematic. One reason for this is that in patent law the tribunals are frequently required to pass judgment on complex and novel technologies. While in deciding whether a person acted negligently a judge may be able to rely on their background experience and knowledge, there may be little to guide them when they are forced to consider, for example, the inventiveness of a genetically modified plant. These problems are exacerbated by the fact that questions about the obviousness of an invention may arise some time after the invention was made. While ascertaining whether an invention is obvious is a difficult task, it is made

easier by the fact that the question is asked from the perspective of the person skilled in the art. While a non-specialist may find it difficult to assess whether an invention is obvious, a person who has knowledge of the area, particularly of what is regarded as normal progress in the field, will find it much easier to judge whether something is inventive. The task of determining whether an inventive step is present is also made easier by the fact that the courts invariably draw upon the evidence of experts. While experts are not able to take the place of the court in making the final decision as to whether an invention is obvious, they play an important role in providing the court 64 Brugger v. Medic Aid [1996] RPC 635, 656. (The inventive concept must be characterized in the light of the claims and must apply to all embodiments in the claim.) 6° [1997] RPC 1, 45. Lord Hoffmann identified the ‘inventive concept’ differently at different stages of his analysis.

© Where the problem and solution approach is followed this question becomes whether the solution that an invention provides to the problem being addressed would have been obvious to the person skilled in the art.

INVENTIVE STEP with a sense of what would be normal

449

in the field (and thus what would be

unexpected and inventive).°’ However helpful these factors may be, it still leaves us with the question: what does it mean to say that an invention is obvious?®

5.1

THE

MEANING

OF ‘INVENTIVE

STEP ?

One of the things that courts and commentators regularly agree on is that the qualitative and factual nature of the inquiry means that it is not possible to reduce obviousness to a precise verbal formulae.” That is, it is not possible to define either ‘inventive

step’ or ‘non-obvious’ in a meaningful or helpful way. While it may not be possible to formulate a test which enables us to predict with accuracy whether an invention will be regarded as obvious, it is possible to offer general guidance as to some of the factors which have shaped obviousness inquiries in the past. An important factor that has influenced decisions as to whether an invention is obvious is the extent to which the researcher has exercised choice or control in the inventive process. In situations where there is no opportunity or need for an inventor

to enter into and shape the research process—that is where there is no ‘no real choice’ or ‘the skilled man is in an inevitable “one way street” situation’””—the invention is likely to be obvious. In these situations there is little or no scope for a researcher to act in a technically creative way. The converse of the need for choice is that there is a possibility that the research will fail. Where the research involves no risk or uncertainty, that is where the results are predictable or likely, the invention is more likely to be obvious and thus unpatentable. In a sense, the focus on the degree of choice or control exercised by the inventor builds upon the idea of invention as a process whereby the inventor (as creator) engages with Nature to produce something new. More specifically, it builds upon a model of the invention as a process in which the inventor is actively involved with and ultimately shapes the final product. It presumes that there is a degree of human intervention in the production of the invention. In situations where there is no real need or opportunity for a researcher to make decisions about the shape and nature of the research, there is no real opportunity for ‘human intervention’ and, as such, no

inventiveness. This is the case, for example, where an invention results from the application of a known technique to a known problem, or where it was obvious to try

the technique in question. It is also the case where the person skilled in the art is ‘directly led as a matter of course’ to the invention.”!

67 Hoechst Celanese v. BP Chemicals [1997] FSR 547, 563; British Westinghouse v. Braulik (1910) 27 RPC 209 (Fletcher Moulton LJ); Brugger v. Medic Aid [1996] RPC 635, 661.

68 While the Windsurfing decision and the ‘problem and solution approach’ provide guidance as to how the invention is to be interpreted, they provide no assistance in determining whether an invention is obvious.

69 John Manville’s Patent [1967] RPC 479, 493 (Diplock LJ). Singer suggests 13 subtests: R. Singer, The European Patent Convention (1995), 182-3.

70 Hallen v. Brabantia [1991] RPC 195 (CA). 71 Olin Mathieson v. Biorex [1970] RPC 157.

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The mere fact that a researcher has exercised a degree of choice and control over the research process is not in itself enough for the final product to be non-obvious. Put differently, while the exercise of (mental) labour and effort is a necessary condition for an invention to be non-obvious, it is not a sufficient condition. In order for an

invention to be non-obvious, it needs to be shown that the way the choice is exercised is technically creative: a notion which not only changes across technologies (both in terms of how it is expressed and also the amount of ingenuity involved), but also over time. A number of different factors have been taken into account when determining whether an invention is technically creative. At a general level, a distinction is drawn (similar to the distinction drawn in copyright law between sweat of the brow and creativity) between the exercise of routine skills (where the results are non-patentable) and inventive skills (the results of which are). This is based upon the idea that inven-

tions which are based on laboratory techniques, are routine, or which follow ‘plainly or logically from the prior art?” do not contribute anything to ‘the real advancement of the arts’? and, as such, are not worthy of protection. The courts have also taken care to ensure that only technical factors are taken into account when determining inventive step. To this end, it was held that the fact that a particular route was not tried for some time because it was believed that the outcome would not get regulatory approval did not make it a route that was not ‘obvious to try’.’* Equally, while the activities of a manager or accountant may play an important role in shaping the research process, their input is not regarded as ‘technical’ and, as such, is not taken into account when deciding whether an invention is non-obvious.”° While the level of inventiveness required must be more than the mere application of time, money, and effort,’° the courts have acknowledged that ‘in practice what is technically feasible is unlikely to be wholly isolated from what is commercially feasible.” This means that in some cases commercial and technical considerations may be so inextricably linked that commercial factors may be relevant when considering whether a contribution is technical.

5.2

SPECIFIC

APPLICATIONS

Given that decisions about the obviousness of an invention are closely linked to the facts of each case, it may be helpful to look at the way inventive step has been approached in a number of different circumstances.

72 EPO Guidelines C-IV, 9. The Guidelines were devised largely by reference to German patent practice: Buhling (1978) AIPLA Quarterly Journal 61, 62.

73 74 7° 76

Atlantic Works v. Brady, 107 US 192 (1883) (Justice Bradley). Richardson Vicks Patent [1995] RPC 568, 579-80. Genentech’s Patent [1989] RPC 147, 237 (Mustill LJ) (CA). Wiederhold/Two component polyurethanelaquer T259/85 [1988] EPOR

209; Medtronic/Defibrillator

1348/86 [1988] EPOR 159; American Cyanamid (Dann’s) Patent [1971] RPC 425, 451.

77 Ward Building v. Hodgson SRIS C/47/97 (23 May 1997) (Robert Walker J).

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451

5.2.1 Technique or avenue for research In some situations, the inventive step may lie in the technique or the avenue of research that is followed. In these circumstances an invention will be obvious if a person skilled in the art would (rather than could) have taken the route in question.”® The person skilled in the art is assumed to have tried all avenues that have a good prospect of producing valuable results.”” Factors which might in reality mean that one route is tried before another—such as low cost, easy availability of starting materials, or the likely time before the outcome of an experiment is known—are ignored since they are not pertinent to whether or not the route is technically obvious. As Laddie J

explained in Brugger v. Medic Aid, ‘if a particular route is an obvious one to take or to try, it is not rendered any less obvious from a technical point of view merely because there are a number, and perhaps a large number, of other obvious routes as well.’®° The position is the same if the route to an invention requires the person to take a succession of obvious steps.*! In order for a particular avenue of research to be obvious, there is no need for a

researcher to be one hundred per cent certain that the chosen route will lead to a particular result. Thus, ‘a route may still be an obvious one to try even if it is not possible to be sure that taking it will produce success, or sufficient success to make it commercially worthwhile.’*® All that needs to be shown for an invention to be obvious is that there was a reasonable expectation of success, or that there was an expectation

that the avenue of research ‘might well produce a useful desired result’.** In John Manville’s Patent Diplock LJ said that an invention would be obvious if the ‘person versed in the art would assess the likelihood of success as sufficient to warrant actual trial’.** The inventiveness of a particular avenue of research can arise in a number of different ways. In some fields an avenue of research will not be obvious to try because the person skilled in the art considers the whole field to be unpredictable.*° In other circumstances, the inventive step may arise from the fact that the research

overcomes ‘prejudices in the art’.®” That is, it breaks with current views about an area 78 Rider/Simethicone Tablet T2/83 [1984] OJEPO 265; [1979-85] C EPOR 715; Genentech/Expression in Yeast 1455/91

[1996] EPOR 85; [1995] OJEPO 684.

79 American Cyanamid v. Ethicon [1979] RPC 215, 266-67.

80 [1996] RPC 635, 661. 81 VDO Adolf Schindling/Illuminating Device 1324/94 [1997] EPOR 146. The number of alternative routes may be relevant: if there is only one route, then even an unexpected result might be treated as being obvious: Rider/Simethicone Tablet T2/83 [1984] OJEPO 265; [1979-85]

C EPOR715.

82 Brugger v. Medic Aid [1996] RPC 635, 660. 83 Olin v. Mathieson v. Biorex {1970] RPC 157, 187. 84 [1967] RPC 479, followed under the 1977 Act in Brugger v. Medic Aid [1996] RPC 635, 661. Chiron

Corporation v. Murex Diagnostics [1996] RPC 535, 557. 85 A distinction is drawn between an exercise of ingenuity and a voyage of discovery. See Beechams Group (Amoxcyillan) Application [1980] RPC 261 (Buckley LJ) (CA).

86 Genentech/Expression in Yeast T455/91 [1995] OJEPO 684. 87 J, Schmidt-Szalewski, ‘Non-obviousness as a requirement of patentability in French Law’ (1992) 23 IC 7251 99—6,

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of research. The decision to follow a particular line of research may be inventive where it had previously been thought that the area was either exhausted or fruitless. Similarly, the decision to follow a line of research may be inventive where all recent

developments have exploited a different avenue.** As the EPO Guidelines explain, as ‘a general rule, there is inventive step if the prior art leads the person skilled in the art away from the procedure proposed by the invention. This applies in particular where a skilled person would not even consider carrying out experiments to determine whether these were alternatives to the known way of overcoming a real or imagined technical obstacle’.*° Similarly, if a document in the prior art suggests that the route in question is unlikely to work, but the patentee successfully took the route, it is likely that the invention will be patentable. A particular line of research will also be inventive where it would not have been pursued by the person skilled in the art. It is also important to show that the research was selected for technical reasons: factors such as the cost of the research are not taken into account. In this context it is interesting to note that in Biogen v. Medeva™ the evidence suggested that whereas a person less skilled in the art might have regarded the route to be obvious, a person skilled in the art would consider it so beset by

obstacles as not to be worth trying.”! 5.2.2 Overcoming of obstacles In some cases, the ingenuity and skill needed for an invention to be non-obvious lies

not so much in the identification of a research problem or in reaching the final goal. Instead, the invention arises in the way the obstacles and problems that arise en route to reaching the final goal are overcome.” Where unforeseeable difficulties exist, the outcome will be non-obvious if the route chosen to overcome those difficulties is inventive.”> However, where the obstacles are overcome through pernacity, sound technique, or trial and error, the outcome remains obvious.”

5.2.3 Selection of the problem

In some cases, the non-obvious nature of an invention may lie in the problem that has been selected, or in the selection of the goals to be pursued.®° In situations where the 88 If a particular route has not been considered for commercial reason, such a prejudice is irrelevant. See Brugger v. Medic Aid [1996] RPC 635, 661.

8° EPO Guidelines C-IV, Annexe 4; Mobay/Nethylenebis T2/81 [1982] OJEPO 394; [1979-85] B EPOR 265

(documents revealed a prejudice or general trend pointing away from the invention). 90 [1997] RPC 1. See also Hoechst Celanese v. BP Chemicals [1997] FSR 547. : 9! Raleigh Cycle v. Miller (1946) 63 RPC 113; Phillip Petroleum/Passivation of Catalyst T155/85 [1989]

EPOR 164.

2 °3 °4 °°

John Manville’s Patent [1967] RPC 479. Unilever/Chymosin T386/94 [1997] EPOR 184, 194. Genentech’s Patent [1989] RPC 147, 276 (Mustill LJ) (CA). Beecham Group’s (Amoxycillin) Application [1980] RPC 261. Buckley LJ said ‘It will suffice if it is shown

that it would appear to anyone skilled in the art but lacking in inventive capacity that to try the step or process

would be worthwhile . .. Worthwhile to what end? It must, in my opinion, be shown to be worth trying in order to solve some recognized problem or meet some recognized need.’ Rider/Simethicone Tablet T2/83 [1984] OJEPO 265; [1979-85] C EPOR 715.

INVENTIVE STEP

453

inventiveness lies in the way the problem to be solved is chosen, for the resulting invention to be non-obvious the perception of the problem must be beyond the capability of the person skilled in the art.°° In Boeing/General Technical Knowledge” the patent application related to a mechanism for extending a high-lift device (similar to a crane): the problem to be solved was how this could be done without using long cables. The solution developed by the applicant involved using short cables and pulleys. The Examining Division rejected the application on the basis of two pieces of prior art: one from the aircraft engineering field, the other a patent application directed at no specific field. The Technical Board of Appeal stated that inventiveness could not be found in the perception of the problem since the overcoming of recognized drawbacks and the achievement of consequent improvements must be considered as the normal task of a skilled person. 5.2.4 Unexpected result Another situation where the pursuit of an obvious route may result in a non-obvious invention is where the outcome is, in some important way, unexpected. If a route is

obvious to try in response to a known problem, but the particular route chosen

produces unexpected advantages, the result might be inventive. This is because the person skilled in the art would not associate the avenue of research with the final result.°® Where the route taken merely produces a result of the sort as was expected, but more cheaply or efficiently, it is unlikely to be inventive.

5.3

SECONDARY

EVIDENCE

While the question of whether an invention is obvious is ultimately decided by the tribunals, at times they have been willing to accept so-called secondary evidence that supports a claim that an invention is non-obvious.” In effect, secondary evidence is evidence which acts as virtual proof that the invention involved an inventive step. That is, it provides a basis from which it can be presumed that the invention is

non-obvious. While supporters of secondary evidence argue that it makes decision-making simpler and adds a degree of realism to the inquiry,’ there is a growing consensus of

96 Rider/Simethicone Tablet T2/83 [1984] OJEPO 265; [1979-85] C EPOR 715. With problem inventions dangers of hindsight are particularly pronounced: Bonzel v. Intervention (No. 3) [1991] RPC 553.

97 T195/84 [1986] OJEPO 121; [1986] EPOR 190. 98 Rider/Simethicone Tablet T2/83 [1984] OJEPO 265; [1979-85] C EPOR 715. The discovery of a yet unrecognised problem may give rise to patentable subject matter and that an unexpected bonus may be interpreted as a solution of a yet unknown problem. 99 See J. Bochnovic, The Inventive Step (1982), 70; R. Singer, The European Patent Convention (1995), 196— 205.

100 See J. Pagenberg, ‘The Evaluation of the “Inventive Step” in the European Patent System: more objective standards needed’ (1978) 9 IIC 12, 13; J. Pagenberg, ‘Different Level of Inventive Step for German and European Patents? The Present Practice of Nullity Proceedings in Germany’ (1991) 22 IIC 763, 764; E. Kitch, ‘The Nature and Function of the Patent System’ (1977) 20 Journal of Law and Economics 265, 283.

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PATENTS

opinion against placing too much reliance on secondary evidence.!®! As Laddie J warned, secondary evidence ‘must not be permitted, by reason of its volume and complexity, to obscure the fact that it is no more than an aid in assessing the primary evidence.’'°? The growing suspicion about secondary evidence may reflect the fact that with the increased specialization of the patent courts the judges are happier to make technical judgments.'”* It also reflects a desire to keep the cost of patent litigation down: with secondary evidence seen as adding unnecessarily to the time and cost of litigation. With these general reservations in mind, we will now outline some of the

forms of secondary evidence that have been used as proof of the non-obviousness of inventions. 5.3.1 Closeness to prior art

One factor that has been used to indicate that an invention is obvious is its proximity to the prior art. If, for example, an invention combines two documents from neighbouring fields, it is likely to be obvious. In a famous case, the Court of Appeal held

that a patent for a sausage machine that merely combined a better way of cutting sausages with an existing filler was obvious.!“ It would be possible, however, for elements from different areas to be combined in a non-obvious way. Similarly, where a patent application is for a ‘new use’ which is analogous to the existing known uses of the thing, it is unlikely to be inventive. The use of a substance to reduce friction when it was already known that the substance operated as a rust inhibitor was held not to be analogous. !° 5.3.2 Comparative efforts

The efforts of researchers working in the same field as the inventor have also been used as evidence to support non-obviousness.'° If a number of people working in the same field were pursuing the same goal, the fact that the inventor was the only person to successfully solve the problem might imply inventiveness. This is on the basis that the corresponding failure of others indicates that the solution was not obvious. On the other hand, if other researchers made the same invention shortly after the applicant, that might imply that the invention was obvious.!” °1 Glaverbel SA v. British Coal [1995] RPC, p. 255; Hoechst Celanese v. BP Chemicals [1997] FSR 547, 566; R. Merges, ‘Commercial Innovation and Patent Standards: Economic Perspectives on Innovation’ (1988) 76

California Law Review 805. 02 Hoechst Celanese v. BP Chemicals [1997] FSR 547, 563 (echoing Molnlycke [1994] RPC 49). 103 Cf. A. Cambrosio, P. Keating, and M. MacKenzie, ‘Scientific Practice in the Courtroom’ (1990) 37

Social Problems 275.

4 Williams v. Nye (1890) 7 RPC 62; J. Bochnovic, The Inventive Step (1982), 76-8; Man/Intermediate Layer for Reflector T06/80 [1979-85] B EPOR 266; Cole [1979] EIPR 316. 5 Mobil/Friction

reducing additive T59/87

[1990] EPOR

514; Mars II/Glucomannan

T112/92

[1994]

EPOR 249.

6 Lucas v. Gaedor [1978] RPC 297; Fichera v. Flogates [1984] RPC 227; Chiron v. Organon (No. 3) [1994] FSR 202; Molnlycke (No. 5) [1994] RPC 49; General Tire v. Firestone Tyre [1976] RPC 197, 203 (HL).

107 Windsurfing International v. Tabur Marine [1985] RPC 59, 73-4; Beloit Technologies [1995] RPC 705,

753; Genentech’s Patent [1989] RPC 147, 221 (Purchas L]).

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455

The courts have emphasized that evidence of comparative effort should be treated with caution. In order to be of any value, the comparative inventors must have been

working from the same prior art as that cited in the non-obviousness inquiry. They must have been pursuing the same goal and working for some time. If different starting points were used, no inference can be drawn as to the obviousness of the invention from their relative activities. As Laddie J said, the fact that ‘a particular researcher working from an unpleaded piece of prior art, arrived at the invention in suit is of no assistance to the court.’! 5.3.3 Long-felt want A related form of evidence that is used to support claims for inventive step is evidence that the invention satisfies a ‘long-felt want’. The logic of this is straightforward: if people had been trying to solve a particular problem for many years and the solution had been obvious, someone would already have invented it.'°? Given the existence of a long-felt want, the fact that no one had previously developed the invention means that the invention must have been non-obvious. While long-felt want may indicate inventiveness, there might be other reasons why a development was not made earlier.'!° As such, it is necessary to be careful when inferring non-obviousness from a long-felt want. The need must have been known about for some time; there must have been an interest in developing the field; and the materials and information that form the basis of the solution must have been known and available.'!! 5.3.4 Commercial success

In some situations, the fate of an invention after grant may provide evidence that suggests that the invention is non-obvious. For example, if an invention proves to be commercially successful, or is widely copied by or licensed to competitors, it might be inferred that the invention involved a leap beyond what previously existed. As Tomlin J said in Parkes v. Cocker, When it has been found that the problem had awaited solution for many years and that the device is in fact novel and superior to what had gone before and has been widely used and indeed in preference to alternative devices, it is practically impossible to say that there is not

present that scintilla of invention necessary to support the patent.'!” Evidence about the fate of an invention after grant that is introduced to prove inventive step needs to be treated with caution.''’ This is because there may be a 108 Hoechst Celanese v. BP Chemicals [1997] FSR 547, 565. 109 See Brugger v. Medic Aid [1996] RPC 635, 654; Frisco-Findus/Frozen fish T90/89 [1991] EPOR 42; Air Products/Removal of Hydrogen Sulphide T 271/84 [1987] OJEPO 405; [1987] EPOR 23.

110 Brugger v. Medic Aid [1996] RPC 635, 654-5. 111 BASF/Metal Refining [1979-85] 124/81 B EPOR 354. VDO AdolfSchindling/Illuminating Device T324/ 94 [1997] EPOR

146.

112 (1929) 46 RPC 241, 248. 113 Longbottom v. Shaw (1891) 8 RPC 333, 336 (Lord Herschell); [CI/Fusecord T270/84 [1987] EPOR 357; EPO Guidelines C-IV, 9.9.

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number of reasons other than the non-obvious nature of an invention which explain the reaction of the market or competitors to the invention. For example, a competitor may have taken out a licence from a patentee to avoid threats of litigation, rather than because they regarded the patentee’s invention as based on a significant technical advance. Similarly, commercial success might be attributable to factors such as advertising, distribution, marketing, or business acumen rather than to technical advance. For evidence of the fate of an invention after grant to be of value, it must suggest a link between the success of the product and the product’s patented features.!!4 As a result, commercial success will rarely be of significance unless it can be shown that there is evidence of a prior need for a solution to the particular problem, that the relevant prior art had been published for some time, and, most importantly, that the commercial success was attributable to the technical features of the invention.!!5 '\4R. Merges, ‘Commercial Innovation and Patent Standards: Economic Perspectives on Innovation’ (1988) 76 California Law Review 805; E. Walker, “Objective Evidence of Non-Obviousness: The Elusive Nexus Requirement’ (1987) 69 JPTOS 175, 236; Comment, ‘Non-obviousness in Patent Law: A Question of Law or Fact’ (1977) 18 William & Mary Law Review 612.

115 EPO Guidelines C-IV, 9.9; Raychem’s Patent [1998] RPC 31.

20 INTERNAL REQUIREMENTS FOR PATENTABILITY 1 INTRODUCTION In this chapter, we turn our attention away from the external criteria for patentability (subject matter, novelty, and inventive step) to focus on the internal criteria for patentability (so named because they focus on the way the patent is drafted). There are three general requirements that concern us here. These are the requirements that: (i)

the patent application must disclose the invention in a manner that is clear and complete enough for it to be performed by the person skilled in the art (section 14(3)/Article 83);

(ii) the claims must be supported by the description (section 14(5)(c)/Article 84); and (iii) the patent must not be amended in such a way that it contains additional

subject matter, or extends the protection conferred by the patent (section 76(2)—(3)/Articles 123(2)—(3)).

2 CLEAR

AND

COMPLETE

DISCLOSURE

In order to ensure that the information which is revealed by a patent is of some practical value, the specification must disclose the invention in a manner which is clear enough and complete enough for it to be performed by or carried out by a person

skilled in the art: section

14(3)/Article 83. Where

the claims ‘include a

number of discrete methods or products, the patentee must enable the invention to be performed in respect of each of them.”! If this cannot be done, the patent will be invalid. This is often known as the need for sufficiency of disclosure. It should be noted that neither British nor European patent law requires that the applicant needs to disclose the best method they know of performing the invention, as was once the case in the UK and is still the case in some countries. Instead, all that is required is that the invention be disclosed in such a way so that it can be performed by the person ' Biogen v. Medeva [1997] RPC 1, 48 (Lord Hoffmann) (HL).

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PATENTS

skilled in the art. The question of whether the invention has been adequately disclosed is assessed as of the date of filing.* A patent can only be challenged on the basis that the invention is not sufficiently disclosed if there are ‘serious doubts which are substantiated by verifiable facts’. A number of different factors need to be taken into account when sone dquine whether an invention has been disclosed in a manner that is clear and complete enough for it to be performed by a person skilled in the art. These include the attributes and skills of the person skilled in the art; the extent to which an invention needs to be disclosed for it to be performed; the extent of performance; and the degree of clarity needed for an invention to be performed. We will deal with each of these in turn.

2.1

PERSON

SKILLED

IN THE

ART

As the 1977 Patents Act and the EPC make clear, the specification must be disclosed in

such a way that it can be performed by the person skilled in the art. For the purposes of determining sufficiency of disclosure, the person skilled in the art is non-inventive, is able to make use of common general knowledge, and is able to perform noninventive experiments. The notional interpreter ‘is not to be expected to exercise any invention nor any prolonged research or inquiry or experiment. He must, however, be prepared to display a reasonable degree of skill and common knowledge of the art in making trials and to correct obvious errors in the specification if a means of correcting them can readily be found.’* While the skilled reader is presumed to have access to everything in the state of the art, this does not mean that they also have knowledge of everything in the state of the art.’ The skilled person who is used to determine sufficiency of disclosure is similar to the notional interpreter used for the purposes of assessing inventive step. One important difference is that whereas for the purposes of evaluating inventive step the skilled person only has knowledge of the prior art, for the purpose of evaluating sufficiency of disclosure the skilled person has knowledge of the prior art and of the invention as disclosed.°

2.2

EXTENT

OF DISCLOSURE

One issue that has arisen in this context concerns the extent to which the invention must be disclosed for it to be performed. In some cases, particularly where a claim is drafted in terms of the novel technical features of the invention, every element of the 2 Biogen v. Medeva [1997] RPC 1, Ibid. 53-4 (Lord Hoffmann) (HL).

> The mere fact that a claim is broad is not in itself a ground for considering the application as not complying with the requirement for sufficient disclosure in EPC Art. 83. Harvard/Onco-mouse T19/90 [1990] OJEPO 476. 4 Mentor v. Hollister [1993] RPC 7, 13 (Lloyd LJ); T60/89 [1992] OJEPO 268; Valensi v. British Radio Corporation [1973] RPC 337; Edison & Swan Electric Light v. Holland (1889) 6 RPC 243. > EPO Guidelines C-IV, 9.6.

& Mycogen/Modifying plant cells T694/92 [1998] EPOR 114, 120.

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459

invention must be disclosed. In other situations, however, the courts have recognized

that if patentees were required to outline every particular manifestation of their invention, it would make those patents unwieldy, cumbersome, and, in some cases, unworkable. This is particularly the case where the patent is for the application of a theoretical principle or a formula. In these circumstances, the courts have accepted that it is not necessary for an applicant to spell out each and every product or process covered by the patent for a patent to be sufficiently disclosed.’ That is, they have been willing to accept that the disclosure of a limited number of examples may be representative of a range of embodiments. For this to occur, the disclosure must provide a

common principle that is shared by all members in the class. As Lord Hoffmann explained, if the patentee has “disclosed a beneficial property which is common to the class, he will be entitled to a patent for all products of that class . . .even though he has not made more than one or two of them.’ This was the case in Genentech where the applicants invented a general principle that enabled plasmids to control the expression of polypeptides in bacteria. As there was no reason to believe that the invention would not work equally well with any plasmid, bacterium or polypeptide, the patent for the more general claims was granted.’ In contrast, if the patentee ‘has hit upon a new product which has the beneficial effect but cannot demonstrate that there is a common principle by which that effect will be shared by other products of the same class, he will be entitled to a patent for that product but not for that class: even though some may turn out to have the same beneficial effect.’'°

2.3

EXTENT

OF PERFORMANCE

Another issue that has arisen in this context concerns the extent to which an invention needs to be performed for it to be valid. This question is important where an application attempts to claim a broad range of products on the basis of a limited number of (representative) examples. This is the case, for example, where an invention consists of

the practical application of a theoretical principle, a formula, or a class of substances (often chemicals). In these circumstances, the patent potentially covers a large number of products and processes beyond the specific examples listed in the patent. It was initially suggested that to be sufficiently disclosed it was not necessary for an applicant to be able to prove that every possible manifestation of the invention could be performed.'! This approach was rejected by the House of Lords in Biogen v. Medeva where Lord Hoffmann said that the specification must enable the invention to be

7 Biogen v. Medeva |1997| RPC 1, 48 (Lord Hoffmann) (HL).

8 Tbid., 49 (Lord Hoffmann) (HL). 9 Genentech/Polypeptide Expression T292/85 [1989] EPOR 1. 10 Biogen v. Medeva [1997] RPC 1, 49 (Lord Floffmann) (HL).

11 Molnlycke AB v. Procter & Gamble [1992] FSR 549, 600 (Morritt J); Chiron v. Organon (No. 12) [1994] FSR 153, 202 (CA).

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PATENTS

performed to the full extent of the monopoly claimed.!” A similar approach has been adopted at the EPO.’? While Lord Hoffmann said that the invention must be performed in all cases, some allowance is made for situations where a few minor or

marginal embodiments cannot be made to work.'* As such, rather than saying that the invention must be performed in all cases, it is probably more accurate to say that all of the essential features of the claimed invention must be capable of being performed.'®

2.4

DEGREE

OF CLARITY

AND

COMPLETENESS

The degree of clarity needed for an invention to be performed varies depending on the nature of the invention and the circumstances of the case.!° For example, in some situations the mere disclosure of a formula may be sufficient for the invention to be performed or worked." In other cases, it may be necessary for both the formula and the starting materials (or means) to be disclosed for the person skilled in the art to

put the invention into practice. In these situations, there must be an ‘enabling disclosure’:'* a concept that we encountered earlier in our discussions on novelty.!° In recognition of the fact that many (if not most) patents need some degree of fine tuning before they can be put into practice, patent law has accepted that in implementing the invention it is permissible for the skilled person to engage in activities above and beyond those which are set out in the patent. This means that patent specifications need not set out every detail necessary for performance, but can leave the skilled man to use his skill to perform the invention.” In putting an invention into practice the skilled person is able to make use of common general knowledge;?! engage in routine laboratory tests; correct obvious errors in the specification;” and

does not have to be told what is self-evident.” The ability of the person skilled in the art to fine tune the invention is subject to the

12 Biogen v. Medeva [1997] RPC 1, 48. See also Evans Medical Patent [1998] RPC 517, 562; Chiron v. Organon (No. 12) [1994] FSR 153, 184 (CA). Similarly, there has ‘never been a requirement that all embodiments within the scope of the monopoly should have been tested. Sufficiency required the monopoly to match the contribution’: American Home Products v. Novartis [2000] RPC 547, 567.

13. Exxon/Fuel Oils T409/91 [1994] EPOR 149.

14 Filtration/Flui filter d cleaning system T126/89 [1990] EPOR 292; Sumitomo/Vinyl Chloride Resins T14/83 [1984] OJEPO 105; T 79/88 [1992] EPOR 387.

1S Mycogen/Modifying plant cells T694/92 [1998] EPOR 114, 119; Exxon/Fuel Oils T409/91 [1994] EPOR 149; Sumitomo/Vinyl Chloride Resins T14/83 EPOR

[1984] OJEPO 105; Unilever/Stable bleaches T226/85

[1989]

18; [1988] OJEPO 336.

'© Mentor v. Hollister [1993] RPC 7, 12; Mycogen/Modifying plant cells T694/92 [1998] EPOR 114, 120. 17 Merck/Starting Compounds T51/87 [1991] OJEPO 177. 18 Biogen v. Medeva [1997] RPC 1, 47 (Lord Hoffmann) (HL); Asahi Kasei Kogyo [1991] RPC 485, Lord Oliver, 536; Lord Jauncey of Tullichettle, 547 (HL).

19 See above at pp. 422-3. 20 Valensi v. British Radio Corp. [1973] RPC 337, 375; Mentor Corp. v. Hollister [1993] RPC7, 12.

*1_ Genentech/t-PA T923/92 [1996] EPOR 275, 302.

22 Air Products/Redox Catalyst T171/84 [1986] OJEPO 95; [1986] EPOR 210. 23 Biogen v. Medeva [1995] RPC 1, 25, 98 (HL); Chiron v. Organon (No. 12) [1996] FSR 153, 185.

INTERNAL

REQUIREMENTS

FOR

PATENTABILITY

461

important rider that the patent must contain sufficient information for the skilled person to perform everything within a claim without the need to do anything inventive.’ If in putting the invention into practice the person skilled in the art needs to engage in any kind of inventive activity, the invention will not have been sufficiently disclosed and, as such, will be invalid. As the Technical Board of Appeal said, the ‘claims need to provide instructions which are sufficiently clear for the skilled person to reduce them to practice without undue burden, i.e. with no more than a reasonable amount of experimentation and without applying inventive skill.’° This can be seen if we take a hypothetical example of a patent which disclosed the ingredients and the method of making mayonnaise. If the specification failed to tell a cook that the oil must be added to the egg yolk drop by drop, which is an essential part of the process of making mayonnaise, the patent would be invalid. The reason for this is that this ‘is something which the skilled cook might only discover for herself after a programme of (inventive) research’.*°

3 CLAIMS

MUST

BE SUPPORTED

BY THE

DESCRIPTION The next internal requirement for patentability is set out in section 14(5)(c)/Article

84. These provide that the claims must be supported by the description. While the provisions dealing with sufficiency of disclosure ensure that the patent provides practical workable information, the requirement that the claims be supported by the description ensures that there is a correlation between what is invented and what has been claimed. More specifically, the requirement that the claims must be supported by the description is based on the ‘general legal principle that the extent of the patent monopoly, as defined by the claims, should correspond to the technical contribution to the art in order for it to be supported or justified.’ By ensuring that the claims (which shape the scope of the legal monopoly) are supported by the description (which provides the necessary technical information), patent law enables potential users to ascertain without undue burden or the need for inventive activity whether their planned commercial use is likely to infringe the patentee’s monopoly.”® 24 Mentor Corporation v. Hollister [1993] RPC 7, 12: Valensi v. British Radio Corporation [1973] RPC 337, Sle

23. Mycogen/Modifying plant cells T694/92 [1998] EPOR 114, 119. The person skilled in the art should not be called upon to make a prolonged study of matters that present some initial difficulty. Valensi v. British Radio Corporation {1973] RPC 337. Badische Anilin v. Société Chimique (1898) 15 RPC 359.

26 Mentor Corporation v. Hollister [1993] RPC 7, 12. ‘Yet a skilled cook, making mayonnaise for the first time, might well fail. She might only succeed with practice. This would not invalidate the patent.’ Asahi Kasei

Kogyo [1991] RPC'485 (HL). 27 Exxon/Fuel Oils T409/91 [1994] EPOR 149, 154; Mycogen/Modifying plant cells T694/92 [1998] EPOR 114, 118.

28 Oxy/Gel-forming composition T246/91 [1995] EPOR 526, 531.

462

PATENTS

For some time, it was thought that while failure to comply with section 14(5)(c) could be objected to prior to grant, it was not a ground on which a patent could be challenged after grant.”? As a result of the House of Lords’ decision in Biogen v. Medeva it is now clear, however, that a patent may be revoked after grant to the extent that the claims are not commensurate with the description disclosed in the specification. That is, it is now clear that failure to comply with section 14(5)(c) is a ground on

which a patent can be revoked.*” While a finding that claims are not supported by the description may lead to revocation on other grounds, it seems that failure to comply with Article 84 is not a ground for revocation post-grant at the EPO: although it is a factor taken into account when a patent is being granted.*! The approach that is used to decide whether the claims are supported by the description is similar to the approach that is used to decide whether the specification has been sufficiently disclosed.** This is because in both cases the applicant must show that they have made an ‘enabling disclosure’. As Lord Hoffmann said in Biogen v. Medeva a description would not support claims for the purpose of section 14(5)(c) unless the specification contained sufficient material to constitute an enabling disclosure under section 14(3).*° As well as providing Lord Hoffmann with a basis on which to argue that lack of support is a ground on which a patent can be revoked, the close relationship between the two requirements also means that similar principles are used to determine whether claims are supported by the description as are used to determine whether the invention has been disclosed in a way that is capable of being performed. As is the case with the requirement of sufficiency of disclosure, a description that outlines one way of performing the claimed invention may be sufficient to support broader claims. This would be the case, for example, ‘where the disclosure of a new technique constitutes the essence of the invention and the description of one way of carrying it out enables the skilled person to obtain the same effect of the invention in a broad area by use of suitable variants of the component features.’** As with sufficiency of disclosure, a single embodiment can only ever justify a broader claim if the 29 PA s. 72(1) states exhaustively the grounds upon which a patent may be revoked. These grounds do not include non-compliance with PA s. 14(5). See Genentech’s Patent [1989] RPC 147, 248 (CA); Chiron v. Organon (No. 3) [1994] FSR 202, 242 (Aldous J); Chiron v. Organon (No. 12) [1996] FSR 153, 178-9 (CA).

30 The ‘substantive effect of section 14(5)(c), namely that the description should, together with the rest of the specification, constitute an enabling disclosure, is given effect by section 72(1)(c). There is accordingly no gap or illogicality in the scheme of the Act.’ Biogen v. Medeva [1997] RPC 1, 47 (Lord Hoffmann) (HL). 31 ‘Although Art. 84 is not open to objection under the terms of Art. 100 EPC, it may nevertheless constitute a proper ground for revoking a patent if objections to either clarity or support arise out of amendments to the patent as granted.’ Mycogen/Modifying plant cells T694/92 [1998] EPOR 114, 119. 32 The phrase, ‘supported by matter disclosed’ is also used in PA s. 5(2) (to establish whether priority from an earlier application is acceptable). 33 Biogen v. Medeva [1997] RPC 1, 47 (Lord Hoffmann) (HL); Asahi Kasei Kogyo [1991] RPC 485, 535-6

(Lord Oliver) (HL). A similar approach was adopted by the Technical Board of Appeal in Mycogen/Modifying

plant cells T694/92 [1998] EPOR 114, 119.

34 Mycogen/Modifying plant cells T694/92 [1998] EPOR 114, 120.

INTERNAL

REQUIREMENTS

FOR

PATENTABILITY

463

class as a whole shares a common principle.*° In other cases, more technical details and more than one example may be necessary to support claims of a broad scope.’°

3.1 MEANING OF ‘SUPPORT’? In determining whether the claims are supported by the description, the skilled person should be able to perform the invention over the whole area claimed without undue burden and without the need for any inventive skill.*” While the tests for sufficiency and support are largely the same, one important difference is that the vital question in determining whether the claims are supported by the description is not whether the claimed invention can be performed. Rather, it is ‘whether the claims cover other ways in which they might be delivered: ways that owe nothing to the teaching of the patent or any principle which it disclosed.** There are a number of ways in which the breadth of a claim may extend beyond the technical contribution provided by the invention.*’ For example, the patent may claim results that cannot be performed from the information in the claims. This would be the case where the patent claims the making of a wide class of products, when it only enabled one of those products to be made and fails to disclose a principle that enables the other products to be made. In other cases, the patent may claim every way of achieving a particular result when it only enables one way of making the product and it is possible to envisage other ways of achieving that result which do not make use of the invention.”

4 IMPROPER

AMENDMENTS

The third internal requirement for patentability concerns the extent to which patents can be amended. As we saw earlier, a number of restrictions are placed on the way patents can be amended. In this section we wish to concentrate on those amendments

which throw the validity of the patent into doubt. There are two important limits on the way patents may be amended. The first is that an application must not be amended in such a way that it contains subject matter that extends beyond the content of the application as filed. The second restriction is that amendments after grant must not extend the protection conferred by the patent. 35 Molnlycke AB v. Procter & Gamble [1992] FSR 549, 600 (Morritt J) based on a reading of Genentech/

Polypeptide Expression [1989] EPOR | and applied in Chiron v. Organon (No. 3) [1994] FSR 202, 241-2. 36 This is the case where the achievement of a given technical effect by known techniques in different areas constitutes the essence ofthe invention and there are serious doubts as to whether the said effects can readily

be obtained for the whole range ofapplications claimed; Mycogen/Modifying plant cells 7694/92 [1998] EPOR 114, 120. Xerox/Amendments T133/85 [1988] OJEPO 441, 448.

37 38 39 40

Mycogen/Modifying plant cells 1694/92 [1998] EPOR 114, 120. Biogen v. Medeva [1997] RPC 1, 50 (Lord Hoffmann) (HL). Tbid., 51 (Lord Hoffmann) (HL). Ibid.

464

PATENTS

The restrictions placed on the ability of patents to be amended have been criticized on the basis that the rules have been applied too rigorously.! It has been said that this denies legitimate inventors the protection they deserve, and encourages loose filing.” Another problem with the law in this area is that there has been very little discussion about the principles on which the restriction of amendment is based. As Staughton LJ observed: [The] problem is not that the technology in this case is obscure or recondite, but that the law as to added matter is . . . A clear and precise test is not to be found in the Patents Act. Those who are engaged in the important business of inventing and manufacturers too, are to my mind entitled to more precise guidance as to how they should conduct their affairs. But they must seek it from Parliament, or from an international convention.*?

4.1

RESTRICTIONS

ON

AMENDMENT

WHICH

ADDS

MATTER

The first limit is that an application must not be amended in such a way that it contains subject matter that extends beyond the content of the application as filed.“ Failure to comply with these requirements opens the patent up to the possibility of revocation.* Consequently, applicants are confined by the scope of the description of the invention that is set out in the application. This ensures that patentees are not permitted to extend the patent so as to claim an invention developed after the priority date.*° It also ensures, as the Technical Board of Appeal said, that applicants are not able to improve their position by adding subject matter not disclosed in the application as filed, giving them ‘an unwarranted advantage and possibly being detrimental to the legal security of third parties relying on the contents of the application as filed.’4” While it is permissible for a patentee to claim the same invention in a different way, patentees are not able to amend their application so as to protect an inventive concept that was not disclosed in the original application.*® As Aldous LJ said, this means that if a feature was omitted from a claim which the specification had made clear was essential, or if a feature was added that had not been disclosed in the application as 41 Protoned BV ’s Application [1983] FSR 110. 42 R. Krasser, ‘Possibilities of Amendment of Patent Claims during the Examination Procedure’ (1992) 23 IC 467, 471. 43 AC Edwards v. Acme Signs [1992] RPC 131, 147 (CA).

44 PA s. 76(2); Art. 123(2); EPO Guidelines C-VI; CPC Art. 57(1). Despite obvious similarities, PA s. 76 is not listed in PA s. 130 (7) as being framed as to have as nearly as practicable the same effect as the corresponding provision of the Convention. Nevertheless, the UK courts have referred to EPO decision. See B & R Relay’s Application [1985] RPC 1; A. C. Edwards v. Acme Signs and Displays [1990] RPC 621; [1992] RPC 131, 144 (Fox LJ) (CA). 45 PA s. 72(1)(d) renders it a ground for revocation that the matter disclosed in the specification of the

patent extends beyond that disclosed in the application as filed. 46 A. C. Edwards v. Acme Signs [1992] RPC 131, 147 (Staughton LJ). 47 British Biotech/Heterocyclic compounds T684/96 [2000] EPOR 190, 197. 48 Southco v. Dzus Fastener Europe [1990] RPC 587, 618. Consequently amendment of a claim from ‘handle’ to a ‘rotatable actuating means’ would be read as not extending the disclosure.

INTERNAL

REQUIREMENTS

FOR

PATENTABILITY

465

filed, the amendment would add matter.” The basic issue is whether the amended patent contains any additional (inventive) material that was not disclosed in the original application.” Basically this requires the tribunal to compare the application as filed (the description, any claims, or drawings! but not the abstract or

priority documents) with the amended application to determine whether the amended application contains any additional matter.’ As has been noted at the European Patent Office, the issues that arise here are conceptually similar to those that arise in relation to novelty requirement: in both cases the issue is whether something ‘new has been added. In the case of novelty, the invention

must be new; in the case of amendment, the amended application must not contain anything new.** Under this approach the test is whether a skilled person could derive any information in the amended patent that was not already in the application as filed.*° Unlike the position after grant, there is no reason per se to object to the broadening of the claims prior to grant.°° This is because it is immaterial whether the amendment widens or narrows the monopoly claimed. The only restriction is the general one that prevents patentees from altering their claims in such a way that they claim a different invention from that which is disclosed in the application.*’ If the application as filed described the insertion of cancer genes in mice and flagged the potential application of the invention to other mammals, there is no reason why the claim should not be expanded to cover cats, dogs, or mammals in general.** The broadening of claims is legitimate as long as there is no new matter introduced. However, if the description as

49 Texas Iron Works Patent [2000] RPC 207, 246-7 (CA). 50 “Clearly the function of this provision is to prevent the addition of subject matter to a patent application after the date of filing. In contrast the reformulation of the same subject matter ... would be permissible.’ Xerox/Amendments T133/85 [1988] OJEPO 441, 449. Milliken Denmark AS v. Walk Off Mats [1996] FSR 292.

51 Amp/Connector T66/85 [1989] EPOR 283; [1989] OJEPO 167; cf. Sulzer/Hot gas cooler [1990] EPOR 14; [1989] OJEPO 441.

52 BULL/Identification System T246/86 [1989] OJEPO 199. The documents are looked at through the eyes of the notional skilled addressee: Siegfried Demel v. Jefferson [1999] FSR 204, 214. 53 Bonzel v. Intervention (No. 3) [1991] RPC 553, 574; Molnlycke AB v. Procter & Gamble (No. 5) [1994] RPC 49 (CA). Aldous J held that ‘matter’ included both structural features and inventive concepts: Southco v. Dzus Fastener Europe [1990] RPC 587, 616. However, this has proved to be controversial. see A. C. Edwards v.

Acme Signs [1992] RPC 131, 144 (Fox LJ). For a more sympathetic reading see Sara Lee Household & Body Care v. Johnson Wax [2001] FSR 261 (Judge D. Young QC), following Metal-Fren/Friction pad assembly T582/ 91 [1995] EPOR 574. 54 EPO Guidelines, C-VI, 5.4, 7.2, 9. Shell/Lead Alloys T201/83 [1984] OJEPO 401; General Motor/Electrodes

T194/84 [1990] OJEPO 59, 65. It is different from the requirement that the claim be supported by the description, since support may justify broadening where novelty would not: Xerox/Amendments 1133/85 [1988] OJEPO 441, 450. In the UK, the courts have referred to the novelty test employed at the EPO as a useful test but one which should be applied with caution. A. C. Edwards v. Acme Signs [1990] RPC 621, 644. 55 British Biotech/Heterocyclic compounds T684/96 [2000] EPOR 190, 197; Advanced Semi-Conductor Products G1/93 [1994] OJEPO 541.

56 Spring Foam'y. Playhut [2000] RPC 327, 337-8. 57 Southco v. Dzus Fasteners Europe [1990] RPC 587, 615. 58 Broadening is permissible where there is a basis for a claim lacking the feature in the application as filed: AMP/Connector T66/85 [1989] OJEPO 167.

466

PATENTS

filed only mentioned mice, then such broadening of the claims would add subject

matter and thus be invalid.” A simple illustration of the way the courts determine whether the amendment has introduced additional matter is provided by Ward’s Application,® which concerned an application for a patent for the packaging of flowerpots. The specification as filed referred to the packaging of a number of articles nested one within another. It also referred to nested flowerpots or similar containers. Subsequent amendments that added references to plant pot bases were objected to by the Examiner on the basis that it extended the content of the application. Mr Bridges in the Patent Office concurred saying that the question was whether ‘the amendment . . . resulted in the specification disclosing matter which extends beyond that disclosed in the specification as filed... matter must not be disclosed which extends, in the sense of enlarging upon the original disclosure, i.e. which increases the specificity or particularization of that disclosure.’ On the basis that plant pot bases are recognisably different from plant pots, the specification breached section 76(3)(a).

While the question of whether an amended application contains additional subject matter always depends on the facts of the case, it may be helpful to outline some of the more common scenarios that may arise. It is not normally possible to amend a patent

application where the description was itself insufficient. As Lord Hoffmann said in Biogen v. Medeva the application may not add new matter to make an insufficient application sufficient.* At the EPO applicants are prohibited from removing matter from a claim which appeared to be essential in the original application.®! This is because if the feature that is being removed was essential in the original application, then the amended feature introduces novel subject matter. The prohibition on removing essential features does not prevent an amendment that introduces an essential feature that was previously described as non-essential.°° Often a patentee may wish to narrow the ambit of the patent. This usually occurs where a search reveals that some of the examples of prior art fall within the claims as originally filed or where subsequent experimentation reveals that some of 59 A. C. Edwards v. Acme Signs [1992] RPC 131. 60 [1986] RPC 50. 61 Ward’s Application [1986] RPC 50, 54. 62 A. C. Edwards v. Acme Signs [1992] RPC 131, 147 (Staughton LJ). 63 According to Terrell, para. 7.62 ‘those preparing patent specifications must be much more careful in pre-grant proceedings as to the nature of the amendments which they seek and indeed should proceed on the basis that it will be impossible to rectify an inadequate disclosure.’ 64 This will be so if the feature as essential in the original disclosure, is indispensable in the light of the technical problem or the removal requires other features to be modified. ALZA/Infuser T514/88 [1990] EPOR 157, 161-2. Adopted in Southco v. Dzus Fastner Europe [1992] RPC 299, 324 (Nicholls LJ), 327 (Staughton LJ)

(CA). 65 See ALZA/Infuser T514/88 [1990] EPOR 157, 161-2. 66 Hymo/Water-soluble polymer dispersion T583/93 [1997] EPOR 129. The rule against the removal of essential features may explain the criticized decision in Protoned BV’s Application [1983] FSR 110. See D. Stanley “Euphemism vy. Pragmatism of the Implication of Added Subject Matter’ (1988) 17 CIPAJ 108; G. Dworkin ‘Implied Added Subject Matter: An Academic Overview’ (1990-1) 20 CIPAJ 340.

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REQUIREMENTS

FOR

PATENTABILITY

467

the examples listed in the claims as filed do not work. Here, an applicant may amend the claim by disclaiming the examples.°’ While increasing the specificity of a claim, for example by narrowing it from mammals to mice, does not generally introduce new matter, it should not automatically be assumed that this is the case. The reason for this is that if the narrowing of the claims adds a technical feature (or something inventive) it will not be permissible.** However, if the limitation merely excludes protection for part of the subject matter of the application as filed, this would not give any unwarranted advantages to the applicant and as such is prima facie allowed.

42

AMENDMENTS

THAT

EXTEND

THE

SCOPE

OF PROTECTION

In recognition of the fact that third parties may modify their behaviour in light of the patent as published, restrictions are placed on the degree to which the scope of protection conferred by the patent can be altered after grant.” To this end section 76(3)/Article 123(3) provide that amendments after grant must not extend the pro-

tection conferred by the patent. That is, after the patent has been granted, a patentee may not amend the scope of the claims so as to extend the monopoly beyond that covered by the claims as granted.”° Failure to comply with these provisions opens the amended patent up to the possibility of revocation.”! The limits imposed on amendments that extend the scope of the patent operate in a similar way to the prohibition on amendments that introduce additional subject matter (discussed above). The provisions will not operate where claims are narrowed.”* Perhaps the most notable situation where amendments have been allowed under this head is where they contain changes to the types of claims employed.” Thus, it is normally permissible to amend a claim from a compound to a use, since the 67 Sulzer/Hot gas cooler T170/87 [1989] OJEPO 441; Molnlycke AB v. Procter & Gamble (No. 3) [1994] RPC 49, 135.

68 If a limiting feature is not disclosed in the application as filed or otherwise derivable therefrom it will violate EPC Art. 123(2). Advanced Semiconductor Products/Limited features G1/93 [1995] EPOR 97; [1994] OJEPO 541; [1995] EPOR 110, 114.

69 Leland/Light Source T187/91 [1995] EPOR 199, 202-3. 70 PA s. 76(3) says that no amendment of the specification of a patent shall be allowed under PA ss. 27(1), 73 or 74 if it results in the specification disclosing additional matter or extends the protection conferred by the patent. PA s. 72(1)(e) provides for the revocation of patents on the ground that the protection conferred by the patent has been extended by an amendment which should not have been allowed. It seems that PA s. 72(1)(e) is only concerned with post-grant amendments: Terrell, para. 7.71. EPC Art. 123(3) makes it clear

that amendments of claims after grant (unlike those before) must not extend the scope of protection. The acceptance of post-grant amendments is subject to the discretion of the comptroller or court, who have tended to employ that discretion to deny amendments to those whose behaviour is not perceived to have been innocent.

71 While it would be possible to allow widening amendments that are prospective only, it might be thought that a person should be able to rely on the patent in its state as granted rather than to have to constantly check to see whether it has been altered. 72 Strix Limited v. Otter Controls [1995] RPC 607; Mobil/Friction reducing additive G2/88 [1990] OJEPO 93, 100-1.

73 In Phillips Electronic’s Patent [1987] RPC 244, the patentee was permitted to add an omnibus claim to a European patent (UK) on the ground that it did not extend the scope of protection.

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PATENTS

claim to a use is narrower than the claim to the compound. Amendments of this type commonly arise where the patent application has been drafted on the basis that the compound was new per se, whereas it turns out that the compound was already within the state of the art, but the use was not.”4 74 Moog/Change of category T378/86 [1988] OJEPO 386 (an amendment of a process claim to include a claim to the apparatus for carrying out the process was allowed); cf. Telectronics/Cardiac Pacer T82/93 [1996] OJEPO 274, where change from a method of operating a device (a pacer) to a device was not allowed, because the latter claim extended the subject matter to cover the situation where the pacer was ready for use (not just when it was being used).

wy OWNERSHIP

1 INTRODUCTION Ownership plays a key role in shaping the way the rights and responsibilities that flow from the grant of a patent are organized. The owner, or as the Patents Act 1977 prefers, the proprietor of a patent is able to exploit and control the use that is made of a patent.' They are also able to make decisions about when and the conditions under which a patent can be assigned, licensed, or mortgaged. The owner of the patent is also the person who is able to sue for infringement.* The question of who is the owner of a patent is closely connected with the question of who is entitled to be granted the patent. This is because the chain of ownership begins with the person entitled to grant of the patent: they are treated as first owner (or proprietor) of the patent. It is important to note at the outset that the right to be granted a patent, which is the central focus of this chapter, is primarily given to the inventor or joint inventors. This presumption may be overridden in a number of situations: notably in relation to employee inventions and in situations where the right to the patent has been transferred to a third party. While a particular individual or group of individuals may initially have been given the right to be granted the patent, it does not necessarily follow from this that they will also be the owner of the patent. One reason for this is that the person entitled to grant of the patent may have assigned his or her rights in the patent to someone else. Alternatively, the patent may have been transferred to a third party as a result of death or insolvency. Consequently, in ascertaining ownership it is necessary to discover who

was initially entitled to the grant of the patent and thereafter whether there has been an effective transfer of the patent to another person.

2 ENTITLEMENT

TO GRANT

Given the consequences that flow from the ownership of a patent, it is not surprising that disputes often arise over who is properly entitled to be granted a particular ! Proprietor’ is not defined in the 1977 Act. 2 Under the 1977 Act, applications for a patent are also capable of being owned.

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PATENTS

patent. Questions about who is properly entitled to be granted a patent can arise both during and after the grant of a patent and may even be heard prospectively, that is before any application has been made for a patent. In practice, however, most disputes tend to be heard after the patent has been granted.’ When the EPC was being drafted it was decided that matters relating to the ownership of patents were better dealt with by the national courts or tribunals, than by the EPC.* As a result, the European Patent Office has only a limited procedural role in determining disputes over entitlement.° The upshot of this is that while the processes by which patents are granted in the UK and the EPO are very similar, the procedures by which a UK patent and a European patent (UK) may be challenged are somewhat different. As such, we will deal with them separately.

2.15

UK

PATENTS

The starting point for British patent is set out the patent applicant is grounds on which this are set out in section

determining who is properly in section 7(4).° This creates a the person who is entitled to presumption may be rebutted, 7(2). If none

entitled to the grant of a rebuttable presumption that be granted the patent. The which we deal with below,’

of these grounds

can be established,

the

applicant will be treated as the proprietor of the patent. The significance of the presumption should not be underestimated. This is because as the evidence about entitlement is often inconclusive,*® the presumption frequently operates to maintain the status quo.’ Prior to the grant of a patent for an invention, anyone may refer to the

3 This is because if an issue is raised during the application under PA s. 8(1), but has not been determined by the time of grant, the dispute is usually continued as if it were a dispute as to the entitlement of a granted patent (that is, as if it were a PA s. 37 application). See PA s. 9; Goddin & Rennie’s Application [1996] RPC 141. 4 This was because disputes about entitlement potentially raise questions about legal personality, contract, equity, and labour law, rather than patent law. > This issue was recently reopened in the EC Green Paper on the Community Patent, where after noting that the application of these different rules has an impact on research work and management, it asked respondents to indicate whether ‘existing differences between member states laws on employees’ inventions impacted on innovation and employment conditions and/or the freedom to provide services and/or the conditions of competition? Are they such as to justify harmonization at Community level?’ See also Commission, Comparative Study of Employees Inventions Law in Member States of the European Communities (1977). © In answering the question of who is the proprietor of the patent, a useful starting point is with the patent itself. This is because PA s. 13(2) provides that anyone who makes an application must state who the inventor is or, if the inventor is not applying, indicate on what basis they are applying. See T. Gold, ‘Entitlement Disputes: A Case Review [1990] EIPR 382. 7 See above at pp. 348-50 and below at pp. 473-85. 8 In part, this is because it is often difficult to determine the precise point in time and the circumstances in

which an invention was created. The reason for this is, as Lord Wilberforce said, that ‘it is often difficult to fix the point or points in a continuous line of discovery at which an invention has been made.’ Beecham Group v. Bristol Laboratories International [1978] RPC 521, 567.

? On the importance of the presumption see Staeng’s Patent [1996] RPC 183; Viziball’s Application [1988] RPG 213:

OWNERSHIP

471

comptroller the question of whether they are entitled to be granted (alone or with other persons) a patent for that invention.'? They may also ask the comptroller to determine whether they have or would have any rights in or under any patent so granted. While these issues will normally be referred to the comptroller, if the comptroller considers that the question involves matters that would be better dealt with by the court, the comptroller may refer the matter to the courts for consideration." The question of who is properly entitled to a UK patent may also be raised after grant. Any person claiming a proprietary interest in a patent may ask the comptroller to clarify who is the true proprietor of the patent, whether the patent should have been granted to the person to whom it was granted, or whether any right in or under the patent should be transferred or granted to another person.”

2.1.1

POSSIBLE

REMEDIES

Where it has been decided that the wrong person has applied for a patent or a patent has been granted to the wrong person, the comptroller has a number of options available. In deciding what action to take, it has been said that the main aim should be

‘to reach a solution which would provide a reasonable opportunity for the patent to be exploited should there be a demand for it’:!* a goal which reflects a desire to see that the invention enters the commercial domain, rather than a concern with recognizing entitlements. Where a succesful entitlement challenge has been made in relation to a patent application, the comptroller can refuse, amend, or transfer the application.'* If the application is refused and the person properly entitled to apply decides to submit a new application, they may be able to avail themselves of the wrongful applicant’s priority date.!° Comptrollers also have jurisdiction to reach more creative solutions. For example, they may grant the patent to one co-inventor, but order that the other co-inventor be given a non-exclusive, non-assignable licence, perhaps with payment of a royalty. Where a patent has been granted, an order may be made directing that the person referring the issue to the tribunal shall be listed as the proprietor of the patent. Alternatively, the comptroller may grant a licence to the claimant or revoke the

10 PA s. 8(1). 11)-PA's, 37(8):

12. PAs: 37(1). 13 Goddin & Rennie’s Application [1996] RPC 141. The factors that were considered relevant in this case included whether either of the joint inventors wished to exploit the patent themselves, and the feasibility of their agreeing to license third parties. 14 PA s, 8(2)(c). PA s. 8(2)(a) suggests that where it is decided that the referent was the sole inventor, it will

probably be ordered that the application shall proceed in the name of that person. Alternatively, if it is found that the invention was made jointly, the likely order is that the application proceed jointly. 15 PA s. 8(3).

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PATENTS

patent on the ground that it was granted to the wrong person."* If it is decided that the patent should be revoked, the comptroller may order that the person who made the application (or his or her successor in title) may make a new application for a patent. It is important to note that no order may be made to transfer the patent or permit the reapplication if the reference was made two years from the date of the grant. This exclusion does not apply, however, if the proprietor of the patent knew that they were not entitled to the patent.'”

2.2 EUROPEAN PATENTS (UK) As we mentioned above, the European Patent Office only has a limited procedural role in determining disputes over entitlement. For the purposes of proceedings before the EPO, the applicant is deemed to be entitled to exercise the European patent, leaving issues of entitlement to be determined in national fora. As a result, the EPO only takes account of questions of entitlement if a decision has been made by an appropriate national court to the effect that a person other than the applicant is entitled to the patent. This means that questions relating to the ownership of European patents (UK)! both before and after grant!” may be heard by the British comptroller”® or courts.?! In order to prevent a proliferation of ownership proceedings in different member states (and to prevent forum shopping), a Protocol to the EPC (The Protocol on Jurisdiction and Recognition in Respect of the Right to a Grant of a European Patent) was formulated. The Protocol provides that questions about entitlement are only to be heard by one member state. The Protocol also establishes rules to determine the nation which has jurisdiction to hear ownership disputes.” In the absence of an agreement between the claimant and the applicant stating the jurisdiction which is to operate, the Protocol provides that questions about entitlement are to be determined 16 That is, to a person not entitled under PA s. 7(2) or PA s. 36. PAs. 72(1)(b); EPC Art. 138 (1)(e). While lack of entitlement is a ground of revocation, it appears that the right to demand revocation is only available to a person ‘initially entitled’ to the patent, and not to someone to whom that right has been transferred. Dolphin Showers and Brueton v. Farmiloe [1989] FSR 1; Henry Brothers v. Ministry of Defence [1997] RPC 693. It remains unclear whether a declaration under PA s. 37 is required prior to an action for revocation under PA s. 72. 17 Protection for third parties in these situations is offered by PA ss. 37(6)—(7), 38(1), 38(3)-(4). 18 PA s, 12(1); s. 77(1)(b). See Norris’s Patent [1988] RPC 159; Canning’s US Application [1992] RPC 459

(re international patent applications). Kirin-Amgen/Erythropoietin T412/93 [1995] EPOR 629 (questions of entitlement could not be considered in opposition proceedings). . '9 It seems that the issue of jurisdiction will be determined in accordance with the general rules of the Brussels Convention and that Art. 16(4), which requires issues relating to the validity and registration of patents to be dealt with by the tribunals of the country from which the patent issued, has no applicability. See Durjnstee v. Goderbauer [1985] FSR 221; [1985] 1 CMLR 220.

20) PA s..37(8). 21 PA s. 82 provides for rules as to UK jurisdiction over disputes as to ownership of European patents. See Kakkar v. Szelke [1989] FSR 225.

*2 It also provided for the recognition of their decisions by other member states. See G. Le Tallac, ‘The

Protocol on Jurisdiction and the Recognition of Decisions in Respect of the Right to the Grant of a European Patent (Protocol on Recognition)’ (1985) 16 IIC 318, 356.

OWNERSHIP

473

by the tribunals (and the law) of the country of which the applicant is resident (or has their place of business). If the applicant is from outside the EPC, ownership is decided by the tribunal of the country of the claimant.’* Consequently, a UK court would decline to hear a case concerning a dispute between a French claimant and a German applicant, or between a British claimant and a French applicant. It would, however, consider disputes between a German claimant and a British applicant, and between a British claimant and an American applicant. 2.2.1 Possible remedies

Once a national tribunal has made a determination as to entitlement, the EPO will take appropriate action. In these circumstances, Article 61 of the EPC provides that three courses of action are available: prosecution of the application in the place of the applicant, the filing of a new application, or a request that the application be refused.”

3 DETERMINING

WHO

IS ENTITLED

TO GRANT

While the 1977 Patents Act provides that anyone is entitled to apply for a patent,” section 7(2) goes on to say that patents should only be granted to a limited category of persons.” These provisions are the basis on which issues of entitlement are determined. The starting point for determining issues of entitlement and ownership is section 7(2)(a). This provides that the right to be granted a patent is primarily given to the inventor or joint inventors. This focus upon the inventor follows the common practice whereby the creator is accorded the privileged status of first owner of intellectual property rights. Although the process of invention is frequently presented as being less creative than the production of literary or artistic works, patent law bears many of the marks of the romantic author. It is, at the very least, based on a model of an

individual inventor; a matter emphasized in the 1977 Act by the requirement that the inventor be the ‘actual deviser’ of the invention.”” The assumption that the inventor is the person who is properly entitled to grant of the patent can be overidden in two situations. The first of these is set out in section 7(2)(b). This states that the presumption in favour of the inventor as owner does not

apply where it can be established that at the time the invention was made another person was entitled to the invention by virtue of (i) any enactment or rule of law, (ii) any foreign law, treaty, or international convention, or (iii) an enforceable term of any 23 These are reflected in PA ss. 82 and 83. 24 Latchways/Unlawful applicant G3/92 [1995] EPOR 141.

22 PA S.A (4). 26 As we saw earlier, PA s. 7(4) creates a rebuttable presumption that the person who applies for a patent is the person who is entitled to grant of a patent. The grounds on which this presumption may be rebutted are set out in PA s. 7(2), which exhaustively sets out the parties to whom a patent may be granted.

2s PAvs..1(3).

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PATENTS

agreement entered into with Although the precise meaning that it deals with the employee The second situation where

the inventor before the making of the invention. of the section remains unclear,” it is widely accepted inventions caught by section 39. the presumption in favour of the inventor as owner is

overidden is set out in section 7(2)(c). This states that a patent may be granted to ‘the

successor or successors in title of any persons or persons mentioned in section 7(2)(a) or (b)’. This provision allows for the rights in the invention to be transferred to third parties.

While section 7(2) potentially covers a broad array of situations, in practice questions relating to entitlement to grant tend to fall into two general areas: (i) inventors and joint inventors; and (ii) employee inventions. We will deal with each of these in turn.

3.1

INVENTOR

AND

JOINT

INVENTORS

Being named as the inventor or joint inventor of a new product or process often carries with it a number of rewards. In addition to the kudos which is associated with being named as the creator of a new invention,” a lot flows from the presumption that patents are granted primarily to the inventor or joint inventors.*° Given this, it is not surprising that the tribunals are often called upon to decide who is properly entitled to be named as inventor or joint inventor of a given invention. Problems in this area tend to group together in two areas. The first arises where someone claims that they and not the named inventor are the ‘actual deviser’ of the patented invention.*! Problems also arise where an individual claims that their contribution to the invention has not been properly recognized.” In both situations, the courts are required to identify the ‘inventive’ elements of the 28 Rather oddly it would not appear to cover the position of an employee who was a joint inventor with someone who was not also an employee, since the employer would not then be a person who at the time of the making of the invention was entitled to the whole of the property. It might have been assumed that such an anomaly would have been capable of being rectified by the use of express agreements between those concerned. However, the clause entitling a person to a patent as a result of being the beneficiary of ‘an enforceable agreement entered into with the inventor before the making of the invention’ is uncertain in scope too. See Goddin & Rennie’s Application [1996] RPC 141. Because the provision excludes from its remit ‘equitable interests’, it is arguable that it would not cover a contractual agreement made prior to invention that a person was to assign their rights, because such an agreement creates a mere equitable right to the patent. However, such a pedantic interpretation seems to render redundant the provision relating to agree-

ments, as well as to contradict the obviously desirable policy of encouraging the formation of such agreements allocating ownership. 29 Inventors are entitled to be named on the patent, even if they are not entitled to the patent: PA s. 13; EPC Arts. 62 and 81. If the inventor is not designated, the application is treated as having been withdrawn, EPR© Agt..91. 30 PA s. 7(2)(a); EPC Art. 60(1). 31 Jnventor’ is defined in PA s. 7(3) to mean

the ‘actual deviser’ of the invention. Joint inventors are

construed accordingly. 32 PA s. 10. On US law, see W. Fritz Fasse, ‘The Muddy Metaphysics of Joint Inventorship: Cleaning Up after the 1984 Amendments to 35 USC’ (1992) 5 Harvard Journal of Law & Technology 153.

OWNERSHIP

475

invention. In turn, the courts are required to consider whether the claimant was responsible for the development of some or all of those elements.*’ In some cases, the courts have being willing to divide an invention up into parts: allocating responsibility for different claims to different inventors. In a recent case the court emphasized that the appropriate way to determine who was the inventor was not to divide up the elements of a claim and ask who devised each. Rather, it was necessary to interpret the

claim so as to ascertain the esssential inventive concept and then determine who contributed that concept.*4 3.1.1 What is an inventive contribution?

In order to determine whether someone is entitled to be called an ‘inventor’ or ‘joint inventor’ under the 1977 Act, it is necessary to know what has been invented.*°? The process of invention is often a complex process. It is also a process in which a range of different factors may have contributed to the final result. While certain contributions—such as the posing of the problem to be solved or the answering of those problems—are usually treated as being inventive, other contributions—such as the supply of the test tubes used in the experiments—would usually be regarded as being non-inventive. In between these two extremes there are a range of other types of contributions which are more difficult to categorize. The question that arises here is which of the various contributions that are made to the production of an invention ought to be recognized as being inventive (or technically creative) and which ought not.*° This is a particularly complex issue, not the least because what is considered to be

inventive not only changes over time,” it also changes between different areas of science and technology.** Given this, and that the definition of inventor offered in the Patents Act offers little guidance in this regard,” perhaps the best way to approach this issue is by example. It is commonly accepted that where a person has done something that helps to solve a particular problem or answer a particular question, this will be regarded as an 33 For an analysis of this in the USA see Mueller Brass v. Reading Industries 352 F. Supp. 1357 at 1372-3. (ED Pa 1972), affd without opinion, 487 F 2d 1395 (3d Cir. 1973).

34 Henry Brothers v. Ministry of Defence [1997] RPC 693. 35 Tbid. [1999] RPC 442, 449 (Robert Walker LJ) (CA). (Who also said that the ‘whole question of co-ownership called for clarification’ (at 452). 36 The task of determining who is the inventor or joint inventor is similar to the non-obviousness inquiry.

However, in contrast with the non-obviousness inquiry that is determined ‘objectively’, the idea of inventorship carries a ‘subjective’ component. This arises because the inquiry can be undertaken

even when no

application has been made for a patent: PA s. 8(1)(a). See Viziball’s Application [1988] RPC 213; Goddin & Rennie’s Application {1996| RPC 141. 37 @.9. it is no longer possible to obtain a patent (as it was for a long time) merely for being the ‘importer’ of an invention. Edgeberry v. Stephens (1691) 1 WPC 35; 1 Haywards Patent Cases 117. 38 The question of who should be recognized as creators in intellectual property law is an important and often contentious issue. Over time, the law has witnessed many occasions where interest groups have attempted to argue that they are creative enough to warrant the protection offered by intellectual property law. While these struggles may not be as visible in patent law as in other areas of intellectual property law, patent law is no exception to this general statement. 39 Inventor is defined in PA s. 7(3) as the ‘actual deviser’.

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PATENTS

inventive contribution. As such, if it can be shown that an individual has done something that helps to solve a problem, it is likely that they will be treated as an inventor or joint inventor. While the answering of a problem is, in some ways, the archetypal inventive contribution, it is by no means the only type of contribution that is recognized as being inventive. For example, the perfection or improvement of a solution may also be regarded as an inventive contribution. Improvement of an existing device or process may itself provide for a patentable invention, in which case one would expect the patent to belong to the person who made the improvements (irrespective of the ownership of the starting invention). However, in practice, the process of devising a patent may incorporate a series of elements, some of which are mere improvements of an initial breakthrough. In those circumstances, the question arises as to whether these later contributions are sufficient for that person to become a joint inventor.” The generation of the idea or avenue for research, that is the formulation of the problem to be addressed, has also been treated as being inventive.*! For example, in

Staeng’s Patent,” it was held that a person (A) was a joint inventor of a new method of securing electric cables, where it was unlikely that the main inventor (B) would

have turned his mind to the question without having been prompted (by A). In this case, the Patent Office was influenced by the fact that the principal inventor, who did not work in the field, was only alerted to the possibility of the improvement by A. In other cases, however, the mere posing of a question to be answered (or the recognition of the problem to be solved) will not be treated as an inventive contribution. The reason for this is that in some circumstances, particularly in the biotechnology industry, particular goals are commonly known (this is illustrated by the fact that a number of different companies often pursue the same goal).*? In these circumstances, the decision to pursue a particular goal is unlikely to be treated as being sufficiently creative for it to be recognized as an inventive contribution. 3.1.2 What is a non-inventive contribution?

In the same way in which certain types of contributions are normally considered to be inventive, there are other types of contributions that are not. It seems that managerial and entrepreneurial contributions, such as the provision of money, facilities, materials, support staff, and the like, will not be regarded as inventive contributions 40 Tn Allen v. Rawson (1845) 1 CB 551; 135 ER 656, Earle J said that where a person collaborated in the

elaboration ofa‘main principle’ and in so doing made valuable accesorial discoveries, these were the property of the inventor of the original principle. The applicability and scope of this principle is, however, unclear. Goddin & Rennie’s Application [1996] RPC 141. *1 Tt was said in Staeng’s Patent [1996] RPC 183, 189 that ‘blowing the fire, rather than igniting it’ can be sufficient for the contributor to be considered as the ‘deviser’ of the resulting invention. 42 [1996] RPC 183. Under German law, the formula for calculating compensation for use of employee inventions, gives equal weighting to those who ‘elucidate’ the problem as those who ‘devise’ the solution. See

V. Schmied-Kowarzik, ‘Employee Inventions under German Law’ (1972) 54 JPTOS 807.

43 See Genentech v. Wellcome [1989] RPC 147 (CA).

OWNERSHIP

477

(although the provider of such contributions may obtain the right to apply for a patent).4 Another type of contribution that seems to be excluded from what may be labelled as an inventive contribution is the supply of crucial starting materials.“ In a celebrated American case, doctors at the UCLA Medical Center extracted a cell-line from the spleen of the patient (and plaintiff) John Moore who was being treated for hairy-cell leukemia. The cell-line formed the basis of an invention that was subsequently patented by the university. The Supreme Court of California held that Moore had no proprietary interests in the invention (or patent).*° More specifically, the court held that he had no property rights in either the genetic information encoded in his cells or the cells themselves. In so doing the court noted that everyone’s genetic material contains information for the manufacture of lymphokines, and as a result that Moore’s cellline was ‘no more unique to Moore than the number of vertebrae in the spine’. The court contrasted the mundane nature of the source materials with the skills of the researchers, noting that the ‘adaptation and growth of human tissues and cells in culture is difficult—often considered an art.’ From the view of one commentator, the case illustrates the pervasive influence of the ‘author-construct’ which leads intellectual property law to privilege certain kinds of contributions: the material basis of intellectual property is disregarded, while the researchers who manipulate that material are prioritized.” A related issue arises in relation to bioprospecting. This is the practice whereby pharmaceutical firms, typically from the developed world, employ the knowledge of indigenous groups to identify the medicinal properties of local plants which are then sythentically reproduced. Perhaps one of the most well-known examples of this is the US patent, which has subsequently been revoked, directed to the medicinal application of turmeric in wound-healing (a practice that has been known about in India for centuries).** In an attempt to argue that indigenous peoples should be compensated for the use that is made of their knowledge, the question has been raised as to whether the contribution of indigenous knowledge (such as the identification of starting materials) ought to be recognized as an ‘inventive’ contribution to the resulting synthetic drugs. As the law is currently formulated, it seems that the provision of 44 Morgan v. Hirsch, 728 F 2d 1449, 1452 (Fed. Cir. 1984) (claimant confused entrepreneurship with inventorship).

45 Cf. in the novelty examination, where the fact that prior art fails to disclose the starting materials may mean that the prior art is not novelty-destroying. See above at pp. 422-3. 46 Moore v. Regents of the University of California, 793 P 2d 479 (Cal 1990), cert denied, 111 S. Ct. 1388 (1991). It was accepted that Moore had a cause of action for breach of fiduciary duty or lack of informed

consent. For some of the many commentaries see T. Dillon, ‘Source Compensation for Tissues and Cells used in Biotechnical Research: Why a Source Shouldn’t Share in the Profits’ (1989) 64 Notre Dame Law Review 628; B. Edelman, ‘L’7Homme aux cellules dor’ (1989) 34 Recueil Dalloz Sirey 225; B. Edelman, “Le Recherche biomedicale dans |’économie de Marché’ (1991) 30 Recueil Dalloz Sirey 203; B. Hoffmaster, ‘From the Sacred to the Profane’ (1992) 7 Intellectual Property Journal 115.

47 ]. Boyle, ‘A Theory of Law and Information: Copyright, Spleens, Blackmail, and Insider Trading’ (1992) 80 Californian Law Review 1413, 1516. 48 See M. Uniyal, “Trade: Biopirates Stake Claim to Southern Knowledge’, Inter Press Service, 29 Aug. 1996.

478

PATENTS

information is unlikely to amount to co-inventorship.?? The main reason for this is that the contribution of knowledge about a plant’s whereabouts or uses, especially where the information is already in the public domain,” is unlikely to be seen as an essential part of the structure and composition of a synthetically produced drug. As a result, many now accept that the goal of providing proper rewards to indigenous communities is better served by other means (such as by the international recognition of a sui generis right). In order for a contribution to an invention to rise to the level of joint inventorship, the contribution must be concrete and specific rather than vague or general.*! Similarly, if an inventor instructs an assistant or employee to carry out specific tests, it is unlikely that the assistant will be treated as a joint inventor. This is because the carrying out of instructions is likely to be seen as a process of execution rather than creation. It is interesting to note that for the purposes of determining ownership between employers and employees, a person who merely contributes advice or other assistance in the making of an invention is not an inventor.” Outside of the employer—employee context, such contributions are also likely to be treated as noninventive unless it can be shown that the advice or assistance was in some way inventive.°° While there has been little guidance as to the amount of mental labour that a person must contribute to an invention for them to qualify as a joint inventor, there may be grounds for arguing that where a person makes only a minor contribution to an invention that they should not to be treated as a joint inventor. The reason for this is that joint inventors are sometimes able to control the ability of the other joint inventors to obtain or maintain a patent:*4 a power that may not be justified if the contribution is particularly small.°° It should also be noted that in contrast with copyright law,” there is no explicit requirement in patent law that for a person to be recognized as a co-inventor the parties must have collaborated. Having said this, it is

4° M. Huft, ‘Indigenous Peoples and Drug Discovery Research: A Question of Intellectual Property Rights’ (1995) 89 North Western University Law Review 1678, 1728; M. Blakeney, “Access to Genetic Resources: The View from the South’ (1997) 3 Bioscience Law Review 94, 99.

5° Whether because the information is known within the community or because it has been documented by ethnobiologists. The classic anti-malarial drug, quinine, is derived from the bark of South American

cinchona trees, the extract from which was first used to treat fever by the indigenous peoples of Peru in the eighteenth century. See M. Huft, ‘Indigenous Peoples and Drug Discovery Research: A Question of Intellectual Property Rights’ (1995) 89 North Western University Law Review 1678, 1700. See the observations of Lord Hoffmann in Merrell Dow v. Norton [1996] RPC 76, 88.

>! Tt.has been suggested that the ‘conceptual specificity of a persons contribution’ is a critical factor in deciding whether or not they are joint inventor. See R. Harris, ‘Conceptual Specificity as a Factor in

Determination ofInventorship’ (1985) 67 JPTOS 315. Garrett v. United States, 422 F 2d 874, 881 (Ct Cl 1970). >2 PA s. 43(4). Allen v. Rawson (1845) 1 CB 551: 135 ER 656; Smith’s Patent (1905) 22 RPC 57.

93. Staeng’s Patent [1996] RPC 183. A PAS BG:

°° A co-inventor who refuses to apply for a patent can have any such patent that has been granted to a coinventor revoked.

$5: \€DPAG Ie

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479

clear that where two persons independently create the same invention, they will not be treated as co-inventors: the first to file is the person entitled to the patent.*”

3.2

EMPLOYEE

INVENTIONS

Although the romantic image of the amateur inventor plays an important role in shaping the way we think about patent law, it has long been recognized that many inventions are made by professional researchers who are employed to invent, often by large corporations:** a situation which has expanded rapidly with the growth of socalled big science in the last forty years or so. Patent law recognizes the financial interests of such employers by providing that in certain circumstances it will be the employer rather than the employee who will be the owner of inventions made by employees. In this way, patent law retains the romantic model of the inventor in name, but allocates the important monopoly rights to the commercial interests that support

and maintain the research. When the EPC was being drafted it was decided that questions relating to ownership of employee inventions were a matter which was better dealt with by national laws rather than the EPC.°! While the EPC (as with the CPC and the PCT) makes no

provision in relation to employee inventions, when the 1977 Patents Act was drafted, the (then) Labour Government

took the opportunity to regulate the position of

employee inventors. In so doing they effectively codified an area which, prior to the enactment of the 1977 Patents Act, was primarily dealt with by case law.” There are two notable features of the 1977 Patents Act relating to employee inventions. The first, which is the focus of the remainder of this chapter, is that sections 39—

43 of the Patents Act provide detailed guidance as to the way in which ownership

57 The other inventor being left with such in personam defences as they can establish. See below at pp. 508-9.

8 Cf. S. Cherensky, ‘A Penny for Their Thoughts: Employee-Inventors, Preitivention Assignment Agreements, Property, and Personhood’ (1993) 81 California Law Review 595; J. Hughes, “The Personality Interest of Artists and Inventors in Intellectual Property’ (1998) 16 Cardozo Arts & Entertainment Law Journal 81. 59 See P. Galison and B. Hevly (eds.), Big Science: The Growth of Large Scale Research (1992). 60 For a comparative position see H. Parker, ‘Reform for Rights of Employed Inventors’ (1984) Southern California Law Review 603, 615 ff.; V. Schmied-Kowarzik, ‘Employee Inventions under German Law’ (1972) 54 JPTOS 807; J. Joviczyk, ‘Employee Inventions’ (1989) 20 IIC 847.

61 As such, national laws are free to determine ownership issues between employer and employee. All the EPC does is specify which national law should operate. EC Green Paper on the Community Patent (1997) COM (97) 314 final, para. 4.3 (explaining that great differences between member states’ rules governing inventions by employees: that in some member states the question is dealt with in general terms by patent law (e.g. in France and the UK); in others a specific law has been enacted, as in Germany and Sweden. Other laws distinguish between ‘permanent’, ‘temporary’, and ‘occasional’ inventive roles, with different rules for determining ownership of the patent in each case. Other laws, such as the German Act, contain a long series of provisions relating to the remuneration of employees with an inventive role and lay down the precise method

for calculating additional remuneration). 62 PA ss. 39-43 only apply to inventions made after | June 1978. J. Phillips and M. Hoolahan, Employee

Inventions in the UK (1982); W. Cornish, ‘Rights in Employee Inventions: The UK Position’ (1990) 21 IJC 290; W. Cornish, ‘Rights in University Inventions’ [1992] EIPR 13.

480

PATENTS

disputes between employers and employees should be determined. The second notable feature of the Patents Act, which is dealt with in Chapter 23, is that employees are provided with a right of fair reimbursement (or compensation) where their inventions belong to their employers. In deciding whether an invention made in the course of employment should belong to the employee or the employer, patent law had to balance a range of competing interests. On the one hand, a desire to protect and promote freedom of labour, particularly for activities carried on outside the scope of employment, lent support to those who favoured employee ownership. These arguments were supported by the longstanding principle that the inventor is the first owner of a patent. Mitigating against this, however, was the powerful and ultimately more influential argument that where someone is employed to do something (such as invent), the employer and not the employee should be the owner of the resulting products (or inventions). Disputes between employers and employees over who is entitled to apply for a patent, or if a patent has already been granted who is the rightful initial owner of the patent, are governed by section 39 of the 1977 Act. Following the common law position, the 1977 Act provides that an invention belongs to an employer in two situations.® Employee inventions that fall outside these two categories belong to the employee.“ The first situation where an employee invention belongs to the employer is where the invention was made in the course of the employee’s normal or specifically assigned duties and the invention was made in circumstances where an invention

might reasonably have been expected to have resulted from the carrying out of those duties: section 39(1)(a).

The second situation where an employee invention belongs to an employer is set out in section 39(1)(b). This provides that in certain circumstances an employee’s

position and status within an organization will be such that they will be taken to be under a ‘special obligation to further the interests of the employer’s undertaking’. Thus, where an employee occupies a senior managerial or administrative position, any inventions that they produce belong to their employer. 3.2.1 Employer ownership of employee inventions

Before looking at the way ownership of employee inventions are allocated under the 1977 Patents Act, it is necessary to take account of a number of preliminary points.

(1) Made in the course of employment. In order for section 39 to come into play, it is necessary to show that the invention was made by an ‘employee’ who was ‘mainly employed’ in the United Kingdom.® For the most part, showing that an invention was 63 PA s, 39(1)(a)(b). As the sections are not necessarily mutually exclusive, an employee may be caught by either subsection (a) or (b): Memco-Med’s Patent [1992] RPC 403, 406. 64 PA s. 39(2). PA s. 39(3), which was introduced by the CDPA, provides that where an employee is entitled

to the patent, they may ‘use material in support of the application in which the employer owns copyright or design.’ For the common law position in the USA see United States v. Dubilier Condenser Corp., 289 US 178 (1933), amended by 289 US 706 (1933).

© PA s, 43(2).

OWNERSHIP

481

made in the course of employment is unlikely to present any major difficulties. Problems may arise, however, in peripheral situations where inventions are made by consultants, academics, visitors to universities, students, researchers on secondment,

home-workers, and company directors.°° While ‘employee’ and ‘employer’ are both defined in section 130 of the Act, this provides little guidance in these grey areas. In order to determine whether a particular inventor is in an employment relationship, a range of different factors are taken into account.®’ These include the relevent National Insurance and tax arrangements, the way the relationship is described by the parties, the provision of materials, as well as the control and responsibility that is exercised by the parties in question. (ii) ‘Inventions’. Another notable feature of section 39 is that it refers to ‘inventions’

rather than to ‘patented inventions’ (or some similar phrase). One of the consequences of this is that the section will operate to resolve issues of ownership irrespective of whether a patent application has been filed or a patent granted. It has also been suggested that the fact that the section refers to inventions may mean that the section extends beyond patentable subject matter to include things such as suggestion schemes. (tii) Onus of proof. While evidential and procedural matters are often overlooked in discussions about patent law, decisions relating to the onus and standard of proof play an important role in shaping the way patent law operates in practice. Although the standard of proof in this context is clear enough—it is the civil standard of balance of probablities—there is some uncertainty as to whether the onus of proof falls upon the employer or the employee. Given that the inventor is presumed to be the owner of the patent and that section 39 provides exceptions to this, it would seem reasonable to expect that the onus of proof falls upon the employer to establish that a particular employee invention belongs to them as a result of section 39(1)(a) or (b). Mitigating

against this, however, is the fact that in a number of cases the Comptroller has presumed that the onus of proof falls upon the person who is putting the question of entitlement in issue.” As this approach concentrates on the person who makes the application, rather than on the relative bargaining powers of the parties, it is if not an

untenable then certainly an undesirable position.”” (iv) It is not possible to diminish the rights of employees by contract. In order to

66 See CIPA, para. 39.06. B. Sherman, ‘Governing Science: Patents and Public Sector Research in the United Kingdom’ (1995) 26 IIC 15.

67 O'Kelly v. Trusthouse Forte [1984] QB 90; Lee Ting Sang v. Chung Chi-Keung [1990] 2 AC 374 (PC); CIPA, para. 39.06. For a discussion on equivalent provisions in copyright, see above at pp. 116-20. 68 In other contexts it has been held that ‘invention’ encompasses unpatentable subject matter: Viziball’s Application [1988] RPC 213. 69 Staeng’s Patent [1996] RPC 183; Viziball’s Application [1988] RPC 213. 70 CIPA, para. 39.07. In Greater Glasgow Health Board’s Application [1996] RPC 207, where an employee agreed to allow the employer to proceed with a patent application pending a decision, Jacob J said that it would be unfortunate if anything turned on the question of onus of proof.

482

PATENTS

protect an employee whose inferior bargaining position may lead them to sign their statutory rights to their employer, section 42 of the 1977 Act provides that any term in a contract of employment’! which diminishes the rights of an employee in any invention shall be unenforceable against the employee.”” The scope of the section is limited by the fact that it does not apply in relation to an employee’s duty of confidentiality.” It is also limited in that section 42 does not seem to prohibit contracts dealing with inventions created after an employee leaves employment.”4 The reason for this is that while such contracts may appear to fall within the terms of section 42, the section probably has no application because the inventions will have been made when the inventor was no longer in employment.” The exact scope of the provision, and the degree to which it modifies the common-law rules in this area, remain unclear. With these initial points in mind, we now turn to look in more detail at the two situations in which employee inventions will belong to an employer. 3.2.2 Persons employed to invent The first situation where an employee invention belongs to an employer is set out in section 39(1)(a). This provides that an invention made by an employee will belong to his or her employer if the invention was made in the course of the employee’s normal or specifically assigned duties and the circumstances in which it was made were such that ‘an invention might reasonably have been expected to result from the carrying out of those duties.’

(1) Scope of an employee’s duties. In order to determine whether an employee invention belongs to the employer by virtue of section 39(1)(a), it is necessary to deter-

mine the scope and nature of an employee’s duties. It is then necessary to ascertain whether the invention was made by the employee carrying out those duties. The job description and the contract of employment are often used as a way of determining the precise nature of an employee’s normal duties.”° There has also been a willingness to look beyond the formal legal arrangement of the contract of employment to the activities that are actually undertaken by the employee.” Once the scope of

7. The provisions apply to contracts of employment, as well as to contracts made between employees and third parties either at the request of the employer or in pursuance of the emplopyee’s contract of employment. The section applies both to contracts made before or after the 1977 Act came into force. 72 PA s. 42(2). 73 On the question of employee’s duty to disclose inventions and its relationship with PA s. 44, see CIPA, para. 42.01. More generally see J. Turner, ‘Preinvention Assignment Agreement Breach: A Practical Alternative to Specific Performance or Unqualified Injunction’ (1997) 5 Journal ofIntellectual Property Law 631. 74 In the USA these are called ‘holdover’ or ‘trailer clauses’. See Hershovitz, ‘Unhitching the Trailer Clause: The Rights of Inventive Employees and Their Employers’ (1995) 3 Journal of Intellectual Property Law 187. 7 Even if these were not invalidated by section 42, they would be subject to the doctrine of restraint of trade. See Electrolux v. Hudson [1977] FSR 312.

76 Staeng’s Patent [1996] RPC 183, 198 (the job description was normally be decisive). 77 In Harris’s Application [1985] RPC 19, the court went beyond the formal duties to look at what was actually done. See also Greater Glasgow Health Board’s Application [1996] RPC 207, 222. It should be noted,

however, that most of the cases begin, at least as a starting point, with the job description.

OWNERSHIP

483

an employee’s normal duties has been ascertained it is relatively easy to determine whether an employee has been assigned any additional duties. Once the duties of the employee have been ascertained it is necessary to determine whether the invention was made ‘in the course of those duties’. The factors to be considered include when and where the invention was made, the facilities used by the

employee, and the relationship between the invention and the field in which the employer operates.’® So long as it can be shown that the activity in question falls within the general scope of employment, this is unlikely to present any major problems. (ii) Duties which can be expected to result in an invention. As well as establishing that the invention was made in the course of an employee’s normal or special duties, the second limb of section 39(1)(a) provides that it is also necessary to show that the

invention was made in circumstances where an invention might reasonably have been expected to result from the carrying out of such duties. One of the notable aspects of the second limb of section 39(1)(a) is that it requires

that the invention be made in circumstances where an invention might reasonably be expected to result from the carrying out of the employee’s duties. The question of what is meant by ‘an invention’ in this context was considered by Falconer J in Harris’s Patent where he said that “an invention’ did not mean any invention, nor did it mean ‘the precise invention that was made’.”? While Falconer J’s comments are useful in telling us what the phrase does not mean, it offers little positive guidance as to what it does mean.®*° One possibility is that it could be construed to mean an invention of the same description or type as the invention in suit.*! An important factor which is often relied upon when deciding whether there was an expectation that the carrying out of the employee’s duties would lead to an invention is the extent to which the employee was engaged to invent or design.® Inventions that are made by an employee whose duties are limited to mechanical, routine, or non-creative tasks will ordinarily remain with the employee.®’ This can be seen in 78 In Staeng’s Patent [1996] RPC 183, it was suggested that any invention that was useful to employer would automatically fall within the employee’s duties, cf. Greater Glasgow Health Board’s Application [1996] RPC 207, 222. See P. Chandler, ‘Employee’s Inventions: Inventorship and Ownership’ [1997] EIPR 262. 79 Harris’s Patent [1985] RPC 19, 29. 80 In this context it is interesting to note that PA s. 40(7) speaks of‘inventions of the same description’. In

Harris’s Patent [1985] RPC 19, 29 Falconer J said that the phrase an ‘invention might reasonably have been expected to result from the carrying out ofthe duties’ refers to ‘an invention which achieves, or contributes to achieving, whatever was the aim or object to which the employee’s efforts in carrying out his duties.’ 81 Another aspect of PA s. 39 that is unclear is that the section provides that the invention must be made in cicumstances where it might reasonably be ‘expected’. It is unclear who it is that ought to expect the invention, whether the invention ought to be expected by the employee, the employer, or, most probably, an objective third party. 82 Presumably, the status of the employee, a factor normally limited to PA s. 39(1)(b), would influence whether an invention would be ‘expected’. It was said in Greater Glasgow Health Board’s Application [1996] RPC 207 that this was to be judged in terms of the circumstances in which the invention in suit was made and

not the general circumstances of employment. 83 Tbid., 222. It was said that a duty to treat patients did not impose a general duty to invent new ways of diagnosing and treating patients.

484

PATENTS

Harris’s Patent:** an ownership dispute between Reiss, who manufactured valves under

licence from Sistag, and Harris, who worked as a manager for Reiss. The particular issue in dispute was whether Reiss or Harris owned rights in a valve, invented by Harris, which controlled the flow of dust through ducts. A number of factors led the court to its finding that the invention belonged to Harris. These included the fact that Harris’s normal duties were limited to the non-inventive tasks of sales and after-sales service. Importantly, in dealing with customer problems, Harris’s role was limited to non-creative or routine application of known engineering practices. The fact that Reiss had no research laboratory, was not involved in research and development, and

always referred major technical problems to Sistag for solution, reinforced the conclusion that Harris had not been employed to design or invent. Indeed, when Harris made suggestions to Reiss as to how the valves could be improved, Reiss turned them down. Given that it was not part of the employer’s business to solve design problems in valves, it could hardly have been a part of Harris’s duties.*°

Where a person is employed to invent or design, there will ordinarily be an expectation that the carrying out of the employee’s duties would lead to an invention and, as such, that any inventions which are made will belong to their employer. This is the case even if the creative aspect of an employee’s duties only forms a small part of an employee’s overall duties. For example, in Staeng’s Patent,®° it was held that while an employee was primarily engaged in marketing, the fact that his job description also assigned to him the creative role of using discussions with customers to generate ideas for new products, as well as thinking of novel uses for existing products, meant that any inventions he made belonged to his employer. As yet, it is unclear how small the creative contribution of an employee’s duties needs to be for section 39(1)(a) not to apply.

3.2.3 Special obligations

The second situation in which an invention made by an employee will belong to his or her employer is set out in section 39(1)(b). While section 39(1)(a) primarily deals with people who are employed to invent or design, section 39(1)(b) is concerned with inventions which are made by managerial or administrative employees. More specifically, section 39(1)(b) provides that in certain circumstances an employee’s position

within an organization is such that they are deemed to be under a special obligation to further the interests of their employer. While the normal or special duties of an employee may not require them to invent or design, this is overidden by the fact that their seniority effectively places them under a legal obligation not to compete with the 84 [1985] RPC 19. o>) dbid.. 32, 86 [1996] RPC 183.

87 In many circumstances this implied duty of good faith meant that an employee was under a duty to assign the patent to the employer: Patchett v. Sterling [1955] RPC 50; British Syphon v. Homeword [1956] RPC 330. The statutory rule may be more strict than the common-law position: on which see Worthington Pumping Engine Company v. Moore (1903) 20 RPC 41.

OWNERSHIP

485

firm.*’ This fiduciary principle, which is embodied in section 39(1)(b), means that if

an employee who occupies a senior position within an organization produces an invention and it can be shown that the invention was made in the course of the duties of the employee, the invention will belong to the employer. Whether an employee is under a ‘special obligation’ largely depends upon the position that the employee occupies within an organization and the responsibilities that flow from that position. Employees who occupy senior positions, such as senior executives, directors, and managers are treated as alter egos of their employers and are, as such, under a ‘special obligation to further the interests of the employer’s undertaking’.** In contrast, fewer obligations are imposed on less senior employees, such as sales managers or marketing managers. The difficult issue here is deciding at what point within the hierarchy of an organization section 39(1)(b) ceases to apply: how junior must an employee be for them to retain the inventions which they produce? We are able to gain some guidance as to where this line is to be drawn if we compare Harris’s Patent where the employee was held not to be under a special obligation, with Staeng where section 39(1)(b) applied. As we saw earlier, Harris’s

Patent turned on the question of whether an invention made by Harris belonged to Harris, as employee, or Reiss, as employer. As well as failing under section 39(1)(a), section 39(1)(b) was also held not to apply. This was because while Harris was called a manager, when the court looked at what Harris actually did, it found that he had no

power to hire, fire, or agree holiday dates, he never attended board meetings (even when his department was being discussed), and had limited financial control. As such,

the court found that Harris did not owe a ‘special obligation’ to his employer. Rather, they found that he was only under an obligation to do the best that he could to effect sales of the valves and related customer after-care service. Consequently, the court concluded that as Harris was not under a special obligation, the invention in question belonged to Harris. In contrast, in Staeng’s case the employee operated at a very senior level: he attended board meetings; often acted in similar capacity as the directors; had some autonomy over budgetary matters (such as hiring, firing, and expenditure); and had discretion whether to solve problems himself or to pass them on to others. From this basis, the court concluded that Staeng was under a special obligation under section 39(1)(b). As such, the invention he made belonged to his employer. 88 Tbid., 46. It was said in Harris’s Patent [1985] RPC 19 that pre-1977 cases offered guidance as to the extent and nature of an employee’s obligations to further the interest of hisemployer’s undertakings.

89 Harris’s Patent [1985] RPC 19, 37-8.

Pe: INFRINGEMENT

1 INTRODUCTION Patent infringement is a notoriously complex area of law. In part this is a consequence of the evidential nature of the inquiry, a fact that often makes it difficult to generalize beyond the particular case in hand. Another factor that has added to this complexity (but simultaneously enhanced the effectiveness of the patent system) is that it has long been accepted that the scope of the patent monopoly should not be limited to situations where the infringing act takes place in relation to a product or process which is exactly the same as the patented invention. While extending the scope of the monopoly beyond a strict reading of the claims may have satisfied the law’s desire to protect the equity of the patent, it generated a new question: how broadly can the patent be read? Similarly, when it was agreed that not all of an invention needed to be taken for a patent to be infringed, the question arose: how much of the invention needs to be taken? The difficulties that these questions generate further accentuate the problems that arise in understanding patent infringement.’ The complexity of the topic is also a consequence of Britain’s entry into the European Patent Convention. When the EPC was drafted it was decided that questions about the infringement of patents issued by the EPO were better dealt with by national courts. Nonetheless, the close relationship between validity and infringement has meant that decisions at the EPO (particularly in relation to novelty) have impacted on the British law of infringement. These transitions have proved to be all the more problematic because of the absence of a common tribunal dealing with infringement. Despite its complex and often uncertain nature, determining patent infringement can be separated into three tasks.

(1) First, it is necessary to determine the types of activities that constitute an infringement. (2) Secondly, it is necessary to ascertain whether the activity complained of falls within the scope of the patent monopoly. ' See A. Benyamini, Patent Infringement in the European Community (1993).

INFRINGEMENT

487

(3) Thirdly, it needs to be determined whether the defendant is able to make use of any of the defences to infringements that are available to them. Each of these tasks will be dealt with in turn.

2 TYPES

OF INFRINGING

ACTIVITIES

It is important to note at the outset that patent law draws a general distinction between direct and indirect infringement. The main difference between them is that direct infringement involves some immediate engagement with the patented product or process,” whereas indirect infringement applies where a person facilitates the act of infringement:? in effect a patent law version of aiding and abetting. Before looking at direct and indirect infringement in more detail, it is important to note that to infringe the activity must be carried out without the consent of the patentee (i.e. the activity must not be covered by licence);* occur within the UK;° and take place during the duration of the patent.°

2.1

DIRECT

INFRINGEMENT

For a patentee to succeed in an infringement action they must show on the balance of probabilities that the defendant performed one of the activities that falls within the patent owner’s control.’ The primary rights given to a patent owner are set out in section 60(1). As we will see, section 60(1) covers a wide array of activities from the

making or using of a product or a process, through to the sale or importation of the product. As a result, most if not all of the commercially valuable activities are within the owner’s control. The rights given to an owner differ depending on whether the patent is for a product, a process, or a product obtained directly from a process. It is important to note that with the exception of the situation where an infringer ‘offers a process for

use’ under section 60(1)(b), direct infringement takes place irrespective of the knowledge of the defendant. This means that in relation to a patent for a product or where a product has been obtained directly from a process, liability is absolute. As such, there is no need for a patentee to show that the defendants knew that they were infringing. In 2 PAs. 60(1). 3 PA

s. 60(2);

CPC

Art.

26. The

Patents

Act

also

contains

provisions

in relation

to contributory

infringement. 4 See below at pp. 515-16. 5 The UK includes the Isle of Man and the territorial waters of the UK, PA s. 132(2)(3).

6 A patentee may only sue with respect to acts that occur after publication ofthe application and then only if the patent has been granted. PA s. 62(3) introduces certain qualifications where the patent application is amended after publication. PA s. 62(2) deals with the position where the patentee fails to renew the patent promptly. For considerations of duration and supplementary protection certificates see below at pp. 550-5. 7 PA s. 60(1)—(2); CPC Arts. 25-8.

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PATENTS

these cases, independent, accidental, and unintentional creation of the same invention

will infringe.

2.2

PATENT

FOR

A PRODUCT

The owner of a patent for a product is given the right to make, dispose of, offer to dispose of, use, import, or keep the product whether for disposal or otherwise.® It is important to note that in this context liability is absolute: the knowledge of the defendant is not relevant when deciding whether they have carried out one of the activities within the owner’s control. While intention to infringe is not relevant to the determination of liability, mens rea might play a significant role in relation to the

remedy granted by the court.’ 2.2.1 The right to make the product

Perhaps the most important right given to the owner of a patent for a product is the exclusive right “to make’ the product. Few problems have arisen in determining what is meant by the right to make a product. One exception to this is where the defendant repairs or modifies the patented product. Patent law has long recognized that purchasers of patented products should be able to repair and modify those products. As Lord Hoffmann said in the United Wire decision, ‘repair is one of the concepts (like modifying or adapting) which shares a boundary with “making” but does not trespass on its territory.’ He added that ‘as a matter of ordinary language, the notions of making and repair may well overlap. But for the purposes of the statute, they are mutually exclusive. The owner’s right to repair is not an independent right conferred upon him by licence, express or implied. It is a residual right, forming part of the right to do whatever does not amount to making the product.’!? At the same time, however, patent law has been keen to ensure that while a person who obtains a patented product is able to repair or modify the product, they may not go so far as to make the product anew.” In these circumstances, the question arises: how much of a product is a person able to repair or modify before they infringe the owner’s right to make the product? That is, when does the legitimate act of repair or modification switch to become the illegitimate making of the patented product? The way these questions are answered depends upon the circumstances of the case under consideration. It seems that both quantitative factors, such as the amount of the product that is repaired and qualitative considerations such as the relative importance of the part of the patented product which has been repaired, are likely to be taken into 8 PA s. 60(1)(a). ° PA s. 62(1). See further below at pp. 1023-4. 10 United Wire v. Screen Repair Services [2000] 4 All ER 353 (HL). Prior to this decision, the right to repair

had sometimes been based on the idea of impled licence: Solar Thompson Engineering v. Barton [1977] RPC

537, 555; British Leyland v. Armstrong [1986] RPC 279, 358, 361-2 (Lord Bridge). Cf. Canon v. Green Cartridge Co. [1997] FSR 817, 822; Hazell Grove v. Euro League Leisure [1995] RPC 529, 537-41.

11 Solar Thompson Engineering v. Barton [1977] RPC 537; Sirdar Rubber v. Wallington Weston (1907) 24

RPC 537 (Lord Halsbury); British Leyland v. Armstrong [1986] RPC 279, 376.

INFRINGEMENT

489

account.’* It is less likely for a court to hold that a person has made a patented product when they have repaired an immaterial part of a product.!* For example, if a patented product related to the invention of a pool table with a novel coin-operating system, it would almost certainly be legitimate for a person to replace the cloth on the pool table. It would probably not be legitimate, however, for them to replace an old coinoperating system with a new one, since it is likely that this would be an essential component of the invention.'* Where purchasers of a patented article are entitled to repair the product, they ‘must be entitled to carry out what is a genuine repair whether it is economical to do so or not, and whether the part repaired or replaced in the course of what is truly a repair is crucial to the function of the patented article or not.’!° It also seems that the fact that the repaired article may not work as well or as safely as the original product will not affect the decision as to whether the repair is legitimate.’* 2.2.2 The right to dispose of the product Another important right given to the owner of a product patent is the right to sell (or vend) the product. The right to sell, which is part of the general right to dispose of the invention,’’ includes the sale of individual articles.'* It also applies where the patented product is sold to people who intend to use the article in non-infringing activities (such as sale to a person who intends to use the article for experimental purposes).'? A patent owner’s right to dispose of a product will be infringed where a person supplies the product in kit form. As with all infringement actions, the kit must fall within the

scope of the claims.” If the kit partially falls outside the claims, a patentee will have to rely on indirect or contributory infringement to prevent sale of the kits.*’ These matters are discussed below.” (i) Implied licences and exhaustion. A patent owner’s ability to control the way patented products are disposed of is limited by the common-law doctrine of implied licence and the doctrine of exhaustion as developed under Community law. 2 Sirdar Rubber v. Wallington Weston (1905) 22 RPC 257.

3 United Wire v. Screen Repairs Services (Scotland) [2000] 4 All ER 353 (HL).

4 > 6 Euro 17

Hazell Grove v. Euro League Leisure [1995] RPC 529. Solar Thompson Engineering v. Barton [1977] RPC 537, 555 (Buckley LJ). Tbid., 556-7 (Buckley LJ). Dellareed v. Delkin Developments [1988] FSR 329; approved in Hazell Grove v. League Leisure [1995] RPC 529, 541. Gerber Garment v. Lectra [1995] RPC 383. To be an infringing act an ‘offer to dispose’ must be made in

the UK and propose disposal within the UK: Kalman v. PCL Packaging [1982] FSR 406. For issues relating to

joint tortfeasance where the joint tortfeasor is located outside the jurisdiction, service out of the jurisdiction, and actions for infringement of foreign patents see below at pp. 986-8, 1000-6. 18 Hadley Industries v. Metal Sections and Metsec (UK) (13 Nov. 1998). 19 Hoffman La Roche v. Harris Pharmaceuticals [1977] FSR 200 (under the PA 1949). 20 Rotocrop v. Genbourne [1982] FSR 241; Furr v. Trueline (Building Products) [1985] FSR 553, 565. A. Benyamini, Patent Infringement in the European Community (1993), 68-74 (suggesting that kits are dealt with

as direct infringements unless they lack one or more essential elements). 21 Rotocrop v. Genbourne [1982] FSR 241, 258-9.

22 See below at p. 503.

490

PATENTS

According to the doctrine of implied licence, in the absence of any limitation to the contrary, where the patentee sells a patented product, the patentee is unable to rely on the patent to prevent the resale of the article. This is because the sale of a product carries with it an implied licence to keep, use, and resell the product.?? However, where there is an express limitation, it will bind those who receive the goods with notice of the limitation: unless the limitation contravenes Article 28 or 81 EC (formerly Articles 30 and 85 of the Treaty of Rome). Under the doctrine of exhaustion,” a patentee is unable to use a patent to prevent the further disposal of an article that has been placed on the market in the EEA with the patentee’s consent.” Consequently, an express limitation on further disposal of a patented article will contravene Article 28 and thus be void if it prevents importation into or resale in another member state.*° However, such a limitation might enable a UK patentee to prevent export to Australia, or perhaps further disposal within the WK???

2.2.3 The right to import the product

The patentee has the right to control the importation of products that fall within the scope of the product. It seems that where the patented product is passively imported (that is where the patented product is of no importance as far as any question of carriage is concerned), the patent will not be infringed. As Tomlin J said, ‘I cannot think . . . that the employment of a patented cutting blow-pipe or a patented hammer in the manufacture of some part of a locomotive would necessarily render the importation of the locomotive an infringement.” A person will infringe where they deal with the patented product in the course of trade or for the purposes of profit.’ As with the right to dispose of the product, the patentee’s right to prevent importation is limited by the common-law principle of implied consent and by the doctrine of Community exhaustion. 23 Betts v. Willmott (1871) 2 Ch LR 6; Incandescent Gas Light Co. v. Cantelo (1895) 12 RPC 262; National Photograph Co. of Australia v. Menck [1911] AC 336. While the common law has tended to adopt an implied licence approach, there is some evidence that this case law may be being reinterpreted as part of an ‘exhaustion of rights’ principle like that found within European law. In Canon v. Green Cartridge Lord Hoffmann said that the notion of ‘a general implied licence to use the patented product at all, which is sometimes used to explain why mere user does not infringe the patentee’s monopoly . . is perhaps better regarded as a consequence of the exhaustion of the patentee’s rights in respect of the particular article when it is sold,’ [1997] FSR 817, 822. 24 See above at pp. 10-13.

:

2° The doctrine of exhaustion has been held applicable to products made under a compulsory licence: Merck v. Stephar {1981} ECR 2063 (EC)). 26 If the CPC comes into force, PA s. 60(4) will come into effect (see CPC Art. 81). On the scope of PA s. 60(4) see Dellareed v. Delkin Developments [1988] FSR 329, 347.

27 Roussel Uclaf S.A. v. Hockley International [1996] RPC 441 (for a limited licence applied to sales of a patented product outside the EEA to be effective, notice of it must be brought to the attention of every person down the chain of supply). 28 Wilderman v. Berk (1925) 42 RPC 79, 88.

2 This is the case irrespective of whether the ultimate destination is the UK or elsewhere: Hoffmann-La Roche v. Harris Pharmaceuticals [1977] FSR 200 (under the PA 1949).

INFRINGEMENT

491

2.2.4 The right to keep the product The patentee’s monopoly also includes situations where an infringer keeps the product, whether for disposal or otherwise. The scope of this right was considered in SKF v. Harbottle*’ where the court was called upon to decide whether the storage of a product in a London warehouse fell within the meaning of ‘keep’ in section 60(1).

This decision arose from the transporting an antihistamine kg. of the drug in a warehouse Airway’s warehouse, a patent

fact that British Airways, who were in the process of drug called Cimetidine from Italy to Nigeria, stored 20 in London. While the drug was being stored in British infringement action was brought by the UK patentees

(SKF) against the owner and importer of the drug, Harbottle. Along with Harbottle,

British Airways were joined as co-defendants in the infringement action on the basis that British Airways had infringed the owner’s right to keep the product. Finding in favour of British Airways, the court held that the act of passively storing a patented drug in a warehouse in London could not be construed as the ‘keeping of a product’ within the meaning of section 60(1). While declining to arrive at a definitive meaning of the term ‘keep’, the court was strongly influenced by the ‘very much more limited’ terms employed in Article 29(a) of the Community Patent Convention where the equivalent wording refers to ‘stocking’ a patented product. On this basis it was said that ‘keep’ implied “keeping in stock’ rather than acting as a custodian. Despite the approach adopted in the Harbottle decision, a broader interpretation of the right to keep a product was adopted in McDonald v. Graham.’' In this case, the patentee asserted that the defendant (who was a marketing consultant who had been introduced to the patentee) retained certain articles (and later made them available to

a third party) and had infringed their right to ‘keep’ the patented product. In response, the defendants argued that the materials had not been kept “for disposal or otherwise’. The Court of Appeal held that the defendant had kept the product ‘in the sense of keeping them in stock for the purposes of his business in order to make use of them as and when it would be beneficial to him to do so.’ As such, the patent had been infringed. In circumstances where the patentee has placed the product on the market, a person will be free from liability under the implied licence theory. However, if no such licence is implied, liability for mere possession or use is absolute (irrespective of knowledge or intent). 2.2.5 Scope of protection for biotechnological inventions In the lead up to the Biotechnology Directive** questions arose about the scope of protection for biotechnological inventions. The issues were dealt with by Articles 8-10 of the Directive. The 1977 Patents Act has recently been amended to take account of 30 1 32 33 w

[1980] RPC 363; M. Howe, ‘Infringing goods and the warehouseman’ [1979] EIPR 287. [1994] RPC 407. [1994] RPC 407, 431. See above at pp. 318-19.

492

PATENTS

these provisions.* The scope of protection of product patent for biological material is dealt with in Articles 8(1) and 9 of the Directive.

Article 8(1) provides that the protection conferred by a patent on a biological material (possessing specific characteristics) extends to any biological material derived from that biological material by propagation or multiplication in an identical or divergent form. This would apply, for example, to inventions for herbicideresistant plants and genetically manipulated animals.** For the derivative biological material to be covered by the patent it must possess the same characteristics as the patented biological material. This means that a patent for a genetically modified animal would extend to include future generations (so long as they retain the ‘specific characteristics’ of the ‘original’ animal).*° In order to minimize the impact of the potentially broad nature of biological patents, special defences have been introduced.*” Article 9 (which is mirrored in the UK in paragraph 9 of Schedule A2 to the 1977 Patents Act)** deals with the scope of protection for a product that contains genetic information. More specifically it provides that the protection conferred on a patent containing or consisting of genetic information shall extend to all material, save as provided in Article 5(1),* in which the product is incorporated and in which the genetic information is contained or performs its function. 2.3

PATENTS

FOR

A PROCESS

The owner of a patent for a process is given the right to use the process or to offer it for use in the UK.” This is subject to the proviso that the right is only infringed where it can be shown that the defendant knew, or it would have been obvious to a reasonable person in the circumstances, that the unauthorized use of the process would be an infringement of the patent. It is important to note that in contrast with the rights given to owners of patent for products (discussed above) and the rights given to patents for products derived from processes (discussed below), liability for infringement of a patent for a process is not absolute. That is, liability depends upon the owner proving that the defendant knew, or that it would have been obvious to a reasonable person in the circumstances, that the unauthorized use of a process would be an infringement of the patent. In essence the owner of a patent for a process is given the right to practise the invention or to put the invention into effect. For the most part, there have been few problems in interpreting this provision (although problems may arise in discovering how a defendant makes a particular product). 34 Patents Regulations 2000 (SI 2000/2037). Arts. 8-10 are said to be declaratory of existing law. 3°. Bostyn, “The Patentabilty of Genetic Information Carriers’ [1999] IPQ 1, 28. 36 Thid. 37 See below at pp. 509-11. 38 Introduced by Patents Regulations 2000 (SI 2000/2037) (in force 28 July 2000). 39 Biotech. Dir. Art. 5(1)/PA Sched. A2, para. 3(a), states that the human body at the various stages of its

formation and development, and the elements thereof (including gene sequences) cannot be patented.

40 PA s. 60(1)(b).

INFRINGEMENT

493

Problems may arise, however, in relation to patents for novelty of use claims, which are discussed below. 2.3.1 Direct products of patented processes It has long been accepted that where a patent is granted over a process the protection includes both the process in question and the products that flow from that process, This principle is now to be found in section 60(1)(c) of the 1977 Patents Act

which provides that a person infringes a process patent if they dispose of, offer to dispose of, use, import, or keep any product derived from that process.*! This protection is particularly important where no claim has been made to a product as such. It is also important where the process is carried on outside the UK and a product derived from that process is imported into the UK.” As we have already looked at the way these terms are construed, there is no need to examine them again. The protection given to process patents is potentially very wide. In part this is because where a range of different products flow from a single process, all of the products fall within the remit of the patent. It is also because the scope of protection not only includes the products that flow from the process, but also the products that are based upon the products which flow from the process: if you like, the derivatives of the derivative. To ensure that the scope of the monopoly is kept within justifiable limits, an important restriction is placed on the products that are protectable by process patents. This has been done by stipulating that for protection to arise, there

must be a direct relationship between the process and the product in question.” The question of what is meant by a ‘direct’ relationship was considered by the Court of Appeal in Pioneer Electronics v. Warner Music.“* This action arose when the claimant argued that their process patent for a method of manufacturing compact

discs had been infringed when the defendants imported optical discs that were a by-product of the patented process into the UK. While there was no doubt that the imported discs had been derived from the patented invention, it was unclear whether there was a ‘direct’ relationship between the process patent and the imported discs. After considering the way equivalent provisions were interpreted in other European jurisdictions, the Court of Appeal concluded that ‘directly’ meant ‘without intermediary’. More specifically, Nourse LJ said that when the 1977 Patents Act stipulated that for protection to arise there had to be a direct relationship between the process and product, this meant that there were no material or important steps that intervened between the process and the product in question. In situations where material and important steps did intervene, the process patent could not be used to control the 41 CPC Art. 25(c); EPC Art. 64(2). 42 CIPA, para. 60.06. 43 PA s. 60(1)(¢). For the common-law position see Saccharin Corp. v. Anglo Continental Chemical (1900) 17 RPC 307. 44 [1997] RPC 757 (CA). See H. Hurdle, ‘What is the Direct Product of a Patented Process?’ [1997] EIPR 322; F. Russell and H. Hurdle, ‘What is the Direct Product of aPatented Process?’ [1995] EIPR 249.

494

PATENTS

use that was made of the product. This situation would only change if it could be shown that the intervening steps were immaterial or trivial. The process patent for the production of the master discs was not infringed when the final discs were imported into the UK. The reason for this was that a number of important and material steps separated the product from the process. A key factor in the finding of non-infringement was that the production of the master discs was only an initial stage in the production of the final optical discs. The master discs were used to produce ‘mothers’ which in turn were converted into ‘sons’, which subsequently acted as the basis from which the moulding of the final discs took place. While the patented invention may have acted as a platform that aided in the production of the final discs, because there were a number of important and material steps that separated them, there was not a direct relationship and thus no infringement. The requirement that there be a direct relationship is in accord with the general logic of patent law. While a product may draw upon a process patent, if the product only comes into existence as a result of material steps that occur outside the process, the products are no longer derivative; they are new products that warrant separate patent protection. If patentees were able to regulate the use that was made of such products, this would extend the ambit of the monopoly beyond the scope of the invention disclosed in the patent. 2.3.2 Direct products of biotechnological processes The question of the scope of protection for patents for biotechnological processes is dealt with in Article 8(2) of the Biotechnology Directive. A similar provision now

exists in the 1977 Patents Act as a result of amendments made in July 2000.*° These provide that [T]he protection conferred by a patent on a process that enables a biological material to be produced possessing specific characteristics as a result of the invention shall extend to biological material directly obtained through that process and to any other biological material derived from the directly obtained biological material through propagation or multiplication in an identical or divergent form and possessing those same characteristics.

As with the protection given to product patents for biological materials, the derived material must possess the same characteristics as the ‘original’ material. It should be noted that the protection under Article 8(2)/paragraph 8 of Schedule A2 to the 1977 Patents Act” is limited to material ‘directly obtained’ from the patented process. It seems that directly obtained would be construed in a similar way as ‘direct’ relationship was construed in Pioneer Electronics.

45 If a ‘patentee wants appropriate cover . . . they should secure a product-by-process claim.’ Banks Committee, para. 297.

46 Patents Regulations 2000 (SI 2000/2037) (in force 28 July 2000). 47 Introduced by Patents Regulations 2000.

INFRINGEMENT

2.4

NOVELTY

OF USE

495

CLAIMS

For the most part, the key question when determining whether a defendant has carried out one of the activities within the patentee’s control is the way the language of the patent is construed. One situation where problems may arise, however, is in relation to patents for a new use of a known substance used in an old way, which have

been recognized at the EPO and in the UK. The decision to accept novelty of purpose patents has met with considerable resistance in the UK.*® As Lord Hoffmann said in Merrell Dow, the Board’s decision in

Mobil has been criticized on the ‘ground that a patent for an old product used in an old way for a new purpose makes it difficult to apply the traditional UK doctrine of infringement.’ The problem with novelty of use claims is that it may be difficult to ascertain when a product is being used in the relevant way. Taking the example of the invention in Mobil Oil (which was for a substance, already being used to inhibit rustformation, to be used as a friction-reducing additive in lubricating oils) Lord Hoffmann asked, how is a court to ‘tell whether the person putting the additive into his engine is legitimately using it to inhibit rust or infringing by using it to reduce friction?’ Unless use claims are confined to uses of products that are distinct, it seems that a patentee of an invention that consists of a new use must demonstrate that the infringer intended to produce the particular effect.*° The reason why the recognition of use claims is incompatible with the traditional UK doctrine of infringement can be traced to the fact that the infringement of a patent turns exclusively on the physical conduct of the defendant. A person will infringe if, for example, they manufacture or sell the patented invention without permission. In so doing, the alleged infringer’s state of mind is irrelevant; it does not matter whether the alleged infringer knew that they were dealing with the patented product. In most cases, this presents few problems. For example, because claims to a new use of an old thing will be physically different from previous uses of the same thing, the earlier use can continue to be performed without it infringing the subsequent patent. Problems may arise, however, in relation to novelty of use patents. This is because for infringement purposes the discovery that a known product used in a known way can be put to a new purpose is physically identical to the prior use: the only difference between the two uses being in the mind of the user. Given that the physical acts protected by a novelty of purpose patent would be the same as the steps taken during the previous use, when someone uses an old substance in an old way, there is no obvious way of telling whether they are using the substance to achieve the 48 To ‘hold that every new use ofan old composition may be the subject of apatent upon the composition would lead to endless confusion and go far to destroy the benefits of our patent laws’: In re Thuau 135 F 2d 344 (CCPA 1943). 49 Merrell Dow Pharmaceuticals y. Norton [1996] RPC 76, 92 (HL). In Mobil it was said that the analogous

problems concerning infringement would arise in relation to second and subsequent medical uses. Mobil/ Friction reducing additive G2/88 [1990] EPOR 73, 89.

50 For consideration of the position of the supplier of the substance see indirect infringement below at pp. 496-7.

496

PATENTS

old purpose, or whether they are using the substance to achieve the new purpose. As Lord Hoffmann said: Liability for infringement is, as I have said, absolute. It depends upon whether the act in question falls within the claims and pays no attention to the alleged infringer’s state of mind. But this doctrine may be difficult to apply to a patent for the use of a known substance in a known way for a new purpose. How does one tell whether the person putting the additive into his engine is legitimately using it to inhibit rust or infringing by using it to reduce

friction?! The problem raised by novelty of purpose patents is that while the only feature which enables a novelty of purpose patent to be distinguished from the previous use is the purpose for which it is used (which exists in the mind of the user), the purpose of the alleged infringer is not taken into account when determining whether a patent has been infringed: all that matters is whether the physical act of infringement has taken place. The consequence of this is that a patent granted for the discovery of a new purpose of an old thing used in an old way could prevent someone from doing what they had already done before: thus denying the prior user their right to work.” While it has been suggested that these problems are based on an artificial distinction,” the inherent conflict between the physical nature of infringement and the mental nature of novelty of purpose patents gives rise to real problems in the UK which will need to be resolved if novelty of purpose patents are allowed. If novelty of purpose patents are not to impinge upon the legitimate (pre-existing) activities of others,™ it may be necessary to limit the scope of the monopoly (possibly to the making, using, and commercial supply of the thing) or to modify the defence of prior use.°°

2.5

INDIRECT

INFRINGEMENT

In addition to the prohibited activities set out in section 60(1), the also provides that a patent is infringed where a person contributes directly take part in, the infringement.® This is particularly important or user is difficult to detect (for example where the manufacture

1977 Patents Act to, but does not where the maker or use occurs in

>! Merrell Dow Pharmaceuticals v. Norton [1996] RPC 76, 92 (HL). See also Bristol-Myers Squibb v. Baker Norton Pharmeucticals [2001] RPC 1, 18 (CA), para. 49 (Aldous LJ said that it was unlikely that the Court of

Appeal would suggest that Mobil was wrongly decided when the House of Lords ‘did not so conclude’). >? ‘New use patents raise vexing questions about the patentee’s right to prevent others from selling the old compound’: Rohm & Haas v. Dawson Chem., 448 US 176 (1980).

53 Paterson, para. 10-31. °4 In response to arguments of this type, the Enlarged Board of Appeal offered the following unhelpful advice: ‘there is a clear distinction between the protection which is conferred and the rights which are conferred by a European patent.’ While the ‘protection conferred by a patent is determined by the terms of the claims (Art. 69(1) EPC) and in particular by the categories of such claims and their technical features.’ ‘In contrast, the rights conferred on the proprietor of a European patent (Art. 64(1) EPC) are the legal rights... [conferred] upon the proprietor.’ Mobil/Friction reducing additive G 2/88 [1990] EPOR 73, 80-1.

55 See below at pp. 508-9. 5© PA s. 60(2); CPC 26(1). Dow Chemical v. Spence Bryson [1982] FSR 598, 628-30 (inducing or procuring

infringement by persuading infringer to adopt process, teaching how to operate it). See below pp. 985-8.

INFRINGEMENT

497

private), or they are not worth suing. Section 60(2) states that a person infringes a patent where they supply or offer to supply any means relating to an essential element of the invention for putting the invention into effect. Thus, a patent for a glue which is produced by combining two chemicals A and B may be infringed by a person who supplies either A or B to a person who then manufactures the glue.*” A person will also indirectly infringe where they supply a number of the essential components of a patented invention. This would occur, for example, where a patent for an oil lamp (which was made up of a vessel holding the oil, a burner and wick, an outer glass

container, and a chimney) and the defendant supplied all of the parts other than the chimney.*® For indirect infringement to take place, three elements must be satisfied. First, the

proprietor of the patent must establish that the means supplied by the defendant relate to an essential element of the invention.” Secondly, the supplier must know, or it must be obvious to a reasonable person in the circumstances, that the means are both ‘suitable’ for and are ‘intended’ to be used in putting the invention into effect. The imposition of a knowledge requirement, which is construed objectively, ensures that parties who do not knowingly benefit from the misuse of a patent are not caught as indirect infringers. Thirdly, in recognition of the fact that there may be legitimate reasons why a person supplies or offers to supply something that enables the means for putting the invention into effect, section 60(3) provides that the supply of a staple commercial product will not constitute an indirect infringement under section 60(2).°!

The meaning of ‘staple commercial product’ is not clear, though it might be assumed that it covers basic products that are readily available.” The staple commercial product exemption does not apply where the product is specifically supplied for the purpose of inducing an infringement.” 2.5.1 Novelty of use claims Given the difficulty in establishing direct liability in relation to new-use patents (discussed earlier), indirect liability may take on a greater significance. Taking the example of a patent for the use of a substance in oil as a lubricant, where it was previously known that the substance inhibited rust, it would seem that a defendant would infringe if they supplied the oil to persons and advertised it as a lubricant.

57 The policy of expanding the patentee’s monopoly to cover contributory infringement seems to conflict with the policy underpinning the rules preventing a patentee from requiring licensees to utilize particular suppliers. On these see below at p. 522. The connection is recognized in US jurisprudence where the Supreme Court has observed that the ‘doctrines of contributory infringement and patent misuse have long and interrelated histories’: Dawson Chemical Co. v. Rohm e& Haas Co., 448 US 176 (1980). 58 See Wallace v. Holmes, 29 F Cas 74 (No. 17, 100) (CC Conn 1871).

59 Hazell Grove v. Euro League Leisure [1995] RPC 529, 541. 60 For the pre-1977 position see Dunlop v. Moseley (1904) 21 RPC 274. 61 In Pavel v. Sony SRIS CC/14/93 the Patents County Court defined staple commercial product as meaning ‘products of regular kind needed daily and generally available’. 62 A. Benyamini, Patent Infringement in the European Community (1993), 234-5. 63 Furr v. CD Truline (Building Products) [1985] FSR 553, 565.

498

PATENTS

However, a person would not infringe if they continued to supply the oil as a rust inhibitor. While it may be known that the oil could be used as a lubricant, it would be difficult to prove that the defendant ‘intended’ that the oil be used in this way (as is required under section 60(2)). In these circumstances, secondary factors such as the

documentation that accompanies the product, which may indicate the way the product was expected to be used may be helpful.™ It would be more difficult to determine whether a defendant indirectly infringes where they supplied the oil saying that it acted both as a rust inhibitor and a friction reducer. The liability of the defendant is also uncertain when they supplied the oil saying it acted as a rust inhibitor, where it was widely known that the oil could also be used to reduce friction. In these circumstances, the likelihood of the user using the oil as a lubricant is high but not certain. Jacob J, who has expressed doubts about the role of novelty of use claims, has called for these issues to be considered in detail by the European Patent Office whenever it gives further consideration to claims for uses.® So far, these pleas have fallen on deaf ears.

2.6

ADDITIONAL

LIABILITY

In addition to the rights set out in sections 60(1) and 60(2), patentees are also able to

make use of a limited number of provisions that exist outside of the 1977 Patents Act. These provisions will be particularly important where a party acts in such a way as to undermine the value of a patent, yet the activities fall outside of the scope of section 60(1) or (2).

Perhaps the most important non-statutory mechanism available to a patent owner is the concept of joint tort-feasance.® This provides that even if a party does not fall within the scope of section 60, if it can be shown that they have acted in a ‘common design’ with a party who is liable of a statutory tort of infringement under section 60 (and that they jointly inflicted damage on a patentee), the patentee can enjoin the third party as a joint tortfeasor.© It has also been suggested that the law of restitution provides patentees with an additional ground on which to found liability. More specifically, it has been argued that independently of the rights set out in the Patents Act, the law also recognizes unjust enrichment as a separate cause of action. Proposals of this type were considered and rejected in Union Carbide Corporation v. BP Chemicals where Jacob J said that the law of restitution could not be used to supplement the law of patents to the

64 It has been said that German case law supports the view that in this form there is direct infringement, either because a use claim is seen as primarily a product claim and this amounts to sale of the product, or because such an act is an offering of a process for use: see A. Benyamini, Patent Infringement in the European Community (1993), 84-90 (advocating direct infringement approach). See further A. Horton, ‘Methods of Treatment and Second Medical Use’ (Aug. 2000) Patent World 9, 12.

65 Bristol-Myers Squibb v. Baker Norton Pharmaceuticals [1999] RPC 253, 280. 66 See, CIPA, para. 60.24. 67 See further below at pp. 986-8.

INFRINGEMENT

499

extent of providing a cause of action for unjust enrichment.® Jacob J did, however, say that there might be cases where the strict rights set out in section 61 of the 1977 Act might not limit what a court could do in furtherance of the policy of patent law: what this policy is and what it might mean in this context was left unclear.

3 HAS

THE

PATENT

BEEN

INFRINGED?

Once it has been ascertained that a defendant has performed one of the activities listed in section 60, it is then necessary to consider whether the patent has been infringed. This, in turn, requires us to undertake two further tasks: first, the scope of the monopoly needs to be determined; secondly, a comparison needs to be made between the patented invention and the defendant’s product or process. The aim of this comparison is to determine whether the defendant’s device or process falls within the ambit of the claimant’s monopoly. 3.1

DETERMINING

THE

SCOPE

OF THE

MONOPOLY

Before a court is able to determine whether a patent has been infringed, the scope of the patent monopoly must be ascertained. The extent of the protection conferred by a patent is determined by the claims of the patent, as interpreted.” The courts have developed a number of rules that influence the way patent claims are interpreted. The more important of these provides that a patent specification must be read as a whole; that the description and drawings shall be used to interpret the claims;”° that the claims must be interpreted as part of the entire document;’! and that the court can hear expert evidence on the meaning of technical terms.”” In some cases, the prosecution history (that is, the information exchanged between the applicant and the Patent Office during the grant process) can be used to interpret the claims.” The patent document is read from the point of view of a person skilled in the art and is understood according to the common general knowledge available at the time of its publication.”* 68 [1998] FSR 1. 69 The extent of protection conferred by a patent or application shall be ‘taken to be that specified in a claim of the specification of the application or patent, as the case may be, as interpreted by the description and any drawings contained in that specification.’ PA s. 125; EPC Art. 69. 70 PA s, 125; EPC Art. 69. In Rosedale v. Carlton Tyre [1960] RPC 59 the Court of Appeal used the drawings and descriptions in determining that ‘holes’ did not have to be round, 71 EMI y. Lissen (1939) 56 RPC 23; Glaverbel SA y. British Coal Corporation [1995] RPC 255, 269. The statement of the problem which the invention is intended to solve may be particularly influential: Minnesota Mining & Manufacturing Co. v. Plastus Kreativ AB [1997] RPC 737 (CA). 72 Glaverbel SA v. British Coal Corporation [1995] RPC 255, 269 (Staughton LJ). 73 Furr v. CD. Truline (Building Products) [1985] FSR 553, 560-4. But, see Glaverbel v. British Coal (No. 2)

[1993] RPC 90. 74 Hoechst Celanese Corporation v. BP Chemicals [1999] FSR 319 (Aldous LJ). On common knowledge, see Beloit v. Valmet [1997] RPC 489, 494.

general

500

PATENTS

3.1.1 Standpoint of interpretation Perhaps the most important factor that shapes the scope of the patent monopoly is the general approach or standpoint that the court adopts when interpreting the patent. While in interpreting the claims British courts have flirted with the so-called ‘literal approach’ (under which the courts read the claims strictly and in so doing limit the ambit of the patent monopoly to what was expressly written in the claims), this has been rejected under the 1977 Act. In its place, the courts have recognized that patents ought to be interpreted purposively.”° In addition, they have accepted that not all of a patent needs to be taken for it to be infringed. In order to understand the way in which patents have been interpreted under the 1977 Patents Act, it is necessary to return to the 1982 House of Lords decision of Catnic v. Hill and Smith where Lord Diplock argued that a patent specification should be given a purposive rather than a literal construction.”° A purposive interpretation demands that the claims be read through the eyes of the person skilled in the art, and that the purpose or function of the invention should be borne in mind when the patent is interpreted.”” Despite the fact that Catnic was decided under the 1949 Patents Act, it has been decided that Lord Diplock’s rejection of the literal mode of interpretation and its replacement by a purposive style of interpretation was not only still relevant under the 1977 Act, it was also accepted that the purposive approach to interpretation is the correct approach to be adopted under the Protocol on the Interpretation of Article 69 of the European Patent Convention.”® The nature of purposive interpretation and the impact that it has upon patent infringement can be seen in the Catnic decision, where the House of Lords was called upon to decide whether in manufacturing steel lintels the defendants had infringed the claimant’s patent for galvanized-steel lintels. (A lintel is a load-bearing beam that spans open spaces such as doors and windows in cavity walls.) While it was evident that the defendant’s lintel and the patented invention (see Figure 22.1) were very similar, one issue remained unclear. This arose from the fact that while the patent specified that the rear side of the lintel should be ‘vertical’, the defendant’s lintel (see Figure 22.2) was at an angle of 84 degrees. In order to determine whether the 7> ‘The exercise does not involve an arid study of the claim outside of its context. The words are to be construed having regard to the inventor’s purpose as set out in the rest of the patent. That is why the words “purposive construction” are apt’: Minnesota Mining & Manufacturing v. Plastus Kreativ AB [1997] RPC 737, 743. Glaverbel SA v. British Coal Corp. [1995] RPC 255, 269 (Staughton LJ) (‘If possible the meaning of the document must be moulded to conform with the purpose of its author’). : 76 [1982] RPC 183, 241 (HL). 77 Kastner v. Rizla [1995] RPC 585. 78 In PLG Research v. Ardon International [1995] RPC 287, 309, the Court of Appeal argued that Catnic was no longer good law under the 1977 Act. However, the promotion of Aldous LJ to the Appeal Court led to an immediate reversal of this view. This has been confirmed in a range of subsquent decision. See e.g. Kastner v. Rizla [1995] RPC 585, 594; Beloit Technologies v. Valmet Paper Machinery [1997] RPC 489 (CA); Minnesota

Mining & Manufacturing v. Plastus Kreativ AB [1997] RPC 737 (CA); Codex v. Racal-Milgo [1983] RPC 369 (CA); Anchor Building v. Redland Roof Tiles [1990] RPC 283 (CA); cf. J. Turner ‘Purposive construction: Seven reasons why Catnic is wrong’ [1999] EIPR 531 (but, see the critical response by M. Franzosi, ‘In Defence of Catnic’ [2000] EIPR 242).

INFRINGEMENT

Se a

ikke

501

oT

eS

PEL IS SPL

“EPEAT F

Fig. 22.1 Plaintiffs lintel

Fig. 22.2 Defendant’s lintel claimant’s patent had been infringed, the House of Lords had to decide whether a claim that specified that the rear support be vertical encompassed a lintel whose rear support was at an angle of 84 degrees. While a literal reading of the claims would have limited the claimant’s patent to lintels at 90 degrees (and thus to a finding of non-infringement), Lord Diplock said that the patent ought to be construed purposively. This meant that when deciding whether ‘vertical’ included lintels at an 84-degree angle, the person skilled in the art (here it was a builder) would take into account the function or purpose of the invention. On reading the patent, it was decided that the person skilled in the art would have understood that the reason why the patent specified that the rear support member was to be ‘vertical’ related to the load-bearing capacity of the lintel. An

502

PATENTS

important factor in the finding that the patent had been infringed was that a 6-degree movement away from 90 degrees only led to a 0.6 per cent reduction in the load-bearing capacity of the lintel. This meant that the defendant’s lintel effectively performed the same purpose or function as the claimant’s lintel. While it is often presupposed that purposive interpretation offers greater protection to patentees than a more literal reading of the claims may provide and, in turn, that the two styles of interpretation are opposites, this is not necessarily the case.’”? The reason for this is that while the use of a purposive style of interpretation often means that the scope of the monopoly is broader than that which would arise if the claims were interpreted literally, purposive interpretation does not necessarily require that the claims be read broadly or indeed in the patentee’s favour. All that the purposive approach states is that the court should interpret patents through the eyes of the person skilled in the art, while taking into account the purpose of the invention. Nothing more, nothing less. How broadly claims will be read in any particular case always depends on the approach undertaken by the person skilled in the art in the case in hand which, in turn, is influenced by the purpose of the invention and the way the claims are drafted.*° The potentially limiting nature of the purposive interpretation was highlighted in Catnic when Lord Diplock said that there may be good reasons why a person skilled in the art reads the patent claims literally, thus restricting the scope of the monopoly.*! The most obvious reason why a patentee might have intended that the primary meaning of the claim should be strictly complied with is because of the existence of some closely related prior art which would anticipate (and thus invalidate) the patent if it was construed broadly. Another reason why the person skilled in the art may think the patentee intended to confine the scope of the claims relates to the language or types of parameters used by the patentee. Where specific numerical ranges or technical terms (such as ‘helical spring’) are used, a person skilled in the art might be inclined to think the choice of wording was deliberate.*

4 COMPARING THE

THE

PATENTED

INVENTION

DEFENDANT S PRODUCT

WITH

OR PROCESS

Once the scope of the patent has been determined, it is then possible to compare the patented invention with the defendant’s product or process. This is done to ascertain 79 See Minnesota Mining & Manufacturing v. Plastus Kreativ AB [1997] RPC 737, 747; Auchinloss v. Agricultural and Veterinary Supplies [1997] RPC 649, (CA 29 Oct. 1998). 80 See above at pp. 331-2. 81 Catnic Components v. Hill & Smith [1982] RPC 183. See also Minnesota Mining & Manufacturing v. Plastus Kreativ [1997] RPC 737, 747.

82 Improver Corp. v. Remington [1989] RPC 69 where Hoffmann J interpreted the term ‘helical spring’ as one which would be understood by a person skilled in the art as being confined so that it did not include a functional equivalent made out of rubber.

INFRINGEMENT

503

whether the products or processes are the same or different; that is, whether the

defendant’s device falls within the ambit of the claimant’s monopoly.* If the products or processes are either identical or very different, few problems arise. The comparison becomes more problematic, however, where there are only minor variations or differences between the patented invention and the defendant’s products or processes. While the way these borderline infringement actions are determined always depends on the facts under consideration, it may be helpful to look at some of the more common scenarios.**

4.1

WHERE

THE

DEFENDANT

ADDS

TO THE

PRODUCT

It is clear that a defendant will infringe where they incorporate the patented invention into a larger process or product. This is the case even if the addition improves upon

the patented invention.

4.22

KIT

FORM

It is also clear that the defendant will infringe where they supply a patented product in

parts or in kit form.® A defendant will not infringe if the consumer needs to exercise some inventive skill in putting the kit together.

4.3

MATERIAL

AND

IMMATERIAL

VARIATIONS

A more difficult situation arises where rather than adding to the patented invention a defendant alters or omits to include part of the patented invention in their product or process and on this basis argues that their invention falls outside the scope of the monopoly. A related situation arises where a defendant supplies most but not all of the patented invention in kit form. In order to ensure that patentees’ interests are not undermined by defendants who dress up infringing inventions to appear as if they fall outside of the scope of the patent monopoly, patent law has long held that it is not necessary for every element of

a patented invention to be taken for it to be infringed. Rather, for an infringement to take place, a defendant must take all of the material or essential elements of the

83 The question of whether the alleged infringing device has been made with an eye to the patented device was irrelevant to the question of infringement. The correct approach to the question ‘infringing or not’ called for an entirely objective investigation: Palmaz’s European Patents (UK) [1999] RPC 47, 78, 92. 84 For a different analysis see Improver Corporation v. Remington Consumer Products [1990] FSR 181, 189, where Hoffmann J suggested a model for deciding interpretation. On the basis that the model tends to focus on one factual situation (viz. where an element of the invention is changed), we have subsumed these steps within more general questions. For problems in the application of the Improver test, see Wheatley v. Drillsafe [2001] RPC 133 (CA); Consafe Engineering v. Emtunga [1999] RPC 154, 160-1; Kastner v. Rizla [1995] RPC

585, 595 (suggesting that the court should lean away from over rigid application of the Improver test). 85 Rotocrop International v. Genbourne [1982] FSR 241.

504

PATENTS

invention.*° Correspondingly, the fact that a defendant fails to take an immaterial or non-essential part of the patented invention will not allow them to escape liability for infringement. For example, if a patent for a solar-powered lawnmower is made up of three elements: the body of the mower, a solar panel, and a coating of non-gloss red paint over all the external parts of the mower. If it were found that the fact that the lawnmower was painted red was immaterial to the invention, it would not affect an infringement action if the defendant’s lawnmower was painted green. However, if in interpreting the claims purposively a person skilled in the art found that the red paint was a material part of the invention (for example if it ensured that the the solar panel received sufficient sunlight to work), the fact that the defendant’s lawnmower was painted green would lead to a finding of non-infringement. Following from the principle that all of the material or essential elements of an invention need to be taken for a patent to be infringed, there would be no infringement if the kit omitted an essential element of the invention (although the patentee might nevertheless succeed as indirect infringement).

4.4

REPLACEMENT

EQUIVALENT

OF PART

OF AN

INVENTION

WITH

AN

PART

It is well settled that for there to be an infringement, the defendant must deal with all the material elements of the invention. One issue that remains uncertain under the 1977 Act is whether a person will infringe where they substitute a material element of an invention with something that is functionally equivalent. Prior to the passage of the 1977 Patents Act, under the so-called doctrine of equivalents, the courts held that elements of an invention were the same not only when they were identical, but also when they were functionally equivalent.*” As Thomas Webster wrote in 1851, ‘the question is, whether that which may have been done, though different in form and configuration, is not a geometrical, mechanical

or chemical equivalent; whether,

though the form be changed, the same result be not attained.’®® Despite its long tradition, doubts have been raised as to whether the doctrine of

equivalents is still applicable under the 1977 Act. The reason given for this is that neither Article 69 of the EPC® nor the Protocol”® makes any specific reference to the 8° There has been little discussion about how the material elements of the invention are to be determined. Presumably, the courts ought to construe the patent purposively from the perspective of the reasonable person skilled in the art. The terms ‘essence’, ‘pith and marrow’, ‘substantial’, ‘material’, and ‘essential’ have been used interchangeably. All boil down to the same point, that for an infringement action to be successful, it is necessary for the essence or core of a patented invention to be ‘taken’. See Clark v. Adie (1877) 2 App Cas 315 (Lord Cairns).

87 See Van der Lely v. Bamfords [1963] RPC 61 (HL); Rodi & Weinenberger v. Showell [1969] RPC 367 (HL); Beecham Group v. Bristol Laboratories [1978] RPC 153.

88 T. Webster, The Subject Matter of Letters Patent for Inventions and the Registration of Designs (1851), 83.

8): PAISH 125:

°0 On the Protocol see B. Sherman, ‘Patent claim interpretation: The impact of the Protocol on Interpretation’ (1991) 54 Modern Law Review 499.

INFRINGEMENT

505

doctrine of equivalents.”' While this is undoubtedly the case, it is wrong to assume from this that the doctrine of equivalents therefore has no place in British law. Rather, following the widely shared view that a purposive style of interpretation is the approach that ought to be adopted under the Protocol, the question of whether the doctrine of equivalents has any continued relevance under the 1977 Act ought to be decided purposively on the facts of individual cases. This means that whether the replacement of a part of an invention with something that is functionally equivalent constitutes an infringement ought to depend on the way the person skilled in the art views the patent in question.”* Such an approach would not only be consistent with the current jurisprudence in other EPC countries, by focusing upon the function or purpose that invention is to perform (which is what the doctrine of equivalents demands) this follows the spirit rather than the letter of the Protocol: the very point that Lord Diplock was making in the Catnic decision. Any remaining doubts about the status of the doctrine of equivalents were answered by the Conference to revise the EPC held in November 2000. In affirming the continued role of the doctrine of equivalents, a proposed new Protocol on Interpretation reads that for ‘the purposes of determining the extent of protection conferred by a European patent, due account shall be taken of any element which is equivalent to an element specified in the claims.”

5 DEFENCES

TO INFRINGEMENT

Once the claimant has proved that the defendant has performed an activity that falls within the scope of the patent monopoly, the obligation then shifts to the defendant to show that the activity is exempted from liability by one of the defences to patent infringement that are available to them. There has been surprisingly little discussion about the defences to patent infringement and the policies that inform them.” At a general level, the exceptions balance the interests of patentees against the interests of other groups, such as competitors, prior users, traders, users, non-profit-making bodies, as well as teaching and research establishments. In some cases, the defences oper-

ate to overcome the market failure that occurs where a patentee declines to license a socially beneficial use because of the transaction costs involved. With these general

91 Beloit Technolgies v. Valmet Paper Machinery [1995] RPC 705, 720. 92 In Eli Lily v. Novopharm [1966] RPC 1, 21 the Federal Court of Canada said that as the court was entitled to adopt a purposive approach in construing the claims and the essential parts thereof, this obviated the need to resort to the doctrine of equivalents. 93 Proposed new Protocol on the Interpretation of Art. 69: Art. 2, item 2 of the Act Revising the Convention on the Grant of European Patents (EPC) (Munich) (29 Nov. 2000) MR/3/00 Rey le. 94 TD. Gilat, Experimental Use and Patents (1995); R. Eisenberg, ‘Patents and the Progress of Science:

Exclusive Rights and Experimental Use’ (1989) 56 University of Chicago Law Review 1017; J. Karp, ‘Experimental Use as Patent Infringement’ (1991) 100 Yale Law Journal 2169.

506

PATENTS

points in mind, we now turn to look at some of the more important defences that may exempt a defendant from liability.

5.1

PRIVATE

NON-COMMERCIAL

USES

Section 60(5)(a) provides that acts that are done privately and for non-commercial

purposes do not infringe.”° The private use exception is usually explained on the basis that while private uses may increase scientific knowledge and thus be socially beneficial, high transaction costs may mean that they are unlikely to be licensed.*° Another factor in favour of the defence is that private non-commercial uses do not pose much of a threat to the patent monopoly. While private uses need not be secret or confidential, they must be ‘for the person’s own use’.”” Where an activity has both commercial and non-commercial benefits, it is necessary to ascertain the subjective intention of the user. If the infringer was motivated by commercial interests, the defence would not apply. However, if the subjective purposes were non-commercial, the defendant could rely on the immunity. This is the case even if the resulting information has a

commercial benefit.”® 5.2

EXPERIMENTAL

USES

Section 60(5)(b) provides immunity for acts done for experimental purposes relating to the subject matter of the invention.”’ This defence gives effect to a number of related policies, the most obvious is that the patent monopoly should not be allowed to inhibit scientific developments. It is likely that the experimental use defence will become increasingly important as patenting (especially in relation to biotechnology) enters the traditional domains of ‘pure’ scientific research carried out within the universities. 1° To a large extent, the scope of the defence depends on the way ‘experimental purpose’ is defined.'®' If it can be shown that the purpose of the activity was to discover something unknown or to test a hypothesis, it would be regarded as an experiment.!© An act will also be experimental where a person is attempting to discover whether the

21GPG Arts

i

°© See D. Gilat, Experimental Use and Patents (1995), 25. The US courts have occasionally employed the principle of de minimis non curat lex. See e.g. Finney v. United States 188 USPQ 33 (CCTD 1975). °7 SKF Laboratories v. Evans Medical [1989] FSR 513, 518; McDonald v. Graham [1994] RPC 407. °8 SKF Laboratories v. Evans Medical [1989] FSR 513.

°? CPC Art. 27(b). See W. Cornish ‘Experimental Use of Patented Inventions in European Community States’ (1998) 29 IIC 735. 100 FE, Barash, ‘Experimental Uses, Patents and Scientific Progress’ (1997) 91 North Western University Law

Review 667 (recommending expansion of experimental-use defence for non-profit research). 101 The ‘purposes for which tests or trials are carried out may in some cases be mixed and in some cases may be difficult to discern.’ Monsanto v. Stauffer Chemical [1985] RPC 515, 542 (Dillon LJ) (CA).

102 Tidy 515:

INFRINGEMENT

507

patented invention works.'°’ This may occur, for example, where a party is thinking to license a patent or they believe that the patent is invalid on grounds of insufficiency. Given the public interest in determining whether a monopoly has been validly granted it is desirable that competitors undertake this kind of policing task. In the absence of an experimental use defence, such acts might require the licence of the patentee, which in the circumstances may not be forthcoming.'™ If the purpose of the activity is to prove something that is already known, to demonstrate to a third party that the product works in the way the maker claims, or to obtain official approval for a product,!” these would not be regarded as acts done for experimental purposes.!° In one case it was held that trials that were carried out to

obtain safety clearances and to gather information to support an attempt to gain approval for a new use of a patented product (to be used once the patent had expired) were for commercial rather than scientific purposes.'®’ So far there has been no consideration given to the question of whether a person who tests an invention to improve it, to invent around the patent, or to invent something else falls within the defence.'** However, the German Supreme Court has held that experiments to discover the most appropriate form that a patented product should take to alleviate a specific disease fell within the experimental use defence under German law.” Once it has been shown that a use has been carried out for an experimental purpose, it is then necessary to show that the experiment relates to the subject matter 103 The decision of the Supreme Court of Canada in Micro-Chemicals v. Smith Kline and French InterAmerican (1971) 25 DLR 79, 89 (that use by a defendant to establish that it could manufacture a quality product in accordance with the specification was not an infringement) was explicitly approved by Dillon LJ in Monsanto v. Stauffer Chemical [1985] RPC 515, 538. Trials directed to discovering whether something which is known to work in certain conditions will work in different conditions could fairly be regarded as experiments: ibid., 542; D. Gilat, Experimental Use and Patents (1995), 20.

104 The situation is analogous to the criticism or review defence in copyright, which is based on the idea that criticism would be stifled if the law were to require a prospective critic to obtain a licence from the copyright owner before criticizing the work. 105 Auchinloss v. Agricultural and Veterinary Supplies [1999] RPC 397, 405. 106 Monsanto v. Stauffer Chemicals [1985] RPC 515, 542 (CA). 107 Tbid., 515; Brown (1992) EIPR 20. Auchinloss v. Agricultural and Veterinary Supplies [1997] RPC 649; {1999] RPC 397 (CA). Another situation where a person may wish to rely on the defence is where they test someone else’s patented invention for the purposes of obtaining regulatory approval, either by providing data or samples to the relevant authority. In Upjohn v. Kerfoot [1988] FSR 1, Whitford J held that the mere application for a marketing authorization in respect of amedicinal product even when accompanied by test

results did not constitute an infringement of the patent since it did not amount to use of the patent. In the USA such samples are permitted under the Drug Price Competition and Patent Term Restoration Act 1984,

35 USC s. 271. The EU argued that a similar Canadian provision, which permits making and stockpiling of the drug up to 6 months prior to the expiry of the patent, contravened TRIPs. The matter was referred to the WTO: 12 Noy. 1998. The Canadian provision was upheld by the WTO. See ‘Canada: Patent Protection of Pharmaceutical Products (Report of the panel)’ (17 Mar. 2000),WT/DS114/R.

108 McDonald v. Graham [1994] RPC 407 (‘No doubt the defendant would be right to submit that supplying a patented article to a designer with a request that he design a non-infringing equivalent would be, in principle, an unobjectionable use of the article if the article were a ‘franked’ article, but the defendant used infringing articles which he was well aware were not supposed to be in his possession at the material time’). 109 Klinische Versuche (Clinical trials) II [1998] RPC 423, s. 11(2) of the German Patent Act. See P. Tauchner, ‘Experimental Use Exemption in Germany’ (Dec. 1997) Patent World 23.

508

PATENTS

of the patent.'!® This means, for example, that a person who wished to test a cure for cancer they had developed by applying it to a genetically modified mouse could not rely on the defence against a claim by the patentee of the mouse. If the law were otherwise, the patentees of diagnostic test kits would never receive any remuneration because all uses of the kit would be experimental.!!! Where a researcher wishes to use patented processes or products to test other subject matter, they would need to obtain a licence.!!2

5.3

PRIOR

USE

As we saw earlier, one of the changes brought about by the 1977 Act was that novelty was redefined only to exclude inventions that had been ‘made available to the public’. As a result, secret third-party use is not novelty-destroying.'!> One of the consequences of this is that the rights conferred by a patent might cover secret activities carried out by a third party prior to grant.''4 In recognition that it would be wrong if patents were allowed to be used to prevent a person from carrying on an activity that they were doing prior to grant (the so-called right to work doctrine), section 64(1) provides prior users with a personal defence.'!° There are a number of points to note about the defence. The first is that it only applies where the prior acts were committed in the UK (or possibly the EEA).!!© Given that the novelty standard is worldwide, this raises the possibility that a person carrying out an activity in Japan which is then patented by another person in the UK, will not be able to practise the invention in the UK.

It is also important to note that the defence is only available where the acts were carried out in good faith. Although the notion of good faith is yet to be interpreted by the courts, this may prevent a member of a research team from relying on the prior use defence where they left the research team contrary to an understanding between them. Similarly, if a former employee was preparing to use trade secrets obtained 110 Tp Auchinloss v. Agricultural and Veterinary Supplies [1999] RPC 397, 402, 406 (CA), Aldous LJ said the

‘subject matter’ of the invention must be ascertained from the patent as a whole. ‘ll SKF Laboratories v. Evans Medical [1989] FSR 513, 523. 112° Monsanto v. Stauffer Chemical [1985] RPC 515, 522. 113 This reinforces the policy that the patent should be granted to the first to file and disclose the invention rather than the first to invent. See P. Hubert, ‘The Prior User Right of H.R. 400: A Careful Balancing of Competing Interests’ (1998) 14 Comp & High Tech Law Journal 189; Symposium (1996) 36 IDEA 345. 114 Art. 4(B) of the Paris Convention leaves such matters to the domestic legislation of contracting states. See R. Rohrback, ‘Prior User Rights: Roses or Thorns?’ (1993) 2 U Balt Intell Prop J 1; N. Marterer, ‘The Prior User’s Right’ (1990) 21 IIC 521; A. Monotti, ‘Balancing the Rights of the Patentee and Prior User of an Invention: The Australian Experience’ [1997] EIPR 351.

M5 Helitune v. Stewart Hughes [1991] FSR 171, 206. 116 The latter modification may be required to prevent the provision being contrary to Art. 28 EC (formerly Art. 30 of the Treaty), as interpreted in EC Commission v. United Kingdom, Case C-30/90 [1993] RPC

283; [1992] 2 CMLR 709. There is no Community harmonization of this issue. See L. Osterborg, “Towards a Harmonized Prior User Right within the Common Market Patent System’ (1981) 12 IIC 447; J. Neukom, ‘A

Prior Use Right for the Community Patent Convention’ [1990] EIPR 165; ‘A Prior Use Right for the Community Patent Convention: An Update’ [1991] EIPR 139.

INFRINGEMENT

509

while in employment to compete with his or her ex-employer, the ex-employee would not be able to rely on the preparatory acts as a defence to patent infringement.'!” The defence is only available where the defendant has done the acts or made ‘serious and effective preparations’ before the priority date of the patent to do an act which would be infringing if it was carried out after the grant of the patent. It has been said that the preparations ‘must be so advanced as to be about to result in the infringing act being done’.''® The defence allows a prior user to continue to do the same act after the patent has been granted. While it is not necessary for a defendant to show unbroken use, they must show a clear link or a ‘chain of causation’ between

the prior use and the infringing use.'!’ As the prior secret-use defence is a personal defence, the continued use must be by the same person (or partner). The exact scope of the act is therefore crucial. The defence is not available to a defendant who commits an act that is wholly different in nature. This would mean, for example,

where the prior use was in relation to a process, the prior user would not be able to use the defence in relation to acts carried out (after grant) in relation to products of

the process.'*° It is important to note that some variation is allowed between the prior use and the alleged infringing act:'”! the difficult question is, how much of a variation is possible? If the act or preparations were done in the course of business, the prior user has the right to authorize the doing of the act by their partners for the time of the business. They also have the right to assign that right or to transmit it on death to any person who acquires that part of the business in the course of which the act was done or the preparations were made.'” Importantly the defence does not extend to include licensees.'*?

5.4

DEFENCES

FOR

BIOTECHNOLOGICAL

INVENTIONS

As a part of the regime dealing with biotechnological inventions, three new defences to the infringement of patents for biotechnological inventions have been formulated. These are set out in Articles 10 and 11 of the Biotechnology Directive and in changes made to the 1977 Patents Act by Patents Regulations 2000.

117 Subject to the ‘springboard principle’, the action for breach of confidence may not be the employee’s patent is published, so it is important that the ex-employee cannot rely on defence. See below at pp. 928-34. 118 Lubrizol Corporation v. Esso Petroleum [1998] RPC 727, 770 (CA); Helitune v. Stewart FSR 171 (serious and effective preparations required more than general research into the same

available once the section 64 Hughes [1991] field).

119 Hadley Industries v. Metal Sections (13 Nov. 1998) (unreported) (Patents Court).

120 Tbid. 121 Helitune v. Stewart Hughes 1991] FSR 171, 206; Lubrizol v. Esso Petroleum [1992] RPC 281, 295; ibid. [1998] RPC 727 (CA).

122 PA s, 64(2) provides an equivalent to exhaustion when a prior user disposes of the product. The person who acquires the product is entitled to deal with the product in the same way as if it had been disposed of by a sole registered proprietor.

123 PA s. 64(3).

510

PATENTS

5.4.1 Exhaustion of biological patents Article 10/paragraph 10 of Schedule A2 of the 1977 Act provide that the protection conferred by a patent!” shall not extend to biological material obtained from the propagation or multiplication of biological material placed on the market by the owner of the patent (or with his consent), where the multiplication or propagation necessarily results from the application for which the biological material was marketed. This is subject to the proviso that the material obtained is not subsequently used for other types of propagation or multiplication. In effect Article 10 introduces a specific form of exhaustion for biological patents. For the patent rights to be exhausted under Article 10, it is necessary to establish that the multiplication or propagation (which potentially infringes) the patent is ‘an incident of what might be called the true purpose of the sale.’!”> The upshot of this is that a person who used a patented yeast to make beer would prima facie infringe the patent in the yeast. This is because the process of making the beer necessarily involves the multiplication of the yeast. However, if the patented yeast were sold in a home brew shop for the purpose of beer-making, Article 10 (and its British equivalent) would provide the defendant with a ‘defence’. However, if the defendant propagated the yeast and offered it for sale, the defence would not apply.!*° The defence will allow farmers to sow a patented seed, to harvest and sell the resulting crop (for example, to sell the wheat for flour). They would not be permitted, however, to sell the seed to other farmers for the purpose of propagating new crops.!2” 5.4.2 Farmers’ privilege

In the debates surrounding the Biotechnology Directive, one of the fears raised was that patent protection over biological inventions would have a negative impact on traditional farm practices. In particular, it was feared that patent protection would mean that farmers would not be able to use the seeds that they harvested from their crops to resow crops, nor would they be able to breed patented animals. The potential problem was that sowing and breeding carried out in relation to a patented product would

infringe. To remedy problems

of this sort, Article

11(1) and (2) of the

Biotechnology Directive provide farmers with specific defences. These provisions have been mirrored

in sections 60(5)(g)

and 60(5)(h)

of the 1977 Patent Act,

introduced in July 2000. Section 60(5)(g) provides a defence where a farmer uses the product of his harvest

for propagation or multiplication by him on his farm, where there has been a sale or other form of commercialization of plant-propagating material to the farmer by the patent owner for agricultural use. In effect the defence enables farmers to save seeds from one year’s crop to sow crops in the following year. The defence in section

124 As set out in Biotech. Directive Arts. 8 and 9; PA Sched. A2, paras. 7, 8, 9. These were discussed above at pp. 491-2.

125 See S. Bostyn, ‘The Patentability of Genetic Information Carriers’ [1999] IPQ 1, 30. Jp; 126 Ibid. 127 R. Nott, ‘You Did It: The European Biotechnology Directive at Last’ [1998] EIPR 347, 349.

INFRINGEMENT

511

60(5)(g) only applies to the plant species and groups set out in paragraph 2 of Schedule Al to the 1977 Patents Act. This covers various types of fodder plants, cereals, potatoes, and oil and fibre plants. In situations where a farmer successfully relies on the defence in section 60(5)(g), the farmer must pay the relevant rights-

holder equitable remuneration.'”* The remuneration must be ‘sensibly lower than the amount charged for the production of the protected material of the same variety on the same area with the holder’s authority.’!”” The need to pay equitable remuneration does not arise if a farmer can prove that he is a ‘small farmer’.!*° Where requested, the rights-holder and the farmer must supply each other with certain information.'*! The use of the defence is subject to a number of other restrictions (such as ability of the farmer to move protected material from their farm). Section 60(5)(h) provides farmers with a defence in relation to the breeding of

animals. More specifically, it provides that ‘the use of an animal or animal reproductive material by a farmer for an agricultural purpose . . . of breeding stock or other animal reproductive material which constitutes or contains the patented invention’ is non-infringing. The farmer’s defence for the breeding of animals is potentially very broad. In part, the scope of the defence will depend on how the phrase ‘use for an agricultural purpose’ is construed. The Act tells us that ‘use for an agricultural pur-

pose’ includes situations where the animal or animal reproductive material is made available for the purposes of pursuing the farmer’s agricultural activity. However, it does not include ‘sale within the framework, or for the purposes of a commercial

reproduction activity .!** It will be interesting to see what impact these defences have upon farming practices. It will also be interesting to see how the biotechnology industry responds to these defences. It has been suggested that defences such as those provided in section 60(5)(g)(h) may act as a stimulus for the development of techniques such as termin-

ator genes or special hybrids that operate to ensure that seeds will not regerminate.'°?

5.5

MISCELLANEOUS

DEFENCES

A number of other exceptions to infringement exist. Section 74(1)(a) expressly provides that the validity of a patent may be put in issue by way of a defence to proceedings for infringement. This is the most commonly used defence: an alleged infringer will normally argue that the patent is invalid because the invention lacks novelty or is obvious. A particular example of this is the so-called Gillette defence, where a 128

PA Sched. Al, para. 3(1) (intreduced by Patents Regulations 2000).

129 PA Sched. Al, para. 3(3) (introduced by Patents Regulations 2000) says that a remuneration will be sensibly lower if it would be ‘sensibly lower within the meaning of Art. 14(3) third indent of the Council

Regulation on Community plant variety rights.’ 130 PA Sched. Al, paras. 4(1)—(2) (introduced by Patents Regulations 2000). A ‘small farmer’ is defined via

Art. 14(3) third indent of the Council Regulation on Community plant variety rights. 131 PA Sched. Al, para. 5-11 (introduced by Patents Regulations 2000). 132 PA s. 60(6B)(a)(b). Sale is defined to include any other form of commercialization: PA s. 60(6C).

133 R. Nott, ‘You Did It: The European Biotechnology Directive at Last’, [1998] EIPR 347, 349 n. 27.

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PATENTS

defendant attempts to demonstrate that the infringing activity was being carried out in public before the priority date of the patent, thus forcing the patentee either to require the patent to be interpreted so as to exclude the activity or to accept that the patent covers the activity and is therefore invalid (for want of novelty). A defence is available where a person in a pharmacy makes an extemporaneous preparation of a medicine in accordance with a prescription.!*4 A defence also exists where products or processes are used on ships, aircraft, hovercraft, or vehicles which have temporarily or accidentally entered UK airspace or waters.!*> The Crown has a broad immunity from infringing the exclusive rights of patentees.!*° The Crown may use an invention without obtaining a licence in advance, so long as it pays compensation. More specifically, the defence permits ‘any government department and any person authorized in writing by a government department’ to do certain acts!*” in return for which the department must provide payment,'* including ‘compensation’ for loss of profits.'*? In some cases, the doctrines of exhaustion of rights and implied licence, reviewed above, also (effectively) provide defences to accusations of infringement. Prior to the passage of the 1998 Competition Act, section 44 provided a defence where a patentee imposed a requirement on a licensee ‘to acquire from the licensor or his nominee, or prohibit him from acquiring from any specified person, or from acquiring except from the licensor or his nominee, anything other than the product which is the patented invention or (if it is a process) other than any product obtained directly by means of the process or to which the process has been applied.’ The defence was available to any person against whom the licensor brought an infringement action.'*° Section 44, which was widely criticized, has now been repealed by the 1998 Competition Act.!*! 13: rs 13

uw

PA s. 60(5)(c). PA s. 60(5)(d)(e).

CSUN st SS, 137 N Listed in PA s. 55(1)(a)-(e).

138 PA s. 55(4). An exception, where no royalty need be paid, operates under PA s. 55(3). eo

15? PAss. 7A. 140 PA s, 44(3). \o

141 = See SI 2000/311 for transitional provisions.

23 PATENT

EXPLOITATION

1 INTRODUCTION As forms of personal property, patents and patent applications may be assigned, licensed, or mortgaged, and they may devolve by operation of law (notably through death or bankruptcy).* One of the consequences of this is that patents have become part of the commercial currency; they can be traded, exploited, and included on the balance sheet of companies. As such, instead of being seen as peripheral aspects of the patent system, patent exploitation is better seen as being at the centre of the patent system.? The terms and conditions that control the way patents are exploited are usually determined contractually by the parties: patent law merely provides a framework within which parties are able to manoeuvre. Where parties have agreed upon the way a patent is to be exploited, the law has been reluctant to interfere with the sanctity of the contract. There are some

situations, however, where this is not the case. Apart

from the general vitiating factors of contract law (such as unreasonable restraint of trade), special provisions exist in the 1977

Patent Act in relation to co-owners,*

employee inventions and, at least until recently, certain types of contractual terms. Competition law, both domestic and European, also places important limits upon the nature and content of transactions entered into by a patentee. In recognition of the fact that non-use of a patent may produce undesirable consequences, in certain situations the law may order a patent owner to grant a licence to work the invention. Where this occurs, it is often necessary for the tribunal to set the rates of remuneration that should be paid to the proprietor.

This chapter is divided into four parts. First, we look at the various ways patents may be exploited. We then look at some of the limits that are imposed on the way patents are exploited to minimize any possible anti-competitive effects. We then look at situations where compulsory licences are available (for example, where a patent is not used or is underused). Finally, we look at the compensation payable where the patent is used via a compulsory licence, as well as when an employer or the Crown

uses the invention. 1 PA s. 30(1).

2 PAs. 30(3).

3 R. Merges, Patent Law and Policy: Cases and Material (1992), 865.

4 PA s. 36(3), (7).

514

PATENTS

2 MODES

OF EXPLOITATION

In this section, we examine some of the ways in which patents are exploited. After considering the situation where patentees exploit the patent themselves, we look at some of the more common forms of voluntary uses: viz. assignment and licence. We then turn to consider situations where the patent is exploited by way of a compulsory licence or a licence as of right.

2.1

EXPLOITATION

BY THE

OWNER

In many cases, the owner of a patent may decide to manufacture or use the patented invention himself. While in most cases self-exploitation presents few legal problems, difficulties may arise when the patent is owned by a number of different parties. The most significant issue that arises here is whether one co-owner is able to practise the invention without the consent of the other co-owners. In some cases, the conditions of use will be dealt with contractually between the parties. As well as setting out the way each of the co-owners is able to exploit the patent, ideally such a contract should also specify the obligations that the parties have to each other. In situations where there is no contract between co-owners of a patent,’ the 1977 Patents Act declares that each of the co-owners is ‘entitled to operate under the patent themselves’. That is, each owner is permitted to use and benefit from his or her undivided share of the patent. This means that a joint owner with a one-per cent interest can work the patent on their own to the detriment of the other owners. The possibility for opportunistic behaviour that this presents is limited by the fact that a joint owner cannot license others to use the patent without the permission of the other co-owners.’

2.2

ASSIGNMENT

A common way in which patented products and processes are exploited is for the owner to assign their interests to another party. An assignment is a transfer of ownership of the patent (or application). As a result of an assignment, an assignee stands in

the shoes of the assignor and is entitled to deal with the patent as they see fit. In contrast with a licence (where the licensor retains an interest in the patent), once a

> A patent may be co-owned where the invention is a product of joint inventorship, or as a result of

dealings with a patent that was initially solely owned, such as an assignment to two persons. © PA s. 36. Disputes between co-owners may be resolved via PA s. 37. See R. Merges and L. Locke, “Co-

Ownership of Patents:

A Comparative and Economic View’ (1990) 72 JPTOS 586.

” Henry Brothers v. Ministry of Defence [1997] RPC 693. Cf. M. Anderson, ‘Applying Traditional Property Laws to Intellectual Property Transactions’ [1995] EIPR 236, 240.

PATENT

EXPLOITATION

515

patentee has assigned the patent they no longer have any interest in or responsibility

to maintain the patent.* For an assignment to be valid, it must be in writing and signed by or on behalf of all the parties to the transaction.’ Where the patent or application is owned by more than one party, for the assignment to be valid, all of the co-owners must consent to the assignment.'” While assignments need not be registered to be valid, certain advantages flow from registration: these are reviewed below."

2.3

VOLUNTARY

LICENCES

Another common way in which patents are exploited is by licence. A licence provides a party with permission to do an act that would otherwise be prohibited. Licences may be made orally or in writing,’ and may be express or implied.'’ Where a patent is owned jointly, all of the co-owners must provide their consent for the licence to be valid.’* In contrast with an assignment, no proprietary interest is passed under a licence.'° Licences may take many forms: from a one-off permission through to an exclusive licence. An exclusive licence is an agreement under which the owner of a patent not only grants the licensee permission to use the patented technology, they also promise that they will not grant any other licences nor will they exploit the technology themselves. The legal consequence of this is that an exclusive licence confers rights upon the licensee to the exclusion of all others, including the licensor."® While the grant of an exclusive licence is very similar to an assignment,’” an

8 Tt seems that an assignor comes under a personal disability in that they may not challenge the validity of the assigned patent: Chambers v. Crichley (1864) 33 Beav. 374 (assignor prohibited from challenging validity of patent on basis of non-derogation from grant). But see A. Robertson, ‘Is the Licensee Estoppel Rule Still Good Law? Was It Ever?’ [1991] EIPR 373.

2 PA s. 30(6). Differently worded but largely equivalent provisions for Scotland are set out in PA s. 31. An oral assignment might take effect as an agreement to assign and be enforceable in equity: Stewart v. Case (1891) 8 RPC 259; (1892) 9 RPC 9. 10 PA s, 36(3), (7). For a situation where the Patent Office ordered an assignment of a patent where one of

seven co-owners was opposed to the agreement, see Florey’s Patent [1962] RPC 186. 'l See below at pp. 517-18. 12 Crossley v. Dixon (1863) 10 HLC 293. 13, See Morton-Norwich v. Intercen and United Chemicals [1981] FSR 337. A voluntary and exclusive licence

is granted ‘under’ and not ‘in’ a patent—therefore PA s. 30(6) does not apply: Instituform v. Inliner [1992] RPC 83; CIPA, para. 30.05.

14 PA s. 36(3), (7). 1S Allen & Hanbury v. Generics [1986] RPC 203, 246. A licence itself can be dealt with: PA s. 30(4)(a). 16 Cf. Peaudouce SA v. Kimberly-Clark [1996] FSR 680, 690-1. 17 There are a number of differences between an assignment and an exclusive licence. For example, while an assignment of a patent must be in writing, an assignment of an exclusive licence need not: Instituform v. Inliner [1992] RPC 83. In addition, note the weak position of the exclusive licensee in relation to the

compulsory licence of right provisions operating in relation to the extension of patent terms: Kaken Pharmaceutical Patent [1990] RPC 72.

516

PATENTS

exclusive licence need not be made in writing.’® Indeed, as with other licences, an exclusive licence may be made orally or in writing,!? and may be express or implied.”° While a “bare licensee’ acquires the right not to be sued in relation to the acts set out in the licence, an exclusive licence confers powers on the licensee that are equivalent to those of the proprietor. Undoubtedly the most significant of these is that an exclusive licensee can sue infringers in their own right: they do not need to persuade the proprietor to take action on their behalf.?!

2.4

MORTGAGES

Like other forms of property, patents may be mortgaged (or assigned as security for a debt). This can be a useful technique that enables patentees to raise the necessary funds for them to exploit the patented invention. In this context, a mortgage is achieved by way of an assignment of the patent by the patentee-mortgagor to the mortgagee-lender. This is subject to a condition that the patent will be reassigned to the mortgagor when the debt is repaid (or as the law says, on redemption). It is important that the assignment reserves for the mortgagor a right to continue practising the invention. This is probably best achieved by the reservation of an exclusive licence. Alternatively, a patent can be used as security by way of a legal charge, in which case there is no assignment.” In this case, the chargee gains certain rights over the patent as security. In order to be valid, a mortgage must be in writing and signed by the parties.”4 Where there are joint proprietors, all of them must consent to the mortgage.” A mortgage need not be registered to be valid, but there are advantages from registration: these are reviewed below.

2.5

TESTAMENTARY

DISPOSITIONS

Because a patent is personal property, it is capable of passing on the death of the proprietor either by will or via the rules of intestacy. Because co-owners hold patents as tenants in common (rather than as joint tenants),*° if a co-proprietor dies their 18 Cf, the position in relation to copyright: CDPA s. 92 (exclusive licences must be in writing). Morton Norwich y. Intercen and United Chemicals [1981] FSR 337. 19 Crossley v. Dixon (1863) 10 HLC 293.

20 Morton Norwich v. Intercen and United Chemicals [1981] FSR 337. ‘ 1 PA s. 67. The proprietor is made party to the proceedings, if necessary by joining them as a defendant. 22 A mortgage includes a charge for securing money or money’s worth: PA s. 130(1). See M. Bezant and R.

Punt, The Use of Intellectual Property as Security for Debt Finance (1997); D. Townend, Using Intellectual Property as Security (1996); M. Henry, ‘Mortgages of Intellectual Property in the United Kingdom’ [1992] EIPR 158. 23 Charges are included within the definition of mortgage in PA s. 130.

24 PA s. 30(6). 45 PA 8336(): 26 On an attempt to alter this (which failed) see Florey’s Patent [1962] RPC 186.

PATENT

EXPLOITATION

517

share passes along with the rest of his or her estate, rather than accruing to the other co-owners. In devolving the patent, the personal representative must sign a written

consent.” 2.6

REGISTRATION

OF INTERESTS

AND

TRANSACTIONS

There is no need for transactions to be registered for them to be valid. Nonetheless, the Patents Act provides that assignments, mortgages, licences, sub-licences, and certain equitable interests may be registered.** While non-registration will not affect the validity of transactions made in relation to a patent, there are two reasons why a transaction should be registered. The first is that registration gives the registrant priority against anyone who has an earlier unregistered right. This is subject to the proviso that the registrant had no notice of the earlier right.”? In so doing, registration helps to allocate priorities between the parties who have interests in a patent. The act of registration enables a person with an interest to secure priority over those who engage in subsequent

transactions. The effect of this can be illustrated as follows: (i)

On 1 July 2001 X assigns their patent to Y.On 1 August 2001 X licenses the patent to Z. At the time of the licence, Y had not registered the assignment, nor

did Z have any knowledge of the assignment to Y. On being informed by Y of their interest, Z registered its licence on 1 September 2001. In this case, Y is bound by Z’s licence. (ii) On 1 July 2001 X grants an exclusive licence to Y, which Y duly registers on 15 July 2001. On 1 August, X grants another licence to Z. Y can sue Z if Z attempts to exercise the ‘rights’ they were purportedly granted. (iii) X grants a mortgage of her patent to Y. Z, who was aware that Y has not registered the mortgage, obtains an exclusive licence from X which they immediately register. Y’s mortgage binds Z. The second reason why registration is advisable is that in the case of assignments and exclusive licences, non-registration may affect a party’s right to damages or an account of profits.*° This is because a proprietor or exclusive licensee who does not

register within six months of the transaction cannot claim damages or an account of profits for infringements which occurred in the period prior to registration.’ Given

27 PA s. 30(6)(b). 28 PA ss. 32-3. 29 The relevant date to assess whether the registrant knew of the right is the date at which the later registrant acquired their interest. Both the fact of registration and the knowledge of the party are assessed at the time of the transaction (which is registered), not the date of registration.

30 Molnlycke AB v. Procter & Gamble [1992] FSR 549, 606-10 (section protects infringers).

31 PAssa68.

518

PATENTS

that this only leaves patentees with an injunction as a possible remedy, this might be a serious penalty.” This means, for example, that if: (i) On 1 January 2001 A assigns the patent to B, but B does not register the assignment until 1 May. C began activities which infringe the patent on 1 March 2001. In this case, B is able to get damages for the period from March to May.

(ii) On 1 January 2001, X assigns the patent to P. On 1 March 2001, D infringes the patent. P registers the assignment on 1 August 2001, P can claim only for period post-1 August (because the registration is outside the sixth-month period).

2.7

LICENCES

OF RIGHT

A patentee who is willing to exploit the technology to all-comers may take advantage of the facility of entering on the register that licences are to be available as of right.** Once an endorsement ‘licences of right’ is entered on the register, anyone is able to apply for a licence and establish the scope of the licence they desire (whether it be to manufacture, sell, or import the invention). There are two reasons why a patentee may want to render a patent subject to licences as of right. First, the endorsement of a patent ‘licences of right’ acts as an advertisement that the owner of the patent is willing to grant licences to parties who wish to exploit the invention. Secondly, such an endorsement halves the renewal fees payable. One of the consequences of making licences available as of right is that the patentee is no longer able to dictate who can exercise the patent, nor control the terms of such licences. The terms of any licence are set by the parties, or if they cannot agree, by the comptroller. The courts have accepted that they have a wide discretion in the determination of terms.** When deciding the terms under which the licences should be exercised, the courts have taken into account the guidelines provided for the grant of compulsory licences.” A patentee who has previously rendered a patent subject to ‘licences of right’ can apply to the comptroller for cancellation of the entry. If accepted, the patentee must repay the balance of the renewal fees owing. Applications to remove the entry may be opposed.*°

32 Presumably, the right to damages could not be regained by assigning the patent (with a right to sue for past breaches) on to another who registers, or requesting reassignment from the original registered proprietor. Cf. Stile Hall Properties v. Gooch [1979] 3 All ER 848. However, it has been held that a grant of a second exclusive licence which included extra rights gave rise to damages when the transaction was registered a month later: Minnesota Mining and Manufacturing v. Rennicks [1992] FSR 118. 33 On the history see Allen & Hanburys v. Generics [1986] RPC 203, 246. 34 Cabot Safety Corp.’s Patent [1992] RPC 39. In that case the tribunal made decisions about who the licence should be granted to. 35 PA s. 50; e.g. Smith Kline & French Laboratories (Cimetidine) Patents [1990] RPC 203, 250.

36 PAs. 47.

PATENT

2.8 COMPULSORY

EXPLOITATION

519

LICENCES

The final mode of exploitation worth noting is the compulsory licence. A compulsory licence is a licence compulsorily imposed on the patentee. In contrast with a licence of right, which is usually initiated voluntarily, the decision as to whether a compulsory licence should be granted and if so the terms on which it is to be granted are decided by the relevant tribunals. We deal with the situations where compulsory licences may be granted in more detail below.*”

3 LIMITS

ON EXPLOITATION

A number of limits are also imposed on the ability of the patent owner to exploit the invention. When a patent owner exploits an invention, they must comply with the general laws and regulations. These require respect for the rights of other patentees, as well as compliance with health and safety laws, environmental regulation, product liability, and criminal

laws.** While

these non-economic

restrictions

on patent

exploitation should not be neglected, our particular concern here is with the potentially anti-competitive effects of patent exploitation. There are three areas of law which minimize the potential for patent misuse. These are British patent law, British competition law, and EC competition law.

3.1

UK

PATENT

LAW

For most of its long history patent law has used various techniques to minimize the potential for abuse that the monopoly conferred. These have included rules prohibiting the use of certain terms in patent licences,” as well as provisions permitting the use of patented inventions by third parties where the patent was being underused or misused by the patentee. Despite this long tradition, it was recently decided that it was more appropriate for the potential abuse of patents to be regulated by competition law rather than by patent law. This farming out of the patent regulation took place when the draconian provisions of sections 44 and 45 were repealed by section 70 of the 1998 Competition Act.

3.2

UK

COMPETITION

LAW

The introduction of the 1998 Competition Act marked an important change in the

way British law regulated anti-competitive behaviour.*® The 1998 Competition Act 37 See below at pp. 524-30. 38 Biotech. Directive, Recital 14. 39 PA ss. 44 and 45 (now repealed). 40 S. Rose, A. Clark, and M. Burdon, ‘A New UK Competition Law: More Restrictions on Restrictions’ (Jan. 1997) Patent World 27.

520

PATENTS

establishes a system that parallels European competition law. It does this by enacting a prohibition (the ‘Chapter 1 prohibition’) that is equivalent to Article 81 EC (formerly Article 85 of the Treaty). Section 2 of the Competition Act provides that agreements which may affect trade within the UK and have as their object or effect the prevention, restriction or distortion of competition within the UK are prohibited. An agreement will not be caught by section 2 if it falls within any individual exemption, or it falls under a ‘block exemption’ which may be made under section 6.*! While the details of the British exemptions to section 2 have yet to be finalized, an agreement is deemed to be exempt from the national prohibition if it is exempt from the Community prohibition.”

3.3

EC COMPETITION

LAW

The key provision of European competition law affecting patent licences and exploitation agreements is set out in Article 81 EC. This provides that all agreements which affect trade between member states and which have the object or effect of distorting competition within the common market shall be void. However, agreements falling within Article 81(1) may, under certain conditions, be exempt from Article 81 as a

result of Article 81(3). These exemptions may be obtained from the Commission either on an individual basis or as part of a ‘block exemption’. The most important ‘block exemption’ for patent licences is the Technology Transfer Regulation, which entered into force on 1 April 1996. Although the effect of the Regulation on patent licences is considered in detail in specialist texts, we will briefly outline its scope and application to a few typical patent licence terms.* The first aspect of the Regulation worth observing is its scope. The Regulation applies to patent licensing and know-how licensing agreements and to mixed patent and know-how licensing agreements. Although the primary target of the Regulation is licences, it also applies to licences that are dressed up as assignments.“ The Regulation provides guidance as to the types of terms that may and may not be included in such licensing agreements if they are to be treated as exempt from Article 81 EC. Article 1 of the Regulation lists eight types of restrictive obligations that would ordinarily be caught by Article 81(1) EC, but which are exempted by the Regulation. Article 2 of the Regulation contains a list of obligations found in licensing agreements that are normally not restrictive of competition. These are exempt from Article 81(1).* This list of terms, which is called the White List, is not exhaustive. Article 3 of the Regulation contains a list of obligations, referred to as the Black List, that may not be included in licensing agreements. These clauses render agreements prima facie 41 Competition Act 1998, ss. 4-11.

42 Tbid., s. 10. 43 See V. Korah, Technology Transfer Agreements and the EC Competition Rules (1996).

44 TTR, Recital 9. 45 Tbid., Recital 27 specifies that agreements which come within the terms of Arts. 1 and 2 and which have neither the object nor the effect of restricting competition in any other way need no longer be notified.

PATENT

EXPLOITATION

521

anti-competitive and thus within Article 81(1) EC. Particular terms excluded by the Black List can, however, be declared to be exempt on a case-by-case basis. Article 4 of the Regulation contains a third category of terms, known as the Grey Terms. These are

terms that are neither within the White List nor the Black List.° Agreements containing Grey Terms may be exempt from Article 81(1) EC so long as the Commission is notified. If the Commission does not give notice of opposition within four months of notification, such agreements are deemed to be covered by the exemption. This procedure is referred to as the ‘reduced opposition procedure’. 3.4

SPECIFIC

EXAMPLES

We now go on to consider how the Regulation impacts upon some of the terms which are commonly used in patent licensing or assignment agreements. 3.4.1 Exclusivity Under the Regulation, a licence may be exempt from Article 81 EC even if the agreement gives the licensee exclusive rights to exploit the patent in a particular territory. However, this is subject to three important limitations. First, for a term guaranteeing exclusivity to be exempt, the duration of an exclusivity provision must be confined to ‘the extent that and for as long as the licensed product is protected by parallel patents.’ Second, while an exempt exclusivity provision may prohibit active exploitation in the territory of another licensee for the duration of parallel patents,*” the agreement may only prohibit passive sales (that is an obligation not to put the licensed product on the market in response to unsolicited orders in the territories licensed to other licensees) for five years from the date when the licensed product was first put on the market within the common market.** Finally, in the absence of ‘an objectively justified reason’, the agreement must not contain an obligation ‘to refuse to meet orders from users or resellers in their respective territories who would market products in other territories within the common market.’ 3.4.2 Field of use limitations

A patent licence may fall within the exemption conferred by the Regulation even if it imposes a ‘field of use’ limitation, but only where the limitation restricts exploitation of the licensed technology to one or more technical fields of application or to one or more product market.” A provision is not exempt if it includes other sorts of restriction on the areas in which the licensee may trade, for example, so as merely to divide up the markets. 3.4.3 No-challenge clauses A patent licence must be notified to the Commission if it contains a ‘no-challenge clause’, that is an undertaking by the licensee not to challenge the validity of the 46 TTR., Art. 4(2), Recital 25.

47 Ibid., Art. 1(1)(5).

48 Tbid., Art. 1(2), Recital 15.

49 Tbid., Art. 2(1)(8) Recital 22.

522

agreement. procedure. agreements the validity

PATENTS

This is a term in the Grey List and thus is subject to the opposition In addition, it should be noted that the White List specifically exempts that permit the licensor to terminate the agreement if the licensee contests of a licensed patent or claim that such a patent is not necessary.”

3.4.4 Tie-in clauses

Under the Bock exemption, patent licences may sometimes include provisions requiring a licensee to purchase unpatented articles from the patentee (so-called ‘tie-ins’). Article 2(5) allows patentees to impose an obligation on the licensee ‘to procure goods or services from the licensor or from an undertaking designated by the licensor,’ in so far as these products or services are necessary to ensure ‘a technically proper exploitation of the licensed technology’.°! This appears to allow a patentee to insist that the licensor buy particular starting materials from them where the invention would not work using alternatives. The White List also states that a tie-in agreement may be imposed where it ensures that ‘the product of the licensee conforms to the minimum quality specifications that are applicable to the licensor and other licensees; and to allow the licensor to carry out related checks.’ The phrase ‘minimum-quality specifications’ appears to be directed at regulatory standards such as EC product liability laws. Beyond these narrowly defined situations, other tie-ins are treated as Grey Terms and are thus subject to the notification/opposition process. Article 4(2) expressly identifies as Grey Terms conditions which oblige the licensee ‘at the time the agreement is entered into to accept quality specifications or further licences or to procure goods or services which are not necessary for a technically satisfactory exploitation of the licensed technology or for ensuring that the production of the licensee conforms to the quality standards that are respected by the licensor and other licensees.’ It is unclear when such clauses will be accepted by the Commission: it has been suggested that while they “may no longer be black clauses ... they are, at least in the Commission’s eyes, near to the [excluded] end of the spectrum.’”

3.4.5 Duration of agreement It seems that patentees may benefit from the exemption even if the licence includes a term that requires royalties to be paid for longer than the duration of the patent (for example, that royalties be paid for thirty years when the patent duration is limited to twenty years). The Regulation allows patentees and licensees to negotiate royalty terms as they think fit. Consequently, the White List permits a patentee to impose an obligation on the licensee to pay royalties for the use of the licensed technology after the patent has expired.°’ However, it is important to observe that Recital 21 states that 90 TTR Art. 2(15)-(16). >! W. Bowman, “Tying Arrangements and the Leverage Problem’ (1957) 67 Yale Law Journal 19, 27-8. >? C. Kerse, ‘Block Exemptions under Article 85(3): The Technology Transfer Regulations: Procedural Issues’ [1996] ECLR 331, 334.

°3 TTR Art. 2(1), (7) provides for a similar rule concerning know-how.

PATENT

EXPLOITATION

523

‘the setting of rates of royalty so as to achieve one of the restrictions listed in Article 3 renders the agreement ineligible for the block exemption.’ 3.4.6 Grant-backs

Subject to certain restrictions, a licence will be exempt even though it requires a licensee to confer on the licensor the benefits of any technological improvements they

make to the patented invention.** More specifically, clauses that ensure that the benefits of any improvements made are shared with the patentee-licensor are permitted.°° On the other hand, any agreement that obliges the licensee to assign any improvements they make to the licensed technology to the licensor is said to have a restrictive effect on competition and, as such, falls into the Black List.°° 3.4.7

Price limitations

Under the Technology Transfer Regulation, price restrictions are treated as improperly limiting the ability of the licensee to exploit the licensed technology. Restrictions on the quantity of goods that the licensor deals with are perceived as potentially having the same effect as export bans.*’ Both types of clauses are therefore black listed.°8 3.4.8 Patent pooling The Technology Transfer Regulation does not deal with the practice whereby two or more patentees organize themselves so that they can obtain the benefit of the other’s patents. Such patent pools range from simple cross-licensing contracts to much more complex arrangements where large numbers of patents are transferred to a company established to control the joint venture. Whether a patent pool operates against the public interest will depend on the circumstances. They might integrate complementary technology or reduce transaction costs. In other cases, the arrangements may appear as cosy cartel-like arrangements designed to exclude competition or facilitate price-fixing. Given this, a patentee involved in a patent pooling arrangement which affects interstate trade would, however, be advised to seek individual exemption from

the Commission.”

54 A. Robertson, “Technology Transfer Agreements: An Overview of How Regulation 240/96 Changes the

Law’ [1996] ECLR 157, 160. 55 TTR Art. 2(1), (4), Recital 20.

© Tbid., Art. 3(6). 57 Tbid., Recital 24. 58 But note ibid., Art. 2(1), (12). 59 Some patent pools may be exempt under Regulation 418/85 which applies to collaboration for research and development.

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4 LIMITS

ON NON-EXPLOITATION:

COMPULSORY

LICENCES

Another way in which patents can be misused is if the owner uses the patent to prevent the product from being manufactured or demand for the product is being met from some other source. In contrast with trade marks law, there is no obligation on a patentee to work or intend to exploit the invention. However, provisions exist in the form of compulsory licences that permit people other than the patent owner to exploit the invention in situations where the patentee is either unable or unwilling to do so. Compulsory licensing provisions were first introduced into British patent law at the end of the nineteenth century. These were motivated by a fear that large (often foreign) organizations that were in a dominant market position might buy up patents and decline to exploit them. There was also a concern that technical progress might be impeded by the holder of a basic patent who refused to license people who made improvements to patented inventions. There was also a perceived risk that patents might be used to prevent the adequate supply of essentials, such as food or medicine. While few applications are made for compulsory licences, it would be wrong to conclude from this that the provisions are of little effect. This is because the threat of such licences being granted may stimulate the patentee into working or voluntarily licensing the patent. Under the Paris Convention, Union members are able to provide for compulsory licences “to prevent the abuses which might result from the exercise of the exclusive rights conferred by the patent, for example, failure to work.’*! The restrictions placed upon the granting of compulsory licences were greatly increased by Article 31 of TRIPs. British law on compulsory licences was amended in 1999 to take account of TRIPs.” As we will see, these changes have restricted the circumstances in which

compulsory licences are available. One of the changes brought about by the TRIPs amendments is that the grounds on which a compulsory licence will be granted depends on whether or not the patent is owned by a WTO proprietor. The Act differentiates between three general situations where compulsory licences can be granted. These are: first, the various grounds set out in section 48 (which in turn distinguishes between patents with WTO owners and patents with non-WTO owners); secondly, following a report of the Competition Commission; and thirdly for

Crown use. It is expected that a new scheme for biotechnological inventions will be introduced shortly. Before looking at these in more detail it is necessary to make some preliminary comments.

69 See e.g. C. Fauver, Comment, ‘Compulsory Patent Licensing in the US: An Idea Whose Time Has Come’ (1988) 8 Northwestern Journal of International Law & Business 666.

61 Paris Arts. 5A(2) and 5(4). 62 Patents and Trade Marks (WTO) Regulations 1999 (SI 1999/1899) (in force 29 July 1999).

PATENT

4.1

COMPULSORY

LICENCES

EXPLOITATION

UNDER

SECTION

525

48

The general conditions under which a compulsory licence may be issued are set out in section 48 of the 1977 Act (as amended). As we mentioned above, the 1977 Patents

Act was recently amended to take account of provisions in TRIPs in relation to compulsory licences. One of the consequences of these changes is that a different approach is taken depending on whether a WTO proprietor or a non-WTO proprietor owns the patent. As we will see the grounds on which compulsory licences will be granted are more onerous in the case of WTO owners than non-WTO owners.” Given the number of countries in the WTO, it is unlikely that these more generous provisions will be used very often. In both cases, a compulsory licence granted under section 48 is not available until three years from the grant of the patent.™ This gives patentees a reasonable amount of time to exploit the invention or to arrange for others to do so. 4.1.1 WTO proprietors

The relevant grounds on which a compulsory licence will be granted in relation to a patent owned by a WTO proprietor are set in section 48A. Before looking at the grounds on which a compulsory licence will be granted, it is important to note that as with all compulsory licences the onus is on the applicant for a compulsory licence to establish a prima-facie case that the grounds relied upon apply.® It is also important to note that a compulsory licence (for a WTO patent) will not be granted unless the applicant has made efforts to obtain a licence from the proprietor on reasonable commercial terms and conditions, and he or she can establish that their efforts have not been successful within a reasonable period. In addition, compulsory licences are not available if the patented invention is in the field of semi-conductor technology.” The grounds for grant are as follows: (i)

The first ground on which a compulsory licence may be granted is where demand in the UK for a patented product is not being met on reasonable terms.”

(ii) A compulsory licence may be granted where the owner’s failure to license a

63 A proprietor is a WTO proprietor if he is a national of, or is domiciled in, a country that is a member of the World Trade Organization; or he has a real and effective industrial or commercial establishment in such a country: PA s. 48(5)(a)(b). 64 PA s. 48(1) (as amended by SI 1999/1899). See PA s. 48B(2).

65 Paris Art. 5. In some cases, 3 years may be too little so the comptroller may reject an application for

compulsory licences ifit is considered that the patentee ought to be given more time in which to attempt to exploit the patent himself.

6° 67 68 69

Monsanto’s CCP Patent [1990] FSR 93, 98. PA s. 48A(2). PA s. 48A(3). PA s. 48A(1)(a).

oon

526

PATENTS

patent on reasonable terms has a blocking effect on later improvements.’’ The comptroller must be satisfied that the proprietor of the patent for the later invention is ‘able and willing to grant to the proprietor of the patent concerned and his licensees a licence under the patent for the other invention on reasonable terms.’”! (iii) A compulsory licence may also be granted where the owner’s failure to license a patent on reasonable terms unfairly prejudices the ‘establishment or development of commercial or industrial activities in the UK’.”” (iv) The next situation where a compulsory licence may be ordered focuses on the conditions imposed on the grant of licences under the patent, or on the disposal or use of the patented product, or on the use of the patented process. A compulsory patent may be granted where it can be shown that as a consequences of these limitations, the manufacture, use, or disposal of materials not protected by the patent, or the establishment or development of industrial activities in the United Kingdom, is unfairly prejudiced.”* The power vested in the comptroller to grant a compulsory licence under section 48 is a discretionary power: section 50 provides a list of ‘purposes’ and ‘factors’ that the comptroller ought to take into account when exercising this discretion.” The recognized purposes are that: ¢ it isin the public interest to work an invention in the UK; * an invention should be worked ‘without undue delay’ and ‘to the fullest extent that is reasonably practicable’; * the patentee should receive ‘reasonable remuneration having regard to the nature of the invention’; and * the interests of the person who has worked the invention ought not to be unfairly prejudiced. The factors which the comptroller is directed to take into account include the nature of the invention, the time which has elapsed since the grant of the patent, and the measures taken by the proprietor or exclusive licensee to make full use of the patent. The grant of a compulsory licence in relation to a patent with a WTO owner is subject to the further restrictions that the licence should:”° 70 PA s. 48A(1)(b)(i). It may be possible in such cases to claim that licences should be made available by the European Commission to prevent abuse of a dominant position contrary to Art. 82 EC. But note Philips Electronics v. Ingman [1998] 2 CMLR 1185 where Laddie J suggested that Magill might have no application to patents. See above at pp. 15, 265-7.

71 PA s. 48A(4). 72 PA s. 48 A(1)(b)(ii).

73 PA s, 48A(1)(c). 74 Monsanto’s CCP Patent [1990] FSR 93, 97. 7° PA s. 48A(6)(a)—(e). TRIPs Art. 31. See M. Blakeney, Trade Related Aspects of Intellectual Property: A Concise Guide (1996), 88-93.

PATENT

EXPLOITATION

527

¢ not be exclusive;

* not be assigned except to a person to whom there is also assigned the part of the enterprise that enjoys the use of the patented invention, or the part of the goodwill that belongs to that part; * predominantly be for the supply of the market in the United Kingdom; ¢ include conditions entitling the proprietor of the patent concerned to remuneration adequate in the circumstances of the case, taking into account the economic value of the licence; and ¢ be limited in scope and in duration to the purpose for which the licence was granted.

In addition, the Act provides that compulsory licences should not be assigned except to a person to whom the patent for the other invention is also assigned.”° 4.1.2 Compulsory licences in relation to non-WTO owners In the case of an application for a compulsory licence made in respect of a patent whose proprietor is not a WTO proprietor,” the relevant grounds are set out in

section 48B of the 1977 Act.” (i)

The first ground on which a compulsory licence may be granted is where

the patented invention is not being commercially worked in the UK, or is not being worked to the fullest extent that is reasonably practicable.” A compulsory licence will not be granted under this head if the patented invention is being commercially worked in a country that is a member state of the WTO, and demand in the UK is being met by importation from that country.*° (ii) A compulsory licence may also be granted where the demand for a patented product in the UK is not being met on reasonable terms, or is being met to a substantial extent by importation from a country which is not a member state of the WTO.*! (iii) A compulsory licence may also be granted where the patented invention is prevented or hindered from being commercially worked in the UK by the importation from a country which is not a member state of a patented

76 PA s, 48A(5). 77 A proprietor is a WTO proprietor if he is a national of, or is domiciled in, a country that is a member of the World Trade Organization; or he has a real and effective industrial or commercial establishment in such a country: PA s. 48(5)(a)(b).

78 For discussions under the law prior to the 1999 amendments see Penn Engineering & Manufacturing Corp. Patent [1973] RPC 233; Monsanto’s CCP Patent [1990] FSR 93, 100.

79 PA s. 48B(1)(a).

80 PA s. 48B(3). 81 PA s, 48B(1)(b). These changes overcome the problem identified in EC v. UK and Italy [1993] RPC 283. See M. Hodgson, ‘Changes to UK Compulsory Patent Licensing Laws’ [1992] EIPR 214.

528

PATENTS

product, a product obtained directly by means of a patented process or to which the process has been applied.” (iv) A compulsory licence may also be granted where the owner’s failure to license a patent on reasonable terms means: * a market for the export of any patented product made in the UK is not being supplied,** or * the working or efficient working in the UK of any other patented invention which makes a substantial contribution to the art is prevented or

hindered,* or * it unfairly prejudices the establishment or development of commercial or

industrial activities in the UK.® (v) The next situation where a compulsory licence may be ordered focuses on the conditions imposed on the grant of licences under the patent, or on the disposal or use of the patented product, or on the use of the patented process. A compulsory patent may be granted where it can be shown that as a consequence of these limitations, the manufacture, use, or disposal of materials not protected by the patent, or the establishment or development of industrial activities in the United Kingdom, is unfairly prejudiced.*° In deciding whether to grant a patent the comptroller must take into account the factors set out in section 50. The only additional limit in relation to non-WTO-owned patents arises where an application is made on the ground that the patented invention

is not being commercially worked in the UK, or is not being so worked to the fullest extent that is reasonably practicable. In these cases, if for any reason there has been insufficient time since the publication of the patent to enable the invention to be so worked, the application may be adjourned by the comptroller for a period of time for the invention to be so worked.

4.2

COMPETITION

COMMISSION

The third situation where compulsory licences may be made available is where a report of the Competition Commission has concluded that an undesirable monopolistic situation exists or an anti-competitive practice is operating against the public

82 PA s. 48B(c). 83 PA s. 48B(d)(i). This is subject to the proviso that compulsory licence granted under this head should not contain such provisions as appear to the comptroller to be expedient for restricting the countries in which any product concerned may be disposed of or used by the licensee: PA s. 48B(4). 84 PA s. 48B(1)(d)(ii). The comptroller must be satisfied that the proprietor of the patent for the other invention is able and willing to grant to the proprietor of the patent concerned and his licensees a licence under the patent for the other invention on reasonable terms: PA s. 48B(5).

85 PA s. 48B(1)(d) (iii). 86 PA s, 48B(1)(e).

PATENT

EXPLOITATION

529

interest.*’ The provision gives the appropriate Minister the power to respond to the report by applying to the comptroller to have the patent endorsed as a licence as of right. The application may be opposed.

4.33

CROWN

USE

A special form of compulsory licence exists for the benefit of the Crown.** The elaborate provisions contained in sections 55 to 59 entitle any government department and any person authorized in writing by a government department to do certain acts*’ in return for which the department must provide payment” (including ‘compensation) for loss of profits.*! In contrast with the compulsory licences described above, there is no requirement that the department needs to apply to the comptroller (or any other authority) before acting.”” The Crown use of a patent is only legitimate where it is done by or with authorization of ‘a government department’,”* and ‘for the services of the Crown’. This is defined to include the supply of anything for foreign defence purposes, the production of specified drugs and medicines, and certain purposes relating to the production or use of atomic energy.” Disputes relating to the exercise, terms, or payment for Crown uses are referrable to the court.”

44

BIOTECHNOLOGICAL

INVENTIONS

One of the features of the packages of reforms introduced by the Biotechnology Directive is that it introduces a new regime for compulsory licensing and crosslicensing of biotechnological inventions. In essence the new scheme attempts to manage the interrelationship between patent protection for biological inventions and plant variety protection. It is expected that a similar scheme will be introduced in the UK shortly.”° The Directive introduces two new forms of compulsory licences. The first of these is set out in Article 12(1). In effect, this provides that where a breeder cannot acquire

or exploit a plant variety without infringing a prior patent, they may apply for a compulsory licence for non-exclusive use of the invention. This is subject to the requirement that the breeder pay an appropriate royalty and that the holder of the 87 PA s, 51; see TRIPs Arts. 8, 31(k), 40. 88 For background see Pfizer Corporation v. Ministry of Health [1965] AC 512. 89 Listed in PA s. 55(1)(a)—(e).

90 PA s. 55(4). An exception where no royalty needs to be paid operates under section 55(3). Payment may have to be made to others: see Patchett’s Patent [1963] RPC 90.

7) DAG S7A 2 There is a duty to inform the proprietor that the department is using the invention. °3 With recent trends to roll back the state, determining what is a government department is not always easy. In many cases, consultation of relevant legislation may be of assistance. See Dory v. Sheffield Health Authority [1991] FSR 221.

94, PA 8. 56(2).) 95 PA s. 58. 6 Draft Statutory Instrument, Patents and Plant Variety Rights Compulsory Licensing Regulations 2000.

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PATENTS

patent will be entitled to a cross-licence to use the protected variety on reasonable terms. The second compulsory licence is set out in Article 12(2). This provides that where the holder of a patent concerning a biotechnological invention cannot exploit it without infringing a prior plant variety right, the patent owner may apply for a compulsory licence for non-exclusive use of the protected plant variety. This is subject to the requirement that the patent owner pay an appropriate royalty and that the holder of the variety right will be entitled to a cross-licence to use the patented invention on reasonable terms. In order for a compulsory licence to be granted under either Article 12(1) or (2) the applicant must show that they have applied unsuccessfully to the holder of the patent or plant variety to obtain a licence. They must also show that the plant variety that they wish to use constitutes “significant technical progress of considerable economic interest compared with the invention claimed in the patent or the protected plant variety.” It seems that this second requirement may impose considerable limitations on the grant of compulsory licences for biotechnological inventions.

5 COMPENSATION

FOR

USE

In the vast bulk of cases, the amount that is paid for the use of a patent is largely left to the market and the negotiating skills of the parties. In a number of exceptional circumstances, however, the comptroller or court may be called upon to determine the amount payable for use of the patent. The question of the compensation payable arises in relation to employer use of employee inventions, compulsory licences, licences of right and Crown use. In each case the tribunal has to make difficult qualitative judgments about the value of the patent, and how the profits that have been or might be made are to be allocated. In due course, international agreements may require that the contributions of indigenous groups are compensated where their knowledge and resources are used to develop pharmaceuticals.”

5.1

COMPENSATION

FOR

EMPLOYER

USE

While the fate of a creator’s relationship with his or her creations is normally left to the vagaries of contract law and the negotiating skills of the creator, intellectual property law occasionally recognizes that creators have residual interests in their creations.” One of the most notable examples of this is found in sections 40(1) and

40(2) of the Patents Act which provides employee-inventors with a statutory right to 97 Biotech. Directive Art. 12(3)(a)(b).

°8 Rio Convention on Biological Diversity, Art. 15(7). °? The most obvious examples are to be found in copyright law where the creator’s personality interests are protected by moral rights, and their financial interests by the droit de suite and unwaivable rights to remuneration.

PATENT

EXPLOITATION

531

compensation where their inventions are exploited by their employer.'°° The compensation provisions apply when an invention made by an employee is owned by the employer by virtue of section 39 (1)(a) or (b) and it can be shown that the patented

invention is of outstanding benefit to the employer.'°! The compensation provisions also apply where an employee-invention has been assigned to or exclusively licensed by the employer and it can be shown that the remuneration that the employee received from the transaction was inadequate. In both these situations, inventors have a statutory right of compensation.'°* Awards for compensation will only be made if it is ‘just’ to do so.!% While these provisions may appear to provide employee-inventors with a potentially valuable source of income, they have been construed in such a way as to provide little direct benefit to employees. Whether the compensation scheme provides indirect benefits to employees, for example, acting as an impetus for the introduction of in-house compensation schemes is another matter.' Applications for compensation can be made to the comptroller or the court during the life of the patent and up to one year after the patent has expired. In recognition of the fact that the fate of a patented invention may change over time, if an initial application for compensation is rejected, employees can reapply for compensation at a later stage.’ After some initial uncertainty,'°° it is now clear that the onus of proving that the patent is of outstanding benefit to the employer falls upon the employee.!” In order to protect employees, the 1977 Act provides that contractual terms which

attempt to undermine the employee’s right to compensation are unenforceable.'° In recognition of the fact that unequal bargaining power might be mitigated by collective action, provision is made for collectively bargained schemes to override the individual claim machinery. Thus section 40(3) states that any employee who is a member of a trade union which has a ‘relevant collective agreement’ with the employer is unable to bring a claim for compensation.'® For the provision to apply, the collective agreement must provide for the payment of compensation in respect of inventions of the same description as made by the employee.'”” 100 See A. Chandler, ‘Employee Inventions: Outstanding Compensation?’ (1992) Journal of Business Law 300; K. Wotherspoon, “Employee Inventions Revisited’ (1993) 22 ILJ 119, 131; J. Hughes, “The Personality Interest of Artists and Inventors in Intellectual Property’ (1998) 16 Cardozo Arts & Entertainment Law Journal 81, 138.

101 PA s. 40(1). 102 PA s. 40. 103 PA ss. 40(1) and 40(2)(d). 104 The regime places an onus on an employer to keep detailed records. PA s. 59(2) specifies that personnel records of inventors should be kept for at least one year after the patent has ceased to have effect.

105 PA s. 41(7). 106 Cf. GEC Avionic’s Patent [1992] RPC 107, 112. 107 Memco-Med’s Patent [1992] RPC 403.

108. PA.s..4242),

109 PA ss, 40(3) and 40(6). 110 PA s, 40(3).

532

PATENTS

5.1.1 Compensation where an invention automatically belongs to employer The first situation where employees are entitled to apply for compensation is set out in section 40(1). This states that where an employee has made an invention belonging to the employer via section 39(1), the employee may be entitled to compensation. For an award for compensation to be made, the employee must show (i) that the patent is of benefit to the employer, (ii) that the benefit is outstanding, and (iii) that it is just that the employee be awarded compensation. We will deal with each of these in turn. (i) ‘Of benefit to the employer’. Determining the level of benefit that an employer has derived from a patent''! is a complex task.!’? The process of calculation is made somewhat easier as a result of the fact that benefit has been construed to mean ‘money or money’s worth’.'!? This means that non-financial benefits such as the kudos and prestige that flow from a patent are excluded from the equation. In calculating the benefit that flows to an employer from a patent, it is important to note that only actual rather than potential or future benefits are taken into account.'' This point was emphasized by the examiner in British Steel’s Patent,'!° when he said that while the benefits that were expected to flow from a patent were relevant when considering whether an award was ‘just’, they were not relevant when deciding whether the benefit from the patent was outstanding.'’® The examiner also declined to consider any benefits that might have accrued had the employer exploited the invention to its full potential. This was said not to have been germane in the circumstances because the relevant benefit was actual rather than potential. Over time, a number of guiding principles have been developed to assist the tribunal when calculating the benefit. For example, in Memco-Med’s Patent,!"” the court

said it was useful ‘to examine what the employer’s position would have been if the patent had never been granted, in comparison with the actual position.’!'® It has also been suggested that the courts should speculate as to what an employee would have paid an independent contractor for the invention.!!? The benefit derived from the patent is not diminished by the possibility that a different invention might have produced a similar benefit, though this might have some bearing on whether the

tribunal considers the benefit to be outstanding.!”° However helpful these principles may be, the courts have tended to rely upon more ‘1 The calculation may take into account the benefits received under foreign patents and equivalent rights (such as utility models): PA s. 43(4); GEC Avionic’s Patent [1992] RPC 107, 111.

'l2 On the importance of foreign patents see ibid., RPC 107; British Steel’s Patent [1992] RPC 117, 121.

13 PA 5. 43(7).

‘4 Future benefits can only be taken into account when they may reasonably be expected to come about. In GEC Avionic’s Patent [1992] RPC 107, 115 ‘options’ were held to be too tentative.

15 [1992] RPC 117.

idee. ATS O92 PREGA 17 [1992] RPC 403. 118 [1992] RPC 403, 413. 119 See British Steel’s Patent [1992] RPC 117, 128.

20 Ibid., 127.

PATENT

EXPLOITATION

533

concrete information when calculating benefit. Thus, where a licence has been granted for use of the patent, the licence fee or assignment income is taken as an indication of the patent’s benefit to the employer.'?! Where a patent has been included on the balance sheet of an organization, this would presumably also provide a similar basis from which the benefits could be calculated. Another important piece of information that has been used to determine benefit is the employer’s sales figures. This is particularly relevant where employers exploit or manufacture the patented

invention

themselves.'**

While

sales figures, licence fees, and the like

provide a useful basis from which to calculate the benefit that an employer has derived from a patent, they cannot be relied upon to provide an exact figure. The reason for this is that while the existence of a patent over a manufactured product will frequently influence sales, the number of products sold (as with the licence or assignment fees which are paid for use of the patent) may be a consequence of a range of factors—such as the advertising and marketing campaigns used to sell the product.!”° Given that sales figures and licence fees may be influenced by an array of factors other than the patented invention, when they are being used to calculate benefit, it is necessary to isolate the net benefits that flow from the patent to the employer from any other contributing factors. British Steel’s Patent'* offers another useful example of the care that needs to be taken when calculating the net benefit that flows to an employer from a patent. The particular accounting problem that arose in this case stemmed from the fact that a number of technical obstacles had to be overcome before the patented invention could be put into practice. In this situation, the examiner accepted that in calculating the net benefit that flowed to the employer, it was necessary to subtract the costs that the employer had incurred in moving the invention from its initial conception to a practical profitable reality. The care that needs to be taken in using sales figures as a indicator of benefit was also highlighted in Memco-Med’s Patent,'*? where Aldous J was called upon to resolve a remuneration dispute over a patented invention which detected when someone was near lift doors and prevented the doors from closing on them. In response to the argument that high sales of the patented detection device was evidence that the employer had derived high levels of benefit from the patent, the court found that the high sales were attributable more to the price and quality of the product and to the fact that the manufacturer had a long and established relationship with the purchaser

121 GEC Avionic’s Patent [1992] RPC 107, 108. 122 The particular problem that arises in these situations is that there is no readily identifiable benchmark against which benefit can be measured. 123 Whether an employer can circumvent the provision by deciding not to patent but utilize other form of protection such as confidentiality agreements remains unclear. PA s. 43(4) defines ‘references to a patent? as covering ‘a patentor other protection’: arguably including confidentiality.

12411992) RPG U7 125 [1992] RPC 403.

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PATENTS

than to the patent itself.!*° From this basis, the court concluded that the benefit that

flowed to the employer from the patent was minimal. (ii) Is the benefit ‘outstanding’? Once the level of benefit that an employer has derived from a patent has been calculated, it is then necessary to determine whether it is ‘outstanding’. It has been suggested that the reason why compensation is only awarded where the benefit is outstanding is that the employees who would be making a claim under section 40(1) would already have received some remuneration for the

invention in their salary package.'’*”? While ‘outstanding’ is not defined in the Act, it has been likened with ‘significant or substantial’ and said to require something out of the ordinary.'** In GEC Avionic’s Patent'”? an application for compensation was rejected on the ground that although the patent conferred some benefit, the employer achieved similar benefits in relation to products not involving the invention. Whether a patent is of outstanding benefit to an employer depends on the circumstances of the case in question. The only guidance that the Act provides is that the ‘size and nature of the employer’s undertakings’ ought to be taken into account when determining whether a patent is of outstanding benefit.!°° The provision has been interpreted in such a way that where an employee works for a large corporation, it is virtually impossible for an employee to produce anything which could be classified as ‘outstanding’.!°! For example, in GEC Avionics the patent enabled the employer to secure a $72 million contract, with a $10 million profit. However, because GEC had entered into contracts of a similar size not involving the invention, the examiner held that the patent did not provide any outstanding benefit to the employer.'* Given that the benefit is looked at in relation to the size of the activities of the employer, it is important to ascertain the scope of the relevant undertaking. While it has been said that the size of the employer’s undertakings could be either the whole or a division of the employer’s business,'*’ the reported decisions have not provided any guidance as to how this issue is to be resolved. Nevertheless, the consequences are clear. In British Steel’s Patent an employee inventor claimed compensation in relation to a patent taken out by his employer for a valve which had been described in the employer’s publicity and the press as revolutionary and vital cost-saving technology. While the employee asserted that the employer had benefited from the patent to the tune of £5 million per year, the employee was only able to prove a benefit of between £100,000 and £500,000 per year. In any case the court rejected the application on the 126 [1992] RPC 403, 417. There is a presumption that sales from non-patented goods are not attributable in any way to the patent. GEC Avionic’s Patent [1992] RPC 107, 114.

127s Tbidss 115; 128 In British Steel’s Patent [1992] RPC 117, 122 the examiner suggested that the term implied a ‘superlative’. See also Memco-Med’s Patent [1992] RPC 403, 414.

129 [1992] RPC 107.

130 PA s. 40(1). 131 British Steel’s Patent [1992] RPC 117. 132 GEC Avionic’s Patent [1992] RPC 107, 115. 133 Memco-Med’s Patent [1992] RPC 403, 414.

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ground it was not outstanding. In so doing, the comptroller defined the undertaking as the undivided totality of British Steel’s operation. Thus neither the proven

benefit'* nor the claimed benefit were outstanding when compared with British Steel’s turnover of £4900 million and a profit of £593 million.'*° (iii) Is it just that compensation should be awarded? For compensation to be awarded,

as well as establishing that the patent is of outstanding benefit to the employer, the employee must also show that it is ‘just’ that the employee be awarded compensa-

tion.'*° The decision as to whether an award for compensation is just is based on the same factors that are taken into account when deciding whether the patent provides the employer with an outstanding benefit. As a result, it is difficult to imagine situations where a patent is of outstanding benefit to the employer and it is not also just for the employee to receive compensation. It may be that the requirement that the award ought to be just enables the tribunal to make more qualitative judgments. For example, where an employee works for a small firm and is already well compensated under their contract of employment, the tribunal may consider that a further award would place an unfair burden upon the employer.'*” The requirement that the award be just may also be used as a way of introducing general equitable principles to reject applications where the employee acted in a way that is contrary to their duty of fidelity.!** 5.1.2 Compensation where an employee-invention has been assigned to an employer The second situation where an award for compensation may be made to an employee is set out in section 40(2). This provides that additional compensation may be paid

where the initial entitlement to an invention lay with an employee but the employee assigned or licensed the invention to the employer. The employee must demonstrate that the remuneration for the transaction is inadequate in comparison with the remuneration derived by the employer from the patent. They must also show that it is just that additional compensation be paid. To determine whether compensation is payable under section 40(2), it is necessary to ascertain the benefit that the employee derived from the contract with his or her employer and the benefit the employer derived from the patent. Once these two figures have been calculated, it is then necessary to determine whether the remuneration was adequate. This appears to require the court to estimate what remuneration

134 The proven benefit in money oy money’s worth to the employer of the patented invention represented no more than 0.01% of turnover or 0.08% of profits. Even on the most favourable interpretation ofthe facts, the benefit was not even equivalent to 1%. 135 British Steel’s Patent [1992] RPC 117, 126. In Garrison’s Patent (SRIS 0/44/97) a benefit of 2-3% ofthe

total turnover of asmall company manufacturing snooker cues was held not to be outstanding.

136 PA s, 40(1): 137 Tr) Memco-Mead’s Patent [1992] RPC 403, 411 it was said that because of duties of employee ‘it would need some quite exceptional benefits to flow from the patent for it to be just that an award should be made.’

138 See CIPA, para. 40.04.

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might have been achieved in a market transaction between a willing seller and purchaser. However, given that an employee who makes an application under section 40(2) will have had an opportunity to bargain with their employer, it is unlikely that the tribunal will hold that remuneration is inadequate in circumstances where it would not treat the benefit to be outstanding. 5.1.3 Calculating the amount of compensation

Once it has been decided that compensation should be awarded to the employee, the question arises: how much? Section 41(1) directs that the award should secure for the

employee a ‘fair share’ of the benefit that the employer has derived. Compensation may be awarded as a lump sum or in periodic payments.’ There is a power to vary the amount at a later stage.'*° In determining the compensation to be awarded, the court or comptroller is directed to take account of an array of factors.'*! In British Steel the examiner said that the question was similar to the question that arose when determining the royalty payable in licence of right proceedings. The relevant considerations included the size of the benefit that had been and was likely to be derived from the patent, and the salary and awards that the employee had already received. In British Steel these would have included a £10,000 ex gratia payment from British Steel and an MBE. In other cases, the tribunal might take account of the contribution made

by other people, such a co-inventors, other employees, and the employer. 5.2

COMPENSATION

FOR

COMPULSORY

LICENCES

AND

LICENCES

AS

OF RIGHT

Another situation where the tribunals may be called upon to determine the compensation that ought to be paid for the exploitation of a patent is where the patent is subject to a compulsory licence or a licence as of right. In these circumstances, the principal goal is to ensure that the owner of the patent receives reasonable remuneration for the use that is made of the invention.!” Three techniques have been used to reach an appropriate sum. These are commonly referred to as the ‘comparable royalties’, ‘costs’, and ‘profits available’ approaches. The comparable royalties test is regarded as ‘by far the best and surest approach’.'*? It involves utilizing evidence from comparable licences to estimate what would have been agreed by the parties. The kinds of evidence used will vary from evidence relating to standard royalty rates for patented products in a particular field,'** through to the actual examples of licence agreements voluntarily entered into 139 PA s. 41(6). 140 PA s. 41(7), (9)-(11). 141

PA s. 41(4)—(5).

142 Smith Kline & French Laboratories’ (Cimetidine) Patents [1990] RPC 203, 236 (CA). 143 Thid.

‘44 Cabot Safety Corp.’s Patent [1992] RPC 39, 61; Chiron Corp. v. Murex Diagnostics (No. 13) [1996] FSR 578.

PATENT EXPLOITATION

Soe

by the patentee. In deciding whether a situation is comparable, the most important factor is the nature of the patentee’s invention: if the patentee’s invention is unusual, and the comparator licence covered the same invention, it is likely to offer a useful comparison (although it may be necessary to make adjustments in relation to market size and other terms in the licence).'*° If the invention is unusual, and the licence that

is used as a basis for comparison relates to a different product, it is likely to be of little value (even if the size of the market is similar).!4° Where no comparable licence exists, the terms are calculated by the so-called ‘costs approach’.'*” Under this approach the tribunal tries to assess the value of the patent in terms of a return on costs. This involves an examination of the patentee’s expenditure on research and development, promotional expenditure, and an appropriate annual increase. The idea behind this approach is that the patentee should receive a fair and reasonable return for their financial outlay. Once the costs have been calculated, it is

necessary to determine what an appropriate increase would be. This may be done by looking at the average annual return that the patentee makes on other inventions.'*® The third approach, which is called the ‘profits available approach’ is used as a last resort.'*? The approach requires the tribunal to determine the profit the applicant will make (if licensed) and then to divide the available profits between the patentee and the licensee. One problem with this approach is that it will often be difficult to decide how to split the profits.!°° It has been said that the profits available approach is particularly dubious because it gets matters the wrong way round. It ‘makes the licensee’s reasonable remuneration the measure of what is an appropriate royalty instead of the patentee’s reasonable remuneration.’!*' There is also a danger that it might leave the patentee with no royalty at all.'°* Despite these problems, it has been acknowledged that “some assistance may often be derived from looking at what are the expected profits, if only as.a cross-check on the end result.’!°

5.3

COMPENSATION

FOR

CROWN

USE

OF PATENTS

Where an invention is used for the services of the Crown, the government department concerned is required to inform the proprietor of the patent and negotiate to pay such terms as may be agreed. In the absence of an agreed rate, the matter is determined by

145 Cabot Safety Corp.’s Patent [1992] RPC 39. 146 Research Corp.’s (Carboplatin) Patent [1990] RPC 663, 701. 147 See Geigy SA’s Patent [1964] RPC 391; Smith Kline & French Laboratories’ (Cimetidine) Patents [1990] RPE 203; 253:

'48 Where the outcome of comparison and PA s. 41 are in conflict, the comparability figure is generally preferred. American Cyanamid Co.’s (Fenbufen) Patent [1990] RPC 309. 149 Smith Kline & French Laboratories’ (Cimetidine) Patents [1990] RPC 203, 244 (Nichols LJ).

150 American Cyanamid Co.’s (Fenbufen) Patent [1990] RPC 309, 338; Smith Kline & French Laboratories (Cimetidine) Patents [1990] RPC 203, 230; Cabot Safety Corp.’s Patent [1992] RPC 39, 63.

151 Smith Kline & French Laboratories’ (Cimetidine) Patents [1990] RPC 203, 244. 152 Research Corp.’s (Carboplatin) Patent {1990} RPC 663, 700. 153 Smith Kline & French Laboratories’ (Cimetidine) Patents [1990] RPC 203, 257.

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PATENTS

the courts who, following the approach taken in compulsory licence proceedings, attempt to second-guess what a willing licensor and licensee would have agreed.'™* At the very minimum, given Article 31 of TRIPs, the court should give the patentee adequate remuneration taking into account the economic value of the authorization. The 1977 Patents Act says that the patentee should be awarded compensation to cover ‘loss of profit? that is ‘any loss resulting from his not being awarded a contract to supply the patented product, or . . . to perform the patented process or supply a thing made by means of the patented process.’!*? In determining the loss, the court takes account of the profit which would have been made on such a contract and the extent to which any manufacturing or other capacity was underused.!°° 154 Patchett’s Patent [1967] RPC 237, 247, 253. 159 PA s. 57A. Reversing the Court of Appeal decision in Patchett’s Patent [1967] RPC 237, 246, 250, 257. 156 PA s. 57A(3).

24 RIGHTS RELATED TO PATENTS 1 INTRODUCTION In this chapter we examine three areas of law that are related to, but do not traditionally form part of, patent law. The first and oldest of the three regimes is the system of plant variety protection. This gives protection to the breeders of new plant varieties. We then go on to look at supplementary protection certificates that currently operate in the UK to extend the length of patent protection. In essence the supplementary protection certificate scheme was introduced to compensate owners for time lost while they were waiting to get regulatory approval to market their patented products. The third area we look at is the protection for utility models. While utility models or petty patent protection is available in some countries, similar regimes do not currently exist in the UK. However, given the plans to harmonize the law in this area within the European Union, it may not be long before such rights are introduced in the UK.

2 PLANT

VARIETIES

While the value of new plant varieties has long been recognized in the UK, a system of protection was only introduced in 1964 (in contrast a system of protection existed in the USA from 1930).! In part this was because of the belief that the development of new varieties was part and parcel of traditional farming practices rather than a distinct activity of breeders (that required separate protection). Moreover, for much of the twentieth century, the leading breeders’ organizations were publicly funded institutions that did not prioritize intellectual property protection.* However, during 1 See B. Greengrass, “The 1991 Act of the UPOV Convention’ [1991] EIPR 466; M. Llewelyn, ‘The Legal Protection of Plant Varieties in the European Union: A Policy of Consensus or Confusion?’ [1997] 2 Bioscience Law Rev. 50; M. Llewelyn, “European Plant Variety Protection: A Reactionary Time’ [1999] Bioscience Law Rev. 211.

2 See P. Palladino, ‘Science, Technology, and the Economy: Plant Breeding in Great Britain, 1920-1970’ (1996) 49 Economic History Review 116 (reporting that 83% of wheat grown by British farmers in the 1990s was derived from seeds grown in publicly financed plant-breeding centres).

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PATENTS

the Second World War the desire to improve agricultural yields became a matter of national significance. In addition by the 1950s it had become clear that the few private seed firms that operated in the UK were losing ground to foreign competitors: the lack of property protection was seen as one possible cause.” The production of successful varieties is thought to be highly desirable in so far as it increases yields, resistance to pests and disease, and the sheer number and diversity of varieties.* While the breeding of new varieties takes a considerable amount of time and is often very costly,’ once a variety is made available to the public it can be readily duplicated.° Indeed, one of the features of plant varieties is that they produce their own reproductive material. Consequently, it was thought that it would be ‘equitable to give plant breeders the opportunity of a fair reward for their work, effort, and investment in breeding, and to grant them protection against unauthorized exploitation.’ It was also intended ‘to provide plant breeders with an incentive to produce improved varieties of a wide selection of plant species to the benefit of farmers, growers, and private gardeners.” However, in the same way in which agriculture was long seen as being nonindustrial (and thus outside the remit of patent law), so too the results of plant

breeding were not thought to be appropriate subject matter for patent protection. In part this was because prior to acceptance of Mendelian theories of genetics, the production of varieties was seen more as an art than a scientifically informed activity.®

This was reinforced by the fact that there were technical problems in describing plant varieties in a way that met the requirements of patent law. However, the most significant reason why plant varieties were thought to be inappropriate subject matter for patent protection was that new plant varieties were unlikely to satisfy the inventiveness threshold of patents: most breeds were obvious. Consequently, it was decided that the protection needed could best be provided by a sui generis system tailored to the characteristics of plant varieties and the needs of breeders, growers, and traders. The UK first adopted a system of plant variety protection in 1964. This was in

3 See P. Palladino, ‘Science, Technology, and the Economy: Plant Breeding in Great Britain, 1920-1970’ (1996) 49 Economic History Review, 116, 131 (another alleged cause was lack of capital).

4 See the benefits listed by the British Association of Plant Breeders, cited in G. Dworkin, ‘The Plant Varieties Act 1983? [1983] EIPR 270, n. 3; P. Palladino, ‘Science, Technology, and the Economy: Plant Breeding in Great Britain, 1920-1970’

(1996) 49 Economic History Review 116 (describing a doubling of yields of

cereals and potatoes and attributing half of this gain to genetic improvements). > For a discussion of the costs of production of a variety of barley see Golden Promise Spring Barley [1981] FSR 562. A successful variety might take between 8 and 20 years to develop: A. Lansley, Hansard (HC) 24 June 1997, col. 711. © CPVR, Recital 5. For criticism of plant variety rights, particularly from a developing country perspective,

see P. Mooney, Seeds of the Earth: A Private or Public Resource? (1979); S. Verma, ‘TRIPs and Plant Variety Protection in Developing Countries’ [1995] EIPR 281; V. Shiva, ‘The Seed of Our Future’ (1996) 4 Development Journal. For a defence against some of these attacks, see Dworkin, ‘The Plant Varieties Act 1983” [1983] EIPR 270, 271.

7 Thid. [1983] EIPR 270. 8 Many of these themes are explored in P. Palladino, ‘Between Craft and Science: Plant Breeding, Mendelian Genetics, and British Universities 1900-1920’ (1993) 34 Technology and Culture 300.

RIGHTS

RELATED

TO PATENTS

541

response to the Report of the Committee on Transactions in Seeds’ and to the International Convention for the Protection of New Varieties of Plants (UPOV), originally formulated in 1961.'° The 1964 Plant Varieties and Seeds Act was substantially

amended in 1978 and 1991 to take into account revisions in UPOV.'! In 1997 it was repealed and replaced by the Plant Varieties Act.'? In 1994 the European Community adopted a Community Plant Variety Regulation’ which made it possible, from 27 April 1995, for breeders to apply for a single community-wide right for varieties. Community plant variety rights have uniform effect within the territory of the Community.'* The grant of a Community right leads to the suspension of any equivalent national rights that may exist.'° As the international, regional, and national systems are in similar terms, we will look at them together.

2.1

PROCEDURE

FOR

GRANT

As with patents, plant variety rights arise as a result of a process of registration. The initial application is made to a relevant granting authority: either the UK Plant Variety Rights Office in Cambridge, or the Community Plant Variety Office in Angers in France.'® Anyone may apply for national rights irrespective of their nationality. However, a person may only apply for a Community right where they are a national of, or domiciled in, a country which is a member of UPOV.'’ As well as identifying the 9 (1960) Cmnd. 1092. See P. Murphy, ‘Plant Breeders’ Rights in the United Kingdom’ [1979] EIPR 236; M. Llewelyn, “The Legal Protection of Biotechnological Inventions: An Alternative Approach’ [1997] EIPR 115, ty.

10 UPOV has 40 members. UPOV, The First Twenty Five Years of the Interational Convention for the Protection of New Varieties of Plant (1986). 1 UPOV was also modified on 10 Nov. 1972, and revised in 1978. The 1991 version came into force in Apr. 1998. For commentary, see 8. Greengrass, ‘UPOV and the Protection of Plant Breeders— Past Developments, Future Perspectives’ (1989) 20 IIC 622; M. Llewelyn, “The Legal Protection of Biotechnological Inventions: An Alternative Approach’ [1997] EIPR 115, 119; N. Byrne, Commentary on the Substantive Law of the UPOV (1991). 12 Tn force as of 8May 1998: Plant Varieties Act 1997 (Commencement) Order 1998 (SI 1998/1028); Plant

Breeders’ Rights Regulations 1998 (SI 1998/1027). The four major changes are: that the regime extends to all genera and species; that the rules on prior exploitation are liberalized to allow market testing; a simplified system of rights pending grant; breeders’ rights are strengthened. The plant breeders’ regime falls under the control of the Ministry of Agriculture, Fisheries and Food rather than the Dept. of Trade and Industry. For an introductory guide see, MAFF, UK Plant Breeders’ Rights Handbook 1998. The 1964 Act had previously been amended by the Plant Varieties Act 1983 which was intended to enable UK ratification of the 1978 Revision of UPOV. 13 See P. van der Kooij, Introduction to the EC Regulation on Plant Variety Protection (1997).

ESCPVR Art. 2. !5 CPVR Art. 92; PVA s. 11(3). The Regulation is otherwise ‘without prejudice’ to the rights of member states to grant national rights. While there is no ‘approximation Directive’, the common need to satisfy the requirements of UPOV and good sense have produced a high level of harmonization. Most countries in the Community have a parallel national system with the exception of Greece and Luxembourg. 16 http://www.cpvo.fr. Neither system is particularly heavily used: in 1994 there were 582 UK applications and 419 grants of PVRs, and in 1998 238 applications and 139 grants; in 1998 there were 1835 Community PVR applications, and 1491 issued CPVRs. See ‘Statistics’ (1999) 86 Plant Variety Protection 8.

17 CPVR Art. 12. The Commission may extend qualification to nationals and domiciliaries of other countries which provide corresponding protection.

-

542

PATENTS

botanical taxon, the applicant must also provide the name of the breeder, a provisional designation for the variety, a technical description of the variety, the geographical origin of the variety, details of any previous commercialization of the variety, and information about applications made in respect of the variety.'* In some cases a colour photograph of the variety must also be supplied. An applicant must select a name for the variety.'? Provision is made for objections by third parties.”° Fees are payable.”! The Office will examine the application in three stages. First, there is a formal examination.” This is followed by a substantive examination whereby the Office examines the application to ensure that it relates to appropriate subject matter (that is, a variety), that the variety is new, and that the applicant is the person entitled to plant breeders’ rights.*? The Office also considers the suitability of the name proposed for the variety, and takes account of a host of considerations, including prior registrations.“ The third stage is the technical examination of the characteristics of the variety. At this stage, the Office examines the application to ensure that the variety is distinct, uniform, and stable. These requirements are sometimes referred to as the ‘DUS’.”* An applicant must supply propagating material that the Office can use to test the DUS by planting and growing the variety.” The tests are often carried out at more than one site. In most cases DUS tests will take between one and three years.”* As a result, it may be some years between application and grant.” Indeed, the crop is grown throughout the period of the monopoly and if it becomes apparent that the variety does not satisfy the requirements of the Act it is liable to be revoked.*° 2.2

SUBJECT

MATTER

All three systems of plant variety protection cover varieties of ‘all plant genera and species’ from ornamental roses, to vines, potatoes, and wheat.*! Section 1(3) of the

1997 Plant Variety Act defines a variety as, 18 PVA s. 3(2); CPVR Art. 50. 19 PVA s. 18(2)(a); CPVR Art. 50(3). 20 CPVR Art. 59. 21 The Plant Breeders’ Rights (Fees) (Amendment) Regulations 1999 (SI 1999/1089). The application fee is

£275, but the tests fees and renewal fees vary according to the species involved—for example, tests are £745 for cereals, but only £120 for roses; renewals are £435 for cereals and £70 for roses.

22 CPVR Art. 53. 23 Tbid., Art. 54. 24 Tbid., Art. 63.

5 UPOV Art. 5; CPVR Art. 6; PVA s. 4(2). 26 CPVR Art. 55. 27 For the UK, this work is mainly carried out by the National Institute of Agricultural Botany (NIAB), the Scottish Agricultural Science Agency (SASA), and the Dept. of Agriculture for Northern Ireland (DANI). See also UPOV Art. 12; CPVR Arts. 53-5;

28 Usually one year for ornamentals, three for herbage varieties and trees, and two years for other species. 29 Provisional protection is provided: UPOV Art. 13; CPVR Art. 95; PVA s. 5(1).

30 CPVR Arts. 20-1; PVA ss. 21-2. 31 CPVR Art. 5 (all botanical genera and species, including, inter alia, hybrids between genera and species); PVA s. 1(2).

RIGHTS

RELATED

TO PATENTS

543

a plant grouping within a single botanical taxon of the lowest known rank, which grouping ... can be (a) defined by the expression of the characteristics resulting from a given genotype or combination of genotypes, (b) distinguished from any other plant grouping by the expression of at least one of those characteristics, and (c) considered as a unit with regard to

its suitability for being propagated unchanged.” A botanical ‘taxon’ means a ‘group’ of plants: the requirements that it be of the lowest known rank is to make it clear that protection could not be granted for a ‘family’, ‘genus’, or ‘species’ which are groups higher in the taxonomical classification system.**

2.3

VALIDITY

In order to be protected the variety must be ‘new’. It is also necessary for the variety to be ‘distinct’, ‘uniform’, and ‘stable’.*4

2.3.1 Novelty The requirement that the variety be new is nowhere near as onerous as the worldwide novelty requirement in patent law. A variety is new if there has been no sale or disposal of propagating or harvested material within the territory (under the Plant Variety Act, the UK, or in the case of the Community Plant Variety Regulation, the Community) more than one year prior to the application. The novelty of a variety may also be lost if there has been a sale or disposal outside of the relevant territory, in the case of trees and vines, more than six years before the application date; in other cases, not more than four years prior to the application date.*°

Three features of the novelty requirement should be noted. The first is that novelty is not lost by prior use (for example, growth) of the variety, but only by prior sale or disposal. As such, a plant can be grown in someone’s garden for years prior to application and an application still succeed. In part this reflects the desire to reward the discovery as much as the breeding of new varieties. Indeed, it seems that the applicant can still obtain a plant variety right even if they have given away propagating or harvested material, as long as this was not ‘for the purposes of exploiting the variety’. The second notable feature is that the novelty provisions allow for substantial “grace periods’. That is, they allow for periods in which the applicant can commercialize the plant prior to grant without prejudicing the application. As a result, a person can sell vines outside the UK for up to six years before they need apply for a plant variety right. Thirdly, and perhaps most significantly, the only disposals or sales to be taken into account when considering the novelty of a particular variety are those by the 32 CPVR Art. 5(2); PVA s. 1(3). 33 A wild rose is in the species ‘carolina’, which is in the genus ‘rosa’, which is in the family ‘rosaceae’, which is in the order ‘rosales’, which is in the class “dicotyledons’, which is in the subphylum ‘angiospermae’, which is in the phylum ‘spermatophyta’ which finally is in the kingdom ‘plants’.

34 UPOV Art. 5; CPVR Art. 6; PVA s. 4(2). 35 UPOV Art. 6; CPVR Art. 10; PVA Sched. 2, para. 4.

544

PATENTS

applicant himself or with his consent.*© Sales of material by third parties who have independently developed the same variety will not render the variety lacking in novelty. In such circumstances, priorities are accorded to the first to apply.°”? However, no protection is given to the independent developer via prior user’s rights. In such circumstances a monopoly may be granted to a person over an activity or trade which someone else was doing already. 2.3.2 Distinct, uniform, and stable

As well as being novel, to be the subject of plant breeders’ rights the variety must also be ‘distinct’, ‘uniform’, and ‘stable’.** These are sometimes referred to as the ‘DUS’ or

‘agro-technical’ requirements. A variety is distinct if it is ‘clearly distinguishable by one or more characteristics which are capable of a precise description from any other variety whose existence is a matter of common knowledge at the time of application.’ Distinctiveness may arise through visible differences in outward appearance, such as height, size of leaves, leaf colour, or in the ears of cereals. It may also arise through physiological differences associated with the variety’s particular chemical or biological structure, such as resistance to disease,” or ability to withstand certain conditions.) Any difference will

suffice: there is no need for the distinguishing feature to confer any particular aesthetic or economic advantage. Distinctness is a comparative test and may require the claimed variety to be compared with similar varieties. The variety must only be compared with ‘other’ varieties and not with examples of ‘itself’. In practice, the comparison is made with the varieties of the same species in the Office’s ‘reference collection’. The reference collection is made up of those varieties for which rights already exist or are being sought. The types of characteristic and the extent of the deviation necessary for a variety to be distinct will vary with the grouping concerned. Moreover, the characteristics needed for a variety to be distinct may be different for each comparison (for example variety A might differ from variety B by being higher, but differ from variety C by being hardier).4 A variety is uniform if ‘it is sufficiently uniform in those characteristics’ which make 3© See A. Christie, ‘The Novelty Requirement in Plant Breeders’ Rights’ (1988) 19 IIC 646. Cf. P. van der Kooij, Introduction to the EC Regulation on Plant Variety Protection (1997), 15. 37 PVA Sched. 2, Part Il, para. 5.

38 UPOV Art. 5; CPVR Art. 6; PVA s. 4(2). 39 UPOV Art. 7; CPVR Art. 7 (clearly distinguishable by reference to the expression of characteristics that results from a particular genotype or combination of genotypes); PVA Sched. 2, para. 1. 40 Maris Druid: Spring Barley [1968] FSR 559 (resistance to mildew accepted as a characteristic). 41 Under the 1964 Act these two types of distinctiveness were referred to as ‘morphological’ and ‘physiological’. 42 Tt seems that a mere modification of genetic structure which is not revealed or expressed in the variety will not make it distinct: Van der Kooij, Introduction to the EC Regulation on Plant Variety Protection, 16. 43 See Christie, ‘The Novelty Requirement in Plant Breeders’ Rights’, (1988) 19 IIC 646, 651-4; cf. Van der

Kooij, Introduction to the EC Regulation on Plant Variety Protection (1997), 16. 4 For an illustration (though under the differently worded provision in the 1964 Act), see Daehnfeldt v. Controller of Plant Varieties [1976] FSR 95.

RIGHTS

RELATED

TO PATENTS

545

it distinct.*° This means that nearly all examples of the variety must bear the characteristics that make the plant distinct. During the early stages of the breeding process, a proportion of the plants grown may not bear the relevant characteristics. Where this is the case, it may be necessary to undertake further breeding to eradicate deviant strains. However, there comes a point where uniformity requires effort that is out of proportion to the improvement in uniformity gained by the removal of deviants. Consequently, it is not necessary for a variety to be completely uniform. This means that a variety will still be uniform even if a few of the plants that are grown do not exhibit the critical characteristics. To this end, the Plant Variety Office has stated that a

variety is sufficiently uniform if there is the degree of uniformity a capable breeder skilled in the art can reasonably be expected to achieve having regard generally to the nature of plant material and more particularly to the biological possibilities of the species in which he is working including its mode of reproduction, and to any special features of the variety under consideration.“

A variety is stable if the characteristics that make it distinct ‘remain unchanged after repeated propagation’.”” The idea is that while a first generation might be distinct and uniform, when a second generation is grown a large number of deviants appear (due to residual ‘heterozygosity’). This requires an assessment to be made of the inherent capability of the variety to remain true to its original characteristics. As with the testing of uniformity, deviants that appear as a result of pollination by nearby crops are ignored.

2.4

OWNERSHIP

The person entitled to the grant of plant breeders’ rights is the person who breeds the plant variety or discovers and develops it.*® However, where these events occur in the course of a person’s employment, the employer is presumed to be the person entitled to grant of the plant breeders’ rights.” Plant breeders’ rights are property rights and as such are assignable, though the statute forbids a separate assignment of rights in the protected variety and rights in “dependent” varieties. The Community right cannot be assigned other than for the Community as a whole. Where this occurs the assignment must be in writing and should be entered in the Register kept by the Community Plant Variety Office.°° 45 UPOV Art. 8; CPVR Art. 8; PVA Sched. 2, para. 2. For an example illustrating the difficulties of determining uniformity in tests where variants can arise through ‘out-pollination’ from nearby crops and spontaneous mutants see Moulin Winter Wheat [1985] FSR 283.

46 Zephyr: Spring Barley [1976] FSR 576, 579.

47 UPOV Art. 9; CPVR Art. 9; PVA Sched. 2, para. 3. 48 PVA s. 4(3); UPOV Art. 1(iv); CPVR Art. 11(1). The fact that rights are available to ‘discoverers’ has sometimes proved controversial: see G. Dworkin, “The Plant Varieties Act 1983’ [1983] EIPR 270, 272.

49 PVA s. 4(4); UPOV Art. l(iv). As far as the CPVR is concerned entitlement shall be determined in accordance with, the national law applicable to the employment relationship in the context of which the variety was bred, or discovered and developed. 50 CPVR Arts. 2 and 23(2).

546

2.5

PATENTS

DURATION

The duration of rights varies with the type of plant concerned: UPOV requires members to provide a minimum duration of twenty years for most plants and a minimum of twenty-five years for trees and vines.°’ However, the European and UK systems go further than these minima, protecting potatoes, trees, and vines for thirty years, and other genera and species for twenty-five years.°* Throughout the period for which the grant operates rights-holders should ensure they are in a position to produce propagating material to the Office.°’ A national right will become ineffective on grant of a Community right for the same variety.**

2.6

RIGHTS

AND

INFRINGEMENT

A valid plant breeders’ right gives the proprietor (initially, the breeder or discoverer) a number of rights.°° While these rights are primarily in relation to the commercialization of propagating material, they may also apply to harvested material and to derivative varieties.°° The rights given to breeders are more limited than in the cases of patentees.°’ Moreover, it should be noted that as with other intellectual property rights these are negative rights. It is also important to note that with the exception of ornamentals and fruit, the breeder must gain relevant regulatory approval before a variety is marketed. 2.6.1 Propagating material The fundamental right conferred on a proprietor of a plant breeder’s right is the exclusive right to authorize certain acts in relation to ‘propagating material’ (which is referred to in the 1997 Act as ‘reproductive material’, and as ‘variety constituents’ in

the Community Regulation). In particular, a plant breeder is given the right to produce or reproduce the material; to ‘condition’ the material for the purposes of propagation; and to sell, offer for sale, stock, export, or import the material.© While 1 UPOV Art. 19. °2 CPVR Art. 19; Council Regulation (EC) 2470/96 of 17 Dec. 1996 (extending protection for a further five years for potatoes); PVA s. 11.

3 PVA s. 16. 34 CPVR Art. 92(1). °° CPVR Art. 11; PVA s. 4(3)-(5). The rights are assignable: CPVR Art. 23; PVA s. 12.

© UPOV Art. 14; CPVR Art. 13; PVA ss. 6-7. 57 1960 Committee, para. 141. °8 They must pass tests of value for cultivation and use, that is of yield, quality and disease-resistance. Once this is done, the variety is entered on the National List: Seeds (National Lists of Varieties) Regulations

1982 (no on a UK European >? For

seed of the major agricultural and vegetable species may be marketed in the UK unless the variety is National List or the EC Common Catalogue). See J. Harvey, ‘UK Plant Breeders’ Rights and the Seed Regime’ (1990) Patent World 22. a discussion of definitional problems, see G. Dworkin, ‘Plant Breeders’ Rights: The Scope of United

Kingdom Protection’ [1982] EIPR 11, 12. 60 PVA s. 6; UPOV Art. 14(1)(a); CPVR Art. 13(2). Though these rights are limited within EC law: Re the

Plant Royalty Bureau [1979] FSR 644 (Commission investigation of restriction on exports).

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propagating material is not defined, it includes seeds for sowing, seed potatoes, seedlings, bulbs, rhizomes, grafts, and the like. The nature of plant material and breeding technology is such that a variety can be propagated from a much wider array of plant material than has traditionally been the case, including material such as cut blooms. Consequently, material will be treated as propagating material if it is intended to be used as a propagating material. Obviously, a person will infringe the fundamental right if, for example, they sell seeds, produce cuttings, or import bulbs. However, if such as person (who has legitimately grown the plant) sells beans for canning, grain for milling, or blooms or rose bushes for personal use, and they are subsequently used for propagation, it is unlikely that the vendor will be liable. In these cases, the user will be liable because they will have reproduced or ‘conditioned’ the material for the purposes of propagation. 2.6.2

Harvested material

In most cases the rights conferred in relation to the exploitation of propagating material also apply to harvested material obtained through the unauthorized use of propagating material (for example, crops of wheat from unauthorized seed). Har-

vested material is defined to include entire plants and parts of plants.®’ As such it will encompass things such as cut blooms from flowers.® An exception to this right arises

where prior to harvest, the rights-holder has had a reasonable opportunity to exercise his or her rights in relation to the unauthorized use of the propagating material.® The plant breeders’ rights also extend to any product that is made directly from such harvested material (such as flour made from wheat) which falls within the

categories prescribed by the Ministers.“ Certain procedures and presumptions operate to assist the holder of plant breeders’ rights in proving that harvested material and products made directly from such material were obtained through unauthorized use of propagating material. The right-holder may issue an information notice to a defendant requesting certain information as to the source of specified material. If the recipient fails to provide the relevant information within a particular time, the material is presumed to have been obtained by way of an unauthorized use. 2.6.3

Derivative varieties

The plant breeders’ rights extend beyond the registered variety to cover varieties that are ‘dependent’ on the protected variety. Dependent varieties include varieties whose 61 PVA s. 6(6)(b). 62 The Scheme under Sched. 3 to the 1964 Act has been abolished. 63 PVA s. 6(3).

64 PVA s. 6(4). The provision only applies if no relevant consent has been gained in relation to dealing with the propagating material, and the right-holder has not had a reasonable opportunity to enforce those rights—for example, where the wheat was produced in a country which did not recognize plant breeders’ rights. It will also only operate as regards varieties prescribed in regulations by the Ministers. For background, see J. Rooker (Minister of State, MAFF) Hansard (HC) 24 June 1997, cols. 692-4.

65 PVA ss. 14-15. Plant Breeders’ Rights (Information Notices) (Extension to European Community Plant Variety Rights) Regulations 1998 (SI 1998/1023).

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production requires the repeated use of the protected variety, as well as ‘essentially derived’ varieties.°° A variety is deemed to be ‘essentially derived’ where it is predominantly derived from the initial variety. In addition, the variety must retain the expression of the essential characteristics that result from the genotype of the initial variety, and at the same time be clearly distinguishable from the initial variety. 2.6.4 Naming rights Registration is conditional on the applicant providing a suitable name for the variety. This prevents the confusion that would otherwise arise if a number of different names were used to describe the same variety.®” Once approved, anyone who sells or markets propagating material is obliged to use that name. This duty, breach of which is punishable under criminal law,” applies to the proprietor as much as to the public at large.” The duty subsists indefinitely, that is, even after expiry of plant breeders’ rights.”” The proprietor of a British plant variety right is also able to control the wrongful use of that name. As a result, the right-holder may bring an action against anyone who uses the name of a protected variety in marketing material of a different variety within the same class, or uses a name so nearly resembling the registered name so as to be likely to deceive or cause confusion.’!

2.7

EXCEPTIONS

One important feature of the plant variety system is the careful way in which the competing interests of developers, users, and other interested parties have been accommodated through the use of exceptions and compulsory licences.”2 UPOV permits members of the Union to impose various restrictions on the operation of the monopoly.” There are certain limitations that parallel those in the EPC. Acts done privately and for non-commercial purposes, and acts done for experimental purposes are not infringing.’ Moreover, acts done for the purpose of breeding or discovering and developing other varieties do not infringe plant breeders’ rights. There are also the customary rules relating to Community exhaustion of rights where material is ‘disposed of to others by the holder or with his consent’.”®

66 PVA s. 7; UPOV Art. 14(5); CPVR Art. 13(5). On essential derivation, see J. Rooker, Hansard (HC) 24 June 1997, cols. 693-4.

:

67 M.-C. Piatti and M. Jouffray, ‘Plant Variety Names in National and International Law’ [1984] EIPR 283. 68 PVA s. 19. Failure to use the name is a crime punishable by a fine. See also UPOV Art. 20(7).

6 UPOV Art. 20; CPVR Art. 63. 70 UPOV Art. 20(7). 71 PVA s. 20(2).

72 Users are represented largely through the National Farmers Union. The breeders are represented by the British Society of Plant Breeders.

73 UPOV Art. 17. 74 CPVR Art. 15; PVA s. 8.

7> CPVR Art. 16; PVA s. 10.

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As regards certain varieties,”° farmers are authorized to use ‘in the field, on their own holding’ the product of a harvest which they have obtained by planting a variety. Small farmers are permitted to use such saved seed without payment, whereas others must provide equitable remuneration.’” Remuneration is required in relation to lists of fodder plants (such as vetch and clover), cereals, potatoes, as well as oil and fibre

plants such as rape.’8 2.8

COMPULSORY

LICENCES

Compulsory licences may be granted by the controller in certain circumstances two years after grant of plant breeders’ rights.”” The first condition is that the holder of a plant breeders’ right has either unreasonably refused to grant a licence or has proposed an unreasonable term for such a licence.*° It has been said that this is a heavy burden to discharge.*' The controller must also be satisfied that such licences are needed to ensure that the variety is available to the public at reasonable prices, is widely distributed (though not necessarily that demand is fully met),®” or is maintained in quality. The applicant must be intending to exploit the rights and be in a position to do so.** The controller sets the terms of the licence as he thinks fit, having regard to the desirability of securing reasonable remuneration to the plant breeder, but the licence must not be an exclusive licence. The controller can require the plant breeder to supply propagating material to the holder of the licence.

2.9

RELATIONSHIP

TO THE

PATENT

SYSTEM

The plant breeders’ rights system was initiated because of the belief that plant varieties fell outside of the types of creations that were traditionally considered to be patentable.** Nonetheless, when

the EPC was formulated,

a specific exclusion was

placed in the definition of patentable subject matter to avoid the possibility of dual

76 CPVR Art. 14(2); PVA s. 9. On the importance ofthese sorts of provisions for developing countries, see S. Verma, “TRIPs and Plant Variety Protection in Developing Countries’ [1995] EIPR 281, 286. 77 CPVR Art. 14(3); PVA s. 9(3)—(4). Small farmers are further defined. Plant Breeders’ Rights (Farm Saved

Seed) (Specified Information) Regulations 1998 (SI 1998/1026). 78 CPVR Art. 14; Art. 29; Commission Regulation 1768/95 of 24 July 1995. Collections of remuneration for farm saved seed began in autumn 1996, 79 CPVR Art. 29 (compulsory exploitation rights); PVA s. 17; Plant Breeders’ Rights Regulations 1998 (SI 1998/1027) Reg. 10 (compulsory licences operate only 2 years after grant). Cama Wheat [1968] FSR 639, 643 (explaining that plant breeder should have complete control at the first introduction of a variety when

seed supplies may be limited and demand uncertain).

80 PVA s. 17(1). 81 Cama Wheat [1968] FSR 639, 644. 82 Tbid., 645 (where the breeder’s licensees supplied 2000 tons of seed, a refusal to license the applicant to sell 30 tons did not result in the seed not being ‘widely distributed’). 83 PVA s. 17(2)(b)—(c). 84 Most importantly, it was not seen as being capable of meeting the requirements of sufficient disclosure. For an international overview, see T. Roberts, “Patenting Plants Around the World’ [1996] EJPR 531.

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protection.® For most of the history of the operation of the EPC it was thought that the patent and plant variety systems were mutually exclusive. Indeed the 1961 version of the UPOV seemed to require that members allow either patenting or sui generis protection, but not both.*

However, developments in techniques for modifying plants such as somatic cell hybridization and genetic engineering more generally have thrown the relationship of mutual exclusivity into doubt. This has been reinforced by the fact that biotechnology companies have attempted to use the patent system to obtain protection for their innovations (for example claims directed to plant cell strains, or to groups of plants at a taxonomical level higher than a ‘variety’).*” In so doing this increases the possibility of overlap with the plant breeders’ system. As a result of the 1991 revision of the UPOV, the patent and plant variety systems are no longer mutually exclusive.®® As such, this increased the possibility for overlap between the regimes. Since the patent system allows for stronger (though not longer) protection, the possibility of overlap has resulted in increased attempts to obtain patent protection for plant-related products.*? Some commentators have called for the removal of the exclusions relating to plant varieties from the EPC, thereby leaving choice between the patent and plant breeders’ regime to the applicant.”® However, others have asserted that the scope of breeders’ rights regimes should be extended and developed to protect plant biological material more generally.”!

3 SUPPLEMENTARY

PROTECTION

CERTIFICATES

Supplementary protection certificates (SPCs) are intellectual property rights that are based on and are similar in nature to patents. SPCs operate to extend patent 85 Art. 53(b) EPC. Ciba-Geigy/Propagating Material Application T49/83 [1979-85] C EPOR 758; [1984] OJEPO 112. (The legislator did not wish to afford patent protection under the EPC to plant varieties within 1961 Convention.) Plant Genetic Systems/Glutamine Synthetase inhibitors (1993) 24 IIC 618 (‘the purpose of Art. 53(b) EPC... is to draw an appropriate dividing line between plant variety and patent law... It is... important that no grey area in which protection is not given exists between the above two systems’).

86 UPOV 1961 Art. 2(1). 87 See above at pp. 394-405.

88 Recital 8 states that the definition of plant variety is not intended to alter definitions applicable in relation to other intellectual property rights, esp. the patent field. 8 A. Christie, ‘Patents for Plant Innovation’ [1989] EIPR 394; S. Crespi, ‘Patents and Plant Variety Rights: Is there an Interface Problem?’ (1992) 23 IIC 168; M. Llewelyn, “The Legal Protection of Biotechnological Inventions: An Alternative Approach’ [1997] EIPR 115, 117; J. Funder, ‘Rethinking Patents for Plant Innovation’ [1999] EIPR 551.

°0 ‘J. Straus, ‘AIPPI and the Protection of Inventions in Plants: Past Developments, Future Perspectives’ (1989) 20 IC 600; in Plant Variety Rights: An Outmoded Impediment? A Seminar Report (1998), T. Cook

argues that the ‘option’ to pretect plants by sui generis rights in TRIPs Art. 27(3), should be removed. °1 B. Greengrass, ‘UPOV and the Protection of Plant Breeders: Past Developments, Future Perspectives’ (1989) 20 IIC 622; M. Llewelyn, “The Patentability of Biological Material: Continuing Contradiction and

Confusion’ [2000] EIPR 191, and Plant Variety Rights: An Outmoded Impediment?A Seminar Report (1998).

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protection where it has not been possible for the patent proprietor to take full advantage of their patent rights over the period of the grant. In particular, they compensate the owner where they have not been able to market the patented product because of delays in obtaining regulatory approval.” The need for additional protection arose as a result of the fact that since the 1970s the systems of regulatory approval have become more rigorous and lengthy. For example, in 1990 the average period for approval of medicines was twelve years. Such delays may erode the time in which the patent owner is able to market their inventions under the protection of the patent monopoly. Following a Proposal by the Commission in 1990 (which has proved to be an important document in interpreting the legislation),”* two Council Regulations were passed creating new rights related to patents for ‘medicinal products’ and ‘plant protection products’.”* The right is characterized as a right distinct from patents in order to avoid the apparent conflict that would otherwise occur with the maximum term under Article 63 of the European Patent Convention.

Because SPCs operate at the interface between the patent system and the system of regulatory approval, the availability, scope, and duration of protection is defined by concepts drawn from each system, coupled with the key hybrid concept of a ‘product’. More specifically, under the systems of regulatory approval, approval is granted to the marketing of highly specifically defined products: ‘medicinal products’ or ‘plant protection products’. These are usually defined by reference to their chemical or other ingredients and, for example, by their physical form or intended mode of delivery.”° In contrast, a patent is likely to be much broader in its coverage, extending perhaps to a chemical per se or combination of chemicals, a method of production, or—at its narrowest—a new medical use of a known product. The effect of this is that a single patent may cover a range of individual medicinal or plant protection products. The key-mediating concept between these two regimes is ‘the product’ (which is the ‘active substance’, for a plant protection product or the ‘ingredient’, in the case of medicinal products, for which approval was gained).”° For example, if marketing

92 The relevant regulatory authorities are the Medicines Control Agency, the Veterinary Medicines Directorate, the European Agency for the Evaluation of Medicinal Products, and the Pesticides Safety Directorate. 93 The USA introduced ‘patent term restoration’ in 1984 and Japan in 1987. In 1991 France and Italy introduced so-called ‘certificates of complementary protection’: see P. Kolker, “The Supplementary Protection Certificate: The European Solution to Patent Term Restoration’ [1997] IPQ 249.

94 Council Regulation (EEC) no. 1768/2 of 18 June 1992 concerning the creation of a supplementary protection certificate for medicinal products (OJ 1992 L 182/1) (hereafter the SPC(MP) Reg). Regulation (EC) no. 1610/96 of the European Parliament and ofthe Council of 23 July 1996 concerning the creation of a

supplementary protection certificate for plant protection products (OJ 1986 L 198/30-5). (Hereafter the SPC (PPP) Reg.) The Spanish unsuccessfully challenged Regulation 1768/2 on the grounds that the Community did not have competence to legislate a new patent right, and that intervention could not be justified by reference to the need to harmonize laws for the internal market: Spain v. Council of the European Union Case 350/92 [1995] ECR I-1985, [1996] FSR 73. 95 SPC(MP) Reg. Art. 1(a); SPC(PPP) Reg. Art. 1(1).

96 SPC(MP) Reg. Art. 1(b) (defining product); SPC(PPP) Reg. Art. 1(8) (defining product), Art. 1(3) (defining active substance), Art. 1(2) (defining substances).

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approval was sought for ‘aspirin in 500-mg. tablet form to be sold in packets of not more than sixteen tablets’, the “active ingredient’ would be aspirin. In most cases the product includes derivatives, such as salts or esters.

3.1

AVAILABILITY

In order to receive an SPC, a person must apply to the national patent office and not the EPO.” The application must be made within six months of receipt of authorization to market the medicinal product or plant protection product in the country concerned (for our purposes the UK).”8 At the time of application, the applicant must be the proprietor of a basic patent that is in force. Taking into account third-party observations,” the Patent Office assesses whether an SPC should be granted (that is whether the patent covers the product,’ and whether appropriate authorizations exist):'! there is no reinvestigation of the validity of the patent. It should be noted that the relevant authorization must be the first authorization.! This means that if a patent is granted for a new process of making an old product, an existing authorization relating to the old product will probably mean that no certificate will be available.1° If a patentee applies for an SPC but is unable to submit the appropriate marketing authorization (for example, because it was granted to the patentee’s licensee and that person refuses to cooperate), the Patent Office may contact the relevant authority.!™ However, the Office will first require the applicant to provide evidence of his or her inability to supply the authorization, as well as official gazette information that will enable the Office to verify the identity of the product and the date of authorization.! Once an SPC is granted, the relevant authority may demand an annual fee to maintain

%7 At present there is an application fee of £250. See the Patent Office, Supplementary Protection Certificates for Medicinal Products and Plant Protection Products: A Guide for Applicants (1997), available online at http://www.patent.gov.uk/forms/supp/pdfs/spctext.pdf. °8 SPC(MP) Reg. Art. 7; SPC(PPP) Reg. Art. 7; Yamannouchi Pharmaceuticals v, Comptroller-General [1997] RPC 844 (ECJ). A valid authorization does not include a mere authorization of clinical trials: British

Technology Group SPC Application [1997] RPC 118.

°° Art. 18(2); BASF AG’s SPC Application [2000] RPC 1. Documents are usually open to public inspection within 14 days of being filed. Observations should be made in writing. 100 If a patent is granted for a combination of ingredients but a certificate relates to one of the ingredients only, no certificate should be granted: Centacor SPC Appn. [1996] RPC 118. Whether a patent for a product would cover its salts or esters will be a matter of interpretation of the patent claims, applying principles explained at pp. 499-502: see Takeda Chemical Industry’s Application (unreported).

'0l British Technology Group SPC Application [1997] RPC 118 (refusing SPC because no relevant

authorization).

102 SPC(MP) Reg. Art. 3(d); SPC(PPP) Reg. Art. 3(1)(d). 103 BASF AG’s SPC Application [2000] RPC 1 (an attempt to claim that the certificate related to a different product which necessarily had certain impurities resulting from the particular patent process was rejected). 104 Biogen v. Smith Kline Beecham Biologicals SA [1997] RPC 833. 105 See the Patent Office, Supplementary Protection Certificates for Medicinal Products and Plant Protection Products: A Guide for Applicants (1997), para. SPM 8.04.1.

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it in force. In the UK these fees are £600 for the first year, rising to £1000 for the fifth (which must be paid in one instalment).'°° In certain circumstances, there may be more than one basic patent relating to a particular product. This can be seen, for example, if we take the situation where A applied for a patent for substance X in 1990 and B applied for a patent for use of substance X in making a pharmaceutical preparation for use in thinning blood in 1993. If authorization was given to B to market the pharmaceutical preparation in 2000, A would be entitled to a certificate lasting five years and B a certificate lasting two years. However, the mere existence of a second patent will not of itself justify the grant of a certificate. If, in the same example, A had received authorization to market the substance as a cure for headaches in 1996, A would be entitled to a certificate for

one year, but B would not be entitled to any certificate. This is because the authorization in 2000 was not the first authorization relating to the product. The existence of B’s 1993 patent is of no special significance.

3.2

SUBJECT

MATTER

The protection provided by an SPC extends to the ‘product’ covered by the authorization and any use of the product as a medicinal (etc.) product that has been authorized before expiry of the SPC.'” The product is defined as the ‘active substance’ (in the case of plant protection) or the ‘ingredient’ (in the case of medicinal products) for which approval was gained).'°* For example, if A applies for a patent for aspirin on 1 January 1990 and was granted marketing authorization for sale of aspirin in tablet form as a treatment for headaches on 1 January 1996 and A then obtained an SPC, the

SPC would not only cover sale in tablet form, but also any subsequent authorizations of the same product which were obtained before the expiry of the patent in 2010. Thus, if A later gets marketing authorization for sale of aspirin in capsule form as a treatment for headaches in 1999, the SPC that would operate from 2010 to 2011 would also cover that use. One might expect that there will be disputes as to when a subsequent authorization is for the same ‘product’. It is important to note that the scope of the SPC is not confined to the specific product for which authorization was first secured. The SPC is capable of covering the product mentioned in the marketing authorization ‘in any of the forms enjoying the protection of the basic patent’.!” As the European Court of Justice said in the Farmitalia decision, if an SPC were only able to protect the product in the specific form stated in the marketing authorization, this would mean that ‘any competitor would be

106 SPC(MP) Reg. Art. 12; SPC(PPP) Reg. Art. 12; Patents (Supplementary Protection Certificates) Rules 1997 (SI 1997/64) r. 5 and Sched. 4.

107 SPC(MP) Reg. Art. 4; SPC(PPP) Reg. Art. 4. The product is the ‘active substance’ (for a plant protection product) or ‘ingredient’ (in the medicinal product) for which approval was gained. 108 SPC(MP) Reg. Art. 1(b) (defining product); SPC(PPP) Reg. Art. 1(8) (defining product), Art. 1(3) (defining active substance), Art. 1(2) (defining substances). 109 Farmitalia Carlo Erba SRL’s SPC Application, Case C-392/97 [2000] RPC 580, 586.

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able, after the basic patent had expired, to apply for and in some circumstances, obtain marketing authorization for [a different version] of the same ingredient, formerly protected by that patent.’ If this were permitted, it would allow ‘medicinal products which were in principle therapeutically equivalent to that protected by the certificate to compete with the latter. The result would be to frustrate the purpose of [SPCs] which is to ensure the holder of the basic patent of exclusivity on the market during a given period extending beyond the period of the validity of the basic patent.’!!° In the BASF decision, the Advocate General said that in the case of plant protection products, the product is the ‘active substance including any impurity inevitably resulting from the manufacturing process’.''! He also added that two plant protection products containing the same active substance in different concentration were identical products for the purposes of the Regulations.!”

3.3

LIMITS

The rights granted under an SPC are subject to the same limitations and obligations as applied to the basic patent.'!? An SPC will therefore be subject to licences of right if the patent would have been subject to such a licence prior to its expiry.'!4

3.4

DURATION

The SPC comes into operation at the expiry of the patent. This is subject to the requirement that the patent is maintained until the end of its potential term.!!5 If the patent is permitted to lapse, is declared to be invalid, or is revoked, the SPC will not come into effect. The duration of an SPC will vary depending on the length of time it took to receive regulatory approval. The maximum period for an SPC is five years. The period is ascertained by calculating the difference between the date of application for the basic patent and the date of the grant of the first authorization, less five years. This means that if a patent application was made in 1988 and authorization was granted in 1997, the relevant certificate should last for four years. However, as there is a maximum duration of five years if the authorization was granted in 2000, the duration of the SPC would be five years. Apparently, the average term of an SPC in the UK is 3.23 years.'!° The duration of the SPC is formulated in a way to ensure harmonization within Europe as to the date of expiry of all national SPCs. Consequently, although for the 110 Farmitalia Carlo Erba SRL’s SPC Application, Case C-392/97 [2000]. RPC 580, 584. 11 BASF v. Bureau voor de Industriele Eigendom, Case C-258/99 (30 Nov. 2000) para. 57 (Advocate General Jacobs).

112 Thid., para. 45 (Advocate General Jacobs). 113. SPC(MP)

Reg. Art. 5; SPC(PPP) Reg. Art. 5.

‘4 Patents (Supplementary Protection Certificates for Plant Protection Products) Regs. 1996, r. 5; Research Corps SPC [1994] RPC 667. On terms, see Research Corps SPC (No. 2) [1996] RPC 320. 115

SPC(MP)

Reg. Art. 13; SPC(PPP)

Reg. Art. 13.

116 B. Domeij, Pharmaceutical Patents in Europe (2000) 268.

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purposes of an application the relevant authorization is the first national authorization, for the purposes of calculating the duration of the SPC, the relevant authoriza-

tion is the first Community authorization.''” For example, if A applies for a patent for aspirin on | January 1993 and A gets marketing authorization for the sale of aspirin in the UK on 1 January 2000, but had already received marketing authorization in Portugal on 1 January 1999, the UK SPC will only last for one year. If national regulatory procedures are particularly quick in other member states, SPCs may not be available in the UK to compensate owners for the loss of the opportunity to exploit the patent in the UK. To a number of commentators, this is unfair since the patent owner suffers delays but gets no compensation.'!® In calculating the duration of the SPC, it does not matter that the first authoriza-

tion was for a different mode of delivery or a different use. For example, if A applies for a patent on 1 January 1993, and receives authorization for use in animals on 1 January 1999 and for use in humans on 1 January 2001, the relevant certificate would only subsist for one year. No separate certificate would be issued based on the latter

authorization.'!?

4 UTILITY

MODEL

The third related form of protection we wish to look at is utility model protection. It should be noted that while the terms “utility model’ and ‘petty patents’ are sometimes used interchangeably, there are differences between the two regimes. Although the terms are not used consistently, the term ‘petty patent’ is normally used to refer to a system that parallels the patent system in its scope and techniques, but confers a shorter period of protection. In contrast ‘utility model’ is normally used to refer to some sort of hybrid protection between designs law and the patent system where functional articles are afforded protection by reference to their shape or configuration. The scope of utility model systems, therefore, tends to be narrower because it does not extend to chemical inventions or processes. Instead, it is confined to ‘ingenious devices’.'”° Utility model aid petty patents are sometimes categorized as types of “second-tier protection’.

117 This would include relevant EEA authorizations, for example, in Iceland, Norway, and Liechtenstein. 118 B, Domeij, Pharmaceutical Patents in Europe (2000), 273.

119 Farmitalia Carlko Erba SRLs SPC Application, Case C-392/97 [1996] RPC 111. 120 Tt is usually asserted that the idea of second-tier protection was first developed in Germany, where the “gebrauchsmuster’ was introduced in the 1891 Utility Models Act, but the better view is that the UK’s Utility

Design Act 1843 was an earlier utility model system: see L. Bently and B. Sherman, “The UK’s Long-Forgotten Utility Model: The Utility Designs Act 1843’ (1997) 1 IPQ 265.

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4.1

PATENTS

BACKGROUND

The EU is considering the introduction of a Europe-wide utility model on the ground that all the member states except the United Kingdom, the Netherlands, and Luxem-

bourg have some kind of second-tier protection.'”! It was also believed that utility model protection would provide a valuable addition to the existing intellectual property rights. Indeed, those who favour such protection argue that in many cases patent law is too difficult and expensive to obtain, and that proper protection of innovations by small and medium-sized enterprises demands a cheaper, quicker system of protection with a lower threshold.!”? In August 1999, the European Commission presented the Amended Proposal for the protection of inventions by Utility Model.!”? If implemented, the Proposal will require the UK to introduce a utility model system for new inventions involving products or processes that involve an inventive step and are susceptible of industrial application.'* The coverage provided by the proposed new right is similar to the coverage provided by patent law. Like patents, utility models will only be available on application to a relevant national granting authority, and on payment of an appropriate fee.'*° The application must describe the invention, and contain one or more claims.'*° The description must be sufficiently clear and complete for it to be carried out by a person skilled in the art.'’” Claims must be clear and concise and be supported by the description.'** However, in contrast with patents, the Office only needs to examine for ‘formal requirements’. That is, it is only necessary to check that the documentation is in order.'”” The competent authority is not permitted to undertake examination on substantive grounds—that is, into whether the invention is capable of industrial application, or whether it is new and involves an inventive step.'2° This seems to leave open the possibility for examination to assess that the subject matter for which protection is sought is of the right kind. If an applicant or any other interested party requests, the authority must draw up a search report.!! Such a search report is required before the proprietor of a utility model can bring proceedings to enforce their rights, and if the proprietor wishes to extend protection beyond the initial term of six years.'°?

21 For background, see M. Kern, “Towards a European Utility Model’ (1994) 25 IIC 627; Green Paper, The Protection of Utility Models in the Single Market (19 July 1995) COM 95 370 final. 22 Proposed UM Dir., recital 6 (need for an instrument which is cheap, rapid, and easy to evaluate and apply).

:

123 (12 Aug. 1999) Brussels COM (1999) 309 final/2 (hereafter Proposed UM Dir.). 24 Proposed UM Dir., Art. 1(1).

125 126 27 128

Tbid., Tbid., Thid., Ibid;

Art. Art. Art. Art.

8(2). 8. 12. 13:

29 Tbid., Art. 15(1)—that is the requirements of Arts. 8-10.

130 Tbid., Art. 15(3).

31 Tbid., Art. 16. 132 iN) Tbid., Arts. 16(4) and 19(2).

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MATTER

The Proposal intends that utility models will be available for roughly the same kind of subject matter as patents. Article 1 proposes that protection be available for ‘inventions involving products or processes that ... are susceptible of industrial application.’ It is not clear whether the qualification ‘involving products or processes’ is intended to exclude from possible protection inventions relating to new uses of known products (or whether new use claims are really claims to processes). Articles 3 and 4 of the Proposal contain some further limitations. Article 3(1)

appears to exclude from protection the sort of subject matter that is excluded from patentability under Article 52 of the EPC. As with Article 52, this is the subject of an ‘as such’ proviso. However, two of the exceptions contained in Article 52 of the EPC are not present in Article 3. In particular, there is no exclusion from the utility model scheme of ‘computer programs’ as such, nor for ‘methods of playing a game’ as such. The intention expressed in the European Parliament was that computer programs and games should be protectable.!* Article 4 introduces further exclusions. As with Article 53(a) EPC, Article 4(a) of

the Proposal excludes inventions the exploitation of which would be contrary to public policy or morality.'** Article 4(b) excludes ‘inventions relating to biological material’ and would thereby seem to go well beyond the exclusions from patentability contained in Article 53(b) EPC. Article 4(c) significantly excludes ‘inventions relating

to chemical or pharmaceutical substances or processes’. Recital 13 tells us that this exclusion is designed to meet the needs of the industries concerned.

A utility model will be available only for inventions that are susceptible of industrial application.’* As with patents, this phase covers inventions that can be made or used in any kind of industry, including agriculture. However, it does not apply to methods of treatment. It should be noted that the wording of the method of treatment exclusions differs from that in Article 52(4) of the EPC. In the proposal the exclusion relates to ‘surgical or therapeutic procedures applicable to the human body or to the bodies of animals and diagnostic procedures which are carried out on the human body or the bodies of animals.’

4.3

VALIDITY

As with patents, utility models are to be subject to both external and internal requirements of validity (which in turn form grounds on which a person may seek to have a utility model revoked).'*° The so-called external requirements are the requirements of novelty and inventive step. Novelty is defined in absolute terms comparable 133 For criticism of the expansion ofthe proposal to cover computer programs, see P. Leith, ‘Utility Models and SMEs’, 2000 (2) Journal of Information, Law and Technology, http://elj.warwick.ac.uk/jilt/00—2/leith.html. 134 Tt is interesting that the phrase ‘ordre publique has been abandoned.

135 Proposed UM Dir., Art. 1(1). #96 “Tbid.; Art. 25.

558

PATENTS

to Article 54 EPC. However, because one of the critical features of utility model

protection is that it is supposed to be available as a second tier for inventions which do not reach standards of patentability, the ‘inventive’ step threshold is set at a lower level than it is in patents. More specifically, Article 6 states that an invention shall be considered to involve an inventive step ‘if it exhibits an advantage and, having regard to the state of the art, is not very obvious to a person skilled in the art.’ The recitals say that a different standard of inventiveness is required ‘to allow for the specific nature of technical inventions protectable by utility model.’'?? The most important thing to observe is that the advantage need not be technical in nature. Article 6(2) says that there must be a practical or technical advantage “or another benefit to the user, for example in the field of education or entertainment.’ As regards the internal requirements of validity, a utility model will be invalidly granted and liable to revocation in three cases. First, the utility model will be open to revocation if it does not disclose the invention in a manner which is sufficiently clear and complete enough for it to be carried out by a person skilled in the art.'°* As with patents, there is no specific ground of invalidity where claims are too broad, but it is to be expected that the reasoning in Biogen v. Medeva'*? would be equally applicable. Second, a utility model will be liable to be revoked if the subject matter extends beyond the content of the utility model application as filed.

4.4

DURATION

A utility model can last for up to a maximum of ten years.'*° Initially, protection lasts for six years calculated from the date of filing.'*! If the owner wishes to renew the utility model before expiry, this can be done by way of two consecutive two-year periods. However, before an extension is granted the proprietor must request a search report.’ A utility model will automatically lapse if patent protection is secured covering the same subject matter,'*’ or if fees have not been paid in time.!“4

4.55

RIGHTS

AND

EXCEPTIONS

The owner of a utility model is to be given rights very similar in nature to those of the patent owner. Where the invention is a product, the owner is given the right to prevent others from making, using, selling, offering for sale, or importing the product. Where the invention is a process, the proprietor is granted the exclusive right to use 137 Thid., rec. 11. 138 Tbid., Arts. 12 and 25(1)(b).

139 See above at pp. 462-3. 140 Proposed UM Dir., Art. 19(1). 141 Tbid.

142 Thid., Art. 19(2). 143 Tbid., Art. 23(2). The provision actually says the utility model shall thenceforth be deemed to be ineffective.

144 Thid., Art. 24.

RIGHTS RELATED TO PATENTS

559

the process and to prevent others from using, selling, offering for sale, or importing products obtained ‘directly’ by that process. Although there is the expected provision dealing with exhaustion by marketing within the Community," there is additionally an explicit provision indicating that there will be no international exhaustion. The rights expressly extend ‘to acts concerning a product covered by that utility model which are done after that product has been put on the market outside the Community by the right-holder or with his consent.’!*° Under the Proposal, the rights conferred by the utility model do not extend to acts done privately and for non-commercial purposes. Nor do they extend to acts done for experimental purposes relating to the subject matter of the protected invention. Member states are given leeway to add certain other defences, so long as they satisfy a three-step test: the exceptions must be ‘limited’, must not unreasonably conflict with the normal exploitation of the utility model, and must not unreasonably prejudice the legitimate interests of the proprietor of the utility model (taking account of the interests of third parties).'7 Member states may include provisions relating to government use of inventions—in the UK so-called “Crown Use’. In these cases, ‘the provisions applicable for patents for similar use shall be complied with.’

4.6

UK

REACTIONS

AND

POSSIBLE

OUTCOMES

When the Commission first proposed the harmonization of utility models, the reaction from interested parties in the UK was largely negative.'*” Some people questioned whether the introduction of such a system would improve technological progress or economic prosperity.'°° Indeed, many feared that the addition of a new form of unexamined intellectual property may complicate and increase uncertainty in trade. Other critics have questioned the extent to which it makes sense, practically or conceptually, to add a second layer of protection onto patent law. More specifically, questions have been raised as to the extent to which it will in fact be possible to locate a standard of protection below the standard of non-obviousness traditionally used in patent law. It has also been suggested that utility models are foreign in origin, and, as

M5 M46 147 M48

Tbid., Ibid, Thid., Tbid.,

Art. Art, Art. Art.

21(1). 21(2). 20(5). 20(6).

149 C. Lees, ‘Utility Models: A Rainbow Response’ (1995) 24 CIPAJ 536; M. Llewelyn, ‘The Model Myth

and the Relevance of the Proposed EC Utility Model System to the United Kingdom’ (Feb. 1996) 79 Patent World 32; M. Llewelyn, Utility Models/Second Tier Protection: A Report on the Proposals of the European Commission (1996).

150 M. Llewelyn, Utility Models/Second Tier Protection: A Report on the Proposals of the European Commission (1996), 70-1; C. Lees, ‘Utility Models:

A Rainbow Response’ (1995) CIPAJ 536, 539. Van Engelen, “The

Misappropriation Doctrine in the Netherlands (1991) 22 IIC 11, 21 describes how attempts to introduce such protection in the Netherlands were opposed (successfully) because it was anticipated that the system would be used mostly by foreign applicants to the detriment of local industry.

560

PATENTS

such, do not properly belong within the ambit of British intellectual property law.'*! For the critics of utility models, many of the failings of the current systems of protection for inventors could be remedied by reform of European patent law, rather than the introduction of a new right. And, with those reforms now receiving greater impetus, the political will to push through the utility model proposal seems to be draining away. 151M. Llewelyn, Utility Models/Second Tier Protection: A Report on the Proposals of the European Commission (1996), 71 (the UK has ‘no recent tradition of this type of protection’).

PART

THE

ITI

LEGAL

REGULATION DESIGNS

OF

1 INTRODUCTION Designs play an important but often neglected part in our lives. As well as influencing the appearance of the clothes we wear, the shape of the chairs we sit in and the surfboards we ride, design also influences the decisions we make as consumers: why it

is that we choose one toothbrush over another. The practice of design covers a variety of domains.' These range from industrial design,’ urban planning, graphic design, and stage design through to costume design, fashion design, product design, and packaging design. In reflection of this diversity, the role played by design varies greatly. In some cases, an object may be designed for frivolous or trivial reasons; in other cases, the way an object is designed may play an important role in how effectively the designed article works. Whatever function design performs, it is widely recognized as a time-consuming, costly, and valuable activity. Given that the art of designing is concerned with the nature and appearance of objects, one of the notable aspects of designing is that the results are not only visible, but also that they are readily copied. Not surprisingly, therefore, intellectual property protection plays an important role in regulating the creation and use of designs. Over time a number of different areas of intellectual property such as trade marks,’ passing off,* and the law of breach of confidence’ have been used to protect designs. In the next six chapters, we concentrate on those areas of intellectual property law more commonly used to protect designs. These are the registered design system established by the 1949 Registered Designs Act; copyright protection provided by the 1988 Copyright, Designs and Patents Act; and the ‘unregistered design right’ protection ! V. Papanek, Design for the Real World: Human Ecology and Social Change (1984) 3—4, defines design as ‘the planning and patterning of any act towards a desired, foreseeable end.’ 2 C. Woodring, ‘A Designer’s View on the Scope of Intellectual Property Protection’ (1996) 24 American Intellectual Property Law Association Quarterly Journal 309 (defining industrial design as ‘the professional service of creating and developing

concepts

and specification

that optimize

the function, value, and

appearance of products and systems for the mutual benefit of user and manufacturer’). 3 Philips Electronics BV v. Remington Consumer Products [1998] RPC 283. 4 Benchairs v. Chair Centre [1974] RPC 429. But cf. Hodgkinson & Corby and Roho v. Wards Mobility Services [1995] FSR 169. > For recent examples, see Carflow Products v. Linwood Securities [1996] FSR 424; Valeo Vision SA v. Flexible

Lamps [1995] RPC 205.

564

THE

LEGAL

REGULATION

OF DESIGNS

which was set up by Part III of the latter. As we will see, each of these regimes regulates different types of designs.®

2 HISTORY While the story of how designs came to be protected by three different systems of protection is a long and interesting one, we must deal with it here only in outline. The story starts in 1839,’ when, out of a desire to improve the aesthetic quality of industrially manufactured goods, Parliament introduced a registered design system.® Under this system, if an applicant submitted certain representations of a new and original design for an article of manufacture, the law would grant a monopoly over the design for up to three years. This registration system seemed to operate successfully for the rest of the century, with many thousands of designs being registered.’ In so far as there were problems with the design system, they largely concerned the relationship between the design system and patent system in the protection of useful mechanical devices—and these seemed to disappear with improvements in the administration of the patent system. However, at the turn of the twentieth century—just as the registered design system reached its peak—issues came to be raised as to the relationship between it and the copyright system. These questions, in large part, arose as copyright law was expanded and rationalized to give effect to the Berlin revision of the Berne Convention of 1908. These reforms presented not only the possibility, for the first time, of the protection of many designs by copyright law (especially on the basis of the design drawings that were artistic works), but simultaneously threatened the viability of the registered system. This was because copyright offered a system of protection which was automatic (no longer requiring registration), potentially longer, and (in some respects) stronger.

The initial response of the legislature was to attempt to draw a boundary between designs which required registration and artistic works (such as works of artistic craftsmanship) which were protected under the copyright system. As a result, the 1911 Copyright Act included a provision excluding from copyright protection works which were ‘capable’ of being registered as designs and which were intended to be used as © For further analysis, see Russell-Clarke; Felner, and Laddie et al., chs. 29-46: 7 Prior to this the Callico Printers Acts 1787 (27 Geo. 3. c. 23 ) and 1794 (34 Geo. 3 c. 23) conferred

protection upon new and original patterns for linens, cotton, callico, and muslins automatically. 8 Copyright of Designs (Registration) Act 1839 (2 Vict. c. 17). While design law was one ofthe first areas of

modern intellectual property law to take shape, over time it has been eclipsed by copyright and patent law. This has led to the (inaccurate) claim that designs law is the stepchild of patents and copyright. See Sherman and Bently, chs. 3, 4, 163-6, 210-12.

° L. Bently, ‘Requiem for Registration? Reflections on the History of the UK Registered Design System’, in A. Firth (ed.), Perspectives in Intellectual Property: Vol. i. The Prehistory and Development of Intellectual Property (1997) 1.

INTRODUCTION

TO DESIGN

PROTECTION

565

the basis for multiplication by an industrial process. Later statutes employed different techniques to regulate the boundary. In one way or another, all of these proved to be unsatisfactory. Perhaps the most bizarre consequence of (at least the last such) attempt to establish a boundary was that designs which were unregistrable because they were ‘dictated by function’, were given greater protection than registrable designs. Such protection was widely referred to as ‘industrial copyright’. The 1988 Copyright, Designs and Patents Act represents the latest attempt to regulate the ‘design—copyright interface’. It does so by modifying the Registered Designs Act 1949, adding important defences to copyright infringement (sections 51 and 52), and establishing a new unregistered design right regime. In brief, the three regimes are: * a registered design system for the protection of the visual appearance of articles for up to twenty-five years; * an unregistered design system, conferring automatic protection (against copying) for the designs of the shape of three-dimensional articles (whether visually attractive or not) for up to fifteen years; * copyright protection for design drawings for artistic works (such as sculptures), two-dimensional designs, and surface decoration (limited to twenty-five years where the design is applied to more than fifty articles). The three regimes are cumulative, in the sense that all three forms of protection can exist simultaneously. However, each seems to be directed at different sorts of designs: copyright at designs for artistic works, unregistered design right at functional designs, and registered designs at attractive ornamental designs.'° Because copyright and unregistered design right can exist simultaneously, a key provision provides that there is no infringement of unregistered design right if there is an infringement of copyright. We examine each of the systems in more detail below.

3 THE

NORMATIVE

BASIS

OF DESIGN

PROTECTION

It is a notable feature of the commentary on the legal protection of designs that there is very little consideration of the justification of design protection. However, in so far as these matters are ever discussed, two differences should be observed between the comments on the justifications for the legal protection of designs and the arguments used for other areas of intellectual property (such as those already outlined in Chapters 1 and 2). 10 Stenor v. Whitesides (1948) 65 RPC 1, 9 per Lord Porter (‘Primarily the object of the Act is to protect what one may call artistic decoration, though the artistry may be bad and the decoration commonplace or worse’). In Mackie Designs v. Behringer Specialisea Studio Equipment (UK) [1999] RPC 717, 722 Pumfrey J

observed that in the registered design system appearance is everything.

566

THE LEGAL REGULATION

OF DESIGNS

First, there is a tendency to place greater emphasis on the potential social costs that the legal protection of designs cause to competitors of the proprietors of such right. As designs are applied to ‘articles’, it is feared that any impediments placed on the reproduction of the design will also interfere with free competition for the article itself."’ As a result, design protection is often described (albeit inaccurately) as giving a monopoly over articles of trade.” Accordingly, it is argued that in order to protect the public interest in free trade, protection for designs should be limited. Second, there is a general tendency to play down the role of the individual designer (for example, by claiming a natural-rights basis for protection). This reflects a commonly held assumption that designs are less creative than artistic works because designing is subject to a number of inevitable constraints.'? For example, the potential scope for the design of a table is constrained by our existing idea of a table, the functions it must form, the need for it to be comfortable, cost, and the possibilities presented by available materials. At least in the case law, therefore, the justification of the legal protection of designs is typically based in the desire to provide incentives for the production of new designs.!* These two assumptions—that legal protection of designs is potentially more harmful to the public interest than the legal protection of literary or artistic works, and the assumption that designs are less creative—have both driven a legal tendency to confer a lesser level of protection on designs when compared with artistic works. This lesser status has been reflected too in a failure, to date, to devise a successful international regime relating to designs.

4 INTERNATIONAL

DIMENSIONS

In contrast with other areas of intellectual property law, designs have not really found a meaningful place within the international conventions for intellectual property protection. This applies both with respect to attempts to facilitate international registration, and with regard to standards.

11 One commentator describes this as the ‘two-market conundrum’ that arises because designs operate to render articles desirable both as (useful) articles and as attractive objects: J. Reichman, ‘Design Protection in

Domestic and Foreign Copyright Law [1983] Duke Law Journal 1143. 12 In the Matter of Morton’s Design (1900) 17 RPC 117, 121. 13 R. Denicola, ‘Applied Art and Industrial Design’ (1983) Minnesota Law Review 707, 741-3, and n. 165; J.

Reichman, “Design Protection in Domestic and Foreign Copyright Law’ [1983] Duke Law Journal 1143, 1160, 1220-1, 1235.

\4 In the Matter of Morton’s Design (1900) 17 RPC 117, 121 Farwell J (the purpose of the Design portion of the Act is the same as the Patent portion of it); Allen West & Co. v. British Westinghouse Electric & Manufacturing Co. (1916) 33 RPC 157, 162 (design protection was said to be ‘primarily to advance our industries and keep them at a high level of competitive progress’); Dart Industries v. Décor Corporation (1989) 15 IPR 403.

INTRODUCTION

4.1

FACILITATING

TO DESIGN

INTERNATIONAL

PROTECTION

567

PROTECTION

Until recently the most significant instrument in the international intellectual property regimes for protecting designs has been the Paris Convention. As we have seen elsewhere, this Convention requires countries of the Union to adopt certain rules relating to national treatment and the priority dates of applications.'” These enable designers to access the registration systems of other countries of the Union. However, it leaves all other matters to be determined by national laws.'* A more ambitious attempt was made to facilitate the international registration of designs in the 1925 Hague Agreement Concerning the International Deposit of Industrial Designs. While this Treaty has been one of the less successful of the WIPO treaties (with only twenty-nine signatories), as a result of a new version of the Treaty, agreed in Geneva in July 1999, its fortunes may change. In its original form, the Hague Agreement allows for protection in signatory states based upon a single deposit with WIPO, and giving the registrant the same rights as he would have gained from a successful national application to that state. While a single application system such as this is attractive, because the Agreement gave national offices a very limited time in which to refuse protection, it was unattractive to countries such as the UK which operate an ‘examination’ rather than mere ‘registration’ system. However, the new Treaty is built more flexibly, so as to accommodate a variety of practices as to grant.'” As a result, it may be that when it comes into force it will attract many more adherents than the current system.

4.2

STANDARDS

By comparison with other areas of intellectual property law there has been little international standardization of substantive law relating to designs. In part this reflects the huge variety in forms of protection employed in different countries.'* As we have noted, the Paris Convention requires that industrial designs shall be protected in all countries of the Union, but says nothing about the content of that protection.'” The Berne Convention is only a little more prescriptive. While ‘applied art’ is included in the subject matter covered by the Convention,”’ countries of the Union are given free rein with regard to the scope of protection and to whether any formalities may be

15 Paris Arts. 2 and 4C(1). 16 Paris Art. 5 quinquies. 17 eg. the prescribed period for the notification of refusals can be 12 months where the Office is an examining office. See Regulations under the Geneva Act of the Hague Agreement Concerning the International Registration of Industrial Designs, r. 18(1)(b). 18 J. Reichman, ‘Design Protection in Domestic and Foreign Copyright Law: From the Berne Revision of 1948 to the Copyright Act of 1976’ [1983] Duke Law Journal 1143; H. Cohen Jehoram, “Designs Law in

Continental Europe and Their Relation to Copyright Law’ [1981] EIPR 235; C. Fellner, The Future of Legal Protection for Industrial Design (1985) ch. 6.

19 Paris Art. 5 quinquies. 20 Berne Art. 2.

568

THE LEGAL REGULATION

OF DESIGNS

required.”! The only specific requirement in relation to designs in the Berne Convention is that if special protection is not granted, then such works shall be protected as ‘artistic works’. The most recent and in many ways the most prescriptive treatment of designs at an international level is to be found in the TRIPs Agreement.” This requires members to provide protection for independently created industrial designs that are new or original. More specifically, it provides that the owner of a protected industrial design shall have the right to prevent third parties from making, selling, or importing articles bearing or embodying the design for at least ten years.”? Certain limited exceptions are permitted.* We will consider, where appropriate, the extent to which UK law complies with TRIPs.

5 REGIONAL

INITIATIVES

For the most part, the laws which govern designs in the UK are largely unaffected by the European Union.” As a result of the Directive on the Legal Protection of Designs,”° which was passed in July 1998, and must be implemented in the UK by 28 October 2001,” this situation is about to change. The Designs Directive requires that the salient features of national design laws to be harmonized. This includes the substantive issues as to what constitutes a design, when a design is protectable (that is, the requirements of novelty and individual character), and the rights which are conferred by registration.** In addition, the Directive enunciates a principle of cumulation of registered design protection with copyright protection for works of applied art and industrial design. The Directive does not, however, require the procedures relating to registration, renewal, and invalidation to be harmonized. It also leaves the scope of

copyright protection for works of applied art and industrial design unharmonized *! Berne Art. 2(7). Under Berne Art. (7)(4) applied art should be protected for a minimum period of 25 years. 22 TRIPs Arts. 25 and 26. See M. Blakeney, ch. 7; A. Kur, ‘TRIPs and Design protection’ in Beier and Shricker.

23 TRIPs Art. 26(3). 24 Tbid., Art. 26(2). °° Keurkoop BV v. Nancy Kean Gifts BV, Case 144/81 [1982] ECR 2853; Consorzio Italiano della Componentistica de Ricambio per Autoveicoli & Maxivar v. Regie Nationale des Usines Renault, Case 53/87 [1988] ECR 6039; AB Volvo v. Erik Veng (UK), Case 238/87 [1988] ECR 6211.

26 Designs Dir. For commentaries see: A. Horton, ‘European Designs Law and the Spare Parts Dilemma: The Proposed Regulation and Directive’ [1994] EIPR 52; F.-K. Beier, ‘Protection for Spare Parts in the Proposal for an European Designs Law’ (1994) 25 IIC 840; G. Dinwoodie, ‘Federalized Functionalism: The Future of

Design Protection in the European Union’ (1996) 24 American Intellectual Property Law Association Quarterly Journal 611; J. Lahore, “The Protection of Functional Designs—The Amended Proposal for a European Design Directive’ [1997] IPQ 128; H. Speyart, ‘The Grand Design’ [1997] EIPR 603.

*7 Both the Directive and the proposed Regulation owe their origin to the 1991 Green Paper on the Legal Protection of Industrial Design (III/F/5131/91-EN, Brussels, June 1991 (hereafter, EC Green Paper).

*8 Designs Dir., Recitals 1-4. The UK unregistered design right is to be left untouched by the Directive.

INTRODUCTION

TO DESIGN

PROTECTION

569

and, as a result, a matter for member states.” The Directive also leaves national laws relating to unregistered design rights intact. A second stage in the process of reform of European design law, which is still being formulated, is a Proposal for a Regulation on the Community Design.* If adopted, the proposed Regulation on Community Design will establish a Community-wide system of registered design protection with a Community Design Office (Office for Harmonization in the Internal Market). It will also establish a Community unregistered design system.*! It is proposed that the Community registered design will be available by application by the proprietor of a design having individual character to a Community Design Office, but without any substantive examination procedure. The proposed Community registered design, which is to last for twenty-five years, will confer an ‘absolute monopoly’ on the proprietor. The validity of the designs will be able to be challenged either in proceedings at the Community Design Office,** or by way of defence to an infringement action in a national Community Design Court.*? It is not proposed that the new Community rights should supplant national registered design protection. The proposed Community unregistered design right is intended to provide shortterm protection for those industries (such as clothing manufacture) where registration is inappropriate: primarily because designs are only of value for a short period.** In this respect, the proposed right will formally embody a form of ‘lead time’ protection. The proposed Community unregistered design right is also intended to provide protection during the period in which a proprietor decides whether the design is

worth registering. Such protection is particularly important for industries which produce a large number of designs of which only a few are successful. The Community unregistered design right will be automatically available on the marketing of a design which has an ‘individual character’.*° It is proposed that the protection afforded by the unregistered design right will last for three years from the marketing of the design. Unlike the Community registered design, the protection to be given by the unregistered design right is merely a protection against copying. The right will be enforced by action in a national Community Design Court. It is at this stage that the validity of the right may be challenged. On 30 November 2000, the Council of Ministers reached a common position on the Proposed Regulation. 29 Designs Dir., Recital 8. The Green Paper ‘looked forward’ to a separate European project on the harmonization of copyright (and especially the concept of originality): EC Green Paper, 11.3.6.1; 11.3.6.9. 30 94/C 29/02 COM (93) 342 final--COD 463 OJC 29/20 31 Jan. 1994.

31 The aim of the Community unregistered design right is to strengthen the competitive position of European industries (not to complete the Internal Market): EC Green Paper, 4.3.9.

32 Tbid., 9.4.2. 33 Tbid., 9.3.2.1 (national Community Design Court); 9.4.4 (counterclaim for invalidity). 34 J, Reichman, ‘Design Protection and the New Technologies: The US Experience in a Transnational

Perspective’ (1989) 19 University of Baltimore Law Review 6, 23.

35 EC Green Paper, 6.2.1. 36 It will be the first Community-wide right to be available automatically.

Zs REGISTERED DESIGN PROTECTION 1 INTRODUCTION The statutory basis for current law of registered designs currently lies with the 1949 Registered Designs Act (as amended). A number of important changes were made to the 1949 Act in the 1988 Copyright, Designs and Patents Act.' As we mentioned above, in order for the UK to comply with the EU Designs Directive aspects of British law need to be amended (by 28 October 2001 at the latest). We will deal with the

expected changes where appropriate. In its current guise, the registered design system is primarily concerned with attractive rather than functional designs for articles, and covers both two- and threedimensional designs. The rights, which arise through registration, confer a monopoly for up to twenty-five years on the owner of the design. A person may register a design (and a registered design is only valid) if they can show that the application relates to a ‘design’ which is ‘new’ and that it does not fall within the excluded subject matter. In the remainder of this chapter, we explore the nature of the registered design and, in turn, the procedure by which a registered design is granted.

2 WHAT

IS A REGISTERED

DESIGN?

A registered design is made up of three key elements: the ‘representations’, the statement of novelty, and the definition of the article. In many ways the application for a registered design, and when granted, the registered design, perform a similar role to that which is performed by a patent. Perhaps most importantly of all, the design documentation sets out the scope of the monopoly and the nature of the design which

is registered (although, as we will see, with much less precision than is the case with the patent).” While the process of putting a design application together also plays a ! For further analysis, see Fellner, paras. 2.01—2.119, 3.109-3.310, 4.60—4.75, 5.149-5.191; Laddie et al., chs. 29-36. 2 While the drafting of a design is important in defining the scope of protection, perhaps the critical

regulatory tool is the reciprocal relationship existing between the scope of the monopoly and the degree of

5/2

THE

LEGAL

REGULATION

OF DESIGNS

role in identifying the design, much less attention is given to the precise form that a registered design should take than is the case with patents.

2.1 REPRESENTATIONS (OR SPECIMENS) Perhaps the most important part of the design registration is the ‘representation’.* This is a visual depiction of the design which helps to define the scope of protection. In general, no descriptive wording is to be used in the representations.* The design may be represented by ink drawings, tracings, or simple line drawings. In most cases, however, the design is represented in photographs. So long as the representations present an accurate and complete picture of the design, the representations need not be to a geometric scale or contain specific details about the dimensions.” In most cases, there will be a number of different views of the article, often from a number of

different perspectives. In some cases, instead of registering a representation of the design, an applicant may register a ‘specimen’ (that is an article with the design applied to it).° This is commonly done with fabric designs. The representations should identify the design clearly enough so that the public is able to determine the extent of protection.’ More specifically, the representation must show the design features which the applicant desires to protect in such a way that when an applicant ‘has secured his monopoly there will be no difficulty in ascertaining, when you look at the representation, what the design features are.’® Failure to comply with these requirements may mean that the design application will be rejected. If a registered design is ambiguous, the registration will be construed against the registrant who is under a duty ‘to make it perfectly clear what design it is in respect of which he seeks to become the proprietor to the exclusion of the general public.” The representations only need to reveal the part of an article to which the design is

novelty. As a result, a registrant is often caught between two stools. As Whitford J explained in Valor Heating v. Main Gas [1973] RPC 871: ‘If [the plaintiffs] try to stretch their design wide enough to catch the [defendant’s

design], then they are going to stretch it so wide that it will be invalidated by the prior publication . . . This is the way in which the defendants quite frequently use prior art. They seek to impale the plaintiff upon the horns of a dilemma.’ > It is necessary for a registration to include either ‘four identical representations of the design’ or ‘four specimens’: RDR r. 17. In the case of sets of articles, the number required is five: RDR r. 18. 4 If the representation of a design includes any words, letters, or numerals, the Registry may (and probably will) require the applicant to disclaim any rights to their exclusive use: RDR r. 22; Associated Colour Printers’ Design (1937) 54 RPC 203; In the Matter of Littlewoods Pools (1949) 66 RPC 309.

> Malleys v. Tomlin (1961) 35 ALJR 352. SRDR x, 2. 7 Re Kevin MacNamara

(1986) 7 IPR 335 (tennis-court fence not registrable because representations

showed a number of fence designs, and comprised rough sketches giving an indefinite appearance so that the Registrar could not be certain as to the precise design). 8 Ford Motor Company’s Design Application [1972] RPC 320, 328. ° In the Matter of Rollason’s Registered Design (1897) 14 RPC 909, 919.

REGISTERED

DESIGN

PROTECTION

573

Fig. 25.1

applied. In Ford Motor Company’s Design Application,'° Ford applied to register the design of a car wheel and only submitted one view of the wheel (see Figure 25.1). In overturning the Registrar’s finding that Ford should submit further representations of the design, Whitford J accepted that while the representation should be adequate to let everybody know exactly what the extent of protection is, he said that as ‘no protection is being sought for the design features of the article at the side or back [of the wheel] it does not seem to me there is any reason why there should be any representation of those aspects of the article at all.”!!

2.2

STATEMENT

OF NOVELTY

A registered design also includes a “statement of novelty’.!* This is ‘a statement satisfactory to the registrar of the features of the design for which novelty is claimed.’ 10 [1972] RPC 320. See also Portable Concrete Buildings v. Bathcrete [1962] RPC 49 (representation of

design of portable garage which only showed front view was valid because rear view would be replica); Gardex v. Sorata [1986] RPC 623 (protection of underside of shower tray). 'l [1972] RPC 320, 328-9. But note the limiting effect of the decision in Interlego AG v. Tyco Industries [1988] RPC 343, seemingly requiring a design to be applied to the whole article. In R v. RDAT, ex p. Ford [1995] RPC 167, the House of Lords declined to comment on this issue.

12 Tn the absence of a statement of novelty, the design is treated as the totality of features: Kestos v. Kempat and Vivien Fitch Kemp (1935) 53 RPC 139, 150.

13: RDRr. 15.

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Such statements normally appear at the end of the representation or are attached to the specimen.'* The applicant has a degree of flexibility in terms of the way the statements of novelty are drafted. In most cases the statement will be cast in general terms. For example, a statement of novelty may relate to ‘the features of shape and configuration of the article as shown in the representation’, the features of ‘pattern and ornament’, or more generally by ‘shape, configuration, pattern, and ornament’. The statement of novelty can also be drawn more specifically, highlighting the particular elements of the design which the applicant regards as novel.'° Although there is some doubt about the exact effect of the statement of novelty on the scope of the rights,’® the better view is that the statement directs attention to the part or parts of the design which the applicant considers to be novel.'” While the court does not have to assume that the statement of novelty is correct, it plays an important role outlining the scope of the design. This is because the statement of novelty ‘precludes the proprietor who has obtained registration on the grounds that certain features of the design give novelty to it, from thereafter denying their novelty and asserting their immateriality, so as to extend the scope of the protected design.’!® In effect, the statement of novelty operates like an estoppel. For example, if an applicant has claimed novelty lies in the shape of the handle of a cup, it is unlikely he will be unable to prevent the sale by a competitor of a cup of a similar shape which has no handle.

2.3

DEFINITION

OF THE

ARTICLE

The applicant must also identify the article to which the design is to be applied.’? Each application must only relate to one article. In turn, the monopoly conferred by registration is confined to the unauthorized use of a similar design for that same article. Consequently, the applicant will want to take care to ensure the article is defined appropriately. For example, if the novelty of a design of a chair lies in the shape of the back, and that back can be used for various sorts of chairs, it would be unwise to limit

the application to ‘dining chairs’ rather than ‘chairs’. Unfortunately, the case law has provided little guidance as to how broadly or narrowly the article can be defined.”° 14 RDR r. 15. There is no need to supply a statement of novelty where the design is for a pattern or ornament for a textile article, wallpaper, wall coverings, or lace. '5. Portable Concrete Buildings v. Bathcrete [1962] RPC 49. 16 In Heath & Sons v. Rollason (1898) 15 RPC 441, 446-7 Lord Herschell denied that the statement could limit the effect of the design, though the preponderance of subsequent case law takes a different view. For example, in Valeo Vision Société Anonyme v. Flexible Lamp [1995] RPC 205, 215, Aldous J said ‘the whole purpose’ of a statement of novelty is to confine the design to certain features. 17 Kent and Thanet Casinos v. Bailey’s School of Dancing [1965] RPC 482, 486-7. 18 Sommer Allibert (UK) v. Flair Plastics [1987] RPC 599.

19 RDRr. 14. 20 In some ways, the idea that the applicant chooses the scope of the article has the merit that the more broadly the applicant defines the article the greater the relevant prior art which might be taken to anticipate. See e.g. Cook & Hurst’s Design Appn. [1979] RPC 197 where the Registered Designs Appeal Tribunal held that a design comprising stripes of particular colours in a specific location might be registrable, but only if the registration was confined to ‘football shirts’.

REGISTERED

DESIGN

PROTECTION

575

Given that it is no longer possible to register for a class of goods, if a person wishes to register a design applicable to a number of different articles, they must make a series of different applications”!—so-called ‘associated designs’. A single registration may however be made with respect to a series of articles which comprise ‘a set’.”? A ‘set of articles’ is defined as ‘a number of articles of the same general character ordinarily on sale or intended to be used together, to each of which the same design, or the same design with modifications or variations not sufficient to alter the character or substantially to affect the identity thereof, is applied.’ This means that it is possible to register a design of a pattern or ornament (such as an image of a rose) which is applied to a tea-set because each component is decorated with the same design. It would often not be possible, however, to register a single design for the shape of the parts of a tea-set (the cups, saucers, sugar bowl, and teapot) since each item would usually have a distinct identity. Equally, it would not be possible to register a chess set made up of characters from ‘Star Wars’. The reason for this is that while together they would constitute a set, each piece would be of a different design.

3 THE

PROCESS

OF REGISTRATION

In contrast with copyright and unregistered design protection, which arise automatically on creation of the design, registered design protection is a creature of registration. As with patents and trade marks, the process of registration not only plays an import-

ant role in shaping the scope of the monopoly granted, it has also played a role in shaping the form that many of the rules and practices in this area have taken. As such, it is useful to familiarize ourselves with the stages of the procedure for registering a design. Applications for design must be made to the Design Registry in the Patent Office. 24 These should include four identical representations of the design, a ‘statement of novelty’ identifying whether protection is sought for “shape and configuration’ or ‘pattern and ornament’ or both, and a statement of the article to which the design is

to be applied.” Except in the case of sets, a separate application should be made for each article to which a design is to be applied.”° In most cases the date when the application is received is the date at which the validity of the design is assessed and if a design is accepted, the date of ‘registration’. The main exception to this is when earlier

21 RDRr. 13. The form of application is important, and there is a prescribed form, Design Form 2A. 22 Each article can be registered separately, irrespective of whether they are sold separately, but registration as a set is cheaper. Five rather than four representations should accompany such an application.

23 RDAs. 44. 24 Current fees are defined in the Registered Designs (Fees) Rules 1998 (SI 1998/1777): an application

normally costs £60, but an application for a set costs £90 and certain textiles applications cost £35.

2° RDA s. 3; RDR rs. 13, 14, 15, 18. 26 RDAs. 1(2), 44. RDR rs. 13, 18.

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OF DESIGNS

filing in a Paris Convention country gives the applicant an earlier priority date.” The filing must take place within the six-month period preceding application to the UK designs registrar. The application should be made by a person claiming to be the proprietor of the design. An application for the registration of a design in which unregistered design right subsists will not be entertained unless it is made by a person claiming to be the owner of the design right. Given that the rules for ownership of registered designs and unregistered design rights operate in parallel, this will normally be unproblematic. However, some difficulties have been identified where divergences in ownership

occur.”8 Once lodged, the Registrar examines the design application to ensure that it satisfies the requirements of registrability, in particular those relating to subject matter and novelty. Design applications are also examined to ensure that they are ‘clear and precise’. In examining applications, the Registrar should, it seems, err on the side of registration: only refusing to proceed with an application which on no reasonable view could be said to be within the ambit of the Act.”? At this stage the design application remains unpublished, and consequently no provision is made for possible objections or observations by third parties.*° The Registrar may make such searches as he thinks fit. If the Registrar has any objections to the application, he sends a statement of those objections to the applicant.*! If an applicant wishes to appeal from the Registrar’s decision, they may require the Registrar to send the grounds and materials used by him in arriving at his decision.” If the Registrar registers the design, the date of registration is deemed to be the date on which the application was made.” In the first instance, the registered design right subsists for a period of five years from the date of registration of the design.** The period for which the right subsists may be extended for up to five periods of five years.*> If no application to extend is made before expiry of the previous period, the right shall cease to have effect. However, if the right is ‘restored’ in the six months following expiration, expiration will not be treated as having occurred.*° On registration (except in the case of textile articles, wallpaper, and lace) the 27 Under RDA s. 3(4) the Registrar can vary the date at which novelty of a design is assessed in certain cases. These are set out in RDR r. 34 and concern two situations—amendment of the design so that the appearance has been “altered significantly’; and applications which revealed more than one design and which have been amended to exclude one and a subsequent application has been made. 28 Laddie et al., para. 34.10, refers to the provision as a product of muddled thinking. 29 Re Ford and Fiats Design Applications [1993] RPC 399, 421 (Registered Designs Appeal Tribunal, per Judge Jeffs QC).

30 Laddie et al., para. 34.13, states that ‘there is no reason why a person who does find out about the application cannot supply information to the registrar which the latter should then take into consideration.’

2b RDR.1.29. 32 Appeal from the Registrar’s decision lies to the RDAT: RDA s. 3(7), s. 28. 3 RDA s. 3(5). The Registrar grants a certificate to the proprietor. RDA s. 18(1); RDR r. 32, Sched. 2. 4 RDA s. 8(1).

5 RDA s. 8. The renewal fees are, respectively, £130, £210, £310, and £450.

6 RDAs. 8(4).

Ww WwW WwW Ww

REGISTERED

DESIGN

PROTECTION

DM:

representation of the design is opened for public inspection.*” Provisions are made for third parties to apply to the Registry to identify the articles to which the design is registered.**® As with the registration of patents and trade marks, registration of a design is not conclusive of the validity of the registration. That is, the validity of the registration may subsequently be challenged. The grounds on which a design can be challenged are that it consists of an inappropriate subject, or that the design is not new. A person may apply to the Registrar for cancellation of the registration or to the court to have the register rectified.*? The latter situation is more common, as a defence and counterclaim to an allegation of infringement.

3.1

THE

FUNCTION

OF DESIGN

REGISTRATION

The process of registration plays a number of different roles.*° As registration provides prima facie evidence that the design satisfies the statutory criteria for protection, especially of the novelty of a design,* it enables the proprietor and those who subsequently rely upon the design, to feel more confident about the validity of the design registration. In so doing, it ensures that third parties can be more confident in investing in the design. The registration system also operates as a functional equivalent of physical possession or title deeds: it fixes ownership and helps to outline the boundaries of a particular asset. Registration thus helps to provide certainty to the otherwise nebulous concept ‘design’. This is particularly important in that it enables the intangible design to become an object of commerce in its own right (as distinct from the object in which it exists). The registration system also operates to disseminate information about designs. However, unlike the patent system which aims to induce disclosure of information that would otherwise be kept secret, the public benefit that flows from design registration is not provided by the disclosure of information that might otherwise be kept secret. Rather, the public benefits from the centralization of that information. Registration also provides evidence of the date from which the registrant claims priority, information of the time from which the protection is claimed, when that term of 37 RDA s. 22. This ‘openness’ is a relatively recent development. Formerly, registrations were not published. This practice was heavily criticized in Phillips v. Harbro (1920) 37 RPC 233, 240. Note Hague Art. 11, and Regulations r. 16 which basically allows for deferment of publication for 30 months, but has provisions permitting contracting parties to require publication earlier.

2o-RDA:S, 23, 39 RDA ss. 1] and 20. 40 L. Bently, ‘Requiem for Registration? Reflections on the History of the UK Registered Design System’ in

A. Firth (ed.), Perspectives in Intellectual Property: Vol. i. The Prehistory and Development of Intellectual Property (1997) 1, 33-44.

41 Report of Departmental Committee on Industrial Designs, Cmnd. 1808 (London: HMSO, 1962) (hereafter Johnston Committee), para. 12, p. 13. The use of registration as a ‘rough and ready test of infringement’

lay behind the extensive use of the system by the textile industry: it was only where registration was effected that textile manufacturers felt sufficiently confident that they were not infringing anyone else’s rights that they would go into production.

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REGULATION

OF DESIGNS

protection has expired, and also as to ownership of a design. As such, the registration system informs competitors as to when they could use a design. This is particularly important where the period of protection is short.” The registration system is also seen as a necessary corollary to the grant of an ‘absolute monopoly’,** that is a monopoly which is enforceable against anyone who produces an identical design even if that person has independently produced the design. As we will see, one of the features of registered design protection is that in proving infringement, there is no need to demonstrate that a defendant has derived or copied the design in question from the proprietor’s design. This potentially creates the unfair situation where a person who independently produced and marketed a design may be liable for infringement, even though they have not copied the design. In order to avoid this situation, the registration system is meant to alert third parties to the existence of the registered design.“* If a competitor independently produces and markets a similar design without checking the register for prior monopolies, they only have themself to blame if it turns out to infringe.” 42 Johnston Committee, para. 48 (‘No formalities are required to obtain literary or artistic copyright, but we consider them necessary for industrial design copyright in order that the public may have means of knowing which articles are registered and which are in the public domain’). 43 Johnston Committee, para. 9, p. 11. However, while an absolute monopoly may require a registration system, it is not clear that a registration system necessitates an absolute monopoly. See e.g. Report of the Committee to Consider the Law of Copyright and Industrial Designs, Cmnd. 6732 (London: HMSO, 1977 (hereafter ‘Whitford Cttee.’), para. 132.

44 EC Green Paper, para. 6.4.4. 45 ‘Nevertheless, it is the fact, which we record, that a monopoly is widely thought to be something worth having in preference to copyright.’ Johnston Committee, para. 27.

26 SUBJECT MATTER 1 INTRODUCTION In order for a design to be registrable under the 1949 Registered Designs Act, two criteria need to be satisfied. First, it is necessary for there to be a ‘design’. Secondly, the design must be novel or new. These issues can arise both prior to grant and after grant where they can used as a basis to challenge the validity of a registered design. This chapter explores the requirement that in order to be validly registered, there must be a ‘design’: that is, it examines the subject matter which is protected by the registered design system. The question of the novelty of designs is considered in the next chapter.

At the outset, it is worth noting two characteristics of the law of registered designs. The first is that it is preoccupied with the visual aspects of articles. This has had an important impact on the types of subject matter protected as registered designs. For example, the preoccupation with the visual dimension of designs operates to exclude texture and function from the scope of protection. It has also meant that ergonomic and environmental design have not been given the emphasis they may otherwise have received. The second feature of the registered design system is that it concerns designs applied to ‘articles’. The fact that protection is only given to design which is applied to articles has meant that garden design, urban planning, and architectural design have been excluded from the remit of design protection. The chapter is divided into three parts. First, we consider the way in which the requirement that there be ‘design’ has been implemented. We then go on to look at the categories of subject matter which are expressly excluded from the scope of protection. We then examine some of the relevant changes that are likely to be made to British law in order to implement the Designs Directive.

2 DESIGN In order for a design to be validly registered, it is necessary to show that there is a ‘design’. To do this it is necessary to satisfy five requirements. These are that there be:

580

THE

LEGAL

REGULATION

OF DESIGNS

(1) ‘features of shape, configuration, pattern or ornament’ (2) which are ‘applied’ (3) to ‘an article’ (4) which (in the finished article) have ‘eye-appeal’. (5) In addition, the appearance of the article must be such that it matters to

consumers. We will deal with each of these in turn.

2.1 ‘FEATURES OF SHAPE OR CONFIGURATION, PATTERN OR ORNAMENT Section 1(1) of the 1949 Registered Designs Act provides that a design means ‘features of shape or configuration, pattern or ornament’. It is generally accepted that ‘shape and configuration’ refers to the three-dimensional aspects, or the form, of a design (such as the shape of a cup or the handle of a hammer).' It is also accepted that shape and configuration are often produced by a single process of manufacture. In contrast, ‘pattern and ornament’, which are normally applied to articles as a form of decoration after they have been manufactured (such as a textile pattern or a fabric design), are substantially in two as opposed to three dimensions. The texture of an article as well as the material from which it is made are not considered to be features of design under the current law.* While colour is not considered to be part of shape or configuration, in some instances colour might form a relevant component of a design comprising ‘pattern and ornament’.

The question of whether an application discloses ‘features of shape or configuration, pattern or ornament’ has not proved to be particularly problematic. Having said that, in some cases the question of whether a design is for ‘pattern or ornament’ or ‘shape or configuration’ may be important. This is because a design registrant usually confines the monopoly, via the statement of novelty, to either shape and configuration or pattern and ornament. As a result, defining whether features are shape and configuration or pattern and ornament can determine whether an alleged infringement is similar. For example, if a person designs a new shape of teapot which carries a speckled surface pattern, and the registration is only for shape and configuration, then whether a person infringes if they make teapots of the same shape but without the distinctive pattern (or with a different pattern), will depend on whether that pattern is regarded as shape or configuration.’ In order to retain flexibility in ! Kestos v. Kempat (1936) 53 RPC 139, 152. 2 Sommer Allibert v. Flair Plastics [1987] RPC 599 (plastic); In re Bach’s Design (1889) 6 RPC 376; In re

Read and Greswell’s Design (1889) 6 RPC 471 (no novelty from changing material). 3 Colour is not an element of shape or configuration: Valeo Vision SA v. Flexible Lamps [1995] RPC 205, 2S 4 Sommer Allibert (UK) v. Flair Plastics [1987] RPC 599 (where ridges on the registrant’s chair were held to

be features of shape, so that the defendant’s chair (with different ridges) was substantially different and thus non-infringing).

SUBJECT MATTER

581

answering such questions, the courts have emphasized that the distinction between ‘shape or configuration’ and ‘pattern and ornament is not rigid and that it is possible for the two categories to overlap.° The question of whether features are ‘shape and configuration’ or ‘pattern and ornament’ may also be important because some of the exclusions from registrability apply only to features of shape and configuration.°

2.2 “APPLIED TO’ Designs are not registered in the abstract. Instead, they are registered as features which are applied to an article. In the case of ‘pattern and ornament’ this is the norm. In the case of features of ‘shape and configuration’, this means that the article is to be made to the shape in question.’ The fact that a design must be ‘applied to’ an article means that the design features must be capable of having a separate existence from the article. In Dover v. Nurnberger, Buckley LJ explained that ‘[t]he Design . . . is not the article, but is the conception which is applied to the article ... The design turns a chair into something more than a mere chair. It becomes a chair with a conception or suggestion about shape or configuration beyond the fundamental form of a chair.” In effect, each article is interpreted as having an essential, almost platonic, characteristic. The requirement that the design must, in some sense, be distinguishable from the article had surprising consequences in Re Littlewood’s Pools.'® In that case, the Patent Appeal Tribunal rejected an application to register a design for a football pools coupon on the ground that the pattern was not applied to the article, it was the article. The decision has been criticized on the basis that there are many other designs for articles which are registrable (such as wallpaper), even though the value of the article is insignificant when compared to the value of the design."! Although it might be possible to construct fine distinctions to avoid holding such designs unregistrable under the Re Littlewood’s principle, it might be preferable to view Re Littlewood’s as having been decided on other grounds.'”

5 Cow v. Cannon [1959] RPC 240; [1959] RPC 347; In the Matter of Rollason’s Registered Design (1897) 14

RPC 909, 913 (Lindley MR said the distinction between pattern and shape is ‘not necessarily scientific and precise’); Heath & Sons v. Rollason (1898) 15 RPC 441, 446-7 Lord Herschell (not a sharp, hard and fast distinction).

6 RDA s. 1(1)(b) (functionality and ‘must match’). But note Ford Motor Co.’s Appns [1993] RPC 399, 410-11, where the Registrar took the view that, in cases where features could be viewed as 2-dimensional or 3dimensional, if features would be excluded as shape they were also necessarily excluded as pattern. 7 Amp v. Utilux Proprietary [1972] RPC 103, 108 per Lord Reid; Re Clarke (1896) 13 RPC 315, 358. 8 Cf. the difficulties in relation to the requirement that a trade mark be distinct from the article to which

it is applied, most notably in Re Coca-Cola Co. [1986] 1 WLR 695. See below at p. 773.

? 10 ' 12

(1910) 27 RPC 498, 503. (1949) 66 RPC 309. Laddie et al., 30.14-15. Indeed, Wynn Parry said ‘this conclusion does not conflict, but indeed is consistent, with Rule 26 of the

Designs Rules, 1932.’

582

THE

LEGAL

REGULATION

OF DESIGNS

2.3 ‘AN ARTICLE’ In order to be registrable, the design features must context, an ‘article’ is defined to mean ‘any article part of an article if that part is made and sold occasions where design laws’ preoccupation with commercial artefacts is at its most obvious.

be applied to ‘an article’. In this of manufacture and includes any separately’.’* This is one of the autonomous, freely transferable,

2.3.1 ‘Article of manufacture’

Perhaps the most important consequence that flows from the fact that the designs must be applied to an ‘article of manufacture’ means that designs for buildings and structures will not be registrable. For example, in Collier & Co.’s Application the Assistant Comptroller took the view that the design of a petrol filling station was unregistrable both because the building or structure was not ‘an article’ (it was a collection of articles such as windows and doors), and because the process of building was not an ‘industrial process’.'* Applying this requirement, in two Australian cases it was held that a design for a fibreglass swimming-pool was registrable whereas a design for a tennis-court fence was unregistrable.!° 2.3.2 “Made and sold separately’ In situations where a design is applied to part of an article, for the design to be validly registered, the part must be for an article which is ‘made and sold separately’.!° The phrase ‘made and sold separately’ was considered by the House of Lords in R v. RDAT, ex parte Ford; a decision which limited the scope of design protection available for spare parts.'”’ The House of Lords held that in deciding whether an article was ‘made or sold separately’, it was irrelevant that the parts were in fact manufactured, stocked,

and retailed separately. For their Lordships, an article is ‘made and sold separately’ only where it is intended by the proprietor to be made and sold separately.'® More surprisingly, the House of Lords also said that articles were only intended to be made and sold separately if they were intended to have an ‘independent life as an article of commerce’ rather than merely as ‘an adjunct of some larger article of which it forms a part.’ The House of Lords held that parts such as main body panels, the bonnet lid, the boot lid, the windscreen, and door panels have no reality as articles of commerce apart from their forming part of a complete vehicle. Since these spare parts were intended to be used as replacement parts, it was held that they were not made and sold 13 RDA s. 44. 14 (1937) 54 RPC 253. Cf. Concrete’s Appn. (1939) 57 RPC 121 (portable air-raid shelter). 15. Tefex v. Bowler (1982) 40 ALR 3261. Re Kevin MacNamara (1986) 7 IPR 335.

16 RDA s. 44. 17 [1995] RPC 167. 18 [1995] RPC 167, 177-8, affirming Sifam Electrical Instrument Co. v. Sangamo Weston [1973] RPC 899. 9 [1995] RPC 167, 179.

20 Ibid.

SUBJECT

MATTER

583

separately. As such, they were not be parts in relation to which designs could be registered.*' In contrast, objects such as wing mirrors, wheels, seats, and steering wheels, where it was possible to substitute articles with different designs, were ‘by

their nature susceptible of being made and sold separately’.”” 2.3.3 Articles of a primarily literary or artistic character Section 1(5) of the 1949 Registered Designs Act gives the Secretary of State power to make rules excluding from registration designs for articles of ‘a primarily literary or artistic character’. Designs for these articles are primarily protected by copyright law (or in the case of wall plaques, medals, and medallions, possibly by unregistered design right). This is given effect to by rule 26 of the 1995 Registered Design Rules” which exclude from registration designs for articles which consist of: (1)

works of sculpture, other than casts or models used or intended to be used as models

or patterns to be multiplied by any industrial process; (2) wall plaques, medals and medallions; (3) printed matter primarily of a literary or artistic character, including book jackets, calendars, certificates, coupons, dress-making patterns, greeting cards, labels, leaflets, maps, plans, playing cards, postcards, stamps, trade advertisements, trade forms and cards, transfers and similar articles.

It should be noted that sculptures are excluded, unless they are to be multiplied by an ‘industrial process’. It should also be noted that the third paragraph is nonexhaustive: as such, articles which are not specifically listed may still be excluded if they can be classified as ‘printed matter of a primarily literary or artistic character’ and have the same general character as the matters listed. This probably provides the best explanation for the decision in Re Littlewood’s to refuse registration of the design of a pools coupon.”

2.4

EYE

APPEAL

In order for a design to be validly registered, it must have ‘eye appeal’.”? This means that in the finished article the design features must be such that they appeal to and are judged by the eye. More specifically it seems that the appeal must be such that it attracts people towards the article. This is, in effect, the conclusion which was reached by the majority in Amp v. Utilix,° where the House of Lords was called upon to decide amongst other things, whether a design for an electric terminal and a strip of

21 For comments and criticism, see L. Bently, ‘Lords Design Constraints’ (1996) 59 Modern Law Review

22-1995] RPC 167, 176. 23 RDRr. 26. 24 See Lamson Industries Application [1978] RPC 1. 25 RDA s. 1(1). The phrase was introduced in s. 19 of the Patents and Designs Act 1919. 26 Amp v. Utilux Proprietary [1972] RPC 103.

584

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OF DESIGNS

terminals for washing-machines had eye appeal. Although their Lordships disagreed as to whether the terminal had ‘eye appeal’, they all considered that the design was unregistrable.’’ In the course of consideration, various of their Lordships attempted to explain the idea of eye appeal. For example, Lord Reid said that a design had eye appeal if an article had greater appeal by reason of its appearance than an article which did not have the design. This required more than merely distinctive appearance but did not have to amount to aesthetic or artistic appeal.”® Lord Morris said that to have eye appeal there must be features which have some individual characteristic calculated to attract the attention of the beholder so as to influence choice or selection.”” Setting the standard at an even higher level, Lord Pearson said that in order for something to have eye appeal, there must be a ‘special, peculiar, distinctive, significant or striking appearance ... which catches the eye.’*° As should be clear, these phrases do not reveal a consensus as to exactly what “eye appeal’ encompasses. However, in Interlego v. Tyco, Lord Oliver (in holding that Lego bricks had eye appeal) distilled from Amp that ‘eye appeal’ refers to the appeal that is ‘created by a distinctiveness of shape, pattern, or ornament as calculated to influence the customers’ choice.*! Probably, Lord Oliver’s summary remains the most useful starting point for any analysis. Although the courts have struggled to reduce eye appeal to a precise verbal formula, there are a number things that we can say with confidence. First, in determining

whether a design has eye appeal, we are concerned with the visual attractiveness of the article, so that functional considerations ought not to be taken into account. This means that the fact that a design looks as if it will work well (or that it was ‘clean, strong or useful’) ought not to be taken into account in considering whether the object has eye appeal. Secondly, while only the visual appearance of an object can be taken into account, it is clear that in order to have eye appeal, a design need not reach a particular artistic standard: indeed a design may be grotesque or ugly and have ‘eye appeal’.*’ Thirdly, the courts have been clear that, in most cases, ‘eye appeal’ is to be judged from the viewpoint of the prospective customer.** However, even if a design is not on display at the point of sale, it has been held that it can have eye appeal if the design becomes visible through use of the article. For example in Ferrero & CSpA’s

*7 Lord Reid and Viscount Dilhorne argued that while there was ‘eye appeal’, the features were excluded as functional. In contrast Lord Morris and Lord Pearson said the design lacked eye appeal.

28 [1972] RPC 103, 108. 29 [1972] RPC 103, 112. 30 [1972] RPC 103, 121. 31 Interlego AG v. Tyco Industries [1988] RPC 343, 355. 32 [1972] RPC 103, 108 per Lord Reid; cf. [1972] RPC 103, 118 per Viscount Dilhorne (article could have eye appeal because it looked clean or strong or useful). 33, Amp v. Utilux Proprietary [1972] RPC 103. 34 Tbid., 109 (Lord Reid), 112 (Lord Morris), 118 (Viscount Dilhorne); Valeo Vision SA v. Flexible Lamps [1995] RPC 205, 215. Cf. Kevi A/S v. Suspa-Verein UK [1982] RPC 173, 178 (in case of an article such as a

furniture castor which is likely to be purchased first by the trade before being incorporated into an article purchased by the general public, the eye is that of both trade customers and ultimate customers).

SUBJECT MATTER

585

Application.* a design for a chocolate Easter egg consisting of an inner layer of white chocolate surrounded by an outer layer of dark chocolate was held to be registrable even though it was not visible at the point of sale. According to Whitford J, as it was

inevitable that the egg would be broken open and thus that the pattern would be seen, it could be said that the design had ‘eye appeal’. Following on from this it has also been held that the display panel of a digital watch, which was only visible when the watch was used for its intended purpose, was capable of being a feature with eye appeal and, as such, registrable.°*° The question of whether a design has eye appeal, ultimately, is a question of fact. In reaching its conclusion, it will assist the court to be presented with evidence from customers and experts as to what customers find ‘appealing’ (but not evidence as to what experts themselves find appealing).*’” Moreover, it seems that the subjective intentions of the designer to create an artefact with ‘eye appeal’ may be taken into account (and may prove conclusive where no other evidence is adduced).** In most cases, however, the onus falls on a person challenging the validity of the registration to demonstrate that the article had no greater appeal by reason of its appearance than it would have had without it. As Lord Reid noted in Amp v. Utilux, this was ‘an almost

impossible burden to discharge’.*?

2.5

MATERIAL

APPEARANCE

OF THE

ARTICLE

The 1988 Copyright, Designs and Patents Act amended the 1949 Registered Designs Act to introduce a further hurdle in the way of an applicant for registration. As well as demonstrating that the design has “eye appeal’, it is also necessary to show that the article to which the design relates is one whose appearance is important to purchasers. To this end, section 1(3) of the 1949 Registered Designs Act declares that: (1) a design shall not be registered if the appearance of the article is not material, i.e. aesthetic considerations are not normally taken into account to a material extent by persons acquiring or using the articles; (2) and would not be so taken into account if the design were to be applied to the article. Given the proliferation of negatives, the meaning of the section is not immediately

transparent. However, the better view is that it requires two questions to be asked. The first (generic) question is: ‘do people normally take into account aesthetic considerations when acquiring articles of the sort in question?’ If the design in question relates to children’s toys or household furniture, the answer would probably 35 [1978] RPC 473. 36 KK Suwa Seikosha’s Appn. [1982] RPC 166. On the question of whether the appeal must be to the ‘unaided’ eye, see Stenor v. Whitesides (1946) 63 RPC 81 (Romer J; Court of Appeal). 37 Valeo Vision SA v. Flexible Lamps [1995] RPC 205, 215 (Aldous J, ‘It is not the mantle of the expert that

should be worn as he is trained to discern small differences which may not have eye appeal’). 38 Gardex v. Sorata [1986] RPC 623, 637-8.

39 Amp v. Utilux Proprietary [1972] RPC 103, 108 (Lord Reid).

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REGULATION

OF DESIGNS

be ‘yes’. As such, the section would present no problem to an applicant. If, however, the design was for a car tyre, a household plug, or a terminal to be fitted into a washing-machine, the answer would probably be ‘no’: people do not normally care what these objects look like when, they purchase them. Where this is the case, it is then necessary to pose the second (specific) question: ‘would people take aesthetic considerations into account when acquiring the article with the features applied?’ If the tread of the car tyre made to the specific design in issue meant that customers were interested in the appearance of the article (though purchasers of tyres were not generally interested in the appearance of tyres), the design would pass the second test and thus be registrable. In the case of the terminal for a washing-machine, the chances are that the particular design would not alter the attitudes of purchasers. In which case, it would fail both the generic and specific tests and as such be unregistrable. The general nature of the test should be clear from these examples. The effect is to make it difficult to register designs for many industrial and functional artefacts. As such it can be seen as part of a process of ‘aesthetization’ of the registered design system. Where there are doubts, it seems that the Registry may be satisfied by evidence of customer attitudes derived from small and cursory surveys.*° It will be interesting to see how the courts interpret the notion of ‘aesthetic considerations’! and how much customer interest constitutes a ‘material extent’.

3 EXCLUDED

SUBJECT

MATTER

Not all ‘designs’ qualify for protection under the Registered Designs Act. Section 1 excludes from the meaning of design (1) methods or principles of construction,

(2) features of shape and configuration dictated by function, (3) features of an article which ‘must match’ the features of another article of

which it is to form an integral part. In addition, immoral designs and certain other designs are excluded under the Registrar’s discretion.

3.1

METHODS

Section

OR

PRINCIPLES

OF CONSTRUCTION

1(1)(a) provides that for the purpose

of registered design law, ‘design’

does not include ‘a method or principle of construction’. The exclusion, originally —

40 See I. Baillie, ‘A Frustration of Good Design’ [1991] EIPR 315. 41 In Amp v. Utilux Proprietary [1972] RPC 103, 109 Lord Reid called ‘aesthetic or artistic appeal’ a vague criterion.

SUBJECT MATTER

587

introduced by the 1919 Patents and Designs Act, helps to police the boundary between patent law (which protects technical inventions) and design law (which protects appearances). A similar exclusion operates in relation to unregistered design

rights.” The exclusion operates in a similar way to the idea—expression dichotomy, which helps to ensure that copyright protection is only granted for specific manifestations (expressions) rather than to the abstract ideas or principles that might lie behind

them. In this context, the exclusion ensures that protection is only granted to the appearance of articles rather than to the methods or principles of construction by which the article is manufactured. As Lord Evershed MR explained in Rosedale Associated Manufacturers v. Airfix Products,** the effect of the exclusion is to prevent registration of the ‘process or operation by which a shape is produced as opposed to the shape itself.’ In effect, the exception operates to ensure that the ‘only protection given by the registration is for the particular form of the article shown in the design registered.’™* Given that design applications must include ‘representations’, it is difficult to imagine many situations where a person will succeed in registering a mere ‘method or principle of construction’ as opposed to a shape or configuration. This is because if the representation suggests that the applicant is seeking protection for a method or principle of construction rather than a shape, the Registrar should refuse to grant protection.* 3.2

FEATURES

DICTATED

BY FUNCTION

The next category of subject matter excluded from protection are those design features which are dictated by function. More specifically, section 1(1)(b)(i) of the 1949

Act provides that ‘features of shape and configuration of an article which are dictated solely by the function which the article has to perform’ are not registrable.*° The exclusion only applies where ‘shape or configuration’ is involved and does not operate in relation to ‘pattern or ornament’.”” The exclusion of functional aspects of designs from the scope of protection also 42 CDPA s. 213(3)(a). In Parker v. Tidball {1997} FSR 680, 696, where the claimant claimed design right in mobile phone cases, the judge excluded stitching in seams as a method of construction. 43 [1957] RPC 239 (the design of the bucket which was used to build sandcastles related to a shape and, as such, was not excluded as ‘a method or principle of construction’). 44 Kestos v. Kempat (1935) 53 RPC 139; Oren & Tiny Love v. Red Box Toy Factory [1999] FSR 785, 792. 45 In Moody v. Tree (1892) 8 TLR 511 the design registered was a picture of a basket the claim being for the pattern of the basket consisting of the osiers being worked in singly and all the butt-ends being outwards. It was held that the registration was bad as being an attempt to register a conception as to the mode of construction and not the shape or configuration. 46 TRIPs Art. 25(1) permits member states to exclude from protection ‘designs dictated essentially by technical or functional considerations’. 47 But in Lamson Industries’ Application [1978] RPC 1, the applicant sought registration of a design for preprinted computer print-out consisting of folded paper with bands of colour. Whitford J held that these were features of pattern or ornament but that the design lacked eye appeal, because they would be chosen by a consumer because paper with these features was more useful. Functionality thus was relevant as requiring a conclusion that there was no eye appeal.

588

THE LEGAL REGULATION

OF DESIGNS

helps to police the boundary between the registered design regime (which is concerned with the appearance of objects) and the patent system (which is concerned with the functional aspects of objects). In this context it should be noted that the fact that some ‘advantage is derived from the adoption of a particular shape does not exclude it from registration as a design.’* That is, the fact that a shape performs a function does not therefore mean that it was necessarily dictated by that function. This is a matter which will depend on the particular context in which the design was created. 3.2.1 Dictated: mandatory or causative? In order to decide whether a particular design is dictated by function, it is necessary to ask: was the shape of the article solely attributable to the function that the article had to perform, or did the designer exercise choice and control in relation to the final design? In short, the exclusion requires the court to ask: why did the design take the particular form that it did? Because section 1(1)(b)(i) focuses on the process of

creation, it is different from other aspects of design law, such as the requirement of eye appeal (which focuses on the appeal the designed article has to consumers) and the exclusion of must match features (which compares the finished article with other articles).

In situations where the designer was unable to exercise any control whatsoever over the final shape of the article (because the shape was dictated by the task that it had to perform), the design will fall squarely within the exclusion. Given that section 1(1)(b)(i) says that the exclusion operates where the design features are solely dictated

by function, it might seem reasonable to presume that this is the only situation in which the exclusion would come into play. (This is known as the ‘mandatory’ approach.) However reasonable this conclusion might seem to be, this reading of the section was unanimously rejected by the House of Lords in Amp v. Utilux. More specifically, the Lords rejected the submission that a shape was only ever dictated by function if it is necessary to use that precise shape and no other in order to perform the function. In part, this was on the basis that to have found otherwise would have rendered the exclusion all but redundant.” 3.2.2 When is a feature prompted by function? The upshot of the House of Lords decision is that features may be excluded by section 1(1)(b)(i), despite the fact that the designer exercised a degree of choice or control over the final design. Given that design features do not need to be completely dictated by function to be caught by the exclusion, this gives rise to a further question: to what extent must features be ‘dictated by function’ for the exclusion to come into operation? Put differently, what degree of control does a designer need to exercise over the shape of an article for it to fall outside the scope of the exclusion? 48 Kestos v. Kempat (1935) 53 RPC 139, 151. 49 In Amp v. Utilux Proprietary [1972] RPC 103, 109 only one example of such a situation was suggested — that of a key which had to be a particular shape to be able to operate a particular lock.

SUBJECT MATTER

589

These are difficult and problematic questions. Indeed, one of the advantages of the mandatory approach is that it avoids having to ask such questions in the first place. While the scope of the ‘dictated by function’ exclusion has been considered in a number of cases (notably by the House of Lords in Amp v. Utilux), these decisions offer little guidance in relation to these issues. For example, while the Lords were clear that the exclusion was not limited to situations where designers had no choice whatsoever (that is where the designs features were mandatory), they were less clear about the amount and type of input that a designer would need to make for a design to fall outside the scope of the exclusion. According to Lord Morris, features were ‘dictated by function’ if they were ‘brought about by or relevant to’ considerations of the function which the article would have to perform.* Lord Pearson said that a feature was dictated by function if it was ‘attributable to or caused or prompted by’ the article’s function (in the case that of forming an electric connection between two electric conductors, the tab and the wire.)*' Lord Reid said that a shape could be said to be dictated by function if it was there not to appeal to the eye ‘but solely to make the article work’.*? Presumably, a design which is primarily dictated by function will still be dictated by function if the only input that a designer has made is in relation to de minimus aspects of the design. Similarly, where the only control that a designer is able to exercise over the shape of the article is in relation to non-creative matters (where they relate to the cost) or to matters which are not relevant to design protection (such as change of texture or material), a design may still fall within the scope of the exclusion. Conversely, where a designer has made a ‘creative’ input to the design process (such as choosing between alternative design options)*’ the resulting design is unlikely to fall within the scope of the exclusion. It seems that the subjective intentions of the designer will be a factor to be taken into account.” 3.2.3 The ‘every feature’ rule A design is only unregistrable if every feature of the design is dictated by function.°° That is, if a design is only partly functional, it may still be registrable. Where a design is made up of a number of different features and some of those features are dictated by function, so long as some of the remaining design features are not determined by function, the design will not fall within the scope of the exclusion. This can be seen,

for example, in Rosedale Associated Manufacturers v. Airfix Products Ltd*® where the °° Tbid., 114. >! Tbid., 122. 52 [1972] RPC 103, 110 per Lord Reid. 53 Valeo Vision SA v. Flexible Lamps [1995] available).

RPC 205, 217 (relevance that other shapes are used or

54 See Stenor v. Whitesides (1948) 64 RPC 1, 17 per Lord Uthwatt. 5° Interlego v.' Tyco [1988] RPC 343, 356. While a design is registrable even if some of its features are dictated by function, this does not mean those features are protection. According to RDA s. 7(6) it is not an infringement to reproduce the functional features of a registered design.

56. (1957) RPC239:

590

THE

LEGAL

REGULATION

OF DESIGNS

plaintiff registered a design for a toy bucket for the building of sandcastles. In response to the argument that the registration was invalid because the design features were dictated by function, Lord Evershed MR said that even if one took the function of the bucket to be the building of sandcastles (which would have meant that aspects of the design were dictated by its function), the objection ‘takes no account whatever of the corresponding shape of the exterior of the bottom of the bucket which plays no part in the shaping of sandcastles, but which is undoubtedly—and admittedly—a significant feature of the design, judged solely by the eye.’”*” 3.2.4 Application of functionality rule to interfaces When the Registered Designs Act speaks of a design being dictated by function, it suggests that the shape of the design is shaped by the role or purpose that the designed article is to fulfil. This would apply, for example, where an article needs to take a particular shape in order for it to fit within, or connect to, another article: for

example, where the shape of certain parts of a car door must fit the chassis of the car. In this situation, the designed article is subservient to the article to which it must be connected. In these circumstances, it would be reasonable to assume that the ‘other

article’ must already exist. However logical this may be, the courts have rejected it: preferring instead to allow policy considerations to shape their reading of the exclusion. This can be seen, for example, in Stenor v. Whitesides, where the design for the

fuse for a vulcanizing machine was held to be invalidly registered. The reason for this was that as the shape of the fuse had to fit the corresponding receptacle, it was dictated by function. The House of Lords rejected arguments to the effect that the shape was not dictated by function because it was created before the receptacle was designed.” Their Lordships also rejected as irrelevant the fact that both the fuse and the receptacle might have been made in different, albeit corresponding, shapes. As Lord Porter concluded, ‘I do not think it matters whether the machine was devised to fit the fuse

or the fuse to fit the machine.’

3.3

THE

MUST

MATCH’

EXCEPTION

The third exclusion from protection is to be found in section 1(1)(b)(ii). This pro-

vides that a design is not registrable to the extent that it includes features of shape or configuration which ‘are dependent upon the appearance of another article of which the article is intended by the author of the design to form an integral part.’ The exclusion, which focuses on the aesthetic interdependence of component features, is commonly called the ‘must match’ exception. The basic aim of the exclusion is to promote competition in the spare-parts market (primarily for car spare parts). The particular problem that the must match exclusion intended to remedy relates to the fact that when a consumer is replacing certain parts 57 [1957] RPC 239, 241. 59 (1948) 65 RPC 1,7 per Viscount Simon.

58 (1948) 65 RPC 1. 60 (1948) 65 RPC 1, 10.

SUBJECT

MATTER

591

of their car, such as the door panel or the bonnet, if they do not wish to change the overall appearance of the car, they have no (real) choice but to do so with a part of exactly the same shape and appearance. In these circumstances the part is, in effect, aesthetically dependent on the appearance of the car as a whole. Because the consumer is forced to buy a replacement part of a specific shape, problems were seen to arise if car manufacturers were allowed to gain registered design protection over such designs. This was because where a spare part must be identical to the part it is replacing, to grant a monopoly right in that part would effectively tie up the market for spare parts: a position which the government of the day felt was undesirable.°' In order to ensure competition in the spare-parts market,” the must match exclusion was introduced. Basically, it provides that where a consumer has no choice but to replace a part with a part of exactly the same appearance, it is not possible to get registered design protection over the part. The must match exclusion aims to prevent the registration of designs for the components of a complex object, such as a car, where such registration would allow the proprietor to control the production of replacement parts which must be made to match the visual appearance of the other part or parts.

The exclusion does not apply, however, where a part is not aesthetically dependent upon the appearance of the car as a whole. As such, where there is no aesthetic imperative upon a car owner to replace a part with another part of the same form and appearance, registration of the design of one form of such an article will not prevent competitors from making equivalent articles. In circumstances where when replacing a part consumers are able to choose between a number of different designs (say, for example, when replacing a steering wheel), the parts are non-dependent and, as such, there is no reason why a registered design should not be granted. As Lord Young said, the exclusion aims to ensure that protection is only available for ‘truly aesthetic, stand alone designs where competitors do not need to be able to copy such designs in order to compete effectively.’ The upshot of the must match exclusion is that vehicle body panels and other parts contributing to the appearance of the vehicle are not registrable. As a result, original spare-parts manufacturers must be satisfied with protection for designs for complete motor vehicles or designs for non-essential parts, such as wing mirrors and hub caps. Although the intent of the must match exclusion is relatively clear, its vague language raises a series of difficult questions of interpretation (what is meant by ‘dependence’, what is meant by ‘integral’, how the court decides what is the ‘other article’, and so on). However, these questions are unlikely to arise in the context of registered designs. This is because, as a result of the House of Lords’ decision in R v. Registered Designs Appeal Tribunal, ex p. Ford, designs for most spare parts that could fall within the ‘must match’ exception are excluded from registration because they are

61 432 Hansard (HC), 28 Apr. 1988, cols. 597-8 (John Butcher MP). 62 491 Hansard (HL), 12 Jan. 1988, cols. 1111-12 (Lord Beaverbrook).

63 489 Hansard (HL), 12 Nov. 1987, col. 1479 (Lord Young).

592

THE

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REGULATION

OF DESIGNS

not designs for articles which are ‘made and sold separately.“ Consequently, we consider these questions in Chapter 30 in the context of unregistered design right.

4 MISCELLANEOUS 4.1

IMMORAL

EXCLUSIONS

DESIGNS

The final form of subject matter that is excluded from protection is ‘immoral designs’. This exclusion is based on section 43(1) which states that nothing in the Act

should be construed as ‘authorising or requiring the Registrar to register a design the use of which would, in his opinion; be contrary to law or morality.’ For the most part, the provision has not attracted too much attention. It seems that the shape and appearance of objects is not a domain in which morals are heavily implicated. One case where the morality of a design did arise was in Masterman’s Design, where the Registrar declined to register a design for a male Highlander doll which, when its sporran was lifted, revealed its genitals. Aldous J allowed the appeal and stated that the test was not whether a section of the public would be offended.® Instead, he said

that the test was whether the moral principles of right-thinking members of the public would think it very wrong for the law to grant protection.”

4.2

INSIGNIA

AND

PORTRAITS

The Registrar may refuse to register designs embodying certain images in the absence of evidence of the consent of relevant persons. Under rule 24, the Registrar may require consents to use portraits of Her Majesty or any member of the Royal Family, as well as designs incorporating an array of official insignia (armorial bearings, insignia, orders of chivalry, decorations, or flags etc.) of any country, city, borough, town, place, society, body corporate, institution, or person.®* A similar rule exists

when the design is for the name or portrait of a living or recently dead person.” Special provision is also made as regards designs which consist of or contain ‘controlled representations’ under the Olympic Symbol Etc. Protection Act 1995,7°

64 [1995] RPC 167.

6 [1991] RPC 89. 66 [1991] RPC 839, 103.

67 Tbid., 104. 68 69 Toys their

RDR r. 24. RDR r. 25. See Spice Girls’ Application for the Cancellation of Registered Designs in the Name of Girl Power [2000] ECDR 148. It is interesting to note that while UK law does not give people the right to exploit names or images, it gives those people power to stop others claiming exclusive rights relating to such

images.

70 RDA s. 1(6).

SUBJECT MATTER

5 REFORM:

THE

SUBJECT

UNDER

THE

593

MATTER

OF DESIGNS

DIRECTIVE

Substantial reform of the subject matter of UK registered designs will be required to implement the Directive. In most respects, the European concept of design is broader. Article 3 requires member states to protect ‘designs’ and Article 1 of the Directive defines a design as ‘the appearance of the whole or part of a product resulting from the features of, in particular, the lines, contour,

colours, shape, texture and/or

materials of the product itself and/or its ornamentation.’ Article 1(b) defines ‘product’ as ‘any industrial or handicraft item, including inter alia parts intended to be assembled into a complex product, packaging, get ups, graphic symbols and typographical typefaces, but excluding computer programs.’ A ‘complex product’ is defined as ‘a product which is composed of multiple components which can be replaced permitting disassembly and reassembly of the product.’

5.1

GENERAL

EXPANSION

IN THE

DEFINITION

OF DESIGNS

Before looking at the special provisions on complex products, functional features, interconnection, and repair parts, the following points should be observed:

* The Directive refers to a design as the ‘appearance’ of a product. It seems that appearance is present even if there is no eye appeal and no one cares what the

product looks like. Consequently, the Directive appears to require the removal of both the requirement that the design must have eye-appeal and the requirement that appearance be a material part of the article. As a result of these changes, the internal features of products (other than complex products) may thus be protected as long as the features can be represented.”! ¢ The restriction of designs to features of shape, configuration, pattern, and ornament will need to be broadened to cover appearance in general, including that which results from the materials from which a design is made, as well as the texture of the article. * Because the Directive does not recognize any concepts equivalent to that of ‘application’, there will no longer be a need for the design and the product to be viewed as conceptually separate matters. As a result it seems that the doctrine of fundamental form and the ruling in Re Littlewood’s will have no place in British law. ¢ The Directive provides that industrial items intended to be assembled into

71 The Directive only requires that registration visibly shows the design features of a product. This provision was included as part of a compromise justifying reject of parliamentary amendments that designs were only to protect ‘outwardly visible’ features: see H. Speyart, “The Grand Design’ [1997] EIPR 603, 605-6.

594

THE LEGAL REGULATION OF DESIGNS ‘complex products’ are potentially registrable.” A “complex product’ is defined to mean ‘a product which is composed of multiple components which can be replaced permitting disassembly and reassembly of the product.’” As a result, it seems that the rule in R v. RDAT, ex p. Ford’* must be reversed.

Because the Directive requires member states to protect designs of ‘products’ rather than ‘articles’, and ‘product’ is defined in Article 1(b) as “any industrial or handicraft item’, it seems that ‘rule 26’ will have to be amended: for example, wall plaques and medallions, labels, playing cards are probably ‘products’ and thus designs for those products should be protectable.

5.2

SPECIFIC

ISSUES

Four other aspects of the Directive deserve special attention. These relate to “complex products’, functionality, interconnections, and spare parts. The provisions on these issues all form part of the compromise over the contentious issue of “spare parts’, on which the Directive almost foundered.” During the passage of the Directive a range of different options were discussed. For example, it was proposed that after spare parts have been marketed for three years, the repair, manufacture, and supply of such parts

should be immune from action. It was also suggested that such designs be subject to some kind of compulsory licensing system. Despite a great deal of debate, it was ultimately agreed that parts of complex products ought to be protected, but only in so far as they are visible during normal use of the finished product.’° It was also agreed that features dictated by function and features which are necessary to enable objects to be connected together are not protectable. Beyond this, it was not possible to reach agreement on a range of related issues. 5.2.1 Complex products As noted above, the designs of parts of complex products are protectable under the Directive. The concept of ‘complex products’ is defined as ‘a product which is composed of multiple components which can be replaced permitting disassembly and reassembly of the product.’ Therefore designs for hub caps, bumpers, car doors, and so forth should be registrable.

72 The EC Green Paper contemplated that a combination of elements making up a kitchen design could be registrable: EC Green Paper, 5.4.14.2. 73 Des. Dir., Art. 1(c).

74 [1995] RPC 167. 7 A. Horton, ‘European Designs Law and the Spare Parts Dilemma: The Proposed Regulation and Directive’ [1994] EIPR 52; B.-K. Beier, Protection for Spare Parts in the Proposal for an European Designs Law [1994] 25 LIC 840; G. Dinwoodie, ‘Federalized Functionalism: The Future of Design Protection in the European Union’ (1996) 24 American Intellectual Property Law Association Quarterly Journal 611, 682-97; H.

Speyart, ‘The Grand Design’ [1997] EIPR 603. 76 Des. Dir. Art. 3(3).

SUBJECT MATTER

595

Although such designs are registrable in principle, where a product is incorporated into a complex product, a requirement of ‘visibility-in-use’ is introduced (under the rubric of novelty and individual character).’” This is to be found in Article 3(3) which

states that a design applied to or incorporated in a product which constitutes a component part of a complex product shall only be considered to be new and to have individual character (a) if the

component part, once it has been incorporated into the complex product, remains visible during normal use of the latter, and (b) to the extent that those visible features of the

component part fulfil in themselves the requirements as to novelty and individual character. Article 3(4) defines ‘normal use’ as ‘use by the end user, excluding maintenance,

servicing or repair work.’ While designs of components that are visible in use will be registrable, spare parts which cannot be seen (so-called ‘under the bonnet’ spare parts) will not.’* In the contexts of automobiles, this means that designs for things such as exhaust pipes and radiators (which are only seen at the garage when the car is being repaired) will not be registrable.” On the basis that the vulcanizing machine and washing-machine would be treated as ‘complex products’, it seems that the fuse in Stenor v. Whiteside and the

flag terminal in Amp v. Utilux would not be protectable since neither item was visible in normal use. 5.2.2 Functionality It was also agreed that features dictated by function would not be protected. Article 7 of the Design Directive states that a design right ‘shall not subsist in features of appearance of a product which are solely dictated by its technical function.’ No further guidance is given to the concept of ‘dictated by function’.*° In earlier drafts of the Directive it was made clear that this exclusion was only to operate to the extent that the realization of a technical function leaves no freedom as regards arbitrary features of appearance.*! That is, the Commission employed a mandatory notion of ‘dictated by function’, the approach that was expressly rejected by the House of Lords

77 ‘bid. 78 See H. Speyart, ‘The Grand Design’ [1997] EIPR 603, 609; G. Dinwoodie, “Federalized Functionalism: The Future of Design Protection in the European Union’ (1996) 24 American Intellectual Property Law Association Quarterly Journal 611, 680. 79 H. Speyart, ‘The Grand Design’ [1997] EIPR 603, 609 argues that the exclusion is unnecessary, for such

designs will be functional or made up of interconnections. 80 G. Dinwoodie, ‘Federalized Functionalism: The Future of Design Protection in the European Union’ (1996) 24 American Intellectual Property Law Association Quarterly Journal 611, 669-75 (arguing that the most

important contribution that the Directive makes is the repudiation of the aesthetic—functional distinction, but recognizing that it may be necessary to exclude certain ‘functional features’ from protection because of their lack of creativity and concerns over competitiveness. Dinwoodie appears to advocate that features should be unprotected where the shape in question is one of a limited number ofshapes which could perform the function).

81 In the EC Green Paper, the Commission states that a feature is dictated by function if no other form could be used to fulfil that function: EC Green Paper, 5.4.6.2.

596

THE LEGAL REGULATION OF DESIGNS

in Amp v. Utilix. It is unclear from the language of the final draft, whether or not the mandatory approach is to be adopted.” 5.2.3 Interconnections

The third special feature of the Designs Directive will require the UK to introduce a new exclusion, which is similar to the ‘must fit’ exclusion used in relation to the unregistered design right. Article 7(2) states that a design right shall not subsist in features of appearance of a product which must necessarily be reproduced in their exact form and dimensions in order to permit the product in which the design is incorporated or to which it is applied to be mechanically connected to or placed in, around or against another product so that either product may perform its function.

The reasoning behind this seems to be that features which enable mechanical parts to be connected together should not be protected by the registered design system. As design features which operate to connect parts together are currently treated as functional features, implementation of the Directive may not alter the substance of UK registered design law. However, the perceived need for an explicit exclusion appears to imply that “dictated by function’ may be construed more narrowly than is currently the case under UK law. The Directive requires that the exclusion set out in Article 7(2) operates without prejudice to ‘modular systems’, such as Lego bricks or Meccano construction sets. To this end, Article 7(3) states that “design right shall ... subsist in a design serving the purpose of allowing multiple assembly or connection of mutually interchangeable products within a modular system.’ While the basic blocks in a Lego set would satisfy these conditions, it is less clear that other parts of a Lego set, such as the cars and people, would do so.

5.2.4 Spare Parts: ‘Standstill plus’ The exclusions on complex products, interconnections, and functionality go some way towards ensuring that many spare parts will not be protected (and thus that a competition in the production of such spares is possible). However, it is clear that designs for things such as car doors or hub caps where the designs are visible in use, but not dictated by function or designed to enable objects to be connected together, will often fall outside those exclusions. Can a member state retain exclusions which go further? A compromise was reached to the effect that the existing laws in member states should be maintained.** This was subject to the rider that any alterations to the laws of member states should only occur if the effect is to liberalize the market for

82 Recital 14 explains that ‘technological innovation should not be hampered by granting design protection to features dictated solely by a technical function.’ 83 A. Horton criticized the proposal for such a clause, arguing that the matter was better left to competition law. See Horton, ‘European Design Law and the Spare Parts Dilemma’ [1994] EIPR 52, 54.

84 Art. 18 of the Directive requires the Commission to submit an analysis of the consequences of the provisions of the Directive for Community industry by 2004 and to propose any necessary changes by 2005.

SUBJECT MATTER

597

spare parts.*° The Commission has indicated that it intends to consult manufacturers of original parts and spare parts, with the aim of arriving at a voluntary agreement between the parties which provides fair and reasonable remuneration.*° 85 This has been called the ‘standstill plus’ compromise: Des. Directive Art. 14. The Council had previously sought to allow a ‘free-for-all’, i.e. allowing the member states carte blanche to introduce or change national legal provisions in this area. See H. Speyart, ‘The Grand Design’ [1997] EIPR 603, 609. Parliament had wanted a harmonized system of fair and reasonable remuneration for right-holders for any use of the design of a component part which is used in the repair of a complex product. 86 Parliament finally accepted the Council’s request that this provision should not be incorporated into the text after receiving assurances from Commissioner Mario Monti that the Commission would issue a declaration referring to such a consultation exercise and that this would appear in the Official Journal along with the text of the Directive.

Lod. NOVELTY

1 INTRODUCTION In order to be validly registered a design must be new.' A design will lack novelty if it is the ‘same’ as a design that is revealed by the prior art, or if it differs only in respect of ‘immaterial details’ or ‘variants commonly used in the trade’. Questions about the novelty of a design can arise at the application stage or at some later stage where validity is put in issue. The concept of novelty in design law is similar (but not identical) to that employed in patent law. It also shares a similar rationale. The novelty requirement is intended to confine any incentive or reward provided by the monopoly to designs which benefit the public by enhancing the art of design. The novelty requirement also operates to prevent the monopoly from unduly affecting any practices that designers or manufacturers may have carried out prior to the date of application.’

In determining whether a design is novel, three steps need to be undertaken. First, the design must be identified. Next, the relevant state of art needs to be ascertained. Once these two steps have been completed it is then possible to consider whether the design is new.

2 WHAT

IS THE DESIGN?

As we have seen, each design application includes a ‘statement of novelty’ which indicates the features of the design in which novelty is claimed. This means that if a

' RDA s. 1(2), s. 1(4). Prior to 1 Aug. 1 1989, the requirement was that the design be ‘new or original’. Report of Departmental Committee on Industrial Designs, Cmnd. 1808, (1962) (hereafter Johnston Commit-

tee), noted that ‘in practice

... nothing turns on any distinction between the two words, and the word

original is unnecessary’ and this observation appears to have informed the decision to remove the term

‘original’ in the 1988 reforms. 2 Conrol v. Meco McCallum (1996) 34 IPR 517, 527 (ECA) (requirement of novelty simultaneously encour-

ages intellectual activity, and ensures monopoly rights do not impede or oppress the natural development of industry); Le May v. Welch (1884) 28 Ch D 24, 33 (pointing to potential oppressiveness); Re S. Travers’s

Application (1951) 68 RPC 255, 260.

NOVELTY

599

statement of novelty refers to shape or configuration, it is not possible to locate the novel features in pattern or ornament. One issue which has arisen in deciding whether a design is novel relates to the approach that ought to be taken when the application includes subject matter which is excluded from registration. Basically two approaches can be adopted. One suggests that the design should be looked at as a whole. That is, for the purposes of considering whether a design is new, the design may include excluded subject matter (such as features which are dictated by function). Alternatively, it has been suggested that when assessing whether a design is novel, the courts should ignore the excluded features. This means that if a design was made up of three features, and one of those was excluded

(because, for example, it fell within the must match exclusion), when

determining whether the application was novel, the design should only be evaluated in light of the two remaining non-excluded features. Most of the case law suggests that the second approach should be adopted and that features such as those which are dictated by function cannot provide or contribute to the requisite novelty.* However, in Interlego v. Tyco the Privy Council rejected, as ‘nonsensical’, the view that ‘all that is ... to be considered in connection with an

application for registration is that part of the shape or configuration which has eye appeal, any purely functional features being excluded from registration.” Instead, Lord Oliver suggested that what was to be considered as the design was the shape of the article as a whole. As a result, it seems that excluded elements of a design can be taken into account

when determining whether a design is novel. As ‘the design can include both features dictated by (T]he court must look at the totality of the design registered designs are novel.” It should be noted been subjected to some caustic criticism,’ and not this area could benefit from some clarification.

3 WHAT

IS THE

STATE

was said in a subsequent decision, function and those that are not... features when deciding whether the that Lord Oliver’s comments have followed in other cases.* The law in

OF THE

ART ?

Once the nature of design in question has been ascertained, it is then necessary to

determine the state of the art that is relevant to the design in question. The relevant 3 See further at pp. 580-1. 4 Kevi A/S v. Suspa-Verein UK [1982] RPC 173, 178; British Franco Electic v. Dowling Plastics [1981] 1 NSWLR 448, 455.

5 Interlego AG v. Tyco Industries [1988] RPC 343, 353, 357. © Valeo Vision SA v. Flexible Lamps [1995] RPC 205, 215. 7 Laddie et al., para. 30.64.

8 See the Registrar’s approach in Ford Motor Co.’s and Iveco Fiat SpA’s Design Appns. [1993] RPC 399, 407— 8, 416 (‘registration in all cases is dependent on the requisite substantial degree of novelty being found to be present in the non-excluded features’).

600

THE

LEGAL

REGULATION

OF DESIGNS

state of the art is that existing at the date of application for registration or, where Convention priority is claimed, the foreign priority date.’ Importantly (and in contrast with patent law), the relevant prior art is limited to designs which are registered or published in the UK.

3.1

MATTER

INCLUDED

IN THE

STATE

OF THE

ART

The 1949 Registered Designs Act specifies that the prior art is made up of two elements.'° First, it consists of designs which are registered for the same or any other article in pursuance of a prior application. If application A is applied for on 1 January 1998 and application B is applied for on 1 March 1998, and application A is later registered, it will be deemed to have been registered at the date of its application (i.e. 1 January 1998). As this is before the priority date of B’s application, and as A’s application is made public on grant, the registered design A will destroy the novelty of B.'! However, if application A is not registered, the novelty of design application B is not affected by the prior application. The state of the art also consists of ‘prior publications’.!? Although prior publication will typically take place through prior dissemination of copies of a document (such as journal articles, trade catalogues, advertisements, or patent applications),}° or the presence of such a document in a public library," a design can also become part of the state of the art through prior sale or prior use of a designed article. For example, in Re Vredenburg’s Design’ the use at a tennis club of a prototype of a design of a tennis racquet where it could be viewed by members of the public who were not in a confidential relationship with the designer, was sufficient to prevent later registration of the design.

3.2

MATTER

EXCLUDED

FROM

STATE

OF THE

ART

Certain types of prior publications are excluded from the ‘state of the art’ and, as such, are not to be taken into account when novelty is assessed. Disclosures which are made in confidence and publications which are in breach of good faith do not form part of the state of the art.'° Such confidentiality obligations would be implied as part

® But note RDA s. 3(4), RDR r. 34 which allows the Registrar to vary the date at which novelty is to be assessed. 10 The terms of RDA

; s. 1(4) seem to leave it open to a tribunal to find that other matters such as

‘commonly accepted design in any particular art’ may form part of the art: Re S. Travers’s Application (1951) 68 RPC 255, 259.

1 12 13 14

Re Shallwin’s Appn. [1961] RPC 203. RDA s. 1(4)(b). Rosedale Associated Manufacturers v. Airfix Products Ltd. [1957] RPC 239. A. Pressler & Co. v. Gartside & Co. (1933) 50 RPC 240.

1S (1934) 52 RPC7 (Farwell J). 16 RDA s. 6(1); s. 16 (designs communicated to a foreign government pursuant to an agreement with the UK government).

NOVELTY

601

of collaborative exchanges during the production of a design, but would be unlikely to exist in cases of market-testing unless the recipient was placed under an explicit obligation to keep the design secret.!” In the case of new or original textile designs which are intended for registration, the acceptance of a ‘first and confidential order for the goods bearing the design’ does not invalidate novelty.'* Moreover, a registration of a design is not invalidated by reason only of display at an exhibition certified by the Secretary of State.'° 3.2.1

Previous use of artistic works

The most important exclusion from the prior act relates to the registration of ‘corresponding designs’ to ‘artistic works’. In essence, the exclusion acknowledges the importance of character merchandizing to the owners of artistic works.”! More particularly, it recognizes that the revenue that arises from the application of a cartoon figure (such as “Popeye’) to items such as brooches, crockery, or duvet covers may be as significant as that which arises from sale of the comics. The exclusion also acknowledges that it may often be impractical to register these designs in advance of sale of the comic containing the character. To ensure that the potentially valuable revenue that flows from merchandizing is not lost, the Act ensures that the prior use of the artistic work does not invalidate a later registration. To this end, section 6(4) provides that where, with the consent of the copyright owner in an artistic work, an application is made for a registration of a ‘corresponding design’, the design will not lack novelty as a result of any previous use of the artistic work. As such, the sale of comics, the exhibition of drawings, or the broadcasting of pictures would not invalidate later design applications for the registration of designs incorporating the artistic work.” (This is subject to the exceptions discussed below.) A design is a ‘corresponding design’ in relation to an artistic work if it is a design which, if applied to an article, would produce ‘something which would be treated for the purposes of copyright law as a copy of that work.’ The grace period that section 6(4) gives only applies to exempt from the prior art uses of the artistic work which do not amount to exploitation of the artistic work as a design. More specifically, section 6(5) says that section 6(4) ceases to apply where the '7 Neville v. Bennett (1898) 15 RPC 412, 414. 18 RDA s. 6(1)(c). Laddie et al. suggests that this exception is otiose given the breadth of section 6(1)(a): see Laddie et al., para. 31.23. See Three Stripe International v. Charles O’Neill (1988) IR 144, 148 (first orders of

‘design for a textile’ did not cover football jerseys which were designs applied to textiles). 19 Certification must be in advance: Mod Tap W Corporation (Delaware) v. BI Communications RPC 333; see G. Moss, “The Danger of Making an Exhibition of Oneself’ [1998] EIPR 433.

[1999]

20 RDA s. 6(4). 21 Gregory Ctte., Cmnd. 8662, para. 244. *2 Although arguably these acts would not invalidate the novelty of the design anyway, for two reasons: first because until the image is applied to an article it is not a design — Saunders v. Wiel (1893) 10 RPC 29, 33;

and secondly, the design comprises a specific appearance applied so even the first application of an image to an article is unlikely to anticipate the use of another image of the same character: see Dean’s Rag Book v. Pomerantz (1930) 47 RPC 485.

23 RDA s. 44.

602

THE

LEGAL

REGULATION

OF DESIGNS

copyright owner consents to ‘the sale, letting for hire or offer or exposure for sale or hire of articles to which the design has been applied industrially.* The subsection only applies if a corresponding design has been applied industrially and there has been sale, etc. A corresponding design is ‘applied industrially’ if it is applied to more than fifty articles or to goods manufactured in lengths or pieces.*? Such industrial application need not take place in the United Kingdom, though it is probably the case that the sale must.*° The consequence of section 6(5) is that once an image such as ‘Popeye’ has been applied to fifty cups and one of the cups has been sold, the exception in section 6(4) ceases to apply.”’ As a result, the design falls within the state of the art. In order to avoid invalidity in these circumstances, applications to register the design for all relevant articles should be made before the relevant threshold is reached.

3.3

ASSOCIATED

ARTICLES

Section 4 allows the proprietor of a registered design in respect of one article to extend it to so-called associated articles. In effect this allows the earlier registration or activity to be ignored when assessing the novelty of the later design.

4 IS THE

DESIGN

NOVEL?

Once the nature of the design and the relevant prior art have been ascertained, it is then possible to ask whether the design is new. The 1949 Registered Designs Act states that a design will lack novelty if it is the ‘same’ as an existing design. It also provides that a design will not be new if it only differs from an existing design as regards ‘immaterial details’ or “variants common in the trade’. We will deal with each of these in turn. Before doing so it is worth noting that the relevant prior art is to be interpreted through the eyes of an ‘instructed person’, who is aware of what is ‘common trade knowledge and usage in the class of articles to which the design applies.’** While the instructed person can make use of knowledge common to the field, he should not ‘have to depend upon his own originality to construct the design from the ideas which 24 Bampals Materials Handling’s Design [1981] RPC 33; Warner v. Commercial Systems (1995) 33 IPR 534 (need consent of all-joint owners).

25 RDR r. 35. A design may have been applied industrially in certain cases where it has been applied to less than 50 articles: Kevlacat v. Trailcraft Marine (1987) 11 IPR 77, 89-90. See also Safe Sport Australia v. Puma Australia (1985) 4 IPR 120, 126 (no industrial application where design applied to three prototypes of sporting helmets). 26 Bissell AG’s Design [1964] RPC 125 (though the result in that case seems strange, given that the carpetsweeper could hardly be regarded as a ‘copy’ of the photograph and hence as a corresponding design). 27 There need only be one sale: Bampals Materials Handling’s Design [1981] RPC 44. 28 Philips v. Harbro (1920) 37 RPC 233.

NOVELTY

603

the document may put into his head.” Similarly, when interpreting the state of the art it is not appropriate to mosaic or combine together pieces of prior art (unless one document inevitably leads to another document).*°

4.1 ‘SAME’ A design will lack novelty if it is the same as a design which forms part of the state of the art (either for the same article or for a different article). The corollary of this seems to be that for a design to be novel, it must (at least) be different from pre-

existing designs (in a way which is more than trifling).*’ The difference must be visual: the question of whether a design is new is one for the eye.** The ‘eye’ which assesses novelty is the ‘instructed eye’ of the person with knowledge of existing trade practices.*° Because novelty requires that the appearance of the article be different from preexisting designs, a design will not be novel merely because it embodies a new technique of construction or a new purpose or function.*? The fact that the same shape is applied to an article with a different purpose (such as the shape of a bicycle crankshaft being employed as the shape of a fuse), will not make the design new.*° Where a new image is applied to an article, it will be a new design. A design may also be novel even though it employs a known image. The reason for this is design protection is not given to ‘images’ as such, but to an image as it is applied to an article. This was made clear in Dover v. Nurnberger Celluloidwaren Fabrik Gebruder Wolff?’ where, in explaining the difference between novelty of design and originality in copyright law, the Court of Appeal said that novelty could arise where an old image (such as a picture of Westminster Abbey) was applied to an article (such as a teaspoon) for the first time. Like words to an author or laboratory techniques to a scientist, the

image of Westminster Abbey is part of the common stock of knowledge from which designs may be constructed.** Consequently, toys made to look like the Spice Girls are new, even though the Spice Girls’ images are well known.” Once a design feature has been applied to an article the application of the same 29 Rosedale Associated Manufacturers v. Airfix Products Ltd [1957] RPC 239. 30 W. Lusty & Sons v. Morris Wilkinson & Co. (Nottingham) Ltd. (1954) 71 RPC 174, 181. 31 Simmons v. Mathieson & Co. (1911) 28 RPC 486 at 490 per Fletcher Moulton LJ (novelty must be substantial not trifling); Lazarus v. Charles (1873) LR 16 Eq 117, 121.

32 Harrison v. Taylor 4 H&éN 815; Eng Rep. 1064; Moody v. Tree (1892) 9 RPC 333; In the Matter of Rollason’s Registered Design (1897) 14 RPC 909, 914; Jones & Attwood vy. National Radiator Co. (1928) 45 RPC 71, 81; Kestos v. Kempat and Vivien Fitch Kemp (1935) 53 RPC 139, 153.

33 Philips v. Harbro (1920) 37 RPC 233. As such the ‘eye’ that is used in a novelty examination is different from that employed when deciding questions of ‘eye appeal’ and infringement. 34 Thid. 35 British Franco Electic v. Dowling Plastics [1981] 1 NSWLR 448, 461.

36 Stenor v. Whitesides (Clitheroe) (1948) 65 RPC 1, 6.

37 [1910] 2 Ch 25, 29-30.

38 Deans’s Rag Book Co. v. Pomerantz & Sons (1930) 47 RPC 485 (Mickey Mouse). 32 Spice Girls’ Application for the Cancellation of Registered Designs in the Name of Girl Power Toys [2000] ECDR 148.

604

THE

LEGAL

REGULATION

OF DESIGNS

design features to different articles will not produce a ‘new design’.*° This is so even if there is no obvious reason for the designer to use an image such as a picture of Westminster Abbey which had previously been used in the design of a teaspoon or a car door.*! As a result, the proposition that ‘a design may be new for a coal-scuttle but not new for a bonnet’ is no longer good law.” That is not to say that the use of different images of Westminster Abbey on a teaspoon could not constitute a new design. The reason for this is that the possibility of registering specific applications of an image was not foreclosed by the first application of designs of that genre to articles. The first person to put a tree on to a piece of fabric did not thereby preclude all others from getting protection for other trees applied to fabric: it only precludes others from using the particular image of the tree. Novelty can also arise from the way known elements are combined. That is, design law recognizes that a combination of old features might produce a novel visual result, even if all of the elements, on their own, would lack novelty. If the combination of two

or more old and well-known designs or parts of designs gives the combination as a whole the appearance of a new design, the design will be novel.** For example, in Wallpaper Manufacturers v. Derby Paper Staining Company,*> Romer J said that although each ingredient in the design for wallpaper could be seen in earlier designs (it consisted of patterns of leaves and floral baskets), the designer had combined the

old materials in a new and original way.*®

4.2

QUALITATIVELY

TRADE

DIFFERENT:

IMMATERIAL

DETAILS

AND

VARIANTS

As we mentioned above, a design will lack novelty when it is the ‘same’ as pre-existing designs. A design will also lack novelty if it only differs from pre-existing designs as regards ‘immaterial details’ or ‘variants common in the trade’.4” The upshot of this is that a design may be different from prior-published designs, yet still lack novelty. While the requirement that designs ought not to be the same as pre-existing designs ensures that registered designs are quantitatively different from the state of the art, the 40 RDA s. 1(4) a design may lack novelty if it is applied to the ‘same or any other article’. 41 This conclusion follows from the wording of the Act and represents a significant change from previous practice under which a design was not new if it had previously been applied to any articles of the same class or had been applied to an article of an analogous character from a different class: Stenor v. Whitesides (Clitheroe) (1948) 65 RPC 1, 6 (Viscount Simon).

42 Re Clarke’s Design (1896) 13 RPC 351, 357; Wells v. Attaché Case Manufacturing Co. (1931) 49 RPC 113, 118.

43° Saunders v. Wiel (1893) 10 RPC 29. Cf. Spice Girls, Application for the Cancellation of Registered Designs in the Name of Girl Power Toys [2000] ECDR 148. “4 Walker & Co. v. A. G. Scott & Co. (1892) 9 RPC 482, 485; In the Matter of Rollason’s Registered Design (1897) 14 RPC 909, 913.

45 (1925) 62 RPC 443. 4© Cf. Lewis Falk v. Jacobwitz (1944) 61 RPC 116 (fabric which was woven so as to simulate Persian lamb fur comprising a vermicelli pattern in black was held to lack novelty).

47 RDAs. 1(4).

NOVELTY

605

requirements that the designs be materially different and that they do not merely involve a variation commonly used in the area impose a qualitative threshold upon the designs which are protectable. In a sense these requirements are akin to the obviousness inquiry in patent law, in that they ensure that the design is qualitatively different from other designs.*® 4.2.1 Immaterial changes

In order for a design to be novel, it must be materially different to pre-existing designs. The reason for this was explained by Baggallay LJ in Le May v. Welch when he said (in the language of the nineteenth century aristocracy) that: If the difference of half an inch in the difference from previous designs, were to collar, no one could have a collar made in risk of infringing some registered design.

placing of a stud, or any other similarly trifling be taken as justifying registration of a design for a his own house by his servants without running the It would be oppressive in the extreme.””

The question of whether a design is materially different from designs which are revealed by the prior art is a question which is to be judged by the eye (normally that of the customer). As such, what amounts to a ‘material’ change depends upon the facts of the case (particularly the industry in question).*° Changes in scale are usually treated as being immaterial. For example, a design for a textile was cancelled on the ground that it lacked novelty given an earlier design from which it differed only as regards a reduction of scale (to a third of the size) and the repetition of the design.’ Changes in the materials from which an article is made are also normally treated as immaterial changes as far as design law is concerned.” In most circumstances, changes to the colour of a pre-existing design will be considered to be immaterial.®* However, in specific trade sectors a variation in colour may give rise to a material change.** This can be seen in Cook & Hurst’s Design, which concerned an application to register the stripes on the England football shirts. While variations in striping were common in sports clothes, the particular combinations of colour (here red and blue) and location (on the arms, over the shoulder to the collar)

48 Cf. Carr’s Application [1973] RPC 689, 695 (warning against conflation with patent law concept). (1884) 28 Ch D 24, 33, See also Allen West & Co. v. British Westinghouse Electric & Manufacturing Co. (1916) 33 RPC 157,162.

°° If the area is one in which there is a strong tradition of design (such as is the case with typefaces, cutlery, and clothing), consumers will be more able to recognize and appreciate small differences in design: Re Monotype Corp.’s Appn. (1939) 56 RPC 243, 248. >! Viisco BV [1980] RPC 509 (Design Registry); Negretti v. Stanley & Co. (1925 ) 42 RPC 358, 366 (small version of athermometer not new). 2 Sommer Allibert (UK) v. Flair Plastics [1987] RPC 599 (plastic); In re Bach’s Design (1889) 6 RPC 376

(lampshades in the shape of a rose, one made out of linen, the other china); In re Read and Greswell’s Design (1889) 6 RPC 471 (no novelty from changing material).

53 Lewis Falkv.Jacobwitz (1944) 61 RPC 116. °4 Calder Vale Manufacturing Co. and Lappet Manufacturing Co. (1935) 52 RPC 117; Smith Kline & French’s Appn. [1974] RPC 253 (colour cannot be ignored, though normally differences in colour are unlikely to be important).

606

THE LEGAL REGULATION

OF DESIGNS

was held to be capable of constituting a new pattern. The fact that the class of articles (football shirts) was of such a nature that the combination of choice and location of

colours was regarded as highly significant by customers, was particularly significant in justifying registration.*° This is because of the peculiar consumer practices in that field where, according to one judge, colours are used in a manner analogous to medieval heraldic practices. 4.2.2 Trade variants

While a pre-existing design may be altered so that it is materially different from the prior art, nonetheless it may still lack novelty if the change employs techniques and procedures commonly employed in the trade.°° This is based upon the policy that members of an industry should be free to employ any of the standard design practices in the relevant trade without the risk of infringement.°”? What amounts to a trade variation in any particular case will depend on the trade concerned. For example, if it were common practice to place spikes on the soles of running shoes, a person would not have a novel design if all they did was place spikes onto an old pair of shoes (without spikes).>°

4.3

A QUESTION

OF FACT

Ultimately, novelty is a question of fact. The evidence of experts is admissible to explain the perceptions of the trade, common variants, and so forth.°? But the decision as to whether a design is sufficiently novel is a ‘matter of feel rather than science’.® One of the consequences of this is, as Lord Herschell explained, that it is ‘not

possible to give reasons for the conclusion at which one arrives’. Moreover, while it may be relatively easy to determine whether two designs are the same, ‘you cannot analyse the difference. You may find differences, and yet come to the conclusion that the designs were the same; you might find but few differences, and yet come to the conclusion that the designs were different’.°! 55 Cook & Hurst’s Design Appn. [1979] RPC 197; cf. Three Stripe International v. Charles O’Neill [1988] IR 144, 147.

© Sebel & Co.’s Application (No. 2) [1959] RPC 19 (combination ofold design for chair having a right arm which operated as a table with variant of the chair being capable of folding was not a new design because foldability of chair was a constructional variation which was commonly used and did not give a visual effect going beyond the impression of the ‘mere substitution of a known alternative’); Sebel & Co. (No. 1) [1959] RPC 12, 18 per Lloyd Jacob LJ (substituting galloping horse for a bucking or leaping one might not be an immaterial variation but could still be an obvious variant).

57 Phillips v. Harbro Rubber Co. (1920) 37 RPC 233, 240; W. Lusty & Sons v. Morris Wilkinson & Co. (Nottingham) Ltd. (1954) 71 RPC 174, 181.

58 Phillips v. Harbro Rubber (1919) 36 RPC79. 59 Falk y. Jacobwitz (1944) 61 RPC 116 Moulton J: Wells v. Attaché Case Manufacturing (1932) 49 RPC 113,

119. But note the criticisms of the use of such evidence in Oren & Tiny Love v. Red Box Toy Factory [1999] FSR 789579.

60 Laddie et al., para. 31.35. 61 Heath & Sons v. Rollason (1898) 15 RPC 441, 446-7 per Lord Herschell.

NOVELTY

607

The final point to note about the novelty examination is that the courts have occasionally taken ‘secondary considerations’ into account when deciding whether or not a design is novel. For example, they have taken the fact that the design was copied — or was commercially successful as evidence of the fact that the design was novel.® As is the case in patent law, care should be taken when such secondary considerations are relied upon to show novelty. The reason for this is that evidence of copying or commercial success is frequently attributable to factors other than the novelty of the subject matter in question.®

5 REFORM In drafting the Designs Directive, the Commission decided to set a high threshold for protection, with a view to granting registered designs stronger protection.“ This is

reflected in the requirement in the Directive that designs must not only be novel, they must also have ‘individual character’. The standard for registerability was also increased as a result of the fact that the state of the art against which a particular design is to be assessed has been broadened.® This increased threshold is likely to make the process of examination at national offices more burdensome and drawn out. In due course, it may well provide a reason for applicants to use the Community registered designs system.

5.1.

NOVELTY,

The test of novelty required under the Directive is similar to that under existing law. Article 4 states that a design ‘shall be considered new if no identical design has been made available to the public.’ It also provides that designs ‘shall be deemed to be identical if their features differ only in immaterial details.’ 5.1.1 The state of the art

Under the Directive, a design is to be assessed for novelty as against designs made available to the public before the priority date of the application in question. A design is deemed to have been made available ‘if it has been published following registration

or otherwise, or exhibited, used in trade or otherwise disclosed.” This suggests, it seems, a worldwide state of the art comparable to that used in patent law.

62 Harvey & Co. v. Secure Fittings [1966] S51:

63 See above at pp. 455-6. 64 Fellner, para. 6.017. 65 Des. Dir., Art. 3(2).

66 Tbid., Arts. 4-6. 67 Tbid., Art. 6.

RPC 515, 520; Cartwright v. Coventry Radiator Co. (1925) 42 RPC

608

THE LEGAL REGULATION

OF DESIGNS

The broadened state of the art is subject to a number of exceptions. First, a design will not form part of the state of the art if it “could not reasonably have become ‘known in the normal course of business to the circles specialized in the sector concerned, operating within the Community, before the date of filing of the application for registration, or if priority is claimed, the date of priority.’ This is a ‘safeguard clause’ aimed at preventing a design from being unregistrable where it had previously only existed in remote places. A design will also not form part of the state of the art where it has merely “been disclosed to a third person under explicit or implicit conditions of confidentiality.’ Nor will a design form part of the state of the art where, in the twelve months preceding the priority date, the disclosure is a consequence ‘of an abuse in relation to the designer or his successor in title’. Another notable feature of the Directive is that it requires the UK to introduce a “grace period’ prior to grant. More specifically it provides that a disclosure made by the designer (or an associated person) in the twelve months preceding the filing or priority date is not to be taken into account when deciding whether a design is new.”° The introduction of a grace period will mean that pre-registration market-testing will not invalidate a registered design.

5.2

INDIVIDUAL

CHARACTER

The Directive contains a new requirement that designs must meet in order to be registered. This is that as well as being novel, a design must possess “individual character’. A design will have individual character ‘if 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.’”! The impression given by the design must “clearly differ’ from the impression produced on them by the ‘existing design corpus’.”” In assessing individual character, the tribunal must take into account the degree of freedom designers have in developing their design, the nature of the product to which the design is applied or in which it is incorporated, and the industrial sector to which it belongs. One advantage with the new proposal is that as the ‘informed user’ is an ideal consumer, rather than a design expert, the courts will be

concerned with a notional individual rather than an empirical entity.” 68 Des. Dir., Art. 6(1).

69 Thid., Art. 6(3). 70 Tbid., Art. 6(2). 71 Ybid., Art. 5.

72 Tbid., Recital 13. 73 Fellner, para. 6.019.

28 OWNERSHIP AND INFRINGEMENT 1 INTRODUCTION In this chapter we explore the issues of ownership of registered designs. We then go on and complete our survey of the registered design system by examining the circumstances in which a person infringes the rights of a registered design proprietor.

2 OWNERSHIP 2.1

FIRST

OWNERSHIP

In most circumstances the initial owner of a registered design (or as the Act prefers the ‘original proprietor’) is the designer, that is, the author of the design.' To this general principle there are two exceptions: first, where a design is created by an employee in the course of employment, the employer is treated as the original proprietor;* second, where a design is made in pursuance of a commission for money or money’s worth, the person commissioning the design is treated as the original proprietor.’ This means that if a third party (A) commissions a company (B) to produce a design, and the design is created by an employee (C) of company B, the proprietor of the design is the commissioner (A) rather than the employer (B).4

The author of a design is defined as ‘the person who creates it’. The person who creates a design is the person who gives the design its specific form and appearance.’ It ! RDA s. 2(1). 2 RDA ss. 2(1B), and 44; Coffey’s Registered Designs [1982] FSR 227 (suggesting that the employer is only the first proprietor where employment carries with it a duty to make the design for the benefit of the employer). 3 RDA s. 2(1A). Where a person requests a design, and agreement is that the designer will have exclusive distribution in some places, the commissioner is the proprietor: Breville Europe v. Thorn EMI Domestic Appliances [1995] FSR 77.

4 RDA s. 2(1B). > RDA s. 2(3). RDA s. 2(4) defines the author of a computer generated design as ‘the person by whom the arrangements necessary for the creation of the design are made.’ © A. Pressler & Co. v. Gartside & Co. (1933) 50 RPC 240 (Luxmoore J).

610

THE

LEGAL

REGULATION

OF DESIGNS

has also been held that a person is not a creator if all they have done is to bring a design into the UK from overseas (despite the fact that it may be ‘new’ in the UK).’ Nor is a person who is given the right to register® or the exclusive right to distribute a design in the UK, a creator.’

If a person who is not the proprietor of the design applies for registration, the registrar may refuse to register the application. In addition, an application shall only be permitted if it is made by a person ‘claiming to be the design right owner’.'° This means that where a design is for shape or configuration, the applicant must also be the owner of unregistered design rights which exist in the design. This provision attempts to ensure that unregistered and registered design rights are vested in the same person. An application may be made for cancellation of the registration where registration has been made by a person who is not entitled to do so, since this is a ground on which the registrar could have refused to register the design."!

2.2

ASSIGNMENT

AND

LICENCES

The proprietor of a design may assign, mortgage, or license others to make articles bearing the design.’* An assignment should be made in writing, as should a licence.’ No provision exists for the assignment of future designs, and it is probably necessary for the original proprietor to register and then execute the relevant dealing.'* An offer of exclusivity in distribution is not an assignment, because it is not a grant of the ‘right to apply’ the design to an article.’ Neither an exclusive licensee nor the sole distributor of a design has a right of action against an infringer: this right belongs to the proprietor alone.’°

2.3

REGISTRATION

OF TRANSACTIONS

Information concerning assignments and other transactions of registered designs is maintained at the Design Registry.'? Any person who becomes entitled to an interest 7 Lazarus v. Charles (1873) LR 16 Eq 117 (importer not entitled to register). Cf. Barker v. Associated Manufacturers (Gowns and Mantles) (1933) 50 RPC 332, 337 (possible to obtain registration of adesign which

was used by the Ancient Egyptians 6000 years ago, if it had not been previously used in the UK). 8 Jewitt v. Eckardt (1878) 8 Ch D 404; Re Guiterman’s Registered Design (1886) 55 LJ Ch D 309. 9 In Neville v. Bennett (1898) 15 RPC 412, it was held that where one person selected an idea for a design

from pre-existing Persian designs, which was then rendered into a workable design by someone else, they were joint designers. This suggests that the process of selecting the basic design was considered a relevant act of creation, a proposition which seems difficult to reconcile with the ‘importation’ cases.

ROR DAts:3 (2):

1 RDA s. 11(2); Leary Trading Co.’s Designs [1991] RPC 609. 12 RDAs.

19.

13, Jewitt v. Eckardt (1878) 8 Ch D 404. 14 Tbid.

15. Leary Trading Co.’s Designs [1991] RPC 609. 16 Oren & Tiny Love v. Red Box Toy Factory [1999] FSR 785, 800 (speculating as to whether an exclusive

licensee could be registered as a proprietor); Woolley v. Broad [1892] 9 RPC 208.

17 RDA s. 17(1)(b).

OWNERSHIP

AND

INFRINGEMENT

611

in a registered design should apply to the Registrar to have their interests entered on the registry.'* The interests which can be listed include assignments, mortgages, coownership, and licences, but not beneficial interests relating to trusts.!? A strong incentive exists to register such a transaction: any document in respect of which no entry has been made in the register may not be admitted as evidence of such title ‘unless the court otherwise directs’.”°

2.4

COMPULSORY

LICENCES/LICENCES

OF RIGHT

Compulsory licences are available in certain specified circumstances. Applications for compulsory licences are made to the Registrar,” by an interested person. A Minister may also apply to the Registrar to take action in the public interest.”” The registered proprietor is notified of the application and can oppose the grant of such a licence.” The Registrar holds a hearing to decide whether the design is being applied to such an extent as is reasonable and makes such orders as he thinks fit.74 Appeal is to the Registered Design Appeal Tribunal. The Registrar may also make an entry in the register that licences are to be available ‘as of right’ and in default of agreement may be called upon to settle the terms of such licences.?°

3 INFRINGEMENT The task of determining whether or not a design has been infringed can be broken down into three parts. First, it is necessary to determine the types of activities that constitute an infringement. Secondly, it is necessary to ascertain the scope of the registered design. Thirdly, it is then necessary to determine whether the defendant’s article is the same as, or not substantially different from, the registered design. We will deal with each of these in turn.”°

3.1

INFRINGING

ACTS

The owner of a registered design has the exclusive right to carry out certain specified acts in relation to articles for which the design is registered. Corresponding to this, the 18 RDA s. 19(1). 1 RDA's, 17(2). 20 RDA s. 19(5). \o

21 RDAs. 10.

22 23 24 5

RDAs. RDRr. RDA s. RDA s.

11A. 53. 10(1); RDR r. 57. 11(4).

6 The law was modified in various ways by the 1988 Act and the following represents the law only as regards registered designs derived from applications after 1 Aug. 1989: CDPA s. 268. Some designs will continue to be governed by the prior provisions.

612

THE

LEGAL

REGULATION

OF DESIGNS

right in the registered design is infringed by a person who without the licence of the registered proprietor, does anything which is the exclusive right of the proprietor.” Although the registration of designs is deemed to come into force on the date on which the application for registration of a design was lodged,”* a design proprietor may only sue for infringements which take place after the certificate of registration is

issued.” Before looking at the way in which rights in design may be infringed, it is worth noting that the rights conferred on the design proprietor are ‘monopoly rights’. This means that infringement may occur even though the defendant did not copy the registered design or derive their design from it. As a result, there is no need for a design proprietor to show any causative link between the defendant’s design and the registered proprietor’s design.*” The corollary of this is that in principle it makes no difference to the assessment of infringement that the alleged infringer deliberately set out to sail as close as possible to the registration without infringing. If the defendant succeeds, and the designs are ‘substantially different’, there is no infringement.*! From the point of view of a registered proprietor, an absolute monopoly is advantageous in that it ensures that no one can legitimately manufacture articles according to the same or a substantially similar design. This is the case even if that person has independently created their design. It thus provides a significant period in which designers are able to attempt to recoup their design expenses. This absolute monopoly is also advantageous in that it means that a claimant is able to avoid the problems of having to prove copying that arise, for example, in relation to copyright.” 3.1.1 Direct infringement According to section 7(1), the registration of a design gives the registered proprietor the exclusive right: (a) to make or import (1) for sale or hire, or (11) for use for the purposes of a trade or business, or (b) to sell, hire, or offer or expose for sale or hire, an article in respect of which the

design is registered. A few points should be noted about the scope of these rights. First, the rights only cover situations where the article is made for commercial purposes. As such, making 27 RDA s. 7(2).

28 RDA s. 3(5) states that the date of registration is the date of application.

RDAs. 7(5). 30 Dunlop Rubber v. Golf Ball Development (1931) 48 RPC 268, 281; Gaskell & Chambers v. Measure Masters

[1993] RPC 76, 81 (‘a bad copy or a copy of only part may not infringe but an independent design may do’). Moreover, there is no defence of innocence (though a defendant who can prove innocence might be rendered exempt from certain remedies: RDA s. 9). 31 Gaskell & Chambers v. Measure Masters [1993] RPC 76, 81; Fisher & Paykel Healthcare Pty. v. Avion Engineering Pty. [1991] AIPC 90-850; Wilson v. Hollywood Toys (1996) 34 IPR 293.

32 Since designers are constrained by numerous factors, the techniques used to show copying which are used in copyright law are inappropriate in the context of design.

OWNERSHIP

AND

INFRINGEMENT

613

an article to the design for personal use is not prohibited. Secondly, the Act only covers ‘making, importing or selling’: possession of infringing articles per se is not within the exclusive rights of the design proprietor. Thirdly, and most significantly, the prohibited activities must take place in relation to the article in which the design right is registered. In this context, an ‘article’ means something which is ‘made and sold separately’.*’ As a result, where someone makes parts for incorporation into a distinct, larger article, they will not infringe any rights that exist in those parts. For example, if a design is registered by A for shower trays and B made similar shower trays as components to be incorporated into completed shower units which B intended to sell, no infringement would occur. The reason for this is that as the shower tray is not intended to be made and sold separately (it is intended to be incorporated in the shower unit) it is not an ‘article’. Moreover, there is no infringement by selling the complex product—the shower unit—since a shower unit is a different article from a shower tray (which was the article for which the design was registered by A). 3.1.2 Indirect infringement In addition to the rights in section 7(1), the owner of a registered design also has the ability to prevent indirect infringements. The rights in the registered design are indirectly infringed by anyone who makes anything which enables an infringing article to be made in the United Kingdom or elsewhere.** This covers situations where a person makes a mould, a print roller for production of textiles, or a transfer of an image which is used to make infringing articles.*° The right applies even if the articles are made outside the UK. As such, if transfers of a particular image which are made in the UK are applied to T-shirts in France and a registration exists in the UK for the image applied to T-shirts, the making of such a transfer will be an infringing act. However, as the statutory provision only relates to the making of objects which enable infringing articles to be made, this means, for example, that the sale or exportation of the transfers would not infringe. The 1949 Registered Designs Act aiso provides that rights in a design are infringed by a person who “does anything in relation to a kit that would be an infringement if done in relation to the assembled article.”** It is also an infringement to ‘make anything for enabling a kit to be made or assembled, in the United Kingdom or elsewhere, if the assembled article would infringe the rights in the design.’ For these purposes a ‘kit? means a complete or substantially complete set of components intended to be

assembled into an article.*”

33 RDA s. 44. 34 RDA s. 7(3). 35 See Aberdale Cycle v. Charles Twigg (1952) 69 RPC 137, 141 (that is, things which when used in their usual manner for.their usual purposes will resuli in the production of the article as designed). 36 RDA s. 7(4).

37 RDA s. 7(4).

614

3.2

THE

WHAT

IS THE

LEGAL

SCOPE

REGULATION

OF THE

OF DESIGNS

MONOPOLY?

The next task that arises in an infringement action is to ascertain the scope of the monopoly.*® Unlike the position with patents, where the Patents Act clearly states that the scope of the monopoly is defined by the claims, design law is much more circumspect in terms of where and indeed how the scope of the monopoly is to be determined. It is certainly an area that could benefit from clarification: hopefully an opportunity that will be taken when the Designs Directive is implemented into British law. 3.2.1 The design as registered As one would expect from a registration system, the scope of design protection is initially determined by reference to the design documents as registered: the representations, the statement of novelty, and the article to which the design is attached. While

the design as claimed in the representation and the statement of novelty play an important role in defining the scope of the monopoly, they should only ever be seen as providing an initial starting point. One reason for this is, as we will see shortly, that design features must be interpreted through the eyes of the notional customer. Depending on the type of designed article in question and the way it is interpreted, the scope of the design may change from the way it ‘literally’ appears in the design documents. We deal with this important issue shortly. (i) The representations. The starting point for determining the scope of protection lies with the representations which, as we saw earlier, should identify the design clearly enough so that the public are able to determine the extent of protection. (ii) Statement of novelty. The representations are to be read in light of the statement of novelty. The impact that the statement of novelty will have in any particular case depends whether it is cast in general terms or in more specific terms (which refer to a limited number of features of the design). Where the statement of novelty is in general terms which claim all the design features as shown in the representations, the scope of the protection will include (as least as a starting point) all the design features in the representations. Where there is no reason to suggest otherwise, for infringement to take place all of the features of the design must be taken.*? For example, for someone to infringe a registered design for a kettle, which consists of three novel features with eye appeal—the handle, the spout, and the body of the kettle—all three features of the design must be found in the defendant’s kettle.” Where the statement of novelty is drawn in more specific terms which highlight the particular elements of the design which the applicant regards as novel,*! the scope of 38 Kevi A/S v. Suspa Verein UK [1982] RPC 173, 177. 39 Tbid.; Turbo Tek v. Sperling (1990) 15 IPR 617, 636-7 (in the absence of a statement to the contrary, the design applies to the appearance as a whole); Jones & Attwood (1928) 45 RPC71, 83.

40 See e.g. Sackett v. Clozenburg (1910) 27 RPC 104 (no infringement where the defendant had copied a part of the claimant’s registered design for a sideboard and varied the other parts). 41 Portable Concrete Buildings v. Bathcrete [1962] RPC 49.

OWNERSHIP

AND

INFRINGEMENT

615

the monopoly will be restricted to those features. As Lloyd-Jacob J said, by limiting the statement of novelty to certain defined features, ‘the applicant must by implication be excluding a claim of novelty in any remaining feature or features of shape which he is not concerned to specify.” Where the statement of novelty is directed to part of the design, in order to infringe it will only be necessary for that part of the design to be taken. That is, it may only be necessary for, say, two of the three elements of the kettle to be found in the defendant’s kettle for them to infringe. This may be the case even if

the remaining parts are different.” The scope of the design monopoly is also restricted by the fact that designs are normally claimed either in relation to the ‘shape and configuration’ or to ‘pattern or ornament’. Where one facet of design protection is opted for, the scope of the monopoly will be limited to those aspects of the designed article. For example, if the registration is confined to features of ‘shape and configuration’, then the protection will not (normally) extend to protect ‘pattern or ornament’. In these circumstances the meaning of ‘pattern and ornament’ or ‘shape and configuration’ may become important. This can be seen, for example, in Cow v. Cannon*® where the representations showed a series of diagonal ribs on the front and on the back of hot-water bottles. The statement of novelty said that the novelty resided in the shape or configuration of the article as shown in the representations. The question arose as to whether the ribs were part of the shape and configuration of the article (which was what was claimed) or its pattern and ornament (which were not). Lord Evershed MR

said that the ribbing was ‘so marked a feature of the bottle as a whole to be entitled to be described as a feature of its configuration.’ Consequently, the court concluded that the ribs were part of the configuration of the hot-water bottle and, as such, that the design had been infringed.*° (iit) The article. The scope of the design monopoly is also restricted by the fact that it is confined to acts which are carried out in relation to the articles for which the design was registered. As such, a registered design can only be infringed ‘by an article which is the same as that identified in the title of the registration.” For example, if a design of a pattern is registered for a teapot, the design is not infringed by a person who applies the design to something other than a teapot (such as a saucepan): even if it is an analogous or related article.** In principle, this may give rise to difficult questions

42 Evered & Co.’s Application [1961] RPC 105, 108; Kevi A/S v. Suspa Verein UK [1982] RPC 173, 180. Cf Jones & Attwood (1928) 45 RPC 71, 83. 43 But it is difficult to reconcile such a proposition with Interlego AG v. Tyco Industries Inc. [1988] RPC 343,

which defines the design as referring to the whole article. 44 Portable Concrete Buildings v. Batchcrete [1962] RPC 49.

45 [1959] RPC 240; [1959] RPC 347.

46 See also Sommer Allibert (UK) v. Flair Plastics [1987] RPC 599.

47 Bourjis v. British Home Stores (1951) 68 RPC 280, 284. 48 Best Products v. Woolworth & Co. [1964] RPC 226.

616

THE

LEGAL

REGULATION

OF DESIGNS

as to how the article nominated in the design documents is to be interpreted,” and the extent to which the article can be defined in broad terms. There has, however, been little discussion of these issues in the case law.

3.2.2 Excluded subject matter (and ‘squeeze’ arguments) Another factor that restricts the scope of the monopoly is that the protection will not be granted to those features of the design which are excluded from the scope ot protection. The Act expressly states that the right in a registered design is not infringed by the reproduction of a feature of the design which, by virtue of section 1(1)(b), is left out when determining whether the design is registrable.”° Moreover, the scope of the monopoly will not extend to features which lack novelty or eye appeal.°’ Consequently, a defendant will often try to argue that there is no infringement because the only features which appear in the registered design and in the defendant’s alleged infringement also exist in the public domain (of previously published designs).** As a result, a registrant is often caught between two stools. As Whitford J explained in Valor Heating v. Main Gas: ‘If [the proprietors] try to stretch their design wide enough to catch the [defendant’s design], then they are going to stretch it so wide that it will be invalidated by the prior publication . . . This is the way in which the defendants quite frequently use prior art. They seek to impale the plaintiff upon the horns of a dilemma.’ The corollary of this is that the greater the advance in the registered design over the prior art, the more likely that a court will find that similarities between the proprietor’s design and the alleged infringer’s article constitute infringement. 3.2.3 Ranking of design features Even if the registration does not specify certain features as important (through the statement of novelty), the courts will often analyse the design so as to prioritize certain design features over others. If the examination of the proprietor’s registration reveals that the design has some particularly striking feature, this is likely to be treated as the essence of the design.** While the impact that this will have will depend on the nature of the article in question (and correspondingly the notional consumer who is used to determine infringement), the fact that certain design features are treated as 49 See e.g. Bourjis v. British Home Stores (1951) 68 RPC 280 (where the article was a container for a

perfume bottle in the shape of a bottle of champagne in an ice bucket, but the es comprised a bottle in packaging resembling an ice bucket).

infringement

50 Pugh v. Riley (1912) 29 RPC 196 (design does not extend to method or principle of construction).

>! Rosedale Associated Manufacturers v. Airfix Products (1956) RPC 360, 364; Gaskell & Chambers v. Measure Masters [1993] RPC 76, 79. But it is difficult to reconcile such a proposition with Interlego AG v. Tyco Industries Inc. [1988] RPC 343, which defines the design as referring to the whole article.

>? Or that if the proprietor’s monopoly covers the defendant’s design, then the monopoly relates to excluded matter: Pugh v. Riley (1912) 29 RPC 196.

53 [1973] RPC 871. 54 Dunlop Rubber v. Golf Ball Development (1931) 48 RPC 268 (striking feature of design of golf ball was

space between dots in the shape of a star); Oren & Tiny Love v. Red Box Toy Factory [1999] FSR 785, 794 (emphasizing element of design with eye appeal).

OWNERSHIP

AND

INFRINGEMENT

617

being of special importance may impact upon the way infringement is determined. In particular, in many cases it is likely to mean that a person who uses a design without

the striking feature will not infringe.’ As Farwell J explained, ‘[I]f a design has in it a striking feature which catches and holds the eye, and which is the one thing that strikes the eye when one looks at the design, a design which otherwise may be like the registered design but which eliminates the striking feature or alters it so that it is not recognizable’ does not infringe. Equally, if a registered design has a striking feature, a person who uses a design with the striking feature will infringe, even if the designs differ in detail.°° In contrast, if the examination reveals there is no single ‘striking feature’, the court

will operate on the assumption that the monopoly lies in the overall combination of features or in the details. If the monopoly relates to the overall combination, then a person will only infringe if their design gives off the same impression (even if the details vary).*’ If the monopoly relates to the detailed configuration of a design, then there is only likely to be infringement by something approaching an exact reproduction. For example, in Deans’ Rag Book Co. v. Pomerantz & Sons, the proprietor’s design was for a toy based on the cartoon character Mickey Mouse. However, because

the character was known, the monopoly was confined to the novel features of the particular embodiment. Consequently, there was no infringement by the sale of another toy of the same character, because that toy had a number of differences of detail.**

3.3

ARE

THE

DESIGNS

THE

‘SAME ¢

Once the scope of the registered design has been ascertained, it is then possible to determine whether or notit has been infringed. In order for a defendant to infringe, the defendant’s design must be the ‘same’ as, or ‘not substantially different from’ the registered design.*’ Few problems arise where the designs are either identical or very different. In most cases the critical issue is whether the defendant’s design is ‘substantially different’ from the registered design. In order for a design to infringe, it must be visually similar to the registered design. That is, it is the appearance of the design and not other aspects (such as the cost of the design or the method by which it was constructed) that are to be taken into account. As Lord Westbury said ‘the eye alone is the judge of the identity of the two things. 5° Dunlop Rubber v. Golf Ball Development (1931) 48 RPC 268, 281; Best Products v. Woolworths [1964] RPC 226 (emphasis on spout of kettle). 6 Breville Europe v. Thorn EMI Domestic Appliances [1995] FSR 77; Harper v. Wright Brother Co. (1895) 12 RPC 483. 57 Gaskell & Chambers v. Measure Masters [1993] RPC 76, 79.

58 (1930) 47 RPC 485 (‘the better known the subject of the design ... the narrower the scope of protection’). °° From 1883 until 1949 the relevant question was whether the defendant’s design was an obvious or fraudulent imitation of the registered design. Case law from that period should consequently be treated with some circumspection.

THE LEGAL REGULATION

618

OF DESIGNS

Whether, therefore, there be piracy or not is referred at once to an unerring judge,

namely, the eye.’ The scope of the design monopoly is limited to the visual appearance of the design features. As such, the design documents should not be construed (as they might be) to provide broad protection to the method or principle depicted therein. This was the approach adopted by the High Court of Australia in Firmagroup Australia Pty. v. Byrne & Davidson Doors (Vic.) Pty.'! which concerned the plaintiffs registered design for combination handle and lock units. It was held that the defendant’s manufacture of a unit which employed a similar principle of construction as was used in the claimant’s design, but with a different appearance, did not infringe. The relevant eye through which the court views the designs is the eye of the notional customer.” As Lord Reid explained in Amp v. Utilux, the reason why the eye of the customer was chosen as a standpoint of interpretation was to ‘preserve to the owner of the design the commercial value resulting from customers preferring the appearance of articles which have the design to that of those which do not have it The first task for the court is to determine who the relevant customers are™ and the conditions in which the article in question would normally be found in trade or commerce.® Particular importance will be paid to factors such as the way the designed articles are purchased, the knowledge of the consumer, and the way a designed article is normally viewed. A number of things flow from the fact that infringement is determined through the eyes of the notional customer. The first and perhaps most important is that while courts and commentators are apt to attempt to reduce infringement to a series of principles (such as that a person only infringes if they repeat the striking features in the proprietor’s design), it is dangerous to place too much emphasis on general statements of this nature. The reason for this is that the degree of similarity that is needed for a design to infringe will vary depending on the article in question and, corresponding to this, the relevant consumer. In some cases it may be necessary for the designs to be almost identical for there to be an infringement. This would be the case, for example, where consumers have a

great deal of knowledge about the design, such as with the sale of football shirts (where the patterning is all important). Where the consumer is highly knowledgeable about the designs, it is more likely that they would be more attuned to design differences. In these circumstances, it is likely that small differences in detail will mean that

60 Holdsworth v. M’Crea (1867) LR 2 HL 380, 388; Saunders v. Wiel (1892) 9 RPC 467, Cave J.

61 (1987) 9 IPR 353. See also Pugh v. Riley (1912) 29 RPC 196. 62 Gaskell & Chambers v. Measure Masters [1993] RPC 76, 81. 63

[1972] RPC

103, 108.

64 Breville Europe v. Thorn EMI Domestic Appliances [1995] FSR77, 101 (designs for sandwich toasters are viewed through the eyes of an ‘ordinary housewife’); Kevi A/S v. Suspa Verein UK [1982] RPC 173, 178-9 (design for castors for furniture viewed through eyes of furniture manufacturers and the ultimate customer).

65 Watson v. Smith Brothers (Wirewaves) [1963] RPC 147, 151.

OWNERSHIP

AND

INFRINGEMENT

619

a design will not be infringed.°° The position would be similar in situations where designed articles are ordinarily sold beside each other (making the point of contrast more exacting). In other cases, however, two designs may differ in detail but nonetheless still infringe. This may arise, for example, because the relevant consumer may not pay a great deal of attention to the way an article is designed. In these cases, the eye of the relevant consumer would be less exacting. Another factor that may influence the way infringement is decided relates to the fact that in relation to certain designs, consumers may purchase from memory or only take account of the appearance of the design from a distance. In these circumstances, the court ‘must consider infringement

not merely upon the basis of a side-by-side comparison, but also upon the basis of having a look at the registered design, then having gone away and come back and perhaps been put in a position of deciding whether some other article is the one you originally saw.’°’ That is, it is important that the court not only compares the designs when they are side by side, but that it also takes account of the ‘imperfect recollection’ of real-life customers. In these circumstances, precise geometrical measurements would generally be inappropriate. In situations where consumers are not particularly interested in the design features of an article, or where the articles are viewed from a distance, a defendant’s

design may infringe even if the detailed contents of the design are quite different. This can be seen, for example, in Wallpaper Manufacturers v. Derby Paper Staining Company” where the registered design for a wallpaper consisted of three stripes, the middle of which was ornamented with a pattern of leaves, a floral basket, and body of blossom and leaves. The proprietor sought an injunction to restrain the defendant from selling a ‘design which, if looked at closely, was different: the shape of the basket differed, the flowers differed, and dots were replaced by little sprigs.’ Despite these differences in detail, Romer J held that there was an infringement: the general

arrangement and measurements were substantially the same and the stripes were of the same width. When looked at at different times and at a distance, Romer J said it

would be impossible to distinguish the one from the other (see Figures 28.1 and 28.2).

Ultimately, the question is one of fact for the court. The key evidence will be the registered design and the alleged infringement. In some cases the courts have found it can make the necessary comparison more readily if it is presented with samples or photographs of articles which embody the proprietor’s design as well as the

66 Although colour is not normally considered a design feature, in cases where consumers are interested in detail, colour might be a crucial factor. 67 Valor Heating Company v. Main Gas Appliances [1973] RPC 871, 878; Gaskell & Chambers v. Measure Masters [1993] RPC 76, 79; Grafton v. Watson (1884) 50 LT (NS) 420, 424. 68 Watson v. Smith Brothers [1963] RPC 147, 151-2; Dart Industries v. Décor Corp. (1989) 15 IPR 403.

69 Dunlop Rubber v. Golf Ball Development (1931) 48 RPC 268, 281.

70 (1925) 42 RPC 443.

THE

é

OF DESIGNS

BREE

Fig. 28. 1

REGULATION

HREMOP

EO

ig

LEGAL

+

620

Pla intiff's Desi ign

Gs cnawehs ghee See

gn gh ameren en RMR yee

Fig. 28.2 Defendant’s Design

OWNERSHIP

AND

INFRINGEMENT

621

defendant's allegedly infringing articles.’”! While this produces a potential comparison of like with like, it has been described as being ‘arguably pernicious’ and inappropriate.’* In addition to carrying out a visual comparison, in some cases the court may take advantage of expert evidence. This may be helpful in interpreting the registration, ascertaining the differences between the design and the prior art, and may also be relevant in determining what customers find attractive.’ However, the courts have

recognized that expert evidence should be treated with caution, because familiarity with designs may mean that experts have a tendency to overemphasize minor differences to which consumers would be oblivious.”4 While evidence of instances of actual confusion by customers of one design with another will support a finding of similarity, expert evidence that customers will confuse designs is irrelevant as it is likely to usurp the judgment of the court: it is the eye of the court and not the expert that must be the ultimate arbiter.”°

4 REFORM The Directive requires member states to confer an array of rights on the proprietor similar to those under the existing law.”° More specifically, the Article states that registration shall confer, ‘the exclusive right to use it and to prevent any third party not having his consent from using it.’ The notion of use covers ‘in particular’, the ‘making, offering, putting on the market, importing, exporting or using of a product in which the design is incorporated or to which it is applied, or stocking such a product for those purposes.’ The scope of protection conferred by a design right shall include any design which does not produce a different overall impression on the informed user.”” In assessing the scope of protection, account must be taken of ‘the degree of freedom of the designer in developing his design’.’”* While these provisions are similar to existing British law, the Directive may require a change of emphasis. If this has any effect, it is likely to strengthen a designer’s protection. 71 Benchairs v. Chair Centre [1974] RPC 429; Dunlop Rubber v. Golf Ball Development (1931) 48 RPC 268, 277 (court entitled to look at the exhibited article as long as the embodiment ‘fairly and properly represents the article manufactured in accordance with the registered design’); Kevi A/S v. Suspa Verein UK [1982] RPC 173, 179 (reference to the embodiment particularly advantageous); Breville Europe v. Thorn EMI Domestic Appliances [1995] FSR 77. 72 Fellner, para. 5.161; Gaskell & Chambers v. Measure Masters [1993] RPC 76, 78-9. 73 Dunlop Rubber v. Golf Ball Development (1931) 48 RPC 268, 278. 74 Wallpaper Manufacturers v. Derby Paper Staining Company (1925) 42 RPC 443. 75 Benchairs v. Chair Centre [1974] RPC 429. 76 Des. Dir., Art. 12. 77 Des. Dir., Art. 9.

78 Proposed ,Art. 5(1) originally specified that more regard is to be taken of common features than differences, and that the more distinctive the design the stronger the differences must be to avoid a finding of infringement.

622

THE

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REGULATION

OF DESIGNS

Member states must also recognize certain limitations on the rights of the registered proprietor.” The rights of a proprietor should not extend to acts done privately and for non-commercial purposes,*° to acts done for experimental purposes,*' or to ‘acts of reproduction for the purposes of making citations or of teaching, provided that such acts are compatible with fair trade practice and do not unduly prejudice the normal exploitation of the design, and that mention is made of the source.’

Unsurprisingly, given that the aim of harmonization is to avoid barriers in the internal market, the Directive enunciates a principle of ‘exhaustion’ of rights. To this end, Article 15 states that the rights conferred ‘shall not extend to acts relating to a product in which a design included within the scope of protection of the design right is incorporated or to which it is applied, when the product has been put on the market in the Community by the holder of the design right or with his consent.’ 79 Des. Dir., Art. 13. 80 Des. Dir., Art. 13(1)(a). 81 Des, Dir., Art. 13(1)(b). The experimentation defence parallels that in patent law which recognizes that technological progress is inhibited by monopolies which extend to research uses. Such a provision has not previously been necessary since functional designs (in a broad sense) were unprotected, and its inclusion is a corollary of the liberal approach taken by the Commission to design protection for functional articles.

te COPYRIGHT PROTECTION FOR DESIGNS 1 INTRODUCTION Although copyright law can provide strong protection for designs, the purpose of the 1988 Act is to limit the operation of copyright for much of the design field. In this chapter, we initially set out the ways in which copyright might be available for designs, before examining the way in which this protection is limited through the defences contained in sections 51-3.

2 SUBSISTENCE

OF COPYRIGHT

IN DESIGNS

Copyright can provide protection for designs by two routes: either directly, by protecting the form and decoration of articles as an artistic work (in particular as a sculpture, engraving, or work of artistic craftsmanship); or indirectly, through the protection copyright confers on the author of a preliminary document on which a design is based. In the latter situation the design document will normally be protected as a graphic work but may, exceptionally, be protected as a literary work. 2.1

PROTECTION

OF THE

DESIGN

ARTICLE

AS AN

ARTISTIC

WORK

In order for an article embodying a design to qualify for copyright protection as an artistic work it must fall within the terms of section 4 of the 1988 Act.' The most obvious ways in which designs might be protected are as engravings, sculptures, and works of artistic craftsmanship. In each case, only some designs will fall within the category and hence get copyright protection, and exactly which designs will do so is very difficult to predict with any precision. 2.1.1 As an engraving

In some cases it will be possible to argue that features of surface decoration (even functional ones) amount to engravings. Indeed, as we saw in Chapter 3, in Wham-O v. 1 CDPA s. 4.

624

THE

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REGULATION

OF DESIGNS

Lincoln Industries,” the New Zealand Court of Appeal held that both the mould from which a frisbee was pressed and the frisbee itself were engravings. However, we cannot assume from this decision that all surface designs for metal work will be protected by copyright as engraving. For example, the Australian Federal Court declined to hold the drive mechanism of a lawnmower to be an engraving.’ This was on the basis that no consideration of policy or other approach ‘could justify straining the English language so far as to call the moulds engravings.’ 2.1.2 As a sculpture Many designs for the shape of three-dimensional artefacts will be susceptible to protection by copyright as ‘sculptures’. In Breville Europe v. Thorn EMI Domestic Appliances‘ Falconer J held that scalloped-shaped moulds for toasted sandwich makers

were sculptures; and in Wham-O, the Court of Appeal of New Zealand held that a wooden model prototype for a plastic frisbee was a sculpture. However, not all designed artefacts will be sculptures. For example, the plastic frisbees which were created by injecting plastic into a mould were said not to be sculptures. Moreover, Laddie J has recently signalled that the term ‘sculpture’ will not be construed broadly so as to encompass designs for products where the main consideratons are achieving a functional effect: in Metix UK v. G. H. Maughan’ Laddie J said that to constitute a sculpture, the maker must be concerned with shape and appearance rather than just _with achieving a precise functional effect. 2.1.3 As a work of ‘artistic craftsmanship’ Designs may also be protected by copyright if they are taken to be ‘works of artistic craftsmanship’.° Although in Hensher v. Restawhile,’ the House of Lords rejected a claim that the prototype of an upholstered chair was a work of artistic craftsmanship, a significant body of designed artefacts may nevertheless fall within the category. In this respect, it should be observed that the decision admits that a work can be a work of artistic craftsmanship even though it is a utilitarian article. More significantly, despite Hensher, there is room to argue that a work may also qualify as a work of artistic craftsmanship even though it is intended to be mass-produced. Although Lord Reid and Viscount Dilhorne suggested that craftsmanship implied ‘hand-made’,® Lord Simon concluded that ‘craftsmanship’ in the statutory phrase cannot be limited to handicraft; nor is the word ‘artistic’ incompatible with machine production.’ 2 [1985] RPC 127. 3 Greenfield Products v. Rover-Scott Bonnar (1990) 17 IPR 417 (FCA, Pincus J) (the term engraving has to

do with marking, cutting, or working the surface, usually the flat surface, of an object). 4 (1985) [1995] FSR 77, 94. 5 [1997] FSR 718, 722 (Laddie J).

© CDPA s. 4(1)(c). 7 George Hensher v. Restawhile Upholstery [1976] AC 64. 8 [1976] AC 64, 77 (Lord Reid); 84 (Viscount Dilhorne). 9 [1976] AC 64, 90. Coogi Australia v. Hysport International (1998) 41 IPR 593 (FCA).

COPYRIGHT

2.2

INDIRECT

PROTECTION

FOR

DESIGNS

625

PROTECTION

Although some designs will get copyright protection as artistic works, many more will be able to benefit from copyright protection indirectly, that is, through the copyright in the documents which were prepared in the process of devising the finished design. These may be drawings or literary works. 2.2.1 Design drawings Copyright protection for designs may also arise through the creation of preliminary drawings for the design. That is, through the creation of two-dimensional graphic works on which the final article is based. As these works are protected irrespective of artistic quality, this is the commonest way in which copyright is used to protect designs for articles. As copyright protection extends to three-dimensional reproductions of two-dimensional works, and also includes indirect as well as direct reproductions, a person who replicates a three-dimensional design will infringe the rights in the two-dimensional drawing. For example, if copyright exists in a drawing for an exhaust pipe or a Lego brick, reproduction of the manufactured exhaust pipe or Lego brick would (subject to what will be said later), infringe.'® 2.2.2 Protection of designs as literary works Copyright protection may also protect certain design documents as ‘literary works’. This is the case, for example, in relation to a knitting pattern which describes a series of stitches needed to be employed to create a pullover of a particular pattern. The protection offered by copyright in this context is very limited. While the copyright owner is able to control reproduction of the pattern, the owner is probably not given the ability to prevent the production of pullovers to the pattern. The reason for this is that, as the pattern and the pullover are not objectively (or visually) similar (as is required to establish infringement of copyright), these are not reproductions.'! While the courts have sometimes suggested that infringement of copyright in literary works ought to be expanded,” as yet there have been no circumstances in which a court has held that a written description of a design has been reproduced by the making of articles embodying the design.

3 LIMITATIONS

ON THE

USE

OF COPYRIGHT

Although copyright protection for designs had been limited judicially (through the requirement of originality,'’ the idea-expression dichotomy, and occasionally 10 See, classically, British Leyland v. Armstrong [1986] RPC 279. 1 Brigid Foley v. Ellott [1982] RPC 433 (Sir Robert Megarry VC) (referring to the guide as comprising ‘words and numerals’). But cf. Autospin (Oil Seals) v. Beehive Spinning [1995] RPC 683.

12 See above at pp. 181-4. 13 Interlego v. Tyco [1988] RPC 343.

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THE LEGAL REGULATION

OF DESIGNS

through the application of public policy considerations),'* for the last twenty years there has been a widely held view that copyright protection is inappropriate in much of the design field.!> This view is commonly based upon an image of copyright law as being concerned with higher works of art (a difficult conclusion to support on reflection). Operating from the assumption that copyright law is intended to protect works of art and literature, the case law that extended copyright protection to design drawings for industrial objects (such as exhaust pipes), was subjected to a considerable amount of criticism. For example, in Franklin Machinery v. Albany Farm Centre Thomas J in the High Court of New Zealand remarked that: The law relating to copyright has got quite out of hand ... It is probable that a law historically developed to protect artistic works was never suitable for application in the field of industrial design in the first place ... Copyright has now invaded the field of technical drawing in a manner which has been dramatic. The most banal of industrial or technical drawings, which involve little more originality than that which accompanies many routine domestic tasks, has come to attract an aggressive claim to copyright protection. Frequently, the monopoly protection which the statute confers is out of all proportion to the degree of originality involved in producing the copyright work. All this is unnecessary."

Similar sentiments informed the radical amendments introduced by the 1988 Act. In short, it was decided that further restrictions should be made of the use that can be

made of copyright protection of designs. To this end, sections 51-3 of the 1988 Act introduce a series of defences which minimize the role of copyright, particularly as regards the protection of three-dimensional designs (which are now, usually, protected by the tailor-made unregistered design right).’”

3.1

SECTION

51

Section 51 of the 1988 Act states that copyright is not infringed by making an article from a design document or a model which records or embodies a design where the design is for ‘anything other than an artistic work or a typeface’. The upshot of this is that copyright in a blueprint for a three-dimensional industrial design (such as an exhaust pipe) will not be infringed where a person makes articles (here exhaust pipes) that reproduce the drawing. The section provides immunity from copyright liability because the blueprint is a ‘design document’, and the exhaust pipes are “articles made to the design’ or copies thereof. Section 51 is not, however, intended to remove all protection from such design drawings. Rather, by limiting the role of copyright in relation to three-dimensional 14 British Leyland v. Armstrong [1986] RPC 279; Canon Kabushiki Kaisha v. Green Cartridge Company [1997] FSR 817.

15 Tn particular it was thought that copyright protection is too long, and too strong (in that it protects against reproduction of even small parts of works, if the part is ‘substantial’).

16 (1991) 23 IPR 649. 17 Mackie Designs v. Behringer Specialised Studio Equipment (UK) [1999] RPC 717, 723 (intention of the legislature that copyright protection be removed from ‘ordinary functional commercial articles’).

COPYRIGHT

PROTECTION

FOR

DESIGNS

627

designs (as we will see in Chapter 30), section 51 opens up a corresponding space for the operation of unregistered design right. This is because according to section 226 if the making of an article to a design drawing is an infringement of copyright, then it is not an infringement of unregistered design right.'* However, if there is a defence to infringement of copyright in the design document, there may be an infringement of unregistered design right. Judicial interpretation of section 51 will consequently be critical in defining the relative roles of copyright and unregistered design right in the protection of designs: if the defence is construed broadly, then unregistered design right has a greater role; if the defence is construed narrowly, then the role of copyright

dominates.” There are three critical elements to the operation of section 51. First, there must be a ‘design document’. Second, the design document must be ‘for something other than an artistic work’. Third, the defence only applies where the defendant has made an article to the design or copied an article made to the design. We consider each in turn. 3.1.1 Design documents Section 51 only applies where there is either a “design document’ or a ‘model recording or embodying a design’. A “design document’ means “a record of a design, whether in the form of a drawing, a written description,

a photograph, data stored in a

computer or otherwise.”° It covers design documents which are both literary and graphic works. It should be noted that in this context ‘design’ has a particular and restricted

meaning. Design means ‘any aspect of the shape or configuration (whether internal or external) of the whole or part of an article, other than surface decoration.’ Thus, the

exception does not affect copyright in any decorative feature that will be applied in two dimensions to industrial articles.*! It does, however, affect three-dimensional

applications embodying the shape or configuration of an article. The term “configuration’ has also been held to encompass the arrangement of features (resistors, diodes,

etc.) on a circuit diagram.” As we see, this definition corresponds to the definition of ‘design’ used for the purposes of unregistered design right. It is unclear how important the intention of the designer is in determining whether the contents of a document constitute a ‘design’. While still unsettled, it seems that something is only a ‘design’ if it is intended by its creator, at the outset, to be a ‘design’.”° Section 51 also applies to ‘models’, that is three-dimensional prototypes: so, for 18 Mark Wilkinson Furniture v. Woodcraft Designs (Radcliffe) [1998] FSR 63, 65 (copyright and unregistered design right described as mutually exclusive). 19 Mackie Designs v. Behringer Specialised Studio Equipment (UK) [1999] RPC 717, 723 (approving broad construction of‘design’ so as to ensure protected by design right not copyright).

COPA TS. 51 (3). 21 On the meaning of surface decoration, see Mark Wilkinson Furniture v. Woodcraft Designs (Radcliffe) [1998] FSR 63,discussed in the context of unregistered design right below at p. 634. 22 Mackie Designs v. Behringer Specialised Studio Equipment (UK) [1999] RPC 717, 722-3. 23 BBC Worldwide v. Pally Screen Printing [1998] FSR 665, 672 (design must have been for something other

than an artistic work from the outset).

628

THE LEGAL REGULATION

OF DESIGNS

example, the wooden prototype for a frisbee could not be relied upon to claim copyright infringement in the reproduction of mass-produced frisbees. 3.1.2 ‘For something other than an artistic work Section 51 only applies where the design or model ‘is for something other than an artistic work or a typeface’. Consequently, there is no defence where the design document or model embodies a design ‘for an artistic work’. This means, for example, that

a sketch of the sitter for a portrait-sculpture or a plan for a building will not be caught by the defence, since they are designs for artistic works.” The section once again raises the question of what is an artistic work. Section 4(1) states that artistic work means a graphic work, photograph, sculpture, work of architecture, or work of artistic craftsmanship. This means that a design drawing for a chair will be a design for an artistic work, if the chair is treated as a work of artistic craftsmanship. Moreover, given that the 1988 Act protects ‘sculptures’ and ‘engravings’ as artistic works irrespective of any artistic quality, it is uncertain which industrial objects would fall within these concepts. 3.1.3 Making articles to the design (or, copying articles) The section 51 defence only applies where a person makes an article that corresponds to the ‘design’ or where a person makes ‘a copy’ of “an article made to the design’. The upshot of this is that the section appears to allow a person to make articles (such as exhaust pipes) to the design; or to copy articles (such as an exhaust pipe) which have been made to the design. The defence does not apply, however, where a person merely photocopies a design document: this remains an infringement of copyright. It has been suggested that the section 51 defence also provides a defence to a person who makes a two-dimensional copy of a (three-dimensional) article that has been made to a design document. In BBC Worldwide v. Pally Screen Printing*? the BBC brought an action for infringement of copyright in the children’s television characters, the Teletubbies. These characters were played by actors wearing costumes, and the defendants sold T-shirts bearing pictures of children’s television characters. The claimant sought summary judgment, asserting infringement of copyright in the drawings upon which the characters’ costumes were based. The defendants sought to resist summary judgment on the basis that there was an arguable defence under section 51. While the defendants admitted that they had derived the characters from the television broadcast (and thus, indirectly, from the documents) they alleged that the T-shirts were copies (albeit in two dimensions) of the costumes which, in turn, were

articles made to design drawings. Laddie J said that while he did not find the defendants’ case ‘terribly attractive’, it was arguable. Summary judgment was consequently

refused.”© 24 BBC Worldwide v. Pally Screen Printing [1998] FSR 665, 672 (emphasizing that if the drawings of the Teletubbies had been prototypes for a cartoon series the s. 51 defence could not have applied).

25 [1998] FSR 665, 672. 26 Affirmed in Mackie Designs v. Behringer Specialised Studio Equipment (UK) [1999] RPC 717, 723-4.

COPYRIGHT

3.2

SECTION

INDUSTRIAL

52: ARTISTIC

PROTECTION

WORKS

USED

FOR

DESIGNS

629

IN

PRODUCTION

Section 52 is intended to limit the term of copyright to twenty-five years as regards artistic works which are used as the basis for designs which are put into mass production. By so doing, section 52 is intended to prevent copyright from providing a longer term of protection for industrially exploited designs than would be gained via registration. As such, its purpose is to regulate the boundary between the copyright system and the registered designs regime. 3.2.1 When the defence applies The defence only arises where the artistic work has been exploited (by or with the licence of the copyright owner) by making ‘by an industrial process’ and marketing articles that are copies of the work. An article is made by an industrial process if more than fifty articles are made (whether or not by hand), all of which are copies.’’ If less than fifty articles are made, the defence may still apply if the system of production is deemed to have the characteristics of an industrial process.78 Certain articles do not fall within the scope of the section.”” These excluded articles, which are of an ‘essentially literary and artistic character’, are: (1) works of sculpture, other than casts or models used or intended to be used as

models or patterns to be multiplied by any industrial process; (2) wall plaques, medals, and medallions; (3) printed matter primarily of a literary or artistic character, including book jackets, calendars, certificates, coupons, dress-making patterns, greeting cards, labels, leaflets, maps, plans, playing cards, postcards, stamps, trade advertisements, trade forms and cards, transfers, and similar articles.

Thus even if these items are duplicated more than fifty times, they fall outside the defence (and hence retain the full seventy-year post-mortem copyright term). Consequently, an artistic work (such as a Barbara Kruger picture) which is used as a design for a book jacket remains protected for the full term. Sculptures, rather circuitously, retain full protection only as long as they are not ‘used or intended to be used’ in mass production. 3.2.2 The scope of the defence Section 52 operates to reduce the duration of copyright to twenty-five years from the

first legitimate marketing of articles that are copies of the copyright work. It does this

27 CDPA s. 52(4)(a); Copyright (Industrial Process and Excluded Articles) (No. 2) Order 1989 (SI 1989/ 1070). This is the same as RDR r. 35.

28 See the discussion in the context of registered designs. 29 CDPA s. 52(4)(b); Copyright (Industrial Process and Excluded Articles) (No. 2) Order 1989 (SI 1989/

1070). This corresponds to RDR r. 26.

630

THE

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REGULATION

OF DESIGNS

by providing a defence to an action for copyright infringement.*® The defence is similar in its operation to section 51. However, because the defence is in addition to

section 51, it will apply most importantly where section 51 would not. That is, it applies to designs for two-dimensional aspects of an article, where a work was not initially intended to be a design, or where the work was initially a design for an artistic work which was subsequently exploited. The defence in section 52 permits a person, in the specified circumstances, to make

articles of any description which correspond to the artistic work. This means that if the artistic work has been applied to teapots, after twenty-five years from the first marketing of the teapots, it will no longer be an infringement of copyright to apply the same work to pillow cases. However, the defence leaves the copyright intact where the design is applied to things other than articles: so after twenty-five years of marketing the teapot, it is still an infringement to photograph the artistic work (in its unapplied state). Anything may, however, be done in relation to an article to which the

artistic work has been applied without infringing copyright in the work.

3.3 SECTION 53 (ACTS DONE ON THE BASIS OF RIGHTS IN THE REGISTERED DESIGN) Section 53 deals with the situation where the ownership of copyright and the proprietorship of a registered design are vested in different persons. This may occur through voluntary transactions or as a result of the fact that the principles by which ownership of copyright are determined differ from those relating to registered designs. Section 53 effectively provides a defence to a person who relies on permission from the registered design proprietor, but has failed to gain the authorization of the copyright owner. More specifically, section 53 states that copyright in an artistic work is not infringed by anything done ‘pursuant to an assignment or licence’ made by the proprietor of the registered design. The idea behind the section is to protect a person who makes a transaction with the registered proprietor by giving that person immunity from copyright infringement. The defence is, however, qualified. It only applies where the person claiming the immunity has acted in good faith in reliance upon the registration and without notice of proceedings for cancellation or rectification of the design (if they exist). In normal circumstances the registered design displaces the copyright as far as third parties need be concerned. As soon as the legitimacy of the registration becomes questionable, however, the copyright regains its force. The acts of the registered proprietor do not fall within the scope of the defence.

30 CDPA s. 52(2). The author’s moral rights of integrity is left intact, while CDPA s. 79(4)(f) denies the author the right of paternity.

COPYRIGHT

PROTECTION

FOR

DESIGNS

631

4 REFORM According to Article 17 of the Designs Directive, a design protected by a design right registered in respect of a member state ‘shall also be eligible for protection under the law of copyright of that state as from the date on which the design was created or fixed in any form.’ This appears to indicate a preference for the cumulation of copyright and registered protection and, as such, does not appear to require any substantial amendment of UK law.*! Nothing is said in the Directive about the extent of, and conditions under which, copyright protection is to be conferred on designs. As mentioned earlier,* different member states take different approaches to the copyright protection of designs. In the context of other copyright Directives, copyright in ‘applied art’ has been treated as a special category—albeit, if only to exempt that area from harmonization. At some stage, however, it will be necessary for the Commission to grapple with this question (which has, as much as many others, the potential to impede the free movement of goods within the EEA). 31 One curious consequence might be that where a design is registered which also is or embodies an artistic work, protection must be provided even if the artistic work lacks an appropriate ‘connection’ with the UK. This curiosity arises because anyone may register a design in the UK, but only those with specified connections may acquire copyright.

32 See above at pp. 567-9.

30 UNREGISTERED RIGHT

DESIGN

1 INTRODUCTION The unregistered design system, which was established under Part III of the 1988 Copyright Designs and Patents Act,' has been described as a ‘conceptual cocktail of copyright and registered designs’. The right protects designs of shapes whether or not they are functional or attractive. The protection, which arises automatically on creation of the design, is confined to copying. Where recognized, the protection lasts for ten to fifteen years. The purpose of unregistered design right is to provide limited protection against unfair misappropriation of the time, skill, and effort expended by the author of the design in the creation of his work.’ The intended effect of this is to ‘reward and encourage design effort’.* As we noted in the previous chapter, the protection given to the proprietor of unregistered design is intended to dovetail with that conferred by the copyright systems in respect of design drawings for three-dimensional designs.

2 SUBSISTENCE

OF THE

DESIGN

UNREGISTERED

RIGHT

As with copyright, unregistered design right arises automatically on creation of a design. In order to establish the existence of an unregistered design right it is necessary to show (i) that there is a design; (11) which falls outside the exclusions from

design right; (iii) which is ‘original’; and (iv) which qualifies for protection in the UK. We will deal with each in turn. ! The right was modelled on principles enunciated in the European Council Directive of Dec. 1986 on the Legal Protection of Semiconductor Chips upon which the 1987 Semiconductor Products (Protection of

Topography) Regulations were based. See A. Christie, Integrated Circuits and Their Contents: International Protection (1995), ch. 4. 2 Farmers Build v. Carier Bulk Materials Handling [1999] RPC 461, 480.

3 Tid. 4 Electronic Techniques (Anglia) v. Critchley Components [1997] FSR 401, 418.

UNREGISTERED DESIGN RIGHT

633

2.1 “A DESIGN’ In order for a design to be protected by unregistered design right, it is necessary to show that there is a ‘design’. In this context, ‘design’ means ‘the design of any aspect of the shape or configuration (whether internal or external) of the whole or part of any article.’ While the subject matter of unregistered design right is more limited than that of registered design, in that unregistered design rights do not protect pattern or ornament,’ in many other respects the subject matter of unregistered design right is remarkably unrestricted. In particular, it should be noted that unregistered design right will protect designs which lack ‘eye appeal’, and designs which are functional.° Indeed, one of the few successful actions for infringement of unregistered design right concerned the internal features of a farming machine used to separate the solid and liquid parts of slurry.’ There is no requirement that the design features be visible to the naked eye: in Ocular Sciences, it was held that detailed dimensions as to the shape of contact lenses could be a ‘design’ despite the fact that to any normal observer many of the lenses would appear to be identical and could only be distinguished with the aid of sophisticated measuring equipment. Unregistered design rights protect designs for ‘articles’. The term is not defined further. Given that there is no need to show that the design was applied by an industrial process (as is the case with registered designs), it is possible that the shape and configuration of buildings may be protected by unregistered design rights. Unregistered design rights not only apply to designs for whole articles, they also apply to designs for parts of articles. In the case of the design of a teapot, an unregistered design right could reside in the shape of the whole pot, or in a part such as the spout, the handle, or the lid.®

2.2

EXCLUSIONS

In order for a design to be protected by unregistered design right, it is necessary to ensure that it does not fall within the list of excluded features contained in section 213. This provides that the unregistered design right does not subsist in ‘surface decoration’, ‘methods or principles of construction’, or features which ‘must fit’ or ‘must match’. An initial problem with the drafting of section 213 should be observed. This arises from the fact that while the nature of unregistered design rights and the way in which these rights are infringed are defined in relation to ‘designs’, the exclusions relate to ‘design rights’. A literal construction of section 213 would > So would not protect stitching on mobile phone cases: Parker v. Tidball [1997] FSR 680, 696. 6 Mackie Designs v. Behringer Specialised Studio Equipment (UK) [1999] RPC 717, 722-3 (holding that ‘configuration’ should be broadly construed to cover circuit diagrams). See also Baby Dan SA vy. Brevi [1999] FSR 377, 383 (‘configuration’ implies some form ofarrangement ofelements, e.g. the ribbing arrangement of a hot-water bottle).

7 Farmers Build v. Carier Bulk Materials Handling [1999] RPC 461. 8 Ocular Sciences v. Aspect Vision Care [1997] RPC 289, 422.

634

THE

LEGAL

REGULATION

OF DESIGNS

produce the nonsensical result that it would be possible for an infringement to take place in relation to subject matter excluded from the scope of protection.’ This problem has been avoided in relation to the exclusion of ‘surface decoration’. This was done by incorporating the exclusion of ‘surface decoration’ into the meaning of ‘design’.!° It is hoped that similar strategies can be applied to the other exclusions." As we have already looked at the exclusion of methods of construction in the context of registered designs, we will restrict ourselves here to the ‘surface decoration’, ‘must fit’, and ‘must match’ exclusions. 2.2.1 Surface decoration Section 213(3)(c) provides that the unregistered design rights does not subsist in

features of ‘surface decoration’. ‘Surface decoration’ is not confined to twodimensional features. As such, it includes both “decoration lying on the surface of the article (for example, a painted finish) and decorative features of the surface itself (for

example, beading or engraving).’ Consequently, in Mark Wilkinson Furniture v. Woodcraft

Designs

(Radcliffe),

Jonathan

Parker

J held that the painted

finish,

V-grooves, and cockbeading on the kitchen furniture the claimant had created was surface decoration and thus not protectable.'* Other features, such as cornices, quadrants, and the handle were not, and as such were protected by unregistered design right (see Figure 30.1). 2.2.2 Must fit Section 213(3)(b)(i) of the 1988 Act provides that the ‘design right does not subsist in

... features of shape or configuration of an article which . . . enable the article to be connected to, or placed in, around or against, another article so that either article may perform its function.’ This is known as the ‘must fit’ exclusion. This exclusion (along with the ‘must match’ exclusion) is intended to minimize the significance of the unregistered design right in the protection of spare parts (particularly for automobiles).

There are a number of notable aspects of the exclusion. (i) The article. The first is that the exclusion specifies that designs are excluded to the extent that they enable an article to be connected (etc.) to another ‘article’. In this context, article has been interpreted very broadly as being synonymous with the word ‘thing’.!? Following from this, it has been held that article not only includes machines and objects, it also includes the human body. Thus, it has been held that the 9 Mark Wilkinson Furniture v. Woodcraft Designs (Radcliffe) [1998] FSR 63.

10 Tbid., 72 (relying on the definition of design in CDPA s. 51(3)). 11 The reasoning employed in Mark Wilkinson Furniture v. Woodcraft Designs (Radcliffe) [1998] FSR 63 would not resolve the problem for must fit or must match features. 12 [1998] FSR 63, 73. See also Jo Y Jo v. Matalan Retail [2000] ECDR 178 (embroidery on ladies’ garments was surface decoration but other aspects of knitted cardigans, such as the choice of knit or fabric and edging were not).

13 Ocular Sciences v. Aspect Vision Care [1997] RPC 289, 425.

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|

i :

Fig. 30.1 The Plaintiffs kitchen. (© Mark Wilkinson)

aspects of the shape of contact lenses which enable the lenses to fit the eyes of their users, or the aspects of the shape of a mobile telephone that enable it to fit with the hand of a person holding it, fall outside the scope of the unregistered design right."

14 Thid., 425-8; Parker v. Tidball [1997] FSR 680, 697. For criticism, see L. Bently and A. Coulthard, ‘From

the Commonplace to the Interface: Five Cases on Unregistered Design Right’ [1997] EIPR 401.

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(11) Integrated parts. Where two articles are joined together to make a single article, the ‘must fit’ exception not only applies to the parts as separate articles, it has been held that the exclusion applies to the interfaces that become elements of the integrated whole.'* However, this view has the potential to produce odd results (apparently, for example, that there would be no unregistered design right in the wing of an aeroplane). Consequently, in Baby Dan v. Brevi, Judge David Young QC preferred the view that when units are assembled unregistered design right may subsist in the whole; whereas when design right is asserted in the parts, protection is confined to parts of the design other than the must fit features. (iii) No need for designer to have intention to fit. The must fit exclusion operates where the shape of an article enables it to be attached or connected to another article. In assessing whether an article must fit another article, the designer’s intention is irrelevant. The reason for this is, according to Laddie J, ‘the subsection does not require that

the designer should know that the features enable the interface, it is sufficient if they do so in fact.’!” (iv) Closeness offit. Features are only excluded as must fit features if they ‘enable’ one article to fit with another article.'* Perhaps the most important question is how closely shapes need to correspond to each other for the feature of one article to be said to enable it to be connected to another. In Amoena v. Trulife!? Judge Sumption QC suggested that the provision was to be read very narrowly. In particular he said that the must fit exclusion was ‘concerned with a ... precise correspondence between two articles, as with a rigid plug and socket, where the functional requirement that one article should fit in or against another displaces original design work.’ Consequently, the design of breast prostheses was not excluded under the ‘must fit’ exception, because while the prostheses were shaped so that they fitted into bras, the shape of the bra would only influence rather than determine the details of the design: the prostheses were highly flexible and compliant so that they would fit a number of different bras. However, subsequent decisions have taken a different approach, suggesting instead that features may fall within the must fit exclusion even though other shapes might do equally well. For example, in Ocular Sciences, Laddie J said?° There is ... nothing in the provision which requires the feature to be the only one which would achieve the proper interface. If a number of designs are possible each of which

15. Electronic Techniques (Anglia) v. Critchley Components [1997] FSR 401, 417-19. 16 [1999] FSR 377, 382. '7 Ocular Sciences v. Aspect Vision Care [1997] RPC 289, 424-8 (features of the claimants’ lenses were

excluded even though they were chosen without the fit requirement in mind). '8 The term can be contrasted with two related notions which we have already encountered—the notion in the must match exclusion that the appearance of one article be ‘dependent’ on that of another, and the exclusion in the registered design arena of features ‘dictated’ by function. See above at pp. 587-92. '9 Unreported, 25 May 1995, Jonathan Sumption QC, Deputy Judge of Ch. Div., SRIS C/72/95. 20 Ocular Sciences v. Aspect Vision Care [1997] RPC 289, 424-8.

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enables the two articles to be fitted together in a way which allowed one or other or both to perform its function, each falls within the statutory exclusion.

Consequently, Laddie J held that the diameter of the claimant’s soft contact lenses was not protected because evidence showed it enabled the lenses to fit onto the eyeball. This approach was approved in Parker v. Tidball by Judge Englehart QC,”! where he held that features of mobile phone casings which permitted use of the phone while inside the case, were excluded on the basis that they were must fit features. This was despite the fact that the function that the shape performed could have been fulfilled by a number of other designs. 2.2.3 Must match Section 213(3)(b)(ii) of the 1988 Act excludes from unregistered design right features

of shape or configuration of an article which are dependent upon the appearance of another article of which the article is intended by the designer to form an integral part. We reviewed the legislative intent behind this provision in the context of registered designs.** Here we need to examine a number of aspects of the exclusion. (i) Appearance. objects. This is interconnection classic example,

The must match exclusion is only concerned with the appearance of to be contrasted with the must fit provision, which concerns the of parts so that either can perform their function. If we consider a such as a car door, there will probably be both must fit and must

match features: the must fit features will enable the door to fit into the chassis, and the

handle to fit onto the door; the must match features will relate to the general shape of the door, in particular any styling features, which must match the rest of the car in order to be of an acceptable appearance. (ii) ‘Dependent’ upon the appearance of another article. The must match exclusion only operates where designs are ‘dependent’ upon the appearance of another article. As we saw earlier, the fact that designs are aesthetically linked to (or dependent upon) the appearance of the article as a whole lies at the heart of the rationale for the must match exclusion. A part will be dependent and thus unprotected if it is not possible for it to be replaced with a different part without radically altering the appearance or the identity of the vehicle as a whole. A Mercedes-Benz with a Volkswagen roof, is no longer a Mercedes-Benz but a cannibalized mismatch. Where the owner of a complete article is obliged to replace a worn, damaged, or missing component with an identical component to maintain the appearance of the article, the part will be dependent. Where a part is dependent, the maker of the spare part has to produce a part which looks exactly like the original or it is unsaleable. They have no design freedom. Consequently, it is likely that parts such as the main body panels, doors, bonnet lids, and so forth will be treated as ‘dependent’ on the appearance of the car as a whole.

21 [1997] FSR 680, 694.

22 See above at pp. 590-2.

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In contrast, a part will be non-dependent and therefore protected if it can be replaced by a part with a different shape and configuration in such a way that it does not alter the appearance of the article as a whole. If it is possible to substitute parts with parts of different shape and configuration, while leaving the general shape and appearance of the vehicle unaffected, the part will not be a dependent. One of the defining aspects of a non-dependent part is that while it (necessarily) contributes to the appearance of the vehicle, it is subsidiary to the overall shape. That is, it can be replaced without ‘radically altering’ the appearance of the vehicle (or article) as a whole. For example, a steering wheel may be replaced with an alternative wheel of a sportier design while leaving the general appearance of the vehicle unchanged. Likewise, an owner might choose to substitute seats with more comfortable seats. Although the owner of a car might wish the component to blend in with the general style of the vehicle, such items would not be dependent on the appearance of another article. This reflects the goal of the section which was to ‘protect spare parts to the extent that they have features of shape and configuration which do not have to be copied in order to fit or to match aesthetically.” (iii) ‘Dependence’ does not require the other article to exist. As with features dictated by function, the must match exclusion only prevents registration where all the features of an article must match those of another article. It is also clear that one shape can be dependent upon another article even though the latter may not yet exist. In Valeo Vision SA v. Flexible Lamps** (a registered design case on section 1(1)(b)(ii) of the

1949 Act) the defendant suggested that a registered design for rear lamps was invalid because the features of the lamp were dependent on the features of the base to which it was to be attached. The proprietor responded that this could not be so because the design of the lamp occurred before the design of the base: if anything, then, it alleged,

that the shape of the base depended on the shape of the lamp. Aldous J rejected the proprietor’s arguments saying instead that the subsection requires the court to assume the pre-existence of another article and decide whether the shape or configuration of the article depicted in the design is dependent on the appearance of that other article. (iv) Defining the ‘other’ article. Another notable aspect of the must match exclusion is that design features are only excluded where they are dependent on the shape of ‘another article’. This gives rise to the difficult question of what is meant by ‘another article’: an issue which was discussed in In re Ford Motor Co. & Iveco Fiat SpA.” In the case, it was agreed that there were basically two ways of construing the phrase. First, ‘another article’ could mean the vehicle as a whole, minus the part in question:”° this is the so-called ‘n-1’ approach. Alternatively, ‘another article’ could mean the whole car, including the part in question. While the decision is not altogether clear (nor 23 494 Hansard (HL), 1 Mar. 1988, col. 110 (Lord Beaverbrook). 25 [1993] RPC 399.

24 [1995] RPC 205. 26 [1993] RPC 399, 411.

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convincing in its reasoning), the Registered Design Appeal Tribunal ultimately favoured the latter approach.?” On appeal, the High Court confirmed that in relation to spare parts, ‘other article’ meant the vehicle as a whole. (v) Integral part. The exclusion only operates where the features relate to an article which forms an ‘integral part’ of another article. A part is integral if it is essential to the overall design or look and feel of the article. As such, it excludes non-essential parts (the extras) such as tool kits or a car jack. As most articles or parts of articles

that are non-integral will also be non-dependent, it seems that it adds little to the scope of the provision. The provision is important, however, in so far as it helps to clarify that, although a particular item may not stand alone, this does not therefore necessarily also mean that the item forms part of another article. While articles, such as cups and saucers or knives and forks may fit together, this does not necessarily mean that they fall within the scope of the exclusion.”® For example, while an article such as a cup might need to match a saucer, it is unlikely that the designer would have intended the cup to form an ‘integral part’ of the saucer. In order for an article to be treated as an integral part of another article, the designed article in question must be subservient to the appearance of the other article. As such, where the articles play an equal part in the overall product, the design will not fall within the scope of the exclusion. This can be seen, for example, in relation to

a unit of a range of kitchen cupboards which was held not to be an article that formed an integral part of another article. Instead, it was seen as one of a ‘series of matching articles none of which forms an integral part of another.”

2.3

ORIGINALITY

Unregistered design rights only subsist in ‘original’ designs. A design is not ‘original’ if, at the time of its creation, it is commonplace in the design field in question.”° Deciding whether a design is original involves two stages. First, it is necessary to decide whether the design is original in the copyright sense. That is, in the sense that the design originated with the designer and was not slavishly copied from a pre-existing design.*! Second, if the tribunal is satisfied that the designer created the design, it must see if the design is commonplace in the field in question. The concept of ‘commonplace designs’ is a new one. In Farmers Build v. Carier Bulk the Court of Appeal said that it would be wrong to attempt any further definition of what ‘commonplace’ meant.” Rather, it preferred to look at the term in the light of its 27 [1993] RPC 399, 412, 420. 28 [1993] RPC 399, 419. 29 Mark Wilkinson Furniture v. Woodcraft Designs (Radcliffe) [1998] FSR 63, 73.

30 CDPA s. 213(4). 31 Farmers Build v. Carier Bulk Materials Handling [1999] RPC 461, 481.

32 [1999] RPC 461, 479.

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legislative history and purpose. Given that unregistered design right is intended to protect functional designs, and gives relatively weak protection (and that there are safeguards excluding protection of spare parts), Mummery LJ concluded that it would be wrong to interpret “commonplaceness’ broadly. Its purpose is “to guard against situations in which even short-term protection for functional designs would create

practical difficulties.’*> Consequently, once it is shown that the design was not copied, all that was required was that the design must be in some respects different from other designs so that it can be fairly and reasonably described as not commonplace. This _ second inquiry itself has three stages. The first stage is to decide what is the design field. Although this is an important stage of the inquiry (on the assumption that the broader the design field, the less likely the design is to be not commonplace), as yet we have little guidance as to the basis on which such decisions are being made.** The second stage of the inquiry requires the court to examine the design of other articles in the same field including any allegedly infringing article. In one case, this included looking at examples drawn from a design collection.*? Third, the court should compare the design in question to determine how similar it is to designs in the same field. The closer the similarities, the more likely the design is commonplace. This is because if different designers have independently come up with similar designs, but each is given protection, practical difficulties of proof of copying and enforcement will arise: and these are precisely the difficulties which the requirement (that the design be not commonplace) is intended to avoid. If, however, there are aspects of the claimant’s design which are not to be found in the field in question, the design is probably not commonplace. Obviously, ‘“commonplaceness’ is a question of fact on which little further guidance can be provided. However, one observation is worth making. The commonplaceness test seems to operate more harshly against decorative designs than against functional ones. This seems to be because, in the case of decorative designs, there is likely to be a larger reservoir of existing designs in the field. This can be seen by comparing Farmers Build with the Scholes Windows case. In Farmers Build, the Court of Appeal held various components of the slurry separator (such as the hopper design), as well as the combination of elements to be original and protected. In part this was because slurry separators were relatively new machines, and there were not many comparators. Consequently, the (albeit visually unexceptional) functional differences between some of the claimant’s parts and those of comparators rendered the claimant’s design not

33 [1999] RPC 461, 481; Scholes Windows v. Magnet [2000] FSR 432, 443. 34 Tn a case concerning designs of kitchen cabinets, the court held that the design field was ‘fitted kitchen furniture’ rather than “cabinetry generally’ because kitchen furniture was ‘a discrete design field, with its own particular problems and characteristics’: Mark Wilkinson Furniture v. Woodcraft Designs (Radcliffe) [1998] FSR 63, 74. In Scholes Windows v. Magnet [2000] FSR 432, 438-9, the court held the field was ‘window design’ not ‘PVC window design’ because the design was decorative and not a response to the particular material. 3° Tbid., 441 (the Brooking collection in the University of Greenwich—a repository of typical architectural forms).

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commonplace.*° In Scholes Windows v. Magnet,*’ however, the claimant’s design was

in the crowded field of window frame design, and the not commonplace test posed more of a hurdle. The design—a design of a PVC window frame which was intended to evoke a traditional Victorian sash window—was held to be similar to existing window designs and not to have sufficient difference to lift it out of the ordinary run of such designs.**

2.4

QUALIFICATION

The unregistered design right is only available in a design which meets one of the following criteria:*? (i) the designer is a ‘qualifying person’, namely a citizen or subject of, or an individual habitually resident in, a ‘qualifying country’, that is, the United Kingdom, the EC, a country to which the relevant Part of the 1988 Act

‘extends’, or a ‘designated country’; (ii) the designer has been commissioned by or is employed by such a ‘qualifying person’;*° or (iii) the design has been first marketed by a ‘qualifying person’ in the United Kingdom, the EC, or a country to which the Part ‘extends’.*!

3 OWNERSHIP The unregistered design right initially vests in the designer.** The designer is the person who creates the design. There are two exceptions to the general principle as to first ownership: designs created in pursuance of a commission are owned by the commissioner; and designs created in the course of employment are owned by the employer.*

36 [1999] RPC 461, 484. 37 [2000] FSR 432.

38 [2000] FSR 432, 442. 39 CDPA s. 218. However, if the design was created in pursuance of a commission or in the course of employment, then it must qualify by that route or by first-marketing. 40 CDPA s. 219. A design which was commissioned or made in the course of employment cannot qualify via the s. 218 route (designer a ‘qualifying individual’). 41 CDPA s. 255 allows for orders ‘extending’ the Part of the Act to the Channel Islands, the Isle of Man, or any colony, while CDPA s. 256 allows for orders to be made ‘designating’ countries as enjoying reciprocal protection. See Design Right (Reciprocal Protection) Order 1989 (SI 1989/1294) (designating countries such as Anguilla, Bermuda, Hong Kong, and New Zealand). Many foreign designs will not qualify: Mackie Designs v. Behringer Specialised Studio Equipment (UK) {1999} RPC 717, 724.

42 43 44 43

CDPA s. 215(1). CDPA s. 214. CDPA s. 215(2); s. 263. ‘CDPA's}215(3),

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4 DURATION The unregistered design right lasts for ten years from the date of first legitimate marketing, or fifteen years from creation. The right is subject to licences of right in the last five years of the term.

5 INFRINGEMENT 5.1

RIGHTS

The owner of an unregistered design right in a design has the exclusive right to reproduce the design for commercial purposes, inter alia, by making articles to that design.*”? Reproduction of a design by making articles to that design is defined to mean ‘copying the design so as to produce articles exactly or substantially to that design’ or making a design document recording the design for the purpose of enabling such articles to be made. The owner of design right also has an ‘authorization right’, that is the right to authorize another to do any of the acts.” Since this is likely to be treated in the same way as the concept of ‘authorization’ in copyright law, the reader is referred back to Chapter 6. The owner of unregistered design right can also object to various acts of secondary infringement. These concern commercial dealings with infringing articles: importing such articles into the UK, possessing such articles for commercial purposes, as well as selling such articles and exposing them for sale. As with secondary infringement of copyright, there is a mens rea requirement: namely, that the alleged infringer ‘knows or has reason to believe’ the article is infringing. The concept of ‘reason to believe’ has been interpreted in the same way as the equivalent copyright provisions,°° and, as before, the reader is referred back to Chapter 8 for further analysis.

Once it is clear that the defendant’s activities fall within the scope of the protected rights, it is necessary to show that there has been ‘substantive’ infringement. The three key elements of substantive infringement are (i) derivation (ii) so as to produce

articles (iii) which are substantially similar in design.

5.2

DERIVATION

In order for an unregistered design right to be infringed it must be copied. As a result,

in order to show infringement it is necessary to demonstrate a causal connection 46 CDPA s. 237. 48 CDPA s. 226(2). 50 Baby Dan v. Brevi [1999] FSR 377, 392.

47 CDPA s. 226(1). 49 CDPA s. 226(3).

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between the two designs. It is not enough to show that the designs are similar. In some cases this will be unproblematic: there will be direct proof of copying. Often this will be where the alleged infringer was formally supplied by the claimant of the design right, but decided (for whatever reason) to start manufacturing similar designs.” Occasionally, there will be evidence that the defendant’s designer used the claimant’s design as ‘inspiration’. However, in many cases there will be no direct proof of derivation, and proof of ‘copying’ will depend on proving ‘access’ and ‘similarity’. This can be seen in Amoena v. Trulife, where the defendant began to market PVC breast prostheses similar to ones which the claimant had been selling over the previous year. Jonathan Sumption QC dismissed Amoena’s allegation of infringement of unregistered design right on the ground that it had failed to prove that Trulife had copied the design. Although the defendant would have had access to the claimant’s product, and produced a similar product comparatively swiftly, Judge Sumption found he was unable to infer copying merely from the fact that the form of the designs were the same. The reason for this was because a number of design constraints limited the range of possible forms the design could take. As such, it was reasonable to conclude that the similarity could be explained on grounds other than copying. In designing breast prostheses a designer needed to emulate the appearance of a breast in a bra, the shape and size of scarring left by a mastectomy, as well as surgical practices. The judge concluded that ‘designers pursuing similar objectives determined by bra design, surgical practice and stocking requirements are quite likely to arrive at designs which have a great deal in common.’ While such similarities might have been the result of copying coupled with the deliberate introduction of difference, the two designs were not so similar that it is the only explanation or even the most inherently probable. The degree of similarity is perfectly capable of being explained on the basis that two designers have independently sought to achieve the result suggested to them by the design of the bra and the location of the scars produced by current surgical methods.

5.3 SO AS TO PRODUCE ‘ARTICLES’ In order to infringe an unregistered design right it is necessary to show that the defendant copied the design so as to produce articles exactly or substantially similar to the protected design. Two interesting questions arise in relation to this requirement. First, is there infringement where a defendant uses the design on different articles? Secondly, in the case of designs for parts of articles, is the comparison to be made between the parts themselves or between the part claimed and the whole of the defendant’s alleged infringement? 51 Baby Dan v. Brevi [1999] FSR 377, 387 (where the defendant’s design retained certain functional features of the claimant’s design, even though in the defendant’s design these features were not necessary to achieve the function); Parker v. Tidball [1997] FSR 680; Farmers Build v. Carrier Bulk Materials Handling [1999] RPC 461, 466.

52 Tbid., 481.

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5.3.1 Application to different articles As noted earlier, the right given to the proprietor of a registered design is confined to the use of the design on the article for which the design was registered.» In contrast, it seems unregistered design right will be infringed where a substantially similar design is used on other articles. In Electronic Techniques v. Critchley Components Laddie J said that since unregistered design rights are ‘presumably intended to reward and encourage design effort, it seems unlikely that the effort should only be protected and rewarded if the infringer happens to use the design on precisely the same type of article.** However, Laddie J added an important qualification to the general proposition that unregistered design right is infringed by use of the design on other articles. He said that this did not mean that the nature of the defendant’s article was irrelevant. It may be that a design applied to certain articles has a different impact to the same design applied to others. In such cases it may well be that the design, in the context of other features of shape and configuration of the article itself, may be viewed differently to the same or a similar design in a different context.

5.3.2 The test with partial designs The definition of infringement as involving the use of the claimant’s design in relation to ‘articles’ rather than to parts of articles has posed particular problems where the claimant’s design is for part of an article. The reason for this is that although design right subsists in ‘the design of any aspect of the shape or configuration ... of the whole or part of any article’, infringement occurs where the defendant is shown to have copied ‘the design so as to produce articles exactly or substantially to that design.’ The statutory provisions thus seem to be inconsistent. In Parker v. Tidball, Judge

Englehart attempted to resolve the conflict explaining that in a case where a design of part of an article is reproduced article, one should ask oneself what by way of comparative interested observer but to do so in the light of the entirety not just by confining attention to the corresponding parts. to substantial, not necessarily exact, correspondence.*°

5.4

SUBSTANTIAL

in part of an allegedly infringing design would be suggested to the of the allegedly infringing article, Moreover, the inquiry is directed

SIMILARITY

In order to infringe an unregistered design right, it must be shown that the defendant copied the design so as to produce articles that are exactly the same as or substantially similar to the claimant’s design.°® While the question of whether designed articles are the same as or substantially 53 4 55 56

See above at pp. 615-16. Electronic Techniques (Anglia) v. Critchley Components [1997] FSR 401, 418. Parker v. Tidball [1997] FSR 680, 691. CDPA s. 226(2).

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similar gives rise to analogous issues as arise in relation to registered design, there are some notable differences. For the most part these arise from the fact that unregistered design protection is not only granted over articles with a striking appearance (as is the case with registered design protection), but also to designs which are

functional. As such, when deciding whether unregistered design rights have been infringed, it is necessary to use a test that is appropriate for the subject matter that is protected. In cases where the design was for the appearance of an article, the question of whether the designs are the same is to be determined through the eyes of the relevant customer.*’ Given that this aspect of the test is similar to that which applies in relation to infringement of registered design protection, the reader is referred back to the earlier discussion. Where a design feature is ornamental, a visual test similar to that which has traditionally been employed in the registered design system is unobjectionable. However, a visual test is inappropriate where the design features lie in details that cannot be seen by the eye. It will be recalled that in Ocular Science, Laddie J accepted the claimant’s

argument that each of their lenses, though differing from their neighbours only in fine dimensional details, might constitute a separate design. Indeed, Laddie J observed that the designs were protectable despite the fact that a member of the public could not tell the design of one lens in a particular range from another in the same range by mere visual inspection. If such protection is to be meaningful, the question of whether copying is exactly or substantially to the same design must not simply be a question of visual similarity. A visual test is also inappropriate where the features of shape or configuration that are protected by unregistered design right are functional.** In those circumstances the question should be whether the defendant’s design embodies a form which is similar (taking into account the way the form operates to achieve the function). Although it was not necessary to decide, this was the kind of approach taken by Pumfrey J in his discussion in Mackie Designs of what would amount to infringement of unregistered design right in a circuit board.” The question of similarity would not be one of visual comparison of the shapes and colours from the point of view of someone unversed in electronics but a comparison through the eyes of someone versed in electronics, and interested in the functioning of the circuit, of the units, their order, and interconnections.

57 Mark Wilkinson Furniture v. Woodcraft Designs (Radcliffe) [1998] FSR 63, 75.

58 Cf. C. & H. Engineering v. Klucznik [1992] FSR 421, 428 (applying visual test to functional design). 59 Mackie Designs v. Behringer Specialised Studio Equipment (UK) [1999] RPC 717, 723; Mark Wilkinson Furniture v. Woodcraft Designs (Radcliffe) [1998] FSR 63, 75.

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6 DEFENCES: UNREGISTERED

OF DESIGNS

RELATIONSHIP

DESIGN

RIGHT

BETWEEN

AND

COPYRIGHT

Section 236 of the 1988 Act states that ‘it is not an infringement of design right in the design to do anything which is an infringement of copyright in that work.’®° Consequently, to the extent that there is dual protection, copyright pre-empts the unregistered design right. However, as we have seen, section 51 severely limits the impact of copyright protection in this area. This is because, where copyright and unregistered design rights both exist, section 51 provides a defence so that the making of an article to the design does not infringe copyright, but may nevertheless infringe unregistered design right. An exhaust pipe produced indirectly from design drawings would not infringe copyright in those drawings. It would, however, infringe unregistered design right as regards those features of the exhaust pipe which are not excluded as ‘must fit’ or ‘must match’ features.*!

7 SYNTHESIS The legal protection of designs is a complicated matter. As a result, it may be helpful to conclude with some simple examples. Example 1. A has designed a double-barrelled syringe. It is unlikely that A will be able to register the design. Although it comprises features of shape and configuration, there is a good chance that the syringe will lack eye appeal, that the appearance of the article is immaterial, and that the features are dictated by function. A will not be able to rely on copyright. The syringe is not itself an artistic work (Metix v. Maugham).° The drawings, if any exist, are designs for something ‘other than an artistic work’. It is not an infringement to make articles to the design or copy articles made to the design: section 51. A may, however, be able to rely on unregistered design right. This protection would arise automatically as regards features of shape and configuration. Surface decoration (such as the measure) would not be protected. Parts of the handle might be excluded on grounds of ‘must fit’—both with the syringe barrel and, possibly, the hand of the user. If the shape is ‘not commonplace’, it may be protected.

©: CDPA's.. 236: 61 However, where a design comprises surface decoration as well as configuration, the division of the creative elements amongst two forms of protection may have undesirable effects: Jo Y Jo v. Matalan Retail

[2000] ECDR 178, 200. 62 [1997] FSR 718.

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RIGHT

647

Example 2. B has designed a steering wheel for a new Volkswagen Millennium Bug and has retained his preliminary drawings. It is circular and characterized in that it has four radiating spokes, in the shape of a ‘CND’ sign. VW are about to commence production. B may be able to obtain a registered design for the shape of the steering wheel. However, the Registry would have to conclude that steering wheel is an article that has a commercial life of its own, that the features were not all excluded on grounds of functionality or must match, and that the design was novel. The fact that the shape is known as a CND sticker will probably not prevent it being novel. B will be able to rely on copyright in any design drawings. However, such copyright will not enable B to prevent anybody replicating the steering wheel: section 51. B will be able to rely on unregistered design right in so far as the steering wheel is a shape, which is original and not commonplace. Design right will not protect must fit nor must match features. The defence in section 236 will not apply because making articles to the design is not an infringement of copyright. Example 3. C has developed a design for a door handle shaped as an eagle’s head. C has original drawings and preliminary clay models. C could register the design, stating that the novelty lies in shape or configuration. There may be issues as to whether the door handle is an article, whether appearance is material, as well as questions of novelty. The fact that pictures of eagles’ heads are widely available, and that they have been used as door handles before will not necessarily prevent registration. However, protection seems feasible. C could rely on copyright protection in the drawings and the clay model, if the latter were treated as a ‘model for the purposes of sculpture’.® If the handle is massproduced it is unlikely to be treated as a sculpture (Wham-O). It could nevertheless be a work of artistic craftsmanship.™ The extent of copyright protection will depend on the application of section 51. If the design is a work of artistic craftsmanship, full protection would apply—either based on direct infringement of the work, or indirect infringement via the sculpture or drawings. Since these are designs for the door handle, an artistic work, the section 51 defence does not apply. If the door handle does not qualify itself, the question arises whether the drawings, on which the sculpture was based, are designs for an artistic work; or whether they will be treated as designs for the door handle (a non-artistic work).

C could also rely on unregistered design right as regards the shape of the handles. However, section 236 will operate so that there will be no infringement of unregistered design right in so far as there is an infringement of copyright. Example 4. D, an artist, produces an abstract painting (in the style of Mondrian). It is later applied, with D’s consent to ties and trays.

63 Cf. J. & S. Davis (Holdings) v. Wright Health Group [1988] RPC 403.

64 Coogi Australia v. Hysport International (1998) 41 IPR 593 (FCA).

648

THE LEGAL REGULATION

OF DESIGNS

D can register the design for the tray and tie. Previous use of the artistic work will not prevent the design being novel. However, once there has been sale of either a tie or a tray to which the design has been industrially applied, the design will become part of the state of the art when assessing novelty. Both registrations should therefore be made before this occurs, if possible. D can rely on copyright in the painting. This is infringed where anybody applies the work to an artefact, because that amounts to reproduction of the work. Section 51 has

no application. However, after twenty-five years from marketing of either the tie or the tray, it is no longer an infringing act to apply the design to an article: it would be legitimate therefore, to make bedspreads bearing the design. D cannot rely on unregistered design right. The design is not a shape. Example 5. E, an artist, creates an abstract sculpture which is exhibited in Holland

Park. F is selling paper-weights in a similar shape. E probably cannot register the sculpture. Although it comprises features of shape, these are not ‘applied to an article’, in so far as the sculpture is an article which is excluded under rule 26 of the Registered Design Rules, as an article of artistic

character. E could rely on copyright. The work is a sculpture, irrespective of artistic quality. E may have unregistered design right, if the sculpture is treated as the design of the shape of an article. However, protection will not operate because of section 236. Example 6. F has produced a photograph and proposes to make birthday cards bearing the image. F cannot register the design: RDR, rule 26. F cannot rely on unregistered design right: there is no shape or configuration. F can rely on copyright. The photograph is an original artistic work. Section 51 does not apply. Application to a greetings card will not affect the duration of protection: the article is excluded from the operation of section 52.

8 SEMICONDUCTOR

TOPOGRAPHIES

A special form of legal protection, based on unregistered design right has been created to afford protection for the layouts of semiconductor chips (which are colloquially known as ‘computer or silicon chips’). This section briefly explains this sui generis right. When protection was first thought desirable for the designs of such chips, it was widely assumed in the USA that copyright protection would not be available (or if available would not be adequate) given that the design of such chips is essentially functional. As a result, in 1984, the USA passed a Semiconductor Chip Protection Act

introducing a sui generis protection regime. Because the USA was only prepared to recognize the claims of foreign designers of semiconductor chips where the country of origin recognized the rights of US chip designers, the EC decided to adopt an

UNREGISTERED

DESIGN

RIGHT

649

equivalent system of protection. Consequently, in December 1986, an EC Directive was adopted requiring member states to bring into effect protection for semiconductor topographies.® In the UK, this was effected initially by the Semiconductor (Protection of Topography) Regulations 1987,° an instrument which was later repealed and replaced by the Design Right (Semiconductor Topographies) Regulations 1989.°

8.1

THE

UK

SCHEME

Semiconductor topographies are now protected in the UK as unregistered designs, with certain modifications. Protection is afforded to the pattern or patterns fixed, or intended to be fixed, in or upon a layer or layers of a semiconductor product. A semiconductor product is defined as ‘an article the purpose, or one of the purposes, of which is the performance of an electronic function and which consists of two or more layers, at least one of which is composed of semi-conducting material and in or upon one or more of which is fixed a pattern appertaining to that or another function.’ The prerequisite of design right protection, that the design be ‘original’ and ‘not commonplace’, applies equally to topographies. Protection is provided against copying, but there is a defence for private reproduction for non-commercial aims and generous provision is made for reverse engineering.® Only a restricted range of foreign claims qualify relative to semiconductor topographies.© While the concept of ‘qualifying country’ is confined to the United Kingdom or another EEA member state, the notion of ‘qualifying person’ includes citizens,

subjects, habitual residents, and bodies corporate listed in Schedule 1 to the Regulations. Consequently, if a design for a topography is commissioned by a ‘qualifying person’ who is also the first owner of design right or is created by a designer who is a ‘qualifying person’” or the first marketing of a topography is by a ‘qualifying person’ in Europe, the design qualifies for protection in the UK. The countries listed include Australia, the USA, Japan, and others.’! 65 Council Directive 87/54/EEC of 16 Dec. 1986 on the legal protection of semiconductor products, OJ L 24/36. 66 (SI 1987/1497).

67 (SI 1989/1100) (hereinafter Semiconductor Regs.).

68 Semiconductor Reg. 8. Cf. Software Directive Arts. 4 and 6. 69 Semiconductor Reg. 4. 70 Nb: the commissioner/employer and the designer routes are mutually exclusive, so that a commissioner or employer who is not a ‘qualifying person’ cannot claim the benefit of the designer being a ‘qualifying individual’. Rather, if the commissioner or employer was first owner, it must be qualified; however, if the designer was first owner pursuant to an agreement to that effect, then the designer must qualify. 71 For a lengthier exposition of these very complex requirements, see A. Christie, Integrated Circuits and their Contents: International Protection, 67—71 (1995).

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31 INTRODUCTION TO PASSING OFF AND TRADE MARKS This chapter has three aims. First, it provides a brief history of the development of the law in this area. Secondly, it considers the ways in which legal protection of signs and symbols are justified. Thirdly, the chapter provides an introduction to the international and regional background that informs and constrains law in the UK.

1 HISTORY Most accounts of the history of trade marks tend to focus on two intertwined themes. One is a history of the social practices and understandings attached to the activity of applying marks to goods; the other is a positivist history of trade marks law. These two histories are often conflated in a way which suggests that the law inevitably evolves with, or ought to reflect the changes in, the nature and function of marks.' While acknowledging that many developments in trade marks law have been made in response to changes in the functions that marks perform, we would prefer to keep the histories separate to avoid any implication that a change in the function of marks requires us to alter (typically expand the scope of legal protection afforded by) trade marks law.

1.1

HISTORY

OF MARKS

In the earliest times traders applied marks to their good to indicate ownership. These are called proprietary or possessory marks. For example, farmers commonly branded cattle and earmarked sheep as a way of identifying their livestock. In a similar way, merchants also marked their goods before shipment so that in the event of a shipwreck, any surviving merchandise could be identified and retrieved. From medieval times marks were used for a slightly different purpose within guild structures. Guilds

1 RB Schechter, The Historical Foundations of the Law Relating to Trade Marks (1925); G. Ruston, ‘On the Origin of Trade-Marks’ (1955) 45 TM Rep. 127 (tracing 6000 years of use); T. Drescher, “The Transformation

and Evolution of Trademarks: From Signals to Symbols to Myth’ (1992) 82 TM Rep. 301, 309-321.

656

TRADE

MARKS

AND

PASSING

OFF

were trade organizations that had control over who could make certain goods or provide certain services. They were also concerned to ensure that the goods were of a satisfactory quality. In order to be able to identify the source of unsatisfactory goods, the guilds required their members to apply identifying marks or signs to the goods.” With the demise of the guilds, it was no longer obligatory for traders to apply particular marks or signs to goods. However, with the growth of regional (as opposed to local) trading and the rise of factory production that accompanied the Industrial Revolution, many traders continued to apply their marks to the goods they manufactured.’ Moreover, with the growth of mass media and the reading public, traders started to advertise their goods by reference to these marks.’ In turn, purchasers of goods started to rely on the signs the goods bore as truthful indications of the source of the goods. Importantly they began to use them to assist their purchasing decisions. Over time, as consumers started to realize that some marks indicated a particular manufacturer, and in turn goods of a certain standard, the nature of the mark

changed from being a source of liability to become an indicator of quality. Another important change in the role played by marks took place around the beginning of the twentieth century. During this period trade marks changed from being indicators of origin (and hence a bases on which those consumers could assume consistency of quality) to become valuable assets in their own right.° Thus it is said that some marks, by virtue of their distinctiveness or appeal were able to convey some sort of emotional allure to potential consumers. Literally the sign attracted custom, not as a result of some idea or assumption of origin or quality, but as a result of socalled ‘advertising’ quality.° Indeed, the mark itself (reinforced by advertising) gave rise to a desire for the product that was distinct from a desire based on a belief that the product would be of a particular quality. The trade mark serves more as a marketing tool and less as a means of identifying a product’s source or sponsorship. This change in the function of trade marks has been described as a transformation from ‘signals’ to ‘symbols’.’ As signals, trade marks trigger an automatic response and serve to identify the maker of the product. In contrast, as ‘symbols’ trade marks evoke a broader set of associations and meanings. Here they are used to identify the product or to give the product an identity. Is so doing ‘the mark became a symbol, a poetic 2 P. Mollerup, Marks of Excellence: The History and Taxonomy of Trademarks (1997) 15-42; S. Diamond, ‘The Historical Development of Trademarks’ (1975) 65 TM Rep. 265, 272. 3 B. Pattishall, “Trade Marks and the Monopoly Phobia’ (1952) 42 TM Rep. 588, 590-1.

4 §. Diamond, ‘The Historical Development of Trademarks’ (1975) 65 TM Rep. 265, 281 (with increased advertising came the increased use of trade marks in their modern function as identifiers of the source of the goods). > Eastman Photographic Material Co. v. John Griffith Cycle Corporation (1898) 15 RPC 105. © Brown identified three elements to the ‘advertising’ or ‘persuasive’ function: that which results from the distillation of associations, allure, etc. by advertising in the trade mark; that which results from previous

experience by consumers of goods bearing the same mark; and that which results from the inherent attractiveness of the mark. R. Brown, ‘Advertising and the Public Interest: The Legal Protection of Trade Symbols’ (1948) 57 Yale Law Journal 1165, 1189.

’ T. Drescher, ‘The Transformation and Evolution of Trademarks—From Signals to Symbols to Myth’ (1992) 82 TM Rep. 301.

INTRODUCTION TO TRADE MARKS

657

device, a name designed to conjure up product attributes whether real or imagined.”* More recently, trade marks have taken on new roles.’ In one commentator’s words, marks have come to take on a ‘mythical status’.'° In their mythical form trade marks help to provide consumers with an identity—for example, as a FERRARI OF VOLVO driver or BUDWEISER Or BUDVAR drinker. when the consumer purchases a product bearing a mark they purchase an ‘experience envelope’ which helps to construct their identity. This conception of the trade mark as myth is illustrated by books such as American Psycho where the attributes of the characters are conveyed through descriptions of their use of particular trade-marked products.'! The conception of trade mark as ‘myth’ can be seen in the increased attention given to ‘brands’. While the definition of brands varies in both marketing and legal analysis, it normally extends beyond a word or device mark to encompass the personality, style, or aura associated with a particular product. For those who would have us believe in the ontological status brands, coca-coLa is more than a product, a reputation for quality and a mark. Instead, it is an image and a way of life that is instituted through the presentation, marketing, advertising, and packaging, (as well as the production) of the product.”

1.2

HISTORY

OF THE

LEGAL

PROTECTION

OF MARKS

The history of the legal protection of trade marks has been less well charted than most areas of intellectual property, and the early developments are particularly obscure. It seems that the courts first began to protect ‘marks’ at the behest of traders in the sixteenth century. Acknowledging that such signs operated as an indication of source, the courts held that if another trader were allowed to use the same sign, this would allow a fraud to be committed on the public. Initially, protection was provided by the Common Law Courts through the action for deceit. The idea being that if a trader had already used a mark, the deliberate use of the same mark by another trader would amount to a form of deceit. Not much later, the Courts of Chancery used the action

for ‘passing off to protect a trader who had developed a reputation or ‘goodwill’ through use of a particular sign or symbol. (This included the protection against innocent misrepresentations.) This action is still available today. In reflection of its origins in the common law of deceit, passing off always required a trader to establish that there had been a misrepresentation which deceived consumers. In effect this 8 Ibid., 338. ® Rochelle Dreyfuss also describes how trade marks are the emerging lingua franca: ‘with a sufficient command of these terms, one can make oneself understood the world over, and in the process, enjoy the comforts of home.’ (Presumably, here lingua franca is shorthand for American fast-food chains and sporting

companies.) R. Dreyfuss, “Expressive Genericity: Trademarks as Language in The Pepsi Generation’ (1990) 65 Notre Dame Law Review 397, 397-8. 10 T. Drescher, ‘The Transformation and Evolution of Trademarks—From Signals to Symbols to Myth’ (1992) 82 TM Rep. 301.

11 8B. Ellis, American Psycho (Random House, 1991). 12 B. Isaacs, Brand Protection Matters (2000), ch. 1.

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TRADE

MARKS

AND

PASSING

OFF

meant that the action was always concerned with confusion as to source. Even though the scope of the passing off action has since expanded, the action has never been severed from its origins in deceit. This has meant that the action has not developed into a general action for misappropriation of intangible value or unfair competition of the type recognized by other European legal systems. A system of registration of marks was first introduced in 1875. The impetus for this came more from foreign sources than from domestic pressure. With increasing interest in international recognition of industrial property rights, foreign traders were unconvinced that British law provided them with the same level of protection against the misuse of their signs that foreign laws afforded to British traders in similar circumstances. Although the main impetus for the adoption of a registration system was to meet foreign concerns, the system that was adopted largely formalized the passing off action. The system allowed for the registration of a limited range of marks that the Registry subjected to examination prior to their entry on the Register.!° Trade mark registration brought with it a number of benefits. The most obvious was that it reduced the difficulties of proving goodwill and distinctiveness that arose in a passing off action.’ In addition, registration brought with it the possibility of a sign being protected prior to use. Other advantages of trade marks over passing off developed later: most notably, when the 1938 Act permitted the assignment of marks separately from the goodwill of the business.!° Despite this, passing off remained valuable in so far as the criteria of registrability were restrictive, the process of registration was inappropriate or unnecessarily onerous, and the rights granted were broader. Perhaps the most vexed question that has arisen has been that of determining the appropriate scope of protection. In reflection of its relationship with passing off, the 1875 Registration Act worked on the assumption that trade marks operated to indicate origin.'° However, as we just observed, around the beginning of the twentieth century marks began to function in other ways, notably as a silent ‘salesman’ that could sell products irrespective of consumer understandings about origin or associated quality. The recognition of the changed function of trade marks was soon coupled with a claim that trade mark proprietors deserved stronger protection to reflect the new ways marks were being understood. One of the most important advocates for greater protection was Frank Schechter, who is also the leading historian of trade marks. Schechter radically asserted that modern trade marks law should have a single

13, Although the position was not initially completely clear from TMA 1875 s. 10, it was soon accepted that the registered trade-marks system was a statutory supplement to the common law doctrine of passing off: Great Tower v. Langford (1888) 5 RPC 66; Faulder v. Rushton (1903) 20 RPC 477. It is clear today that

protection is cumulative: TMA s. 2. 14 Spalding v. Gamage (1915) 32 RPC 273 (the difficulty of proving distinctiveness was ‘one of the evils sought to be remedied by the Trade Marks Act 1875’).

DTTMAT938's. 22: 16 TMA 1875 s. 10.

INTRODUCTION TO TRADE MARKS

659

rational basis.'7 More specifically, Schechter proposed that ‘the preservation of the uniqueness of a trade mark should constitute the only rational basis for its protection.’'’ For Schechter (and his cohort of followers), marks should be protected as a species of property. Importantly this would mean that the owner would be protected when they were used on dissimilar goods as well as similar goods. Schechter argued trade mark law was no longer adequate if it was wedded to a prerequisite of consumer confusion. The reason for this was that The real injury in all such cases . . . is the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use upon non-competing goods. The more distinctive or unique the mark, the deeper its impress upon the public consciousness, and the greater its need for its protection against vitiation or dissociation from the particular product in connection with which it has been used.’

Schechter’s article soon became “a talisman to members of the trademark bar who [sought] to expand the protection available to their clients.’”° In fact, its impact was not confined to the bar. Today, many commentators treat the subsequent period as one in which Schechter’s insights have come to fruition. In particular, the arguments he made for expansion have gradually been acknowledged and implemented in national law. Notable examples including the expansion of the rights given to a trade mark proprietor to include ‘dilution’ (that is, certain uses of marks on dissimilar goods, even where consumers appreciate there is no connection); the recognition of signs as assets;) the gradual abandonment of various restrictions on dealings with marks; and the introduction of extended infringement provisions in the 1994 Trade Marks Act.

2 THE

COSTS

OF TRADE

MARKS

One of the major charges against the protection of trade marks is that trade marks are monopolies and that monopolies are inefficient.** In most situations the

17 F Schechter, ‘The Rational Basis of Trade Mark Protection’ (1927) 40 Harvard Law Review 813, 831. Schechter would have confined his proposal for stronger protection to coined, invented, or other unique

marks. 18 Tbid. 19 Most modern commentators argue that the three functions sit side by side rather than that the origin and quality functions are subsumed in the advertising function: e.g. S. Diamond, The Historical Development of Trademarks (1975) 65 TM Rep 265, 289-90; J. Lunsford, ‘Consumers and Trademarks: The Function of

Trademarks in the Market Place’ (1974) 64 TM Rep. 75. 20 J, Swann and T. Davis, ‘Dilution: An Idea Whose Time Has Gone. Brand Equity as Protectable Property, the New/Old Paradigm’ (1994) 84 TM Rep. 267, 285. 21 Lego v. Lemelstrich [1983] FSR 155; Mirage Studios v. Counter-Feat Clothing [1991] FSR 145. See below at

pp. 828-38, 901-2. 22 E, Chamberlain, cited in N. Economides, ‘The Economics of Trademarks’ (1988) 78 TM Rep. 523, 532.

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characterization of trade marks as monopolies is unhelpful. As one commentator has noted, “‘[m]onopoly is merely an ugly word used by people to put a curse on any kind of property they do not like.’ In any case, trade marks are not properly treated as monopolies. This is because, in contrast with patent, design rights, and copyright, a trade mark does not give exclusive control over the sale of particular goods or services. Rather, it merely provides control over the use of the sign in connection with goods or services. Trade marks do not create monopolies, unless the sign is treated in combination with the goods or services as a product in its own right.** As one commentator pointed out a trade mark “quite simply, is not a monopoly in the underlying good, and no product market has ever been defined as narrowly as a single brand.”° Even if the charge that a trade mark is a monopoly has little to be said for it, that does not mean that trade marks law does not impose certain costs which require justification. Indeed, the grant of exclusive rights over certain signs has a number of social costs.** Probably the most obvious is that it restricts other people (most importantly other traders) from using the same or a similar sign. As the scope of the subject matter of trade mark rights has expanded to cover shapes, to avoid infringement a trader may need to design different packaging or shapes for goods. As the rights conferred by trade mark laws expand, the costs increase for traders, even if they are not trading in the same or a similar field: costs of developing suitable marks, searching registers, and where necessary negotiating with owners of related marks. To a large extent the way in which the ‘harm’ caused by trade marks is evaluated depends on the way signs and language are viewed. If we take the view that the number of suitable signs is infinite and the value of the sign fairly consistent, then the cost of adopting a different sign from one already used or protected by another trader should not be that great. If, however, we take the view that some signs are better than others and that the pool of available marks is limited, then the costs to other traders of

one trader being granted ownership of a particular mark may be significant. As the better marks are used up, a trader will have to invest more and more money in establishing and building suitable associations with their signs. Business practices suggest that many traders consider that the choice of trade symbols is an important one and that some signs are better than others. This explains why firms such as Exxon spend so much time and money developing their marks. It also explains why so many marks are selected for their ‘suggestive’ or ‘allusive’ qualities.”” 23 E. Rogers, ‘The Social Value of Trade Marks and Brands’ (1947) 37 TM Rep. 249, 249. *4 See e.g. P. Behrendt, “Trademarks and Monopolies: Historical and Conceptual Foundations’ (1961) 51

TM Rep. 853.

25 J. Swann and T. Davis, ‘Dilution: An Idea Whose Time Has Gone. Brand Equity as Protectable Property, the New/Old Paradigm’ (1994) 84 TM Rep. 267, 272. Brand premiums are rationalized as mere returns on reputation or investment in advertising.

26 W. Landes and R. Posner, ‘The Economics of Trademark Law’ (1988) 78 TM Rep. 267, 268-9 (referring, inter alia, to the costs of transferring marks, enforcing them, and from the restriction of others using similar marks).

27 See J. Cross, ‘Language and the Law: The Special Role of Trade Marks, Trade Names and other Trade Emblems’ (1997) 76 Nebraska Law Review 95 (arguing that trade marks potentially operate to communicate

INTRODUCTION

TO TRADE

MARKS

661

More expansive trade mark protection, which gives a trade mark holder the ability to control non-trade mark uses or uses of similar marks in relation to dissimilar goods, imposes further costs. Some such regulations may even restrict free speech. To the extent that the law confers power over words and symbols, it places to some degree the ability to make and control meaning in private hands. As Rosemary Coombe has observed, intellectual property law enables ‘the commodification of symbols, imagery and text’. This enables trade mark owners to control both ‘the sign’s circulation and its connotations’. As such, intellectual property laws ‘play a fundamental role in determining what discourses circulate in the public realm and achieve dominance, and how these “languages” are spoken, while providing both enabling conditions and limiting obstacles for those who seek to construct identities and compel recognition.’”®

3 JUSTIFICATIONS

FOR THE

OF TRADE

LEGAL

PROTECTION

MARKS

In this section, we ask the question: why should we protect trade marks? In contrast with commentaries on copyright and patents, this topic has received relatively little attention. One possible reason for this is that the direct impact of trade mark rights is relatively limited. Another reason is that for much of the last fifty years the flourishing of brands has been equated with the success of capitalism (in terms of increasing consumer choice).”? Indeed, to some commentators the benefits of trade marks (and

thus their legal protection) are self-evident. In a remarkable post-war commentary, it was said that ‘the faith in trade marks is a phenomenon that the social sciences, some day, will describe as one of the greatest contributions of all time to social harmony and social progress.’ Moreover, trade marks ‘transform mental confusion into mental harmony and... convert social distrust into mutual understanding.’*°However, such blind faith in the value of trade marks is difficult to sustain and the time is ripe for a more open and critical examination of the justifications for protecting trade marks.*! A number of different rationales have been used to justify trade mark protection. four distinguishable messages: the ‘denominative’ message that the product came from a particular source; the ‘associative’ message that the goods are the same as those previously experienced by the consumer; the ‘descriptive’ message that the goods are of a certain quality or type; and the ‘allusive’ message, one which obliquely suggests some quality or association). 28 R. Coombe, “Tactics of Appropriation and the Late Politics of Recognition in Late Modern Democracies’ (1993) 21 Political Theory 411, 414-5. 29 Brand names, then, are the keystone of a competitive economy, an economy where every man

is

encouraged to do the best he can, and the public is the judge of whether or not he succeeds, because by branding his goods people will know that they came from him’: E. Rogers, “The Social Value of Trade Marks and Brands’ (1947) 37 TM Rep. 249, 253. 30 H. Link, ‘The Social Significance of Trademarks’ (1948) 38 TM Rep. 622, 623, 625. 31 e.g. N. Klein, No Logo: Taking Aim at the Brand Bullies (2000).

662

TRADE

MARKS

AND PASSING

OFE

As we will see, there have been few problems in justifying the protection given to signs and symbols in so far as they operate as indicators of origin (to identify the origin or ownership of goods to which the mark is affixed), or as guarantees of quality (to signify that all goods bearing the mark are of a certain quality).** However, more problems have arisen in justifying the extensive protection that is currently granted to marks.

3.1

CREATIVITY

The arguments which are used to justify copyright, designs, and patents, which focus on the protection of labour and personality (whether as recognition of a right, as a reward, or as an incentive) are difficult to apply to trade marks. This is because while some trade marks may be invented, novelty is not prerequisite to protection. These differences have not prevented some commentators from trying to extend the idea of ‘creation’ to encompass trade marks. This has been done either by claiming that a trader creates goodwill as much as an author creates a work, that a trade mark must be created to be protected in the sense of being either invented, or by virtue of the fact that a new association between the mark and a product, that is, a new meaning, has

been created. Nevertheless, attempts to justify trade marks or goodwill as creations are weak, in part because while the associations between the mark and a source or goodwill may be instigated and nurtured by the trader, they are as much created by the customers and the public. Perhaps the most plausible argument made along these lines see trade marks as a reward for investment. This argument was summed up by Justice Breyer of the US Supreme Court when he said trade mark law helps ‘to assure a producer that it (and not an imitating competitor) will reap the financial, reputation-related rewards associated with a desirable product.’ In so doing trade mark law thereby encourages ‘the production of quality products ... and simultaneously discourages those who hope to sell inferior products by capitalising on a consumer’s inability quickly to evaluate the quality of an item offered for sale. It is the source-distinguishing quality ... that permits it to serve these basic purposes.*?

3.2

INFORMATION

Perhaps the most convincing arguments for the protection of trade signs is that they operate in the public interest in so far as they increase the supply of information to consumers and thereby increase the efficiency of the market. These arguments highlight the fact that trade marks are a shorthand way of communicating information that purchasers need in order to make informed purchasing choices. By ‘preventing others from copying a source-identifying mark’ trade marks law reduces ‘the customer’s costs of shopping and making purchasing decisions ... for it quickly and 32 E. Hamak, ‘The Quality Assurance Function of Trademarks’ (1975) 65 TM Rep. 318, 319. 33 Qualitex v. Jacobson Products 115 S Ct 1300 (1995).

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easily assures a potential customer that this item—the item with this mark—is made by the same producer as other similarly marked items that he or she liked (or disliked)

in the past.’*4 The information provided by trade marks is particularly important in relation to goods that a consumer cannot judge merely through inspection. (These are known as ‘experience goods’.) Where the quality and/or variety of goods is not readily apparent, trade marks enable consumers to choose the product with the desired features. Trade marks also encourage firms to maintain consistent quality and variety standards and to compete over a wide quality and variety. Consequently, it has been said that the ‘primary reason for the existence and protection of trade marks is that they facilitate and enhance consumer decisions and ... they create incentives for firms to produce products of desirable qualities even when these are not observable before purchase.’*° In some respects, it is impossible when assessing the protection of trade marks to divorce considerations about trade marks from considerations about advertising. This is because ‘[t]rade symbols are a species of advertising: their special characteristics are brevity and continuity in use, both of which are essential to their symbolic function.”*° If trade marks function as a vehicle for advertising, one obvious question is whether we value advertising.*’ In a very influential article, American academic Ralph Brown tied the legitimacy of trade mark protection to advertising.*® He said that ‘advertising depends on the remote manipulation of symbols, most importantly of symbols directed at a mass audience through mass media or imprinted on mass-produced goods. The essence of these symbols is distilled in the devices variously called trade marks, trade names, brand names or brand symbols.’ Importantly, Brown drew a distinction

between what he called informational and persuasive advertising.*’ ‘From the point of view of the economic purist, imparting information is the only useful function of advertising.“ However, most advertising was ‘persuasive advertising’ and was socially unjustifiable. This was because it added costs and effectively insulated traders from competition. “By differentiating their products in order to carve out a separate market in which demand, price, and output can be manipulated ... The main drive of

34 Tbid. (Justice Breyer).

35 N. Economides, ‘The Economics of Trademarks’ (1988) 78 TM Rep. 523, 525-6. Landes and Posner call this the ‘economizing function’: W. Landes and R. Posner, “The Economics of Trademark Law (1988) 78 TM

Rep. 267, 270. 36 R. Brown, ‘Advertising and the Public Interest: The Legal Protection of Trade Symbols’ (1948) 57 Yale Law Journal 1165, 1185. 37 During the middle of this century economists were extremely sceptical about advertising. A view was

taken that advertising persuaded consumers to accept or choose the wrong products and that it promoted allegiances that went beyond the superiority of the product. A. Greenbaum, “Trademarks Attacked’ (1968) 58

TM Rep. 443. 38 R. Brown, ‘Advertising and the Public Interest: The Legal Protection of Trade Symbols’ (1948) 57 Yale Law Journal 1165. 39 See S. Haan, ‘The Persuasion Route of the Law: Advertising and Legal Persuasion’ (2000) 100 Columbia Law Review 1281 (describing the shift from informative/cognitive advertising to affective, symbolic, emotional, non-rational techniques of persuasion, and discussing the implication of this shift for legal advocacy). 40 R. Brown (1948) 57 Yale Law Journal 1165, 1168.

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advertising is to facilitate this latter form of control.’ Brown was sceptical about the idea that in buying brands consumers were buying the associations, intangible allure, etc. Given his negative view of persuasive advertising, Brown argued that the task of the courts in trade marks cases was to ‘pick out, from the tangle of claims, facts and

doctrines they are set to unravel, the threads of informative advertising, and to ignore the persuasive.”*! Brown argued that in addition to being justified in so far as they were used to indicate source and quality, trade mark protection was also justified where it supports the informational aspect of advertising. For Brown, the advertising or persuasive function of marks is ‘of dubious social utility. There seems little reason why the courts should recognize or protect interests deriving from it.” He considers likelihood of confusion to be the ‘universal judicial touchstone’.*? Because persuasive rather than informational advertising can lead to distortions to incentives in a competitive economy,** in order to justify a corresponding extension of protection, these costs need to be shown to be worth sacrificing to some greater goal.

3.3

ETHICAL

JUSTIFICATIONS

Ethical arguments have also been used to justify the trade mark regime. The main ethical argument for the protection of trade marks is based on the idea of fairness or justice. In particular, it is said that a person should not be permitted ‘to reap where they have not sown’. More specifically, it is said that by adopting ‘someone else’s mark, a person is taking advantage of the goodwill generated by the original trade mark owner.’ Through this agricultural metaphor, the justification for protecting trade marks is linked to the broader arenas of the protection of traders against ‘unfair competition’ and ‘unjust enrichment’.*® While classic cases where a trader uses someone else’s trade mark on identical goods are clearly objectionable under the principle that a person should not reap what they have not sown, the principle has also been used to justify more extensive protec-

tion. For example, it is said that one objection to ‘comparative advertising’ is that even though it does not confuse consumers, it takes advantage of the reputation that the earlier trader has built up. Similarly, the objections which are made to marks being used on dissimilar goods (for example the ROLLS

ROYCE café) is that it takes

advantage of the repute of the earlier mark. Problems do arise, however, when attempts are made to use the principle that a person should not reap what they have not sown to justify more extensive forms of

41 R. Brown (1948) 57 Yale Law Journal, 1165, 1184.

42 Tbid., 1190. 43 Tbid., 1195 44 N. Economides, ‘The Economics of Trademarks’ (1988) 78 TM Rep. 523, 533.

4>_ A. Kamperman Sanders, Unfair Competition Law: The Protection of Intellectual and Industrial Creativity (1997).

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protection. The first problem is that it is not always easy to determine what the trade mark owner has sown: the mere selection of signs and symbols from the public domain seems a meagre basis on which to found such a claim (especially against a trader who is not aware of the prior registration). It is also not obvious that we should necessarily treat the associations that develop in the minds of the public as something of value which the trade mark owner has sown.*° Second, it is often unclear whether a

person is reaping from the cultivated soil of the trade mark owner or has obtained his of her fruits from the uncultivated commons. Although the causal link can be substantiated in cases of misrepresentation leading to confusion, it is difficult to justify protection where consumers are not “confused’.*” Thirdly and more generally, the law does not penalize every case of reaping without sowing (for example, copying an unpatented business idea). As such, the onus falls on the advocates of the reap—sow principle to provide guidance as to the other factors that trigger the legal operation of the principle.** Other ethical arguments have also been used to justify trade mark protection. For example, it is sometimes argued that the misuse of trade marks is justified by reference to moral norms which treat ‘truth-telling’ as a core ‘good’ (rather than as necessary for the maintenance of efficient markets).*? Under this approach, it is argued that the law ought to allow a person who suffers harm as a result of lying to bring an action against the liar. Misrepresentations as to the source of goods are equivalent to lying or deception and are simply ‘wrong’.°’ While arguments of this sort would justify a law of trade marks and passing off in some form, they would not appear to justify the protection of one trade mark owner against the innocent adopter of a mark, nor against uses which the public would not understand as indicating a business connection with the owner. As such, it would only support a very narrowly confined law of trade marks.”

4 INTERNATIONAL

AND

REGIONAL

DIMENSIONS

Trade marks have always been connected to particular geographical conditions. Indeed, in some sense, the need for legal recognition of marks arose with the decline 46 M. Spence, ‘Passing Off and the Misappropriation of Valuable Intangibles’ (1996) 112 Law Quarterly Review 472, 479-80.

47 Ibid. 472. 48 W. Howarth, ‘Are Trademarks Necessary?’ (1970) 60 TM Rep. 228 (legal protection of trade marks is

really a means of directing and enforcing business morality). 49 Cf. J. Cross, ‘Language and the Law: The Special Role of Trade Marks, Trade Names and other Trade Emblems’ (1997) 76 Nebraska Law Review 95, 111 (the law’s role is to control deception and thereby facilitate market communication).

°0 B. Pattishall, “Trade Marks and the Monopoly Phobia’ (1952) 42 TM Rep. 588, 600 (trade mark infringement is a.sister of forgery, fraud, counterfeiting). 51 M. Spence, ‘Passing Off and the Misappropriation of Valuable Intangibles’ (1996) 112 Law Quarterly Review 472, 480 (arguing that norms concerning truth telling explain the existing limits of passing off).

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of the local economy, which meant that consumers became dissociated from the source of the goods.” It is not surprising therefore that further changes in the geographical aspects of trade have prompted alterations in trade mark law. These have largely taken two forms. First, growth in international trade led to the establishment of international systems of registration, thereby enabling traders to gain protection swiftly and cheaply in all relevant markets. Secondly, changes in international trade prompted the establishment of international minimum standards of protection.

4.1

INTERNATIONAL

REGISTRATION

Traders who operate on more than a local level will wish to protect their marks on a transnational basis. Various mechanisms have been developed to assist in this regard. The earliest of these was the Paris Convention of 1883 that requires members to apply the principle of national treatment. That is, it requires members to treat foreign nationals of contracting states as they would their own nationals.** This ensures the possibility for foreign protection of trade marks. This is further facilitiated by provisions which give registrants in one country a short period of priority,* and provisions obliging national offices to register any trade mark which has been registered in its country of origin.» While the Paris Convention was of some assistance to transnational traders, it failed to create a mechanism for the international application for marks. However, the Madrid Agreement on the International Registration of Marks of 1891 and the Madrid Protocol of 1989 provide just such mechanisms. Under these arrangements, after making a ‘home registration’ or ‘home application’, an individual or company may apply to the Bureau of the World intellectual Property Organization for an international registration. The Bureau passes the application on to relevant national trade mark offices. If the Office of the contracting party does not refuse the application within a limited time, it is treated as registered. The simplification of the process

of international registration has obvious advantages for trade mark owners. While the UK long-resisted invitations to join the Madrid Agreement”® (mainly on the ground that the Agreement worked unfavourably against those who first registered in the UK where examination of all applications is required), the UK is now a party to the Protocol.” While the Madrid Agreement and Protocol provide useful simplified mechanisms for obtaining national registrations, they necessarily result in the proprietor holding a portfolio of national marks each of which needs to be managed, licensed, and 52 B. Paster, ‘Trade-Marks: Their Early History’ (1969) 59 TM Rep. 551, 551-2 (‘The need for trademarks is a product of man’s complex commercial society’).

°3 Paris Art. 2. The Trademark Law Treaty, signed on 28 Oct. 1994, is a limited agreement relating mostly to subject matter and prosecution procedure.

54 Paris Art. 4. °° Paris Art. 6 quinquies: the tell-quelle obligation. 56 The UK has now acceded to the Madrid Agreement by way of the Protocol. See below and Chapter 31.

57 See below at pp. 755~7.

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enforced separately. In contrast, the Community trade mark, which became fully operational on | April 1996, confers on a trade mark owner a single legal right that operates throughout the European Community. Such rights are acquired by the filing of a single application for a Community trade mark with the Office for Harmonization in the Internal Market (Trade Marks and Designs) (the OHIM), which is located at Alicante (Spain). As of 30 December 2000, the OHIM had

received over 200,000 filings and had registered 93,800 marks.”

4.2

INTERNATIONAL

STANDARDS

There has been relatively little action, either at the international or regional level on the protection of unregistered marks. In part, this can be explained by the fact that if a business operates on a transnational level, it will typically have the resources to protect its interests via registration. As a result, the protection of unregistered marks tends to be a matter of concern only for small enterprises and, as a consequence, has

not prompted activities at the diplomatic level. Moreover, the forms and conditions of protection of unregistered marks varies widely, very much reflecting local legal principles. (In the UK the main form of protection is through the judge-made law of passing off.) That said, the geographical expansion in the operations of many businesses has given rise to a form of opportunism, against which international action has been

taken. More specifically, the Paris Convention has been revised to prevent the preemptive adoption of such marks by interlopers in countries where the ‘proprietor’ has not yet commenced marketing. Article 6 bis of the Paris Convention imposes an obligation to recognize and protect well-known marks even where they have not been registered.” The concept of well-known marks (as distinct from distinctive marks, marks with a reputation, and famous marks) is left undefined, and has been contested.*! Article 16(2) of TRIPs indicates that in assessing whether a mark is wellknown, members

shall take account of the knowledge of the trade mark in the

relevant sector of the public, including knowledge in the member concerned which has been obtained as a result of the promotion of the trade mark. UK law only recently gave effect to its obligation to recognize a special category of ‘well-known trade marks’. This is examined further in Chapter 34. Second, and more generally, parties to the Convention are obliged to provide effective protection against unfair competition.® Article 10 bis of the Paris Convention

58 Annand and Norman (1998).

59 See below at pp. 747-53. 60 Paris Art. 6. See TMA s. 52(2). 61 FB Mostert, “Well-Known and Famous Marks: Is Harmony Possible in the Global Village?’ (1996) 86 TM

Rep. 103, 115 ff.;'A. Kur, “Well-Known Marks, Highly Renowned Marks and Marks Having a High Reputation: What’s it All About?’ (1992) 23 ITC 218; M. Blakeney, ‘Well-Known Marks’ [1994] EIPR 481.

62 TMA s. 56. See below at pp. 688-9. 63 Paris Art. 10 bis.

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obliges member countries to assure ‘effective protection against unfair competition’ which, in turn, is defined as any ‘act of competition contrary to honest practices in industrial or commercial matters’.“4 UK law has not expressly implemented this provision, presumably on the assumption that the existing rules relating to passing off and malicious falsehood already deal adequately with it. In relation to registered marks, the TRIPs Agreement provides by far the most detailed international prescription of the substantive rules relating to the protection. Articles 15 defines the protectable subject matter expansively, to include, for example, service marks. It also prohibits discrimination as to registrability according to the nature of the goods and services to which a trade mark is to be applied. Article 16 requires recognition of certain rights, in particular the use of an identical or similar mark on identical or similar goods or services where such use would result in a likelihood of confusion (though not extending to dilution).® Articles 17 and 18 provide, respectively, for limited exceptions to the rights conferred by a trade mark, and for the potentially indefinite registration of marks on the basis of renewable terms each of a minimum of seven years. Article 19 limits the circumstances in which registrations may be revoked for non-use, and Article 21 prohibits the compulsory licensing of marks.*’ The significance of these standards for UK law is mainly in the restrictions that they place on future potential developments. 4.3 REGIONAL HARMONIZATION

It is impossible to understand current UK law without reference to regional harmonization matters. The most significant of these is the EC Trade Marks Directive. As we explained in Chapter 1, disparities in the trade mark laws of individual member states (which gave trade mark owners different rights in different circumstances) were thought to impede the free movement of goods and freedom to provide services and to distort competition within the Common Market.°* In response, the Trade Marks Directive was designed to approximate ‘those national provisions of law which most directly affect the functioning of the internal market.’ The Directive therefore harmonized the general ‘conditions for obtaining and continuing to hold a registered trade mark’ and the rights conferred by a trade mark.”° In certain areas, however, it was decided that harmonization was not necessary. Consequently, member states are given discretion to decide whether to adopt certain of the rules provided for in the Directive. For example, there are certain optional grounds for refusing to register or 64 Art. 39 of TRIPs requires member states to protect undisclosed information under Art. 10(2) of the Paris Convention.

6° Paris Art. 6 sexies only contained a wish to that effect. D. Gervais, ‘The TRIPs Agreement: Interpretation and Implementation’ [1999] 21 EIPR 3. See also TLT Art. 15. 66 TRIPs Art. 16 (likelihood of confusion). 67 TRIPs Art. 21. 68 TM Dir. recital 3 (aim not ‘to undertake full-scale approximation of the trade mark laws of the member states’).

69 Trade Marks Directive, Recital 3. 70 Tbid., Recital 7, Arts. 5, 6 and 7.

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invalidating a trade mark.’! The Directive also leaves to the member states matters such as the procedure concerning the registration, revocation, and invalidity of trade

marks.” In addition to the Trade Marks Directive, it is also important to be aware of three other EC initiatives in the general field. First, following a Directive on Misleading Advertising, the Council and Parliament adopted a Directive on Comparative Advertising, which harmonizes the circumstances where comparative advertising is permissible. This has been implemented in the UK.”* Secondly, the Community adopted an important Regulation on enforcement, which is discussed (alongside similar rules relating to other intellectual property rights) in Chapter 46. Finally, the Community has a number of related initiatives dealing with the protection of “designations of origin’ (PDOs) and ‘geographical indications’ (PGIs) for wines, spirits, agricultural products, and food.”*

> THE

FUTURE

UK trade mark law has undergone dramatic change in the last decade: notably as a result of having implemented the Trade Marks Directive in the 1994 Act, and the entry into force of the Community Trade Mark Regulation. It should not be supposed, however, that intellectual property lawyers can simply sit back and slowly familiarize themselves with these rules. New pressures are constantly demanding judicial or legislative responses. The wider recognition of brands has provided further fuel for those with expansionist tendencies. In addition to advocating protection against use of similar marks even where there is no confusion, arguments have been made for the subject

matter to be expanded, for owners to be given broader control over imitation (especially in relation to ‘look-alikes’ and ‘me-toos’), and for the relaxation of controls over licensing. Some commentators have argued that ‘the positive associations that comprise a brand—a brand’s equity—can rise to the level of a property right entitled separately to protection irrespective of confusion or the existence of a dilution

statute’.”° The recognition of electronic commerce and the possibility of direct sales of goods over the Internet has brought with it new questions for trade marks, the most immediate of which has been the determination of the relationship between trade marks and domain names. This issue has excited a lot of attention, both at the 7) Ybid., Arts. 3(2) and 4(4); Art. 5(2).

72 Ybid., Recitals 4—6. 73, See below at pp. 874-5. 74 Council Regulations 823/87, no. 1576/89, 2392/89, 2081/92. See below at p. 729. 75 J. Swann and T. Davis, ‘Dilution: An Idea Whose Time Has Gone. Brand Equity as Protectable Property, the New/Old Paradigm’ (1994) 84 TM Rep. 267.

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national and international level. As we will see, UK law has responded to these pressures through existing legal regimes, rather than attempting to develop new jurisprudence. There has also been an international response of an interesting sort: the establishment of a code (ICANN) and a system of dispute resolution administered by WIPO.’ 76 See below at p. 1007.

ewe PASSING

OFF

1 INTRODUCTION The oldest of the modern legal regimes for the protection of trade symbols is the action for passing off.' In essence the action allows trader A to prevent a competitor B from passing their goods off as if they were A’s. Lord Langdale MR summed up the rationale for the passing off action in Perry v. Truefitt? when he said: A man is not to sell his own goods under the pretence that they are the goods of another man; he cannot be permitted to practise such a deception, nor to use the means which contribute to that end. He cannot therefore be allowed to use names, marks, letters or other indicia, by which he may induce purchasers to believe, that the goods which he is selling are the manufacture of another person.’

While the early history of passing off is unclear,’ it is widely thought that an action of this sort was first recognized in the Elizabethan case of JG v. Samford. It is also generally acknowledged that the common law roots of the action are found in the torts of deceit and misrepresentation,° with the strictures of the common law action being mollified in a number of Chancery cases in the early nineteenth century.’ The modern or classic formulation of the action (usually classified as a tort) emerged in the second half of the nineteenth century. In its classic form, the basis of the action was the existence of a ‘misrepresentation’. Typically, a misrepresentation occurs where a person says or does something that suggests, incorrectly, that the goods or services they are selling are the goods or services of the claimant. In order to justify injunctive ! The pre-modern regimes included guild regulation, heraldry, and cutlers’ marks: see Sherman and Bently, 166-8.

2 (1842) 6 Beav. 66; 49 ER 749. 3 (1842) 6 Beav. 66, 73; 49 ER 749, 752. 4 W. Morison, ‘Unfair Competition and Passing Off (1956) 2 Sydney Law Rev. 50, 53; Henderson v. Radio Corporation Pty (1960) [1969] RPC 218, 236. 5 First cited as a precedent in Southern v. How (1617) Cro Jac 468, 79 ER 400. See the discussion in FE. Schechter, The Historical Foundations of the Law Relating to Trade Marks (1925) 10.

© e.g. Sykes v. Sykes (1824) 3 B & C 543; 107 ER 834. For arguments that there remains a common law action based on fraud, without a requirement of goodwill, see Gummow J in 10th Cantanae Pty v. Shoshama Pty (1989) 10 IPR 289; ConAgra Inc. v. McCain Foods (Australia) Pty (1992) 23 IPR 193.

7 In particular Equity judges abandoned the requirement of bad faith in Millington v. Fox (1838) 3 My & Cr 338, 40 ER 956.

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relief, the courts believed that it was necessary for the action to be based on a property right. For some time it was suggested that this property right was located in the name or symbol employed. This approach was rejected in the 1860s when it was said that the basis of equitable intervention was the property in ‘goodwill’. The concept of goodwill, which will be examined in detail below, remains a prerequisite for a successful passing off action today. It is important to recognize that the modern action, if it can be called a single action,’ has moved beyond the classic case. Indeed, as a result of adapting to changes in the commercial environment, the tort now extends beyond the sale of goods to cover services; beyond pretences concerning the origin of goods to cover pretences concerning their quality; and beyond simple pretences that the goods are those of another trader, to cover pretences that the goods have been licensed by another trader.'° As a result, the tort continues to play a central role in the legal regulation of trade behaviour.'’ The common law nature of the action also gives it a flexibility that makes it attractive in situations that are not covered by the statutory regimes. This is particularly important where business practices change and the legislature is slow to respond.” With these developments it has become increasingly difficult to state the law of passing off with any clarity or precision. Indeed, it has been said that the law ‘contains sufficient nooks and crannies to make it difficult to formulate any satisfactory definition in short form.’!’ The difficulty in formulating a precise and accurate statement of the law has not been made any easier by the fact that the most recent authoritative statements of the law, which are found in the House of Lords’ decisions in Warnink v. Townsend (sometimes called the ‘Advocaat’ decision),'* and Reckitt & Colman v.

8 Perry v. Truefit (1842) 6 Beav 66, 73; 44 ER 749, 752; Spalding v. Gamage (1915) 32 RPC 273, 284. 9 J. Phillips and A. Coleman, ‘Passing Off and the Common Field of Activity’ (1985) 101 Law Quarterly

Review 242, 244-5, have argued that passing off is better seen as a family of actions each with particular characteristics. Despite the strength of this argument, the courts have continued to treat passing off as a unitary action, only occasionally distinguishing ‘classic’ passing off, from ‘extended’ passing off. See e.g. Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury [1998] RPC 117, 127 (differentiating between ‘extended’ and ‘classic’ passing off and describing question of whether it is the same tort as ‘a matter of semantics’). Note also British Diabetic Association v. Diabetic Society [1996] FSR 1, 11 per Robert Walker J

(warning against assumption that principles from one set of facts can be applied to very different facts). 10 However, the law of passing off has not expanded into a tort of unfair competition. See below at pp. 730-4.

"| Cadbury Schweppes Pty v. Pub Squash Co. [1981] RPC 429, 490 per Lord Scarman (the tort ‘is no longer anchored in its early nineteenth-century formulation’). But cf. Hogan v. Koala Dundee (1988) 12 IPR 508, 517 (Pincus J, Federal Court of Australia) (little progress in English law beyond the traditional notion of passing off). 12 Passing off also operates as a basis for relief where a trader has failed to register a mark. The law relating to passing off also retains a role within the registered trade-mark system. As will be seen at p. 839 it is not possible for a person to register a sign as a trade mark if the use of that sign would amount to passing off. 13 Conagra v. McCain Foods (Aust.) (1992) 23 IPR 193, 247 (FCA). 14

Erven Warnink BV v. Townend (J.) & Sons [1979] AC 731. The case contains two different formulations

of the requirements of the action. Lord Diplock, at 742, laid down five ‘characteristics’ that must be present to create a valid cause of action in passing off: (i) a misrepresentation; (ii) made by a trader in the course of

trade; (iii) to prospective customers of his or ultimate consumers of goods or services supplied by him; (iv) which is calculated to injure the business or goodwill of another trader (in the sense that this is a reasonably

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Borden, are in very different terms.'° Having said that it is possible to formulate a general statement as to the elements of the action. In order to succeed in an action for passing off, a claimant must establish that: (1) the claimant has ‘goodwill (Chapter 32), (2) the defendant made a ‘misrepresentation’ that is likely to deceive the public (Chapter 33), and (3) the misrepresentation damages the goodwill of the claimant (Chapter 34). Before turning to examine goodwill in more detail, two caveats are in order. The first is that each of the three elements must be shown to have existed or occurred at the time when the conduct to which the claimant objects took place (as opposed, for example, to the time of proceedings.)'® The second point to note is that the three elements are interrelated. As a result, the same facts may be important in proving goodwill, deception, and/or damage. Consequently, the courts may dismiss an action for lack of misrepresentation where it might as easily involve a lack of goodwill.'” The interrelationship is also important because developments in one area, such as misrepresentation, may impact on another area, such as damages. This can be seen, for example, with the recent recognition of dilution as a form of damage, which has thrown into doubt the need for the defendant’s misrepresentation to cause confusion or deception."®

2 GOODWILL The first factor that needs to be proved to establish an action for passing off is goodwill.’? The mere fact that consumers are confused about the source of a product or service is not enough for a trader to bring a successful passing off action against foreseeable consequence), and (v) which causes actual damage to a business or goodwill of the trader by whom the action is brought or (in a quia timet action) will probably do so. Lord Fraser at [1979] AC 731, 755— 6, also set out five requirements: (i) That [the claimant’s] business consists of, or includes, selling in England a class of goods to which the particular trade name applies; (ii) that the class of goods is clearly defined, and that in the minds of the public, or a section of the public, in England, the trade name distinguishes that class from other similar goods; (iii) that because of the reputation of the goods, there is a goodwill attached to the name; (iv) that he, the Plaintiff, as a member ofthe class of those who sell the goods, is the owner of goodwill

in England which is of substantial value; (v) that he has suffered, or is really likely to suffer, substantial damage to his property in the goodwill by reason of the defendant selling goods which are falsely described by the trade name to which the goodwill is attached. 15

In Reckitt & Colman Products v. Borden [1990] 1 WLR 491, 499, Lord Oliver reduced the elements of the

action to three: reputation, deception, and damage. 16 J.C. Penney v. Penneys [1975] FSR 367; Barnsley Brewery Co. v. RBNB [1997] FSR 462, 470; Chocosuisse Union des Fabricants Suisse de Chocolat v. Cadbury [1999] RPC 826, 836, 846. 17 e.g. Chivers & Sons v. Chivers & Co. (1900) 17 RPC 420. 18 Harrods v. Harrodian [1996] RPC 697. 19 Star Industrial Co. v. Yap Kwee Kor [1976] FSR 217, 223; Warnink v. Townend [1979] AC 731, 742, 755-6.

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another trader with whom their products are being confused.” Before a trader is able to bring an action, they must show that they have goodwill in relation to the product or service in question. Goodwill is a form of intangible property that is easy to describe, but difficult to define. It is the ineffable thing, the magnetism that leads customers to return to the same business or buy the same brand. In IRC v. Muller & Co.’s Margarine, Lord

Macnaghten said [goodwill] is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force that brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely or extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates. Goodwill is composed of a variety of elements. It differs in its composition in different trades and in different businesses in the same trade. One element may preponderate here and another

element there.”! As Lord Macnaghten stressed, for goodwill to exist, there must be some ‘causative’ impact upon customer behaviour. Goodwill is the attractive force which ‘brings in’ custom. The goodwill must have a “power of attraction sufficient to bring customers home to the source from which it emanates.’ One consequence of this is that just because a trader has started business does not necessarily mean that there will be goodwill. This is because consumers might use the business, purchase the goods or services, because it is conveniently located or just because it is there. Rather, for

goodwill to exist, customers must be buying the goods or using the services as a result of the reputation that they have developed.”

2.1

MANIFESTATIONS

OF GOODWILL

The law of passing off is concerned with goodwill when it manifests itself in certain ways. Passing off is usually concerned with the signs or ‘badges’ that are understood as indicating that a product or service emanates from a particular trade source. These ‘badges’ can take a variety of forms. Typically, passing off is concerned with the goodwill that arises in relation to the name, symbol, or logo that has been employed by a trader and thus has come to be associated with the business. For example, it is clear that there is goodwill associated with the name “Marks & Spencer’, and the Nike ‘swoosh’ or tick. In these situations, the law is relatively straightforward. However, the courts have recognized that goodwill may arise in a number of other situations. These

20 HFC Bank v. Midland Bank (2000] FSR 176, 182-3. 21 [1901] AC 217, 224 (Lord Macnaghten). Although a tax case, it has been frequently employed in passing off cases and the Court of Appeal has said that ‘no one, judge or jurist, has yet improved’ on it as a description: Scandecor Development AB v. Scandecor Marketing AB [1999] FSR 26, 41. 22 HFC Bank v. Midland Bank [2000] FSR 176, 183.

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include, goodwill associated with the packaging, get-up, or trade dress of products, and advertising style. In this section, we will limit our discussions to some of the less straightforward situations. 2.1.1 Goodwill in descriptive words While goodwill is typically developed through the use of words, such as NIKE, MARLBORO, COCA-COLA, OF ROLLS-ROYCE, to distinguish one trader’s goods or services from those of its competitors, in some circumstances goodwill may come to be associated with words which initially were capable of being understood as descriptive of the goods themselves. For example, FRUIT PASTILLES might be taken to be a description of a product delivered in pastille form which tastes of or is made from fruit. However, most children (and adults) in the United Kingdom will understand the words as

indicating a particular brand of sweet confectionary, in fact made by Rowntree’s. Consequently, such words have become the manifestation of the goodwill that Rowntree’s own in the sweets. (Other familiar examples include ‘TrEETs’ (no longer

designating a special indulgence but a confectionary made by Cadbury’s) and Ev1AN (no longer designating a place but instead a brand of water). While it is possible for a descriptive term to become associated with a claimant, the courts are extremely reluctant to allow a person to obtain a monopoly in descriptive words.” In part, this is because policy considerations favour allowing other traders to make use of words that are part of the common stock-in-trade. It is also because in relation to descriptive words, it will be more difficult for a trader to show that the words indicate source, rather than what they ordinarily describe. In short, the more descriptive the words of the goods or services which the trader sells, the more difficult it will be to establish the existence of goodwill attaching to those words. For a trader to show that they have goodwill in a descriptive word, they need to show that the word has become ‘distinctive in fact’ or has taken on a ‘secondary meaning’. This can be seen, for example, in Reddaway v. Banham,” where the House of Lords acknowledged that the claimant’s use of the term CAMEL HaiIR to describe their belts had acquired a secondary meaning. Other examples of (largely) descriptive words that acquired secondary meaning include: ovEN CHiPs for potato chips to be cooked in the oven rather than fried;*° FLAKED OATMEAL;*’ MALTED MILK;’* and

MOTHERCARE for clothing for expectant mothers and children.” For a trader to show that they have goodwill in a descriptive word, the trader needs to demonstrate that the words have acquired a secondary meaning not only of goods 23 Spalding v. Gamage (1915) 32 RPC 273, 284; Cellular Clothing Co. v. Maxton & Murray [1899] AC 326, 339.

24 See Wadlow (1995), para. 6.02, pp. 348-9. Acquisition of secondary meaning is discussed in the context

of registered marks at pp. 797-804.

25 [1896] AC 199. 26 McCain International v. County Fair Foods [1981] RPC 69. 27 Parsons y. Gillespie [1898] AC 239 (PC). 28 Horlick’s Malted Milk Co. v. Summerskill (1916) 33 RPC 108. 29 Mothercare v. Penguin Books [1988] RPC 113, 115.

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or services of that description, but also specifically of the goods or services of which they are the source.*? It is also necessary to show that descriptive terms are distinctive of one source.*! Thus, where two publishers are competing to launch magazines with a title such as Leisure News, it is unlikely that either will be able to bring a passing off action until the magazine has been in the marketplace for a sufficient period of time to build up a public association between the name and a particular source.** As Farwell J said, the name should ‘have to the whole of the trade and to all persons who

have any knowledge of the article in question the sole meaning sought to be attached to it by the plaintiffs—that is to say, the original primary meaning must have been eliminated from the dictionary of persons who deal in this article in the trade and all other persons whom it may concern to know it.”? In proving secondary meaning, it will be common for a claimant to submit evidence of things such as the length of use and the amount of money spent on advertising.** It will certainly be easier to find that a name is distinctive and thus protected where a trader has used the name separately rather than in conjunction with another sign that designates source.*? Moreover, distinctiveness will be acquired more readily if the sign is not exclusively descriptive, as was the case with FARM FLUID for farm disinfectant.°° A trader may acquire secondary meaning in a descriptive phrase through public adoption rather than their own action.*” In these cases, the most important evidence is evidence of the trade or public. On the whole, the association must be in the mind of the general public, so that it is not normally legitimate ‘to slice the public into parts’.°** Similar principles apply to geographic words and personal names. In general the adoption of a geographic term or a personal name will not prevent another trader from using the same designation.* In certain circumstances, however, secondary meaning can attach to such signs. For example, in Montgomery v. Thomson*® the

30 Secondary meaning is essential not just where the name describes the product, but also where it embodies a reference to quality. For example, THE HIT FACTORY was descriptive of a quality of the claimant’s recording studio and in the absence of a demonstration of secondary meaning could not form the basis of a passing off action: Peter Waterman v. CBS [1993] EMLR 27. 31 Tbid. 32 Marcus Publishing v. Leisure News [1990] RPC 576, 584. 33 Chivers v. Chivers (1900) 17 RPC 420, 430 (Farwell J) (in the context of personal names) Wadlow (1995), paras. 6.08—17.

34 Such factors will not, of themselves, give rise to recognition. Advertisement distinguished from trade is nothing: Chivers v. Chivers (1900) 17 RPC 420, 431 Farwell J (describing the act of advertising as an atrocious disfigurement of the fairest landscape in the kingdom); Burberrys v. Cording (1909) 26 RPC 693 (slip on). 35 McCain International v. County Fair Foods [1981] RPC 69 (OvEN cuiPs used with McCains). See more generally at pp. 802-3.

3© Antec International v. South Western Chicks (Warren) [1997] FSR 278; [1998] FSR 738, 743-4. 37 Edge & Sons v. Gallon & Son [1900] RPC 557; Peter Waterman v. CBS [1993] EMLR 27.

38 Ibid. (rejecting arguments that it was sufficient that the claimant’s recording studio was known as THE HIT FACTORY to popular music press and ‘non-pompous end of market’ when other sectors treated the phrase as referring to others). 39 Chivers v. Chivers (1900) 17 RPC 420.

40 [1891] AC 217.

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claimant had operated a brewery in the small town of Stone in Staffordshire for over a hundred years. Over time, its beer had become widely known as sToNE ALE. The defendant, who had recently established a brewery in Stone, was prevented from using the term stone to describe its beer.*! Similarly, it was held by the Court of Appeal that the term swiss CHOcoLaTE had come to be understood by a significant section of the pubic to mean and mean only chocolate made in Switzerland, and that this was understood as being of a particular quality.” Words, once distinctive, may later lose their ability to indicate source. In such cases, a passing off action will no longer be available. A classic example is LINOLEUM, which is the name used for a floor-covering made of solidified oil. The floor covering had been the subject of a patent, and during that time the claimant was its only manufacturer. After expiry of the patent other manufacturers began to make and sell the floor covering under the name LINOLEu. Fry J refused to prevent competitors using this term, on the basis that it had become generic. That is, the public had begun to use the term to refer to the product generally, without connoting the source of manufacture.” 2.1.2 Goodwill associated with packaging, get-up, and trade dress A person may acquire goodwill through use of particular packaging or “get-up’ for their products. For example, in Reckitt & Colman’ the claimant sold lemon juice in plastic containers that resembled a lemon in size, shape, and colour. The House of

Lords held that in using plastic lemons that were very similar to the claimant’s, the defendant had passed off its juice as the claimant’s. This was because the claimant had succeeded in persuading the public that lemon juice sold in plastic lemon-sized containers had been manufactured by it. The protection that passing off provides over trade dress, get-up, and the packaging of goods is particularly important where consumers identify products by their external features rather than by words. This will be the case where goods are sold in foreign-language markets (such as China) where little attention is likely to be paid to the words,*° or where the goods are sold to people who are illiterate.*” Get-up is also more likely to be an identifying feature in the case of common household goods," rather than goods which are bought under professional supervision.” 41 See also My Kinda Town v. Soll [1983] RPC 407 (Chicago pizza); CPC (United Kingdom) v. Keenan [1986] FSR 527 (Oxford marmalade, Oxbridge marmalade). 42 Chocosuisse Union des Fabricants Suisse de Chocolat v. Cadbury [1999] RPC 826, 832.

43 Linoleum Manufacturing Co. v. Nairn (1878) 7 Ch D 834, 836. 44 J. Evans, ‘Passing Off and the Problem of Product Simulation’

(1968) 31 Modern Law Review 642;

Wadlow, paras. 6.49-6.69, 426-461; Edge v. Nicholls [1911] AC 693 (washing soap sold in a calico bag with a stick attached). For the possibility of design protection for the shapes of articles and limitations of such protection see at pp. 579-92.

45 [1990] RPC 341, 406. 46 Modus Vivendi v. Keen (World Marketing) [1996] EIPR D-82 (sale of butane gas by defendant in similar get-up in China); Johnston v. Orr Ewing (1882) 7 App Cas 219, 225. 47 Edge v. Nicholls [1911] AC 693. 48 United Biscuits (UK) v. Asda Stores [1997] RPC 513. 49 Hodgkinson & Corby v. Wards Mobility Services [1995] FSR 169.

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In order to establish that the claimant has goodwill associated with the get-up or packaging of a product (and thus that copying of it may amount to passing off), a claimant must be able to prove that the public recognizes that the get-up is distinctive of the claimant’s goods or services.°° In practice, a claimant may experience a number of difficulties in establishing such an association, particularly where the claim relates to the shape rather than the packaging of a product. More specifically, it may be difficult to show that consumers care at all about the trade origin of a product. Moreover, it may be difficult to establish that consumers

understand

functional

features of a product as indicating source. The need to show that the public regard a particular feature of a product as indicating source will prove particularly difficult where the product feature in question performs some function. While there is no public policy exception to the passing off action for ‘functional features’ and no requirement that features of get-up be ‘capricious’,”! it will be very difficult for a trader to demonstrate that the public view functional or non-capricious features of an article as indicating source. As Jacob J said in Hodgkinson & Corby v. Wards Mobility Services,’ the claimant must prove a misrepresentation which will be hard where there is no manifest badge of trade origin. This is because people tend to buy things for what they are and what they do, rather than out of interest in their origin. Accordingly, Jacob J found that a defendant who produced cushions which were used to help alleviate bed sores, had not passed themselves off as the claimant. This was the case even though the claimant’s cushions were memorable and striking, and the defendant’s cushions were similar in appearance. 2.1.3 Advertising style A trader may also attempt to establish that they have goodwill associated with particular advertising techniques or slogans, and thus that a defendant is liable for passing off as a result of using techniques or slogans that are similar to those which are used by the claimant. In Cadbury Schweppes v. Pub Squash,** the claimant produced a lemonflavoured soft drink called soxo. As a part of its marketing campaign in Australia, the claimant launched a series of television advertisements which featured ‘ruggedly masculine and adventurous men’ drinking soLo. The defendant promoted their lemonflavoured soft drink with a similar campaign. While the Privy Council rejected the passing off claim, Lord Scarman said that there was no reason in principle why the

°° However, while it is clear that imitation of get-up or packaging may constitute a misrepresentation, this does not mean that in all cases it will do so: Reckitt & Colman Products v. Borden [1990] RPC 341, 406.

>! Hodgkinson & Corby v. Wards Mobility Services [1995] FSR 169, 177. However, the House of Lords in Reckitt [1990] RPC 341, 416, did indicate that such imitation of get-up might not amount to a misrepresentation when it was the only way to present the product. Lord Oliver noted that the association of the plastic shape with the claimant arose because ‘there is nothing in the nature of the product sold which inherently requires it to be sold in the particular format.’ 52 Hodgkinson & Corby v. Wards Mobility Services [1995] FSR 169. 53. Cadbury Schweppes v. Pub Squash Co. [1981] RPC 429.

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claimant could not have acquired. goodwill associated with a particular advertising style. The reason for this was that™ the tort is no longer anchored as in the early nineteenth-century formulation to the name or trade mark of a product or business. It is wide enough to encompass other descriptive material, such as slogans or visual images, which radio, television or newspaper advertising campaigns can lead the market to associate with the plaintiff's product, provided always that such descriptive material has become part of the goodwill of the product.*

While the Privy Council recognized that passing off may protect a claimant’s advertising campaign, it seems that claimants will have difficulties in demonstrating that the public associates a specific style of advertising with a particular source.” 2.1.4 Use of image, likeness or voice

Finally, it is worth observing that, in principle, there is no reason why goodwill might not also arise through the use of a celebrity’s image,” likeness, or voice.°* Whether this is the case will always be a question of fact. In particular it will depend on whether the public believe, that there is a relevant connection between the celebrity and the goods or services in issue. It should be noted that unlike the position in many continental jurisdictions” and in several states in the USA, British law does not recognize a general right of publicity or personality.

2.2

A ‘TRADER

OPERATING

IN TRADE’

As we indicated earlier, in order to demonstrate goodwill, a claimant must be a trader and operate in trade. We will look at each of these in turn. 2.2.1 The claimant must be a ‘trader’

For a claimant to be in a position to show that they have the goodwill necessary to sustain a passing off action, they must show that they are engaged in a very general sense in a business or commercial activity. The upshot of this is that the action is not available where one person changes their name to that of another, or calls their cat, boat, or house by the same name as their neighbour (however inconvenient or

confusing that may be). For the most part, the requirement that the claimant be in a trade has presented few problems. This is because the courts have been quite generous when deciding whether 54 [1981] RPC 429, 490. 53> Tbid. 56 For further consideration of advertisements, see the cases discussed by Wadlow (1995), para. 6.73.

57 Henderson v. Radio Corporation Pty (1960) [1969] RPC 218. 58 Sim v. H. J. Heinz Co. [1959] 1 WLR 313. 59 W. Van Caenegem, ‘Different Approaches to the Problem of Celebrities against Unauthorized Use of

Their Image in Advertising’ [1990] EIPR 452.

60 ©. Goodenough, “The Price of Fame: The Development of the Right of Publicity in the United States’ [1992] EIPR 55 and 90.

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OFF

someone is engaged in business.°! For example, the courts have recognized authors,” performers, unincorporated associations,“ and charities as businesses that potentially give rise to goodwill. The courts have only occasionally rejected a claimant’s claim to passing off because of a lack of business status. One situation where a passing off action was denied was in Kean v. McGivan® where the claimant claimed the exclusive right to the name Social Democratic Party. The Court of Appeal refused relief on the basis that the claimant was involved in a non-commercial activity. This was because the claimant was a small northern-based political party whose engagement in commercial activities was limited to the hiring of halls for meetings. If the claimant had been one of the major political parties who receive and spend large sums of money, however, the court might well have held that they were engaged in a trade. It should be noted, too, that the decision in Kean v. McGivan has been treated as doubtful, in the light of earlier

authorities that were not cited to the court.©” A further situation in which the requirement that the claimant be a trader has proved problematic is where an action for passing off is brought by a trade association. If the trade association does not manufacture or sell any particular product, it will be unable to bring a passing off action against a defendant who has merely passed off its products as those of the members of the trade association.®* However, where a

trade association organized exhibitions, it could own goodwill through its members which would form the basis for an action in passing off: in such a case the action would have to be commenced by a member of the association acting in a representative capacity.” 2.2.2 The claimant must be trading Once it has been shown that a claimant is engaged in a trade activity, there will usually have been few problems in establishing that they have the goodwill necessary to sustain a passing off action. Traders have, however, experienced problems in

61 “The word ‘trade’ is widely interpreted: Kean v. McGivan [1982] FSR 119, 120 (Ackner LJ). 62 Alan Clark v. Associated Newspapers [1998] RPC 261, 269. 63 Henderson v. Radio Corporation Pty (1960) [1969] RPC 218; cf. Kaye v. Robertson [1991] FSR 62 (Kaye, an actor, not a trader in relation to story about accident). 64 British Legion v. British Legion Club (Street) (1931) 63 RPC 555, 562. 5 British Diabetic Association v. Diabetic Society [1996] FSR 1, 5. 66 [1982] FSR 119. The defendants were a high-profile breakaway group, known as the ‘Gang of Four’, from the Labour Party. In due course, the defendants’ Social Democrats merged with the Liberal Party to form the Liberal Democrats. 67 Holy Apostolic & Catholic Church of the East (Assyrian) Australia New South Wales Parish Association and others v. Attorney-General (New South Wales) [1989] 18 NSWLR 291, 294 (Court of Appeal of New South Wales).

68 A trade consortium may sue in its own name but cannot bring a representative action: Consorzio del Prosciutto di Parma v. Marks & Spencer [1991] RPC 351. See also Chocosuisse Union des Fabricants Suisse de

Chocolat v. Cadbury [1999] RPC 826, 843-4. The Court of Appeal did however acknowledge that it might be convenient if a trade association could sue on behalf of its members in such circumstances. 69 Artistic Upholstery v. Art Forma (Furniture) [1999] 4 All ER 277, 286-7.

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establishing goodwill in three situations. These are before they have started trading, after trading has ended, and where the trader is situated overseas. We will deal with each in turn. (i) Pre-trade goodwill. Given that goodwill ‘has no independent existence apart from the business to which it is attached’,” difficult questions arise when a person is setting up a business. In these circumstances the question may arise: at what point can a person claim to have goodwill? Is there any way in which a trader who is about to launch their business, and who has spent time and money on advertising and marketing can prevent a competitor from taking advantage of their pre-launch publicity? The traditional position is that before a passing off action can be brought, trading must have actually commenced.”! This can be seen, for example, in Maxwell v. Hogg.” Maxwell proposed to launch a magazine called BELGRAVIA in October 1866. As a part of the pre-launch publicity, in August and September of 1866 Maxwell advertised the forthcoming launch of BELGRAVIA in a magazine run by Hogg. On 25 September 1866, Hogg issued a magazine also called BELGRaAvIA. Despite noting that this was hardly fair and candid dealing, the court held that Maxwell could not restrain Hogg from using the same name. This was because a declaration of intention to use a name did not secure any protection.

In contrast, where there has been substantial pre-launch publicity, claimants have occasionally succeeded in gaining interim relief prior to the launch of their products. In Allen v. Brown Watson,”? the publisher of a book entitled My Life and Loves by Frank Harris which had been widely advertised prior to publication, was granted an interim injunction against the defendant who proposed to publish an abridged version also called My Life and Loves by Frank Harris.’* Similarly, in BBC v. Talbot Motor Co., the BBC had publicized their forthcoming traffic information service named CARFAX, which required motorists to have special car radios fitted or conventional ones adapted. The BBC was granted an interim injunction preventing the defendant from selling spare parts for vehicles under the name carFAx. Sir Robert Megarry V-C noted that ‘[a]lthough that scheme has not yet been launched, that does not prevent the BBC from having built up goodwill in it which is entitled to protection.’ While these authorities represent individual victories based on pre-launch publicity, they have not established conclusively that the courts will recognize goodwill prior to trade. In part

70 Star Industrial Co. v. Yap Kwee Kor {1976] FSR 217, 223; IRC v. Muller & Co.’s Margarine [1901] AC 217, 229:

71 The period of time and the types ofactivities that are needed to generate goodwill will vary from case to case: Stannard v. Reay [1967] RPC 589 (3 weeks’ trade under the name mr CHIPPy was sufficient to establish goodwill on the Isle of Wight). 72 (1867) LR2 Ch App 307.

73 [1965] RPC 191. 74 However, the claimant’s book had been published by the time of the hearing.

75 [1981] FSR 228, 233.

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AND

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this is because the cases were interim,” aspects of the reasoning are unconvincing,” and neither really turned on a demonstration of goodwill.” Later authorities, which have adopted a more hard-line approach, have acknowledged that while pre-launch advertising and publicity assists in the acquisition of goodwill, it is necessary for a trader to have customers for them to demonstrate that they have goodwill. This can be seen, for example, in My Kinda Bones v. Dr Pepper’s Stove Co.”? where the claimant’s claim to goodwill was based exclusively on pre-launch publicity. While the court refused to strike out the claimant’s action on the ground that their case was not ‘manifestedly unarguable’,®’ nonetheless Slade J said that he thought that the claimant’s prospects of success were very doubtful. The reason for this was that there was a requirement that ‘a substantial number of customers or potential customers must at least have had the opportunity to assess the merits of those goods or services for themselves.’

Slade J added

that customers

‘will not have sufficient

opportunity to do this until the goods or services are actually on the market.’*! While it might be inappropriate to protect a trader who has only made preparations to launch a product, fewer objections can be made about a trader being able to rely on passing off where they have engaged in widespread pre-launch advertising. This is because in these circumstances competitors are likely to be aware of the claimant’s intention to use the name in a business context. Consumers are also more likely to expect a product with specific associations. While the law in this area is unclear, it is important to note that even if there is no

pre-launch goodwill, if goods or services are placed on the market after extensive preparatory publicity, goodwill may well be generated after a very short time.® It is also important to recognize that different businesses have different relationships with their customers. For example, the launch of a radio programme requires very little, if any, active involvement by the public. Finally, it is worth noting that other jurisdictions have been more flexible in recognizing the rights of traders based upon pre-launch publicity than has been the case in the UK.*® (ii) Goodwill after trading ends? Given that goodwill is directly linked to the existence of a business, it follows that once a business ceases to trade that the goodwill starts to

76 But in BBC v. Talbot [1981] FSR 228 the court was considering the parties’ prospects of success, not merely whether there was a serious question to be tried. 77 e.¢. BBC v. Talbot [1981] FSR 228 may have misunderstood Allen v. Brown Watson [1965] RPC 191. See Wadlow (1995), para. 2.27. : 78 Wadlow (1995) explains that ‘[I]n reality, neither Allen v. Brown Watson [1965] RPC 191 nor BBC v.

Talbot [1981] FSR 228 actually turned on the existence of goodwill’ because both Allen and the BBC had long-established businesses: para. 2.27. 79 [1984] FSR 289 (concerning restaurants selling spare ribs, both to be called ‘rib shack’). 80 [1984] FSR 289, 303. BBC v. Talbot meant it was not impossible to argue the case. 81 [1984] FSR 289, 299. See also Marcus Publishing v. Leisure News [1990] RPC 576.

82 My Kinda Bones v. Dr Pepper’s Stove Co. [1984] FSR 289. 83 Pontiac Marina Private v. Cdl. Hotels International [1998] FSR 839, 861 (Court of Appeal for Singapore); Turner v. General Motors (1929) 42 CLR 352 (Australia); Windmere Corp. v. Charlescraft Corp. (1989) 23 CPR (3d) 60 (Canada).

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wither away.** As Lord Macnaghten said in Commissions of Inland Revenue v. Muller & Co.’s Margarine, goodwill ‘cannot subsist by itself. It must be attached to a business. Destroy the business and the goodwill perishes with it.’*° Nevertheless, in recognition of the commercial reality that businesses may recede, change hands, or close temporarily, the courts have held that goodwill is an asset that does not dissipate immediately a business ceases to operate. As a result, when trading stops ‘elements remain which may perhaps be gathered up and revived again.’ The critical question is how long can goodwill survive without the support of a business?®° This question was addressed in Ad-Lib Club v. Granville.8’ The claimant opened a night-club in 1964 called “The Ad-Lib Club’. As a result of noise problems the club closed in 1966. Pennycuick V-C granted an interlocutory injunction against the defendant who in 1970 announced that they were going to open a disco under the same name. Pennycuick V-C said that even after the cessation of business that the goodwill was retained for ‘some period of time’. Pennycuick V-C added that it was a question of fact as to when the goodwill associated with a business disappeared. Although five years had passed since the business had closed, the court held that the claimant had residual goodwill in the name, Ad-Lib Club. This was because the public still associated the name with the club and, as the claimant had been seeking an alternative venue since the club had closed, there was no reason to think they had abandoned the business. An intention to reopen the business coupled with a continued reputation are critical factors in deciding whether goodwill continues to exist after a business ceases to trade. This can be seen by contrasting Ad-Lib Club with the Privy Council decision in Star Industrial.** In Star Industrial, the claimant was a Hong Kong-based company that manufactured and exported toothbrushes to Singapore, where they were sold under the name ACE BRAND, until it ceased trading there in 1965. In 1968 the claimant

assigned the exclusive use of the name ACE BRAND to a subsidiary in Singapore. When the defendant began using the same name for toothbrushes in Singapore, the claimant began proceedings for passing off. The Privy Council dismissed the claim. Lord Diplock said that the claimant had no right in the name because the claimants had ceased trading in Singapore, and had no intention of resuming trade there.* The Privy Council also held that even if there had been residual goodwill in the name, the claimant would not have succeeded because they had assigned the residual

goodwill to their subsidiary.” 84 Wadlow (1995), paras. 2.87—90. 85 [1901] AC 217, 224. 86 In the context of registered marks, 5 years’ non-use, without due cause, is treated as a ground for revocation: see pp. 844-54.

87 [1971] FSR 1; [1972] RPC 673. See also A. Levey v. Henderson Kenton (Holdings) [1974] RPC 617 (closure for 2 years of claimant’s department store, because of fire, coupled with notices saying that reopening, held to maintain goodwill).

88 [1976] FSR 256 (PC). 89 [1976] FSR 256, 269 (PC). 90 In Peter Waterman v. CBS [1993] EMLR 27, Browne-Wilkinson V-C has suggested that this case may be

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TRADE MARKS AND PASSING OFF

(iii) Foreign traders. The next situation where questions about the existence of goodwill arise is in relation to foreign traders.?! Where a business located in a foreign country acquires an international reputation, this may lead the foreign trader to set up business in the UK. In this case, the UK-based business will normally have goodwill.

In many situations, however, something short of this may occur. For example, the foreign business may merely have an agent in the UK, or may only respond to orders taken directly from customers in the UK. Alternatively, the only connection that a trader may have with England and Wales is that they have a reputation, but no place of business or customers to speak of. In these circumstances, the question arises: can a foreign trader rely on passing off to prevent their interests being used in the UK? The case law, which is by no means conclusive, appears to distinguish between three situations. We will deal with each in turn. (a) Evidence of business activity. If the claimant can demonstrate a trading link with the UK, they will normally succeed in establishing goodwill. The courts have been generous when considering whether a foreign trader has a sufficient trade presence and, consequentially, goodwill in the UK. It is clear that there is no need to have a

registered business in the UK. The generous approach taken by the courts can be seen, for example, in Sheraton.” In this case, the claimant company, which ran a chain of high-class hotels, but at the time had none in England, was granted an interim injunction to prevent the defendant from using the name, ‘Sheraton Motels’. The court held that although at the time the claimant did not have any hotels in the UK, the fact that bookings for their hotels abroad were frequently made both through an office which Sheraton maintained in London, and through travel agencies, was sufficient to entitle them to relief. (b) No business activity, but customers. The second situation where a foreign trader

may attempt to claim goodwill is where they have customers in the UK.” The law on this point is unclear. On the one hand there is a line of cases that suggest that for a foreign trader to establish goodwill in the UK, they must show both that they have customers and that they carry on business in the UK. This can be seen in the Crazy Horse decision.” In this case, the claimant was proprietor of the CRAZY HORSE SALOON in Paris. The defendant opened a place of the same name in London. Pennycuick J refused to grant an interlocutory injunction to restrain the defendant from using the CRAZY HORSE SALOON name in London. While the claimant had distributed leaflets in

better seen as one which was not so much about the existence of goodwill as about damage to the claimant. He has asked ‘since the Hong Kong company had neither customers nor residuary goodwill in Singapore, how could any act done there injure its goodwill wherever it was situate?’ 9! For consideration of the extent to which a UK claimant can sue for passing off committed abroad, see

pp. 1000-6.

92 Sheraton Corporation v. Sheraton Motels [1964] RPC 202.

°3 There is some authority to the effect that this is insufficient to justify a passing off action, but the preponderance of authority now appears to be to the contrary.

94 Bernadin v. Pavilion [1967] RPC 581.

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England advertising the saloon, there was no evidence that there were English customers of the Paris saloon (at least in the sense of persons who made bookings in the UK). The judge explained that ‘a trader cannot acquire goodwill in this country without some sort of user in this country. His user may take many forms and in certain cases very slight activities have been held to suffice . . I do not think that the mere sending into this country by a foreign trader of advertisements advertising his establishment abroad could fairly be treated as a user in this country.’ The Crazy Horse decision has been criticized by commentators and distinguished by the courts in the so-called ‘soft-line’ of cases.*° In this second line of cases, it was

held that if a foreign business can demonstrate that they have customers in the UK (other than foreign customers who have merely moved here),”’ it is likely that the court will treat this as sufficient to establish goodwill. That is, it is not necessary for them to also establish that they carry on business in the UK (in any formal sense). For example, in Athlete’s Foot Marketing Association Inc. v. Cobra Sports, an American retailer selling shoes under the name ATHLETE’s FOOT sought to prevent a UK business from using the same name. While the American firm had a reputation in the UK at the relevant time, they had not yet conducted business in the UK. Moreover, the claimant was unable to demonstrate that a single person in England and Wales had purchased their shoes. In considering whether the claimant had goodwill, Walton J said ‘it does not matter that the plaintiffs are not at present actually carrying on business in this country, provided they have customers here.’ The reason for this was that no trader can complain of passing off as against him in any territory . . . in which he has no customers, nobody who is in a trade relation with him. This will normally . . . be expressed by saying that he does not carry on any trade in that particular country (obviously, for present purposes, England and Wales) but the inwardness of it will be that he has no customers in that country: no people who buy his goods or make use of his services (as the

case may be) there.”* Given that the claimant had no customers in the UK, the court held that they did not have the goodwill necessary to sustain the passing off action. Perhaps the most formidable critique of the approach adopted in the Crazy Horse decision is in Peter Waterman v. CBS.” Here, CBS was proposing to refurbish studios

in London and call them THE HIT Factory. The claimant, who ran a recording 95 [1967] RPC 581, 584. °© The terms ‘hard’ and ‘soft’ were characterizations used in Athlete’s Foot [1980] RPC 343, at 349. See also Baskin-Robbins Ice Cream v. Gutman {1976] FSR 545, 548 and Maxim’s v. Dye [1978] 2 All ER 55, 59.

97 Customers on US forces bases who bought Budweiser beer from PX stores were excluded from consideration in Anheuser-Busch v. Budejovicky Budvar Narodni Podnik [1984] FSR 413 even though sales numbered 65 million per annum; however, in Jian Tools for Sales v. Roderick Manhattan Group [1995] FSR 924

Knox J treated as relevant customers resident in the UK who had been influenced by foreign advertising and ordered goods from the US business: these were customers on the open market. 98 [1980] RPC 343, 350. See also S.A. des Anciens Etablissements Panhard et Levassor v. Panhard Levassor Motor Co. (1901) 18 RPC 405.

99 [1993] EMLR 27.

686

TRADE

MARKS

AND PASSING

OFF

business nicknamed THE HIT FACTORY, brought an action to stop CBS from using the same name. Based on the running of a recording studio in New York which was called THE HIT FACTORY, CBS responded by arguing that it had goodwill in the UK that was at the very least concurrent with any goodwill of the claimant. Browne- Wilkinson V-C held that the claimant failed to establish the distinctiveness of THE HIT FACTORY and, as such, consideration of the defendant’s position was unnecessary. Nevertheless, Browne-Wilkinson V-C went on to review the authorities on the issue of whether the English courts will protect a foreign trader in the United Kingdom. Browne-Wilkinson V-C began by noting that the essence of goodwill is the ability to attract customers and potential customers to do business with the owner of the goodwill. Consequently, any interference with the trader’s customers is an interference with their goodwill. Browne-Wilkinson V-C added that prior to the Crazy Horse decision, there was nothing in the authorities inconsistent with that view. For the Vice-Chancellor, that case law merely required the use of the name and the presence of customers in this country. To the extent that the Crazy Horse decision required that the trader had conducted some business (however slight) in England and Wales,

Browne-Wilkinson V-C said that the case was wrongly decided.!°° The judge took the view that the presence of customers in this country was sufficient to constitute the carrying on of business here. This is the case whether or not there is a place of business in England and Wales, or services are provided there. On this basis, BrowneWilkinson V-C held that since the defendant’s New York recording studio had a substantial number of customers in England, they would have been entitled to protect their name in the UK against third parties. (c) Mere reputation. The third situation where the question of whether a foreign trader has goodwill in the UK is where the claimant merely has a reputation, but no customers as such in the UK. This might be the case where there is ‘spill-over’ advertising or where the product becomes known through films, television, or via the Internet. Given that it is necessary for a foreign trader to have customers in the UK for them to establish goodwill (or on a more extreme view, customers and business), it

would seem reasonable to assume that where a foreign trader merely has a reputation in the UK, they would not be able to prove that they had the goodwill necessary to sustain a passing off action. The case law on this point is unclear. On the one hand, there is authority that supports the conclusion that a foreign trader who only has a reputation in the UK may nonetheless still be able to show that they have goodwill. Indirect (and inconclusive) support for this comes from the cases dealing with pre-trade goodwill, which were discussed above.'*! More direct support for this approach comes from the 1976 100 For Browne-Wilkinson V-C if the foreign trader uses his or her name for the purposes of trade in the UK, the piracy of that name is an actionable wrong wherever the goodwill is located. Browne-Wilkinson V-C

acknowledged that there is binding authority to the effect that the basis of claim must be a goodwill situated in England. 101 See pp. 680-2.

PASSING OFF

687

decision of Maxim’s v. Dye. The claimant in this case was the world-famous restaurant in Paris known as MAxim’s. In 1970, the defendant opened a restaurant in Norwich

also called Maxim’s. In considering whether the claimants were entitled to protect their reputation, although they were not running any business in England, Graham J held that the claimant did have sufficient goodwill to bring a passing off action. After noting that globalization was making the ‘world grow smaller’, Graham J said that the true legal position was that the ‘existence and extent of the claimants’ . . . goodwill [in his business] in every case is one of fact however it may be proved and whatever it is based on.’ Graham J added that the claimants’ existing goodwill in this country, ‘which is derived from and is based on a foreign business ... may be regarded as prospective but none the less real in relation to any future business which may be later set up by the plaintiff in this country.’!° In another line of decisions, however, the UK courts have made it clear that where a trader only has a reputation in the UK, they will not have the goodwill necessary to justify an action for passing off.'* This can be seen, for example, in the Budweiser case.'°° In this decision Anheuser-Busch, an American company who manufactured BUDWEISER beer sued the Czech brewers, Budejovicky Budvar, for passing off. The Czech brewers began selling their boutique beer in England under the name BUDWEISER BUDVAR in 1973.' While at this time the claimant’s sales of BUDWEISER were confined to stores on American Air Force bases, the beer was widely known throughout the UK. The Court of Appeal rejected the claimant’s claim on the basis that there was no goodwill in the UK. As the sales on the Air Force bases were not available for general purchase, the court held that they were to be ignored.'” In rejecting the action, the court supported the view that mere reputation alone would not justify an action for passing off. The requirement that for a foreign trader to have goodwill they must be able to show that they have customers in the UK has been criticized by those who consider the geographical division of goodwill to be out-of-step with the commercial reality of globalized trade.'°’ Support for this criticism comes from the fact that a number of comparable jurisdictions have recognized the international character of goodwill. The Full Federal Court of Australia in ConAgra v. McCain Foods (Australia)'® has perhaps

102° Maxim’s v. Dye [1978] 2 All ER 55, 59 quoting from Baskin-Robins [1976] 2 FSR 545, 548. 103 Maxim’s v. Dye [1978] 2 All ER 55, 60. 104 Athlete’s Foot Marketing Association v. Cobra Sports [1980] RPC 343; Jian Tools for Sales v. Roderick Manhattan Group [1995] FSR 924.

105 Anheuser-Busch v. Budejovicky Budvar Narodni Podnik [1984] FSR 413. 106 Budweis is the old German name of the town in which the Czech beer is brewed. 107 In Anheuser-Busch v. Budejovicky Budvar Narodni Podnik [1984] FSR 413, 462, Oliver LJ defined the

question as ‘how far is it an essential ingredient of a successful claim in passing off that the plaintiff should have established in this country a business in which his goods or services are sold to the general public on the open market?’ 108 A. Coleman, ‘Protection of Foreign Business Names and Marks Under the Tort of Passing Off (1986) Legal Studies 70, 76; F. Mostert, ‘Is Goodwill Territorial or International?’ [1989] EZPR 440. 109 ConAgra v. McCain Foods (Australia) (1992) 23 IPR 193, 234.

688

TRADE

MARKS

AND PASSING

OFF

gone the furthest in this regard. In this case, Lockhart J said that the ‘real question is whether the owner of the goods has established a sufficient reputation with respect to his goods within the particular country in order to acquire a sufficient level of consumer knowledge of the product and attraction for it to provide custom which, if lost, would likely result in damage to him. This is essentially a question of fact.’!!° In the Peter Waterman v. CBS case, Browne-Wilkinson V-C commented on the need

for passing off to be adapted to modern business environments in this way: The changes in the second half of the twentieth century are far more fundamental than those in nineteenth century England. They have produced worldwide marks, worldwide goodwill and brought separate markets into competition with the other. Radio and television with their attendant advertising cross national frontiers. Electronic communication via satellite produces virtually instant communication between all markets. In terms of travel time, New York by air is as close as Aberdeen by rail. This has led to the development of the international reputation in certain names, particularly in the service fields, for example Sheraton Hotels, Budget Rent A Car ... In my view, the law will fail if it does not try to meet the challenge thrown up by trading patterns which cross national and jurisdictional boundaries due to a change in technical achievement.’ Despite these comments

and his liberal interpretation of the case law, the Vice

Chancellor was not prepared to abandon the requirement that to establish goodwill, a foreign trader must have customers in the UK. This reluctance to allow an action based merely on reputation may have been grounded in a fear that if such a prerequisite was abandoned it would enable claimants with an international reputation to enforce a worldwide monopoly without any guarantee that they will ever expand into the domestic market. In Australia, this objection has been met by emphasizing the need for a claimant to show damage, diversion of trade that it is about to com-

mence, or the tarnishment of reputation.’ (d) Well-known marks. Whatever the criticisms and prospects for further development, the 1994 Trade Marks Act provides foreign traders who lack local goodwill with a potential remedy.'’? Section 56, which gives effect to Article 6 bis of the Paris Convention,'"4 states that: The proprietor of a trade mark which is entitled to protection under the Paris Convention as a well-known trade mark is entitled to restrain by injunction the use in the United Kingdom of a trade mark which, or the essential part of which, is identical or similar to his mark, in relation to identical or similar goods or services, where the use is likely to cause confusion. 110 ConAgra v. McCain Foods (Australia) Pty (1992) 23 IPR 193, 234. 111 Peter Waterman v. CBS [1993] EMLR 27. 112 ConAgra v. McCain Foods (Australia) (1992) 23 IPR 193, 235. 13 This remedy is less attractive than passing off in three obvious respects: firstly, TMA s. 56 is only available if the mark is “well known’; second, s. 56 results only in injunctive relief rather than compensation or restitution; third, s. 56 does not extend to dissimilar goods, whereas passing off might. Note, however, that many of the limitations to registrability of trade marks (e.g. s. 3(2) ), and statutory defences to infringement

of registered marks (TMA ss. 11-12), do not appear to apply on the s. 56 action. 114 Trademark Law Treaty, Art. 16 and TRIPs Art. 16(2) require application of Paris Art. 6 bis to service

marks.

;

PASSING OFF

689

Importantly, this provision applies to a proprietor of a ‘well-known’ trade mark ‘whether or not that person carries on business, or has any goodwill, in the United

Kingdom.’ The key limitation in section 56 is not goodwill. Rather, it is whether the mark is ‘well-known’. In Microsoft Corporation’s Applications!'’ the Trade Mark Registry held (albeit in a different context)'’® that in May 1991 winpows was not a well-known mark. The Registrar explained that he did not consider that the status of well-known mark was one to be conferred lightly. He added that ‘there would need to be some independent evidence from the trade and, perhaps, more importantly the public as to the recognition accorded to the mark in this country. Evidence of use alone . . . cannot sustain the claim.’'!” It seems that a number of considerations will be taken into account when deciding whether a mark is well-known. These include trade recognition and public recognition abroad and in the United Kingdom;!"* the inherent distinctiveness of the mark; advertising use; sales; and the value of the goodwill.

3 THE

SCOPE

OF GOODWILL

Once it has been decided that the claimant has goodwill, the next question to consider is its scope. This is an important question because it may influence whether the defendant’s representation amounts to a passing off. While similar inquiries take place with other forms of intellectual property, there is one important difference, which relates to the territorial scope of the property. For example, when considering whether a patent has been infringed, the question of the geographical scope of the protection is not an issue. This is because the patent operates throughout the whole of the UK. This is not the case, however,

in relation to an action for passing off where

the

territorial or geographical scope of the goodwill must first be ascertained. Despite the apparent dominance of nationwide firms and franchises, there are many businesses that only trade in a small and relatively confined area. In these circumstances, the way the physical limits of the goodwill are determined may be crucial to the success or otherwise of a passing off action.

115 [1997-8] Information Technology Law Reports 361. 116 That of TMA s. 6(1)(c).

117 [1997-8] Information Technology Law Reports 361, 371. 118 Art. 16(2) of TRIPs requires that account be taken of the knowledge of the trade mark in the relevant sector of the public, including knowledge that has been obtained as a result of the promotion of the trade mark.

690

TRADE

MARKS

4 OWNERSHIP

AND

PASSING

OFF

OF GOODWILL

In principle, the owner of goodwill is the business that generates it. While goodwill will normally be owned by a single trader or business, the courts have recognized that a group of traders may share goodwill in a name or feature of a product that they have in common. Where the singularity of a product is shared by a group of traders (normally in a specific region), they may share goodwill in the identifying feature: the name, image, logo, etc. The courts have recognized shared goodwill in relation to

champagne,'”’ sherry,'”° whisky,'?! advocaat, and Swiss chocolate. ae Problems arise, however, where a number of different people, companies, or businesses cooperate in the making and distribution of a product. In these circumstances, the courts are forced to decide whether the goodwill is individually or jointly owned and, if so, by whom. The difficulties in deciding how the ownership of goodwill is to be ascribed have become all the more problematic with the expansion of international trade, the globalization of markets, and the growth of multinational corporations.'”° In such cases it is common for a firm in one country to expand into another through a subsidiary, distributor, agent, or licensee. In the absence of a carefully formulated contract dealing with the relationships between the parties, difficult questions can arise as to ownership of the goodwill generated by the actions of the local distributor and foreign supplier. This is especially the case when the arrangements between the parties end. This can be see, for example, in Scandecor Development v. Scandecor Marketing.'** In this case a Swedish art poster business founded in the 1960s was rearranged so that a subsidiary, Scandecor Marketing (the defendant), had responsibility for marketing the claimant’s products in the UK. The claimant supplied poster products for sale. The defendants also sold ancillary products, such as calendars and cards, not supplied by the claimant, and over which they had no control. The defendant’s marketing occasionally referred to the fact that they were connected with the world’s largest poster company. In the 1980s the claimant was taken over. The new owners terminated the agreement with the defendant. After further negotiations failed, the claimant demanded that the defendant stop using the scaNDECOR mark. At first instance, Lloyd J held that the goodwill was shared between the claimant

and defendant, effectively finding two different, yet connected, forms of goodwill: a distributor’s goodwill and a publisher’s goodwill. The Court of Appeal rejected that view, holding instead that the goodwill belonged to the defendant. The Court of Appeal observed that where the goodwill originates from a common source overseas, 119 Bollinger v. Costa Brava Wine Co. [1960] Ch 262; Taittinger v. Allbev [1994] 4 All ER 75 (champagne companies able to prevent use of Elderflower champagne). 120 Vine Products v. Mackenzie [1969] RPC 1.

121 John Walker & Sons v. Henry Ost [1970] 2 All ER 106 . 122 Chocosuisse Union des Fabricants Suisse de Chocolat v. Cadbury [1998] RPC 117. 123 Scandecor Development AB v. Scandecor Marketing AB [1999] FSR 27, 38-9 (CA).

124 Tbid. [1998] FSR 500; [1999] FSR 27 (not considered by the House of Lords).

PASSING OFF

691

but then expands, spreads, and is developed by different companies in different territories, it is necessary to analyse the effect of the changes occurring from time to time

in the control and ownership of the businesses which generate the goodwill.'” Reviewing that history, the Court of Appeal noted that the contact with customers had been largely through the defendant. They also denied that there was any ‘rule of law or presumption of fact that the goodwill generated by the trading activities of a wholly owned subsidiary company belongs to the parent company.’!”° Instead, ‘what matters is who retailers identified as the person carrying out the trading activities in the local territory.'’’ In this respect the Court of Appeal placed less emphasis than Lloyd J had on the fact that the defendant had occasionally referred to the international scope of its activities. The evidence showed the customers treated the supplier, that is the defendant, as more significant than the publisher.

4.1

GOODWILL

AS PROPERTY

Goodwill is a form of property that is transmissible by assignment, on death, or by operation of law.'*® There are no formalities laid down for assignment of goodwill inter vivos. However, it is relatively settled that goodwill cannot be assigned in ‘gross’, that is separately from the business to which it is attached.'”? 125 The Court of Appeal in Scandecor [1999] FSR 27, 42 accepted that in an appropriate case, it is legally and factually possible for a business based overseas to acquire goodwill in this country by the supply of its products or services through a subsidiary, agent, or licensee. Whether or not that occurs must depend on the facts of the particular case. Cf. Habib Bank v. Habib Bank AG Zurich [1981] 2 All ER 650 (international parent

may retain international goodwill); Gromax Plasticulture v. Don & Low Nonwovens [1999] RPC 367. 126 [1999] FSR 27, 43. 127 [1999] FSR 27, 45. 128 Artistic Upholstery v. Art Forma (Furniture) [1999] 4 All ER 277, 286 (goodwill is property in context of assignment, nationalization, bankruptcy; and can be owned by unincorporated association through its members).

129 Barnsley Brewery Company v. RBNB [1997] FSR 462, 469.

33 MISREPRESENTATION

1 INTRODUCTION The second element of the passing off action, which we consider in this chapter, is the misrepresentation.’ Historically, the need for a misrepresentation, which is one of the factors that distinguishes passing off from a law of unfair competition, is explained by the fact that the passing off action grew out of the common-law action for deceit.’ Typically, a misrepresentation occurs where the defendant says or does something that indicates (expressly or impliedly) that the defendant’s goods or services derive from (or are otherwise economically connected with) the claimant. Initially, liability for passing off was limited to situations where the defendant’s actions gave rise to the suggestion that their goods or services had come from the claimant; that is, that there was confusion as to the source of the goods. Over time, however, the action has

expanded to include representations that relate to the quality of the goods or services, and to representations that suggest that there is a connection between the claimant and the defendant. This chapter is divided into four parts. First, we consider the type of conduct that forms the basis of the defendant’s misrepresentation. Secondly, we look at the types of suggestions that are actionable. Thirdly, we look at the requirement that, for a statement to be a misrepresentation, it must be likely to cause confusion. Fourthly, we note that a passing off action can be brought not only against a person who carries out the misrepresentation, but also against someone who provides the means that enables the misrepresentation to occur.

2 NATURE

OF THE

DEFENDANT S REPRESENTATION

There are no formal restrictions on the types of representations that are actionable. Indeed, as Lord Parker said in Spalding v. Gamage, it is ‘impossible to enumerate or ' In Spalding v. Gamage [1915] 32 RPC 273, 284, Lord Parker referred to false representation by the defendant as ‘the basis of a passing off action’. 2 See, J. Phillips and A. Coleman, ‘Passing Off and the Common

Quarterly Review 242, 243 for a comparison of passing off with deceit.

Field of Activity’ (1985)

101 Law

MISREPRESENTATION

693

classify all the possible ways in which a [trader] may make the ... representation relied upon.” So long as the representation confuses the public in a relevant way, the means by which this comes about is irrelevant. Having said this, it may be helpful to consider some of the more important points about the types of conduct that may constitute a misrepresentation.

2.1

DEFENDANT’S

STATE

OF MIND

In deciding whether a misrepresentation has taken place, the key concern is with the consequences of the defendant’s actions and the effect that these have upon the public, rather than the state of the defendant’s mind. As such, to succeed in a passing off action, there is no need for the misrepresentation to be conscious, deliberate, inten-

tional, or fraudulent.* It also does not matter whether the misrepresentation was made deliberately or innocently. Similarly, the fact that a statement is true does not matter, so long as the defendant’s actions/representations generate the requisite confusion in the mind of the public. The misrepresentation is actionable even if it is unintentional, or can be explained on what seem like legitimate grounds.’ For example, if a person trades under their own name they might still be passing their goods off as those of the claimant.® For example, in Parker Knoll v. Knoll International the defendant, Hans Knoll, established

a furniture manufacturing business that he called KNOLL INTERNATIONAL. Another firm of furniture makers, established by the defendant’s uncle, already traded as PARKER KNOLL. Despite dicta to the effect that individuals have a ‘natural and inherent right’ to use their own name,® the House of Lords denied that a person was entitled to use their own name to indicate that their goods are the goods of another. Consequently, their Lordships granted an injunction.’ Given that there is no defence where a person uses their own name, it is not surprising that there is no defence where someone changes their name or uses a nickname.'®

2.2

FORM

OF THE

MISREPRESENTATION

The courts have been very flexible in deciding whether a defendant has made the requisite misrepresentation. The flexible nature of the misrepresentation is reflected 3 4 5 ©

Spalding v. Gamage (1915) 32 RPC 273, 284. HFC Bank v. Midland Bank [2000] FSR 176, 181. Montgomery v. Thompson [1891] AC 217, 220. G. Kodilinye, ‘Passing Off and the Use of Personal Names’ (1975) 26 Northern Ireland Legal Quarterly

177; Wadlow

(1995) paras. 7.10—7.14, pp. 482-491.

7 [1962] RPC 265; Nad Electronics Inc. v. Nad Computer Systems [1997] FSR 380, 392.

8 Marengo v. Daily Sketch (1948) 65 RPC 137. IAG) Kodilinye, ‘Passing Off and the Use of Personal Names’ (1975) 26 Northern Ireland Law Quarterly 177,

preferring Lord Denning’s dissenting speech to those of the majority, argues that the case ‘far from laying down any coherent principles, seems to have thrown the law into even greater confusion than before.’ 10 Biba Group v. Biba Boutique [1980] RPC 413, 420.

694

TRADE MARKS AND PASSING OFF

in the fact that the misrepresentation can arise through the use of words or actions. We will look at each of these in turn. (i) Words. The commonest

form of misrepresentation involves the use of words,

whether oral or written. In some cases this will occur where the defendant makes a statement that links them either explicitly or implicitly to the claimant. Often, the defendant will use a name that is identical or very similar to the trade name used by the claimant. Thus in Taittinger v. All Bev,'! the Court of Appeal held that by calling their drink ELDERFLOWER CHAMPAGNE the defendants had made a misrepresentation that they were part of the group of champagne producers. One of the consequences of the fact that words are able to form the basis of a misrepresentation is that passing off may prevent a person from calling their book, film, record, or band by the same name or title as is used by someone else.'” (ii) Action. In some cases the relevant misrepresentation may be implied from the

action of the defendant. Perhaps the clearest example of this is where the defendant manufactures their goods to look like the claimant’s. It will also occur if a customer asks a trader to supply them with someone else’s goods, but the trader instead supplies the customer with their own goods, this would be an actionable misrepresentation.’* A misrepresentation can also occur where the defendant places their product in close proximity to the claimant’s. For example, in Associated Press v. Insert Media," the court held that by inserting advertisements inside the claimant’s newspaper after the paper had been delivered to newsagents, the defendant passed the inserts off as if they were the claimant’s. The position might have been different, however, if the two

products had only been delivered at the same time. It does not seem likely that where products are placed side by side on a supermarket shelf that this would amount to a misrepresentation. Another situation where the action of a defendant may give rise to an actionable misrepresentation is in relation to the registration of names used on the Internet. This can be seen in British Telecommunications v. One In A Million’? which was one of the earliest British cases to deal with the practice of cybersquatting. The defendant in this case was a dealer in Internet domain names and had secured domain name registration for prestigious names such as and . These were registered without the consent of the organization who owned the goodwill in those names. The defendant’s aim was either to sell the names they registered to the owners 11 [1993] FSR 641. 2 Wadlow (1995) 415—426; R. Stone, “Titles, Character Names and Catch Phrases in the Film and Televi-

on Industry: Protection under the Law of Passing Off (1996) 7 Ent LR 263.

Ss=

3 Bristol Conservatories v. Conservatories Custom Built [1989] RPC 455; LEEC v. Morquip (7 Feb. 1996)

[1996]

EIPR

D-176

(speculating

on

the possible

significance

of body language

in forming

the

misrepresentation).

4 [1991] FSR 380. 15 [1998] 4 All ER 476. For criticism, see M. Elmslie, ‘The One in a Million Case’ [1998] Ent LR 283, 284

(questioning the conclusion given that no evidence of how users view the register was given in the case). See also French Connection v. Sutton [2000] ETMR 341.

MISREPRESENTATION

695

of the goodwill (using the blocking effect of the registration to negotiate for a better price),'° or to sell them to other people (such as collectors). The Court of Appeal held that the act of registering names such as amounted to an actionable misrepresentation. This was particularly the case where the name denoted a particular trader and no one else. Aldous LJ explained that the ‘placing on a register of a distinctive name such as “marksandspencer” makes a representation to persons who consult the register that the registrant is connected or associated with the name registered and thus the owner of the goodwill in the name.’!” This decision, which is not without its critics, has important ramifications for the legal regulation of the Internet."*

3 WHAT

TYPE OF SUGGESTIVE IS ACTIONABLE?

CONDUCT

In the previous section we looked at the various forms of conduct that constitute a misrepresentation. In this section we turn to look at the consequences that flow from that conduct. In so doing, it is important to note that in order to promote the sale of their products or services, a trader may act or make statements that are suggestive of a number of things. For example, a defendant may act in such a way that the public comes to believe that their products are cheaper than the claimant’s, that they are environmentaly more sound, or better designed. They may also suggest that their goods are very suitable to be used in connection with the claimant’s. Equally, a trader may suggest that their goods are similar to or better than the claimant’s. While the defendant’s conduct in each of these cases may harm the claimant, this does not mean that they will succeed in a passing off action. This is because passing off only protects against certain types of suggestions. In this section we examine the types of

suggestions that are actionable. Before looking at these, it should be noted that the misrepresentation may be made expressly or may be implied from the conduct of the defendant. The most straightforward situation is where the defendant makes an express statement, for example, that the claimant is the source of their goods or services. Another straightforward situation is where the defendant takes an aspect of the claimant’s “indicium of reputation’, such as their name, logo, or slogan, colour, or get-up. In some cases, however,

the reference to the claimant might be more indirect. For example, in Copydex v. Noso,'? the claimant’s sold a type of glue called copypEx. The glue was demonstrated

16 For example, the defendants offered to sell the domain name to BURGER KING for

£25,000.

:

17 [1998] 4 All ER 476, 497.

18 See the discussion of ICANN at p. 1007 below.

19 (1952) 69 RPC 38.

696

TRADE MARKS AND PASSING OFF

on a television programme called “Women’s Hour’. However, the name of the glue was not mentioned. The defendant subsequently advertised its glue with the words “as shown on Woman’s Hour’. Vaisey J said he would have granted interim relief but accepted an appropriate undertaking from the defendant.” Similarly, the placement of advertising leaflets inside the claimant’s newspaper gave rise to the suggestion that the claimant’s had control over the content of the advertisements.”

3.1

MISREPRESENTATION

AS TO

SOURCE

The traditional form of misrepresentation occurs where the defendant’s actions give rise to a suggestion that the defendant’s goods or services are those of the claimant. That is, the defendant somehow suggests that the claimant is the ‘source’ of their

goods.” Such a misrepresentation is objectionable because it confuses the public and attempts to ride on the back of the claimant’s reputation. A misrepresentation as to source occurs, for example, where the defendant suggests that they are the manufacturer, marketer, or retailer of the product. It also occurs

where the defendant uses a word or name that the public associates with the claimant’s business. In both these situations the defendant’s conduct gives rise to the suggestion that their goods emanate from the claimant. The representation may also give rise to a suggestion that the goods or services of the claimant and defendant are related. For example, in Kimberley Clark v. Fort Sterling,” as a part of the defendant’s campaign to promote the NOUVELLE toilet roll, the defendant offered to placate customers who had brought NOUVELLE but was dissatisfied with it, by replacing NOUVELLE with ANDREX toilet paper. The claimant, who owned the goodwill in ANDREX, objected. The court held the offer to be a misrepresentation because it was likely to lead purchasers into thinking that NOUVELLE was a product from the ANDREX Stable, or that ANDREX was in some way behind the promotion.

3.2

MISREPRESENTATION

AS TO QUALITY

The courts have also recognized that a misrepresentation may occur where a defendant makes a representation about the quality of the claimant’s goods. The objection here is not that the defendant is riding on the back of the claimant’s reputation (although this may occur), so much as to the negative impact that the defendant’s actions have upon the claimant’s goodwill. This can be seen in Spalding v. Gamage.”*

20 While it is not completely clear whether the basis of the action was passing off, malicious falsehood, or slander of title, it illustrates how the misrepresentation may be made indirectly. 21 Associated Newspapers v. Insert Media [1991] 3 All ER 535. 22 It is irrelevant that the customers are not actually familiar with the source: Birmingham Vinegar Brewery v. Powell [1897] AC 710, 715; Edge v. Nicholls [1911] AC 693; United Biscuits (UK) v. Asda Stores [1997] RPC 513. This is referred to as the ‘anonymous source’ doctrine.

23 [1997] FSR 877. 24 [1915] 32 RPC 273.

MISREPRESENTATION

697

In this case, the claimant, who manufactured and sold footballs, brought a passing off action against the defendants who had obtained some of the claimant’s old disused stock and sold them as if they were new and improved footballs. Lord Parker held that this was a misrepresentation. The reason for this was that [the] proposition that no one has the right to represent his goods as the goods of somebody else must, I think . . . involve as a corollary the further proposition, that no one, who has in his hands the goods of another of a particular class or quality, has a right to represent these goods to be the goods of that other of a different quality or belonging to a different class.”

The extension of the passing off action to include representations about the quality of the claimant’s goods may enable a trader to control the parallel importation of their goods. This has been particularly important where a trader places goods of one quality on a foreign market under a particular sign and goods of a different quality on the UK market under the same sign. In these circumstances, the trader may be able to use passing off to prevent goods marketed abroad from being imported into the United Kingdom. In Colgate-Palmolive v. Markwell Finance,”* the claimants were all members of an international group of companies which marketed toothpaste in different countries. While the external appearance of the toothpaste tube that was sold in different countries was very similar (the mark and get-up were the same), the quality of the contents varied from country to country. For example, the coLcare toothpaste

sold in Brazil was of a lower quality than that which was available in the UK. This was because the Brazilian toothpaste used a number of cheaper raw materials, such as local chalk, instead of the preferred ingredients which were used in the UK. Colgate UK, a wholly owned subsidiary of Colgate US, instigated an action to prevent Markwell from importing lower-quality coLGATE toothpaste which had been sold in Brazil into the UK. Markwell argued that Colgate UK had no right to rely upon the reputation for superior quality toothpaste that it had in the UK, when the corcare trade marks and the get-up were used as worldwide presentation for different quality toothpaste. Markwell also argued that Colgate US must have foreseen that different quality toothpaste would circulate around the world. In effect what Markwell argued was that it was Colgate, and not Markwell, who had made the relevant misrepresentation.

Applying Spalding v. Gamage, the Court of Appeal held that traders who placed the same mark on distinct classes of articles were entitled to bring a passing off action against a person who resold the inferior goods in circumstances which constituted a false representation that the goods were of the superior class and thereby damaged the trader’s reputation.’” Given that the defendant had made a misrepresentation to consumers in the United Kingdom as to the character and quality of the Brazilian 25 (1915) 32 RPC 273, 284.

26 [1989] RPC 497. 27 [1989] RPC 497, 514 (Slade LJ), 529 (Lloyd LJ). Cf. Champagne Heidsieck v. Buxton [1930] 1 Ch 330 which was distinguished, at 513, because on the facts resale in Colgate carried with it a misrepresentation as to quality.

698

TRADE

MARKS

AND PASSING OFF

toothpaste, it was irrelevant that the goods were originally produced and sold by a subsidiary of Colgate US. Another situation where the courts have recognized misrepresentation about the quality of goods is in relation to the so-called “extended form of passing off, which was first recognized by Danckwerts J in Bollinger v. Costa Brava Wine Co.”® As we explained earlier, this case recognized that a class or group of traders may share goodwill in a name (or some other indicator) that is distinctive of a particular class of goods. In

particular, it was recognized that champagne producers who made sparkling wine with grapes from the Champagne region of France using the champenois process had goodwill in the ‘champagne’. It was also recognized that individual members of the class of traders are able to bring an action against anyone who uses the distinctive name in relation to products of a different quality. On this basis, French champagne houses have been able to stop other traders who do not make drinks with those characteristics, for example, producers of the drinks spANISH CHAMPAGNE OF ELDERFLOWER CHAMPAGNE, from using the term ‘champagne’. The House of Lords approved this line of authority in Warnink v. Townsend. In so doing they granted relief to a producer of an egg-based alcoholic drink apvocaar.*? The action has subsequently been used by the producers of PARMA HAM (albeit unsuccessfully) and swiss cHocoLaTE.*! The specifics of the action, which has a number of idiosyncratic characteristics, are considered below.”

3.3

MISREPRESENTATION

RESPONSIBILITY

OVER

THAT

THE

THE

GOODS

CLAIMANT OR

HAS

CONTROL

OR

SERVICES

The courts have also recognized that a misrepresentation may occur where the defendant’s conduct gives rise to the suggestion that the claimant has some type of control or responsibility over their goods or services. In British Legion v. British Legion Club (Street)’? Farwell J held that an organization formed to assist First World War veterans called the “British Legion’ could rely on passing off to prevent the words ‘British Legion Club (Street)’ from being used to describe a local social club. This was because members of the public would have thought that the social club was ‘either a Branch of the plaintiff association, or at any rate that it was a club in some way amalgamated with or under the supervision of the plaintiff association for which the plaintiff association had in some way made itself responsible.’** 28 Bollinger v. Costa Brava Wine Co. [1960] RPC 16. See above at p. 690. 29 Taittinger SA v. Allbev [1993] FSR 641(elderflower champagne). But not ‘Babycham’: H. P. Bulmer and Showerings v. J. Bollinger SA [1978] RPC 79. 30 Erven Warnink BV v. Townend (J.) & Sons (Hull) [1979] AC 731, 742. 31 Consorzio del Prosciutto di Parma v. Marks & Spencer [1991] RPC 351 and Consorzio del Prosciutto di Parma v. Asda Stores [1988] FSR 697 (parma ham); Chocosuisse Union des Fabricants Suisses de Chocolat v.

Cadbury [1999] RPC 826.

32 See below at pp. 724-9. 33 (1931) 63 RPC 555. 34 (1931) 63 RPC 555, 564.

MISREPRESENTATION

699

It should be noted that the mere fact that a defendant suggests that they are somehow connected to the claimant will not necessarily amount to a passing off. This is because the connection will only be relevant if the defendant’s misrepresentation suggests that the claimant has some type of control or responsibility over the goods or services in question. The nature of the connection that is necessary to sustain a misrepresentation was considered in Harrods v. Harrodian School.*° In this case, the famous London department store was refused an injunction to prevent a preparatory school known as “The Harrodian Club’, which was built on the site of the former Harrod’s club, from calling itself the “Harrodian School’.*° (Harrods claimed that Harrodian was the adjectival form of Harrods.) In the Court of Appeal Millett LJ explained that the relevant connection must be one by which the plaintiffs would be taken by the public to have made themselves responsible for the quality of the defendant’s goods or services . . . It is not in my opinion sufficient to demonstrate that there must be a connection of some kind between the defendant and the plaintiff, if it is not a connection which would lead the public to suppose that the plaintiff has made himself responsible for the quality of the defendant’s goods or services. A belief that the plaintiff has sponsored or given financial support to the defendant will not ordinarily give the public that impression.*”

The Harrods decision places an important limit on the scope of passing off, particularly in relation to sponsorship. For example, it seems that if a trader was to adopt the logo of the Diana Memorial Fund, this would not amount to passing off. This is because the public would most probably take this to mean that the trader has made a donation to the Diana Fund, rather than that the Fund had any control over the

trader’s business.** 3.3.1 Personality merchandising The expansion of passing off to include situations where the defendant makes a representation that the claimant has some type of control or responsibility over their goods or services helps to ensure that the action continues to be relevant in the modern commercial environment. It has also given rise to the possibility that celebrities may be able to utilize passing off to control the use that is made of their images or other personal indicia.” This is potentially very important given that personality merchandizing, that is the practice whereby celebrities use their names and images to

35 [1996] RPC 697; H. Carty, “Passing Off at the Crossroads’ [1996] EIPR 629, taking the view that Millett LJ’s restrictive approach is less in line with existing authorities than Sir Michael Kerr’s dissenting judgment. 36 In so doing, the Court of Appeal criticized Bulmer v. Bollinger [1978] RPC 79, 117 (Goff LJ) where it was

said that the connection must ‘lead people to accept them on the faith of the plaintiff's reputation’. 37 [1996] RPC 697, 712-13. 38 B. Isaac, ‘Merchandising or Fundraising? Trade Marks and the Diana, Princess of Wales Memorial Fund’ [1998] EIPR 44 (use of Diana logo not an indication of source but rather an indication that the user has given

the fund financial support). 39 See, M. Elmslie and M. Lewis, ‘Passing Off and Image Marketing in the UR’ [1992] EIPR 270.

700

TRADE

MARKS

AND

PASSING

OFF

endorse and associate themselves with products and services—has become a common feature of modern marketing. Despite the flexible nature of the passing off action it has provided, at best, minimal protection against traders who appropriate aspects of someone else’s personality.*° In Lyngstrad v. Annabas Products,*' the pop group ABBA complained that the defendant was selling paraphernalia that bore the name and image of the group. Refusing to grant relief, Oliver J said that he did not think anyone could reasonably imagine that the pop stars had given their approval for the paraphernalia. He also added that the defendants were not doing ‘anything more than catering for a popular demand among teenagers for effigies of their idols.’4 The courts in Australia have adopted a more generous approach to the application of passing off to personality and character merchandising. For example, in Henderson v. Radio Corporation,*’ the defendants reproduced a picture of the claimants, who were ballroom dancers, on one of their record covers. The Supreme Court of New South Wales held that in so doing the defendants had made a misrepresentation that there was a ‘connection’ between the claimants and the defendants. This was because ‘the class of persons for whom the record was primarily intended would probably believe that the picture of the respondents on the cover indicated their recommendation or approval of the record.’“4 An even more liberal approach was adopted by the Federal Court of Australia in Hogan v. Koala Dundee* where Pincus J said that it was no longer necessary to show misrepresentation to prove passing off. In this case the claimant, who was the writer and star of the film Crocodile Dundee, brought an action against two tourist shops which sold clothing, hats, and T-shirts that were ‘of a particularly Australian nature’. The basis of the claimant’s complaint was that the defendants had used the name DUNDEE and had also used an image of a koala bear which, like the hero in the claimant’s film Crocodile Dundee, was dressed in a sleeveless shirt, wore a bush hat with teeth in the band, and carried a knife. The Federal Court of Australia granted the

claimant relief, denying that there was a need for a misrepresentation. The court grounded the decision on the basis of ‘wrongful appropriation of a reputation, or, more widely wrongful association of goods with an image properly belonging to an applicant.’*° However, in a second Crocodile Dundee case of Hogan v. Pacific Dunlop,’ the full Federal Court reverted to the conventional position that to succeed in a passing off action the claimant must show that there has been a misrepresentation. Here, the

40 41 42 43 44 45 46 47

For other impediments, in particular, the difficulty with demonstrating damage, see below at pp. 719-20. [1977] FSR 62. Ibid. (1960) [1969] RPC 218. [1969] RPC 218, 232. (1988) 12 IPR 508. (1988) 12 IPR 508, 520. (1989) 12 IPR 225.

MISREPRESENTATION

7O1

claimant advertised shoes by reference to a particular scene (the knife scene) in the film Crocodile Dundee. The Federal Court of Australia said that there was a misrepresentation ‘involving use of the image or indicium in question to convey a representation of a commercial connection between the plaintiff and the goods and services of the defendant, which connection does not exist.’ English cases have stuck to the view that passing off requires a misrepresentation. They have also held that while the public does not need to believe that the personality made the goods or services, the public must have thought that the personality endorsed them. As a result, while labelling a product with the words ‘official’ or ‘approved by’ a particular personality would probably be treated as a misrepresentation, the unauthorized use of a celebrity’s image on an advertisement would not.*’ In a similar vein, in the Elvis Presley decision Laddie J said that the public would not assume that the use of the words ELVIS, ELVIS PRESLEY, or the

signature ELVISLY youRS on toiletries and perfumes indicated any connection with Elvis’s estate. This was because when people buy such articles, they probably do not care one way or the other who made, sold, or licensed them. Similarly, it

has been said that persons purchasing stickers of the Spice Girls are unlikely to believe that the stickers were published by the band, or that the quality of the stickers was authorized by them. This was because the traders who supplied the merchandise were merely responding to a demand ‘for effigies and quotes of today’s idols.’ 3.3.2 Misrepresentations in character merchandising Character merchandising involves the application of images of cartoon and other fictional characters to merchandise. While the Australian approach has not been followed in the UK in relation to personality merchandising, it has been more enthusiastically applied to character merchandising. For example, in Mirage Studios v.

Counter-Feat Clothing’' the defendants were found liable for passing off when they applied the claimant’s characters, the Teenage Ninja Mutant Turtles, to their clothing. Browne-Wilkinson V-C explained that ‘the critical evidence in this case was that a substantial number of the buying public now expects and knows that where a famous cartoon or television character is reproduced on goods, that reproduction is the result of a licence granted by the owner of the copyright or owner of other rights in the character.” As a result, he concluded that sale of the merchandise involved two misrepresentations. First, a (mis)representation to the public that the goods were ‘genuine’ (i.e. that the drawings were the drawings of the claimants). Secondly, a 48 Gummow J, at first instance. 49 Elvis Presley Trade Marks [1997] RPC 543, 558. 50 Halliwell v. Panini SpA (6 June 1997) Lightman J, echoing Lyngstrad v. Annabas Products [1977] FSR 62 and refusing the claimant an ex parte injunction demanding disclaimer.

51 [1991] FSR 145. 52 [1991] FSR 145, 155.

no further sale of the albums

without a

702

TRADE

MARKS

AND

PASSING

OFF

misrepresentation that the goods were licensed.» Browne-Wilkinson V-C went on to say that he regarded the Australian authorities as ‘sound’. While the implications of the Ninja Turtle case have yet to be fully explored,°° the indications are that the English courts will treat the decision as being limited to its particular facts.°° As we have seen, the decision has not been extended to personality merchandizing cases. Nor does it appear to extend to the use of names, as opposed to the use of copyright images.*’ This is because in the case, the judge distinguished a number of authorities on the ground that they were concerned with the licensing of names in which no copyright subsists, rather than the copyright material.°* Moreover, even where the merchandising is protected by copyright, the courts have recently indicated that to succeed in a passing off action, the claimant must show that the public understood that the goods were licensed and that they bought the merchandise on that basis. This can be seen in BBC Worldwide v. Pally Screen Printing. The BBC owned copyright and merchandising rights to the popular children’s characters known as the Teletubbies. The defendants printed pictures of the Teletubbies on various items such as T-shirts. In response to the BBC’s action for passing off, Laddie J explained that to succeed the plaintiffs will need to show that they have built up the necessary reputation so that members of the public would look at this type of artwork and consider it to represent the plaintiffs or products made with the plaintiffs’ approval. It seems to me that it is quite possible that members of the public will look at T-shirts bearing this artwork and think no more than it is artwork bearing illustrations of well-known television characters without having any regard whatsoever to the source of supply and without having any regard as to whether or not these T-shirts were put out with the sanction of or under the aegis of the plaintiffs.

Laddie J refused to grant the BBC summary judgment against the defendants because it was ‘not unforeseeable’ that the defendants might succeed. 3.4

REVERSE

PASSING

OFF

Reverse or inverse passing off is the name given to the situation where a trader tries to claim the benefit of another trader’s goods or service to enhance their own °3 The reference to ‘genuineness’ was interpreted by Laddie J as perhaps referring to the creator of the character, or his successors: Elvis Presley Trade Marks [1997] RPC 543, 553.

°4 The authorities did not, however, include the two Dundee cases. For a comparison of English and Australian law, see S. Burley, “Passing Off and Character Merchandising’ [1991] EIPR 227, 228. >> Wadlow (1995) says that the case leaves UK law in an unsatisfactory state from almost every point of view: para. 5.41, p. 310. More approving sentiments can be found elsewhere: J. Holyoak, ‘United Kingdom Character Rights and Merchandising Rights Today’ [1993] Journal of Business Law 444, 451 (in general arguing that character merchandising is now adequately protected). 56 Elvis Presley Trade Marks [1997] RPC 543, 553.

97 Nice and Safe Attitude v. Piers Flook [1997] FSR 14, 21. 58 E.g. Wombles v. Womble Skips [1977] RPC 99; Tavener Rutledge v. Trexapalm [1975] FSR 179. He also

asserted that Lygstrad v. Anabas Products [1977] FSR 62 could be distinguished on that basis.

>? [1998] FSR 665, 674.

MISREPRESENTATION

793

reputation.” In the classic passing off action, the defendant’s misrepresentation gives rise to a suggestion that the defendant’s goods or services are those of the claimant. However, with reverse passing off the defendant’s misrepresentation gives rise to the suggestion that the defendant is the source of the claimant’s goods or services (or is somehow responsible for the quality of the claimant’s goods or services). That is, instead of the defendant pretending that their goods are the claimant’s, the defendant claims the claimant’s goods as their own. It is not clear whether reverse passing off amounts to an actionable wrong.®' In principle, it depends on whether the standard requirements of the ‘classical trinity are met. The problem here is in establishing misrepresentation and damage. If a person merely resells the goods of another trader, this will not usually amount to a misrepresentation. This is the case even if they have added a new sign to the goods. Moreover, given that the claimant-manufacturer will have already placed the goods on the market, it is difficult to see where the damage lies. Although a defendant may derive benefit where they resell the goods, this does not in itself harm the manufacturer. In some circumstances, however, the activities of the reseller may cross into

the realm of passing off. A good example of this is where a person represents the claimant’s goods as their own, but subsequently supplies their own goods. For example, in Bristol Conservatories v. Conservatories Custom Built,” both the claimant and the defendant were engaged in the business of designing and selling conservatories. The defendant’s salesmen showed potential customers photographs of the claimant’s conservatories. In so doing, they led customers to believe that they were examples of their own design and craftsmanship. The defendant’s application to strike out the statement of claim as disclosing no reasonable cause of action was successful at first instance. This decision was, however, overturned by the Court of Appeal. The Court of Appeal held that the defendant had made a misrepresentation that their goods were of the same quality as the claimant’s. They added that as the claimant’s goodwill was ‘asserted and demonstrated as the photographs were shown’, it did not matter that the customer might not have known of the claimant. The damage caused was the diversion of sales from the claimant to the defendant. The Court of Appeal took the view that it did not matter that there was no confusion, because the misrepresentation ‘left no room for confusion’. Whether it is helpful to categorize the case as one of reverse passing off is a matter of debate.

60 J. Cross, ‘Giving Credit Where Credit Is Due: Revisiting the Doctrine of Reverse Passing Off in Trademark Law’ (1997) 72 Washington Law Review 709-73.

61 H. Carty, ‘Inverse Passing Off: A Suitable Addition to Passing Off?’ [1993] EIPR 370.

62 [1989] RPC 455, 464-5.

63 Wadlow (1995), para. 5.54, p. 331 (not a nominate tort in its own right but a further example of an actionable misrepresentation to which the normal principles apply); J. Drysdale and M. Silverleaf, Passing Off: Law and Practice (1995) para. 4.14 (doubting that the concept of reverse passing off is of any value).

704

3.5

TRADE

COMPARATIVE

MARKS

AND

PASSING

OFF

ADVERTISING

‘Comparative advertising’ is the term used to describe advertisements where the goods or services of one trader are compared with the goods or services of another trader. To show the advertiser’s wares in a favourable light, comparative advertisements usually emphasize differences in things such as price, value, durability, or quality.“* The question of whether a person engaged in comparative advertising is liable for passing off depends on the nature of the comparison. In some situations the comparison will not be treated as a misrepresentation. For example, in Bulmer v. Bollinger, Goff LJ said that there is no actionable passing off ‘if one says that one’s goods are very suitable to be used in connection with the plaintiffs.’ Equally for a defendant to say that their goods are similar to or better than the claimant’s does not amount to a passing off. In other circumstances, however, comparative advertising may be treated as a misrepresentation. For example, in McDonald’s Hamburgers v. Burgerking®’ Burgerking advertised its hamburgers in the London Underground with the slogan ‘It’s Not Just Big Mac’. Opinion poll evidence indicated that members of the public treated these as advertisements for a Burgerking hamburger called ‘Big Mac’, or as an improved version thereof. The evidence also indicated that people were likely to respond to the advertisement by going to Burgerking stores and ordering a ‘Big Mac’. Consequently, Whitford J held that the advertisement was a misrepresentation. In Kimberley Clark v. Fort Sterling’ the defendant was promoting its NOUVELLE toilet roll by offering to placate dissatisfied customers by replacing their NouvELLE with ANDREx toilet roll. The NOUVELLE packaging said prominently ‘Softness guaranteed (or we'll exchange it for Andrex®).’ The claimant, who owned the aANpREx brand, claimed that the defendant’s promotion amounted to a passing off. The court agreed, holding that this was a misrepresentation because it was likely to induce purchasers into thinking that NoUVELLE was another product ‘from the Andrex stable or that ANDREX is in some way behind the promotion’.

4 IS THE

MISREPRESENTATION

DECEPTIVE?

As we explained earlier, in deciding whether a misrepresentation has taken place the key concern is not with the state of the defendant’s mind. Insteadit is with the consequences of the defendant’s actions and the effect that these have upon the public. In particular, the claimant must show that the defendant’s actions have either 64 For the position of comparative advertising under the registered trade marks regime, and non-legal regulation, see below at pp. 869-75.

65 [1978] RPC79, 117. 6© [1986] FSR 45. 67 [1997] FSR 877.

MISREPRESENTATION

705

confused or are likely to confuse the public or a substantial part thereof. That is, to succeed in a passing off action, the claimant must show that the defendant’s misrepresentation is deceptive.’ The question of whether the misrepresentation is deceptive is a question of fact that requires the court to predict how the public will interpret the defendant’s actions.® It does not matter that the defendant’s representation is true, honest, or legitimate if it deceives the public. Equally, it does not matter if the defendant uses their own name, a relevant geographical name, or a descriptive term if it was used in a way that was deceptive.” In deciding whether the misrepresentation is deceptive, a number of different questions may arise. While the nature and relative importance of each will vary from case to case, these include: who must be deceived? how many people must be deceived? and, when must the deception occur? After looking at these we will consider the types of evidence that may be used by the courts in this context. We will then look at some of the factors that may be taken into account in deciding whether the misrepresentation is deceptive. 4.1 WHO

MUST BE DECEIVED?

The question of whether the misrepresentation operates to deceive the public is

largely looked at by the courts through the eyes of the general public.” However, where the goods or services are not marketed to the general public, the court considers the impact that the misrepresentation has upon that part of the public for whom the product or services were intended. Although there are dicta to the effect that the appropriate part of the public is the defendant’s customers, the better view is that the ‘relevant public’ should vary according to the type of misrepresentation being alleged. Thus, where the allegation is that the defendant has made a misrepresentation which suggests that the claimant is the source of their goods and the goods of the claimant and the defendant are similar, the court would consider the impact that the

misrepresentation has upon the claimant’s customers. Where the parties’ goods or services are different, so that some other type of connection is being alleged, the court will focus on customers who are familiar with the claimant’s activities, but who are in the market for goods and services of the defendant. This kind of approach was adopted in Harrods v. Harrodian School” where the relevant public was described by Millett LJ as ‘affluent members

of the middle class who live in London, shop at

Harrods and wish to send their children to fee-paying schools.’ The attributes and skills of the notional customer will vary depending on the facts 68 Hodgkinson & Corby v. Wards Mobility Services [1995] FSR 169, 175; Nice and Safe Attitude v. Piers Flook [1997] FSR 14, 20; Barnsley Brewery Company v. RBNB [1997] FSR 462, 467 (confusion but no deception).

69 This is a ‘jury question’: Harrods v. Harrodian School [1996] RPC 697, 717; Neutrogena Corporation v. Golden [1996] RPC 473, 482.

70 Montgomery v. Thompson [1891] AC 217, 220.

71 Marengo v. Daily Sketch and Sunday Graphic (1948) 65 RPC 242, 250. 72 [1996] RPC 697, 716.

706

TRADE MARKS AND PASSING OFF

in question.’* Indeed as Lord Oliver said in Reckitt v. Coleman, the ‘customers have to

be taken as they are found’.’”* In some cases, the relevant public might be quite discerning. For example, in a decision involving a passing off action between two banks, it was said that ‘potential customers wishing to borrow large sums of money from a bank could reasonably be expected to pay rather more attention to the details of the entity with whom they were doing or seeking to do business’.” In other situations, however, the notional customer might be careless and uninterested: as with

supermarket shoppers who apparently spend less than ten seconds examining each purchase. A defendant cannot escape liability by arguing that customers would not have been misled if they were ‘more literate, careful, perspicacious, wary or prudent’.’”° While the attributes and skills of the notional customer may vary depending on the facts in question, the court will not take account of situations where the notional customer does not care one way or another about the goods they are buying.”’ If customers are indifferent to the goods they are purchasing, a claimant will be unable to show that the defendant’s misrepresentation was deceptive. This is because in these circumstances the misrepresentation has no impact upon the relevant consumers.’

4.2

HOW

MANY

PEOPLE

MUST

BE DECEIVED?

The next question to consider is how many people must be deceived? It is clear that for an action to succeed it is not necessary for a claimant to show that all of the consumers in the relevant section of the public were deceived by the misrepresentation. As Jacob J said ‘there is passing off even if most of the people are not fooled most of the time but enough are for enough of the time.’ But what is enough? The courts response to this has been that a ‘substantial’ part of the public must be confused. As Falconer J said in Lego, passing off only arises if there is a ‘real risk that a substantial number of persons among the relevant sections of the public will in fact believe that there is a business connection between the plaintiff and the defendant.’” This, in turn, gives rise to the further question: what is meant by a ‘substantial’ part of the relevant group? There is no clear answer to this question. For the most part, the courts have defined the term negatively. Thus, it is clear that ‘substantial’ does not 73, Reckitt & Colman (Products) v. Borden [1990] RPC 341, 423.

74 Thid., 415-16. 79 HFC Bank v. Midland Bank plc [2000] FSR 176, 185. 76 Reckitt & Colman (Products) v. Borden [1990] RPC 341, 415-16; Clark v. Associated Newspapers [1998] RPC 261, 271. 77 As Lightman J said in Clark v. Associated Newspapers [1998] RPC 261, 271 ‘No claim lies if they are

indifferent or careless as to who is the author.’ See also Politechnika Ipari Szovetzkezet v. Dallas Print Transfers [1982] FSR 529.

78 This explains Foster J’s exclusion from consideration of a ‘moron in a hurry’: Morning Star CoOperative Society v. Express Newspapers [1979] FSR 113. See also Newsweek v. BBC [1979] RPC 441, 447. (The test is whether ordinary, sensible members of the public would be confused. It is not sufficient that the only confusion would be to a very small unobservant section of society.) 79 Lego v. Lemelstrich [1983] FSR 155, 188.

MISREPRESENTATION

707

mean either a large proportion or a majority of the public.*? For example in the Chocosuisse case, the number of persons confused into thinking a chocolate bar called SWISS CHALET was made from Swiss chocolate was smaller than those who had not been deceived. Nevertheless, this was substantial enough to amount to a passing off.*? The Court of Appeal has said that references to ‘more than de minimus and ‘above a trivial level’, which had been used in some cases, were best avoided.** Beyond

these comments, the courts have been unwilling to give much guidance as to what ‘substantial’ entails.

4.3

WHEN

MUST

THE

DECEPTION

OCCUR?

One issue that remains largely unexplored in English law relates to the question: at what point of time must the public be misled? The way this question is answered depends on the facts of the case. In most cases the answer is straightforward: the confusion must occur at the time of purchase. This can be seen in Bostik v. Sellotape GB.*° The claimant in this case manufactured and sold a blue reusable adhesive called BLU-TAK. To compete with the claimant, the defendants launched a blue-coloured adhesive called sEttoTaxk that was sold in a similar sized wallet as BLU-TAK. Except for being approximately the same size, the competing products were ‘wholly different in appearance’. As a result the claim for passing off rested entirely on the colour of the tack. The court held that the defendants had not passed their product off as BLuTAK when they sold blue adhesive putty. The reason for this was that the defendant’s blue adhesive putty was not visible at the point of sale.** In other cases, the relevant time to consider whether consumers were deceived is the point in time when the product is consumed or used, rather than when it is purchased. For example, in relation to an action for passing off brought in relation to the authorship of a newspaper story, it was said that the relevant time to consider whether the public is confused is when the person reads the story, rather than when the newspaper was purchased.* Post-sale confusion may also be significant in other environments. This may be the case, for example, with designer goods, such as clothes or kitchen equipment, where the manufacturer’s label is often visible long after purchase.*° 80 Neutrogena Corporation v. Golden [1996] RPC 473 (claimant had only 0.25% of the market but it was held that a substantial number of members of the public would be misled into thinking the defendant’s products were those of the claimant).

81 Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury [1998] RPC 117, 143; affirmed by the Court of Appeal on the basis that the conclusion was not one which could be regarded as ‘perverse’: [1999] RPC 826, 838.

82 Neutrogena Corporation v. Golden [1996] RPC 473, 494.

83 [1994] RPC 556. 84 See I. Karet, ‘Passing Off and Trade Marks: Confusing Times Ahead?’ [1995] EIPR 3, 4. 85 Clark v. Associated Newspapers [1998] RPC 261, 271; Marengo v. Daily Sketch and Sunday Graphic (1948) 65 RPC 242, 250. 86 Chelsea Man Menswear v. Chelsea Girl [1987] RPC 189, 204 (Slade LJ, when considering risk of damage,

observed that labelled garments can readily move about the country with their wearers).

708

TRADE

MARKS

AND

PASSING

OFF

One question which remains unresolved is whether there is passing off where a defendant’s misrepresentation causes immediate confusion, but that confusion vanishes by the time at which the consumer makes the decision whether to purchase the defendant’s goods or engage the defendant’s services. This will be a realistic scenario as regards transactions which are prefaced by lengthy formalities, etc. such as those involving financial services. In HFC Bank v. Midland Bank, it seemed that a number of customers had gone to Midland because it was using a name, HSBC, similar to HFC, but that in no case did a customer do business with Midland without having been disabused of the error. Lloyd J accepted that to amount to passing off the deception must be more than momentary or inconsequential,®” but beyond that declined to venture a view.*® Even if such deception was treated as sufficient to give rise to passing off, it remains necessary for a claimant to show a likelihood of damage.

4.4

EVIDENCE

OF CONFUSION

While the question of whether there is a likelihood of confusion is ultimately decided by the court,®’ the courts frequently do so on the basis of evidence introduced by the parties. Three types of evidence are commonly used, usually in combination: evidence of actual confusion, expert evidence, and survey evidence. While there is no requirement that to succeed in a passing off action the claimant must show evidence of actual deception, evidence that people have actually been misled will be highly significant.” The lack of such evidence may also be probative, but only where the products have been on the market for some time. If after a lengthy period of time there is no evidence of actual confusion, this will weigh against a claimant, primarily because it suggests that there is no confusion.?! However, before inferring a lack of confusion from this, it is important to note that a lack of evidence of confusion may arise for other reasons. For example, it may simply be because the relevant consumers have not been found or are not willing to come forward. The courts have also been willing to accept expert evidence in relation to matters that the court is ignorant about and needs to be informed. Often this involves information about the particular trade involved and includes evidence of things such as the class of people, how the goods are displayed or purchased, the numbers sold,” and the amount of attention average shoppers give to the appearance of products at the point 87 See also Newsweek v, BBC [1979] RPC 441, 449.

88 HFC Bank plc v. Midland Bank plc [2000] FSR 176, 186, 202. 89 North Cheshire & Manchester Brewery v. Manchester Brewery [1899] AC 83, 86; Mothercare v. Penguin

Books [1988] RPC 113, 116. The court must not surrender its own independent judgment to any witness or number of witnesses: see A. G. Spalding Bros. v. A. W. Gamage (1915) 32 RPC 273, 286-7 per Lord Parker, But note that it is the court’s (rather than the judge’s personal) judgment as to whether it would be deceived that is relevant: Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury [1998] RPC 117, 136.

9° Harrods v. Harrodian School [1996] RPC 697, 716. 91 Kimberley Clark v. Fort Sterling [1997] FSR 877, 887-9. See also Antec International v. South-Western Chicks (Warren) [1998] FSR 738, 745.

92 Slazenger & Sons v. Feltham & Co. (1889) 6 RPC 531, 534.

MISREPRESENTATION

709

of purchase.” Thus in deciding whether the public was deceived into thinking that a chocolate bar called swiss CHALET was made from Swiss chocolate, the Court of Appeal made extensive use of the expert evidence of the person responsible for selecting products (notably the chocolate) for Marks & Spencer.” In another decision, the

court went so far as to admit expert evidence as to whether consumers were likely to be deceived. Although this is the very question that the court itself must determine and therefore one on which evidence is not normally admitted, Browne-Wilkinson

V-C saw no good reason why the court should not be assisted by experts in making that judgment.”° It is also commonplace for the courts to admit and rely upon survey evidence when deciding whether the public is deceived by the misrepresentation.”° Although costly, surveys save the court from the obvious alternative, namely, a lengthy parade of witnesses.” The courts have been careful to scrutinize the nature of the survey. To this end, the courts frequently hear evidence from experts criticizing the methodology of the survey undertaken. The courts also scrutinize the survey to take account of issues such as who was interviewed, the questions asked, and whether or not the

interviewees were prompted.”*

4.5

FACTORS

THE

TO BE TAKEN

MISREPRESENTATION

INTO

ACCOUNT

IN DECIDING

WHETHER

IS DECEPTIVE

In deciding whether a defendant’s misrepresentation is deceptive, the court will take a number of factors into consideration. These include the: (i)

strength of the public’s association with the claimant’s sign,

(ii)

similarity of the defendant’s sign,

(iii) proximity of the claimant’s and defendant’s fields of business, (iv)

characteristics of the market,

(v)

intention of the defendant,

(vi)

whether the defendant has made a disclaimer, and

(vii) whether the defendant is attempting a parody or satire.

93 Kimberley Clark v. Fort Sterling [1997] FSR 877, 884. °4 Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury [1999] RPC 826, 836. 95 Guccio Gucci SpA v. Paolo Gucci [1991] FSR 89, 91; Sodastream v. Thorn Cascade Co. [1982] RPC 459, 468.

6 It seems that the problem ofsurvey evidence being excluded because it is hearsay has been avoided. This has been done by treating surveys as situations which do not involve proof of the truth of the opinion stated, so much as its existence: Lego v. Lemelstrich [1983] FSR 155, 178-9. See, e.g. Wadlow (1995), para. 8.46, p. 571-5. In any case, hearsay evidence is admissible in civil cases: Civil Evidence Act 1995, s. 1.

97 Pontiac Marina Private v. Cdl. Hotels International [1998] FSR 839. 98 Mothercare v. Penguin Books [1988] RPC 113, 117 per Dillon LJ. Even when flawed some courts some-

times still find survey to be ‘qualitatively valuable’, though others find surveys unhelpful. Kimberley Clark v. Fort Sterling [1997] FSR 877, 886-7.

710

TRADE

MARKS

AND

PASSING

OFF

We will consider these in turn. It is important to note that the relative importance of each of these will vary according to the facts in question and that the various factors are often closely interrelated. 4.5.1 The strength of the claimant’s sign One factor that will influence a court when deciding whether a misrepresentation is deceptive is the relative strength of the claimant’s sign. If the claimant’s mark is highly distinctive, the courts are more likely to find that the use of similar marks in a different field of trading is likely to cause confusion. The classic example of this is provided by the Lego case, where it was held that the claimant’s mark Leco for children’s toys was so strong that confusion resulted from use of the name on coloured plastic garden equipment.” Where a mark or sign is less distinctive, slight differences between the claimant’s and defendant’s marks, or between the fields of trading may mean that there is no passing off. Where a claimant has adopted a descriptive word as a mark, a defendant may be able to avoid passing off by changing the word slightly.’°° Thus, where a claimant used the term FURNITURELAND, the court refused to hold a furniture retailer liable for passing off for using the name FURNITURE ciTyY.'®! In contrast, ‘BusinessPlan Builder’ for software was held to be sufficiently similar to ‘BizPlan Builder’ to constitute a passing off. This was because ‘BizPlan Builder’ was not wholly descriptive, the words ‘Biz’ and ‘Business’ were virtually interchangeable and the capital ‘p’ and the style of script were common to both.!” 4.5.2 The similarity of the signs Another factor that may influence the court when considering whether a misrepresentation deceives the public is the similarity of the signs. It is important to note that the approach adopted by the courts in deciding whether the signs are similar always depends on the facts in hand. As such, the points below should be treated as providing no more than general guidance. In deciding whether two signs are similar enough to cause confusion, the marks are rarely looked at side-by-side. Instead, the courts tend to ask the hypothetical question: if a person saw the signs separately, would they mistake the defendant’s product for that of the claimant’s? When deciding whether signs are similar, the courts also tend to look at the signs as a whole and in the context in which they are used. The impact that this has upon the scope of passing off can be seen, for example, in Wagamama v. City Centre Restaurants. The claimant in this case ran a chain of Japanese restaurants called waGAMAMaA. Laddie J held that the defendant was liable for passing off when the defendant used the name rRajAMAMaA for their chain of Indian restaurants. The 9 Lego v. Lemelstrich [1983] FSR 155, 187; Antec International v. South-Western Chicks (Warren) [1998] FSR 738, 747.

100 Office Cleaning Services v. Westminster Window and General Cleaners (1946) 63 RPC 39. 101 Fyrnitureland v. Harris [1989] FSR 536, 539-40. 102 Jian Tools for Sales v. Roderick Manhattan Group [1995] FSR 924.

MISREPRESENTATION

Jil

Judge was influenced by the similar form (the shared second half) of the word which

might give an impression of similarity and connection. This was important in an area where it was common for recommendations to be made orally and where recollections were imperfect.!° The fact that signs are looked at as a whole has important ramifications where only part of the claimant’s sign or mark is appropriated. Where this occurs, the likelihood of there being a passing off depends on the relative distinctiveness of the element that is different. It also depends on the importance that consumers place on the part when purchasing the product in question. For example, where the distinctive feature of the claimant’s get-up for water-bottles was that the bottles were cobalt-blue and were made of a particular shape, it was held that the defendant was not liable for passing off when they sold water in cobalt-blue bottles of a very different shape.! This can be usefully contrasted with Reckitt v. Coleman which, as we saw earlier, was a passing off action in relation to the get-up of lemon-juice containers. While the shape, colour, and size of the two containers were the same, the labels on the two products were

different. Nonetheless, the courts held that there had been a passing off. This was because the labels were only a minor part of the get-up and not an element to which a customer would pay particular regard.'” In judging the similarity of signs, the courts sometimes emphasize the ‘idea of the mark’. That is, they do not focus on the detail of the mark so much as the general idea that it conveys. For example, in one case the shared idea of ‘seabirds’ was a significant factor in holding that the defendant had passed its puFFIN biscuits off as the claimant’s who sold their biscuits under the name PENGUIN. Given the type of audience in question and the similarity of the get-up, the court held that a substantial number of customers would have been deceived into incorrectly thinking that the biscuits were produced by the same manufacturer.'° 4.5.3 The proximity of the claimant’s and defendant’s fields of business For some time it was thought that to succeed in a passing off action, the claimant and

defendant had to share ‘a common field of activity’. Thus where a radio presenter’s name was used for a breakfast cereal it was held that there was no passing off. This was because the fields of radio presentation and the sale of breakfast cereals did not overlap.'°”’ However, the need to show a common field of activity was, even at its inception, difficult to reconcile with a number of earlier decisions.'® It has since been 103 [1995] FSR 713; Neutrogena Corporation v. Golden [1996] RPC 473. 104 Ty Nant Spring Water v. Simon Feeney Associates (28 Apr. 1998) Scott VC refusing interlocutory injunction where both used bottles of the same colour (cobalt blue).

105 [1990] RPC 341, 423. 106 United Biscuits (UK) v. Asda Stores [1997] RPC 513. 107 McCulloch v. May (1948) 65 RPC 58. 108 e.g. Eastman Photographic Materials Co. v. John Griffiths Cycle Corporation (1898) 15 RPC 105 (cameras and bicycles); Walter v. Ashton [1902] 2 Ch 282 (The Times newspaper and bicycles). As argued by J. Philips and A. Coleman, ‘Passing Off and the Common Field of Activity’ (1985) 101 Law Quarterly Review 242 and accepted by Millett LJ in Harrods v. Harrodian School {1996| RPC 697, 714.

32

TRADE

MARKS

AND

PASSING

OFF

reinterpreted,!” diluted,'!° and ultimately declared to be heretical.!"! If a claimant can demonstrate a misrepresentation and likelihood of damage to their goodwill, they will succeed: there is no additional requirement that they need to establish a common field of activity. Having said this, it is clear that the ability to demonstrate a “common field of activity will greatly assist a claimant’s action for passing off. This is because if two traders share a common field of activity, it will be easier for a court to hold that there is a misrepresentation that is likely to deceive the public and thus cause damage to the claimant.'!? Indeed, the abandonment of the requirement of a common field of activity has meant that a comparison of the trade activities of the parties is a factor that is taken into account in determining the likelihood of deception. The similarity of the fields also interacts with other factors such as the distinctiveness of the claimant’s sign.

The courts have adopted a liberal approach when deciding whether the claimant and defendant operate in same field. For example, in one decision the use of CARFAX for spare parts for motor vehicles was held to be likely to amount to a passing off, given the claimant’s plans to launch a traffic information service under the same name.'!? Similarly, a claimant who used the name MARIGOLD for household rubber gloves was granted an injunction to prevent the defendant from using the mark on toilet tissue. The

court

was

confident

that a customer

or, more

specifically a

‘housewife’ who was familiar with the claimant’s gloves, would expect toilet roll sold under the same name to be a product of the same business.!"4 In a recent trade-mark case, however, the Registry took the view that the owner of the EVER READY mark

for batteries would not be able to succeed in a passing off action against a person who used the same words for condoms.'!? Consequently, the mark was registrable for condoms. 4.5.4 The characteristics of the market

In deciding whether a misrepresentation is deceptive the courts take account of ‘the background of the type of market in which the goods are sold, the manner in which they are sold, and the habits and characteristics of purchasers in that market.’!!® 109 In the Abba case, Lynstrad v. Anabas Products [1977] FSR 62, Oliver J interpreted McCulloch as merely requiring a ‘real possibility of confusion’.

110 Lego v. Lemelstrich [1983] FSR 155. 'l Mirage Studios v. Counter-Feat Clothing [1991] FSR 145, 157 Browne-Wilkinson V:C (referring to the common field of activity theory as discredited); Harrods v. Harrodian School [1996] RPC 697.

"2 Nice and Safe Attitude v. Piers Flook [1997] FSR 14, 21 (Robert Walker J) ‘the Lego case, though it illustrates a relaxation of the common field of activity concept does not mark its extinction. It must still be very relevant to the likelihood of deception.’ Oasis Stores’ Trade Mark Application [1998] RPC 631, 644 (where the fields of activity are far apart the burden of establishing a likelihood of confusion or deception will be significantly greater). 113 BBC y. Talbot [1981] FSR 228. 114 TRC v, Lila Edets [1972] FSR 479. 115. Oasis Stores’ Trade Mark Application [1998] RPC 631 (in the context of TMA s. 5(4)). 116 Reckitt & Colman (Products) v. Borden [1990] RPC 341, 415-16.

MISREPRESENTATION

713

The characteristics of the market have a particularly pronounced impact on decisions that two signs are similar. Where consumers are well-informed or particularly attentive to detail,!!” small differences between signs may be sufficient to avoid a finding of deception. For example, the defendant’s use of MOTHER CARE/OTHER CARE as a title for their book was held not to be a misrepresentation that the book was connected with the shop MOTHERCARE. As Bingham LJ explained, the claimant’s lettering was not employed, the words were not spelled as one word, the Penguin mark was liberally used on the books, and no one who was familiar with the claimant’s literary output could see any similarity of style, content, or format. Bingham LJ added that reasonably literate

people would not see the title as an indication that the contents bore any reference to the claimant.'!* The better the consumer’s memory for detail, the closer the marks must be to cause deception.

Ultimately, the level of detail remembered by the consumer will depend on the goods or services in question. While there may be exceptions, the courts do not normally assume that consumers have a perfect memory of the goods in question. Instead, they tend to assume that the notional consumers have a vague and hazy memory of the goods or services. That is, it is often assumed that consumers have ‘imperfect recollection’. Consequently, where a defendant adds laudatory or commonplace words such as ‘International’ or ‘Super’ to a name, this will not mean that

they will be able to escape liability.'!? The reason for this is that while the addition of the prefix may mean that the signs are not identical, nonetheless they may be similar enough to deceive a consumer with a hazy and imperfect memory. It is usually assumed that consumers pay little attention to detail in relation to purchasing of cheap necessities in supermarkets.'”° It will also usually be assumed that non-English-speaking

audiences

will pay little attention to verbal or textual, as

opposed to visual references.!*! 4.5.5 The intention of the defendant

It is well established that it is not a prerequisite to liability that the claimant be able to show that the defendant intended to pass their goods off as those of the claimant.'*” However, it will assist a claimant if they can show that a defendant has acted fraudulently.'”? In these circumstances the likelihood of deception is more readily inferred. This is because the defendant is assumed to have achieved their

'17 Although evidence as to consumer behaviour might reveal that even with elite goods consumers are oddly inattentive: Guccio Gucci SpA v. Paolo Gucci [1991] FSR 89. 118 Mothercare v. Penguin Books [1988] RPC 113, 121-2. 119 Pontiac Marina Private v. Cdl. Hotels International [1998] International v. South-Western Chicks (Warren) [1998] FSR 738, 745.

120 121 122 123

FSR

839

(CA

of Singapore);

Kimberley Clark v. Fort Sterling [1997] FSR 877, 884. Modus Vivendi v. Keen (World Marketing) [1996] EIPR D-82. Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury [1998] RPC 117, 137. Burberrys v. Cording (1909) 26 RPC 693, 701.

Antec

714

TRADE

MARKS

AND

PASSING

OFF

goal.'** Occasionally, a similar attitude has been taken to a defendant who makes a conscious decision to live dangerously and use a sign as close to that of the claimant as is legally possible.'”° 4.5.6 Disclaimers

Because the representation is to be viewed in context, it is sometimes possible for a defendant to correct any misunderstandings that their actions may potentially create.!*° For example, a defendant was able to avoid what would otherwise have been a passing off by placing the word ‘sliced’ in front of the claimant’s distinctive designation ‘parma ham’. This was held to be sufficient to counteract the alleged misrepresentation.’”’ It is a question of fact whether a defendant succeeds in correcting any misunderstandings the public may have as a result of their misrepresentation.!*® The relative effectiveness of a disclaimer depends on a number of things. To be effective a disclaimer must be as ‘bold, precise and compelling as the trade description itself and must be as effectively brought to the notice of any person to whom the goods may be supplied’.!”° In effect, the disclaimer must negate the misrepresentation. The precise form that the disclaimer needs to take will depend upon the nature of the misrepresentation. In the old case of Edge v. Niccolls,’° the claimants produced distinctive calico bags. The defendants produced a calico bag with a similar get-up as the claimants, to which the defendant added a label saying niccotts. The disclaimer was ineffective because the consumers of the goods (being the ‘poorer classes’), relied on the get-up, rather than the name of the product. The point in time when the disclaimer is communicated to the consumer will also influence whether or not it is effective. As a general rule the disclaimer must reach the relevant consumer before the misrepresentation brings about the requisite damage. Thus, a disclaimer will be ineffective where customers have already been lured into

examining the defendant’s product as a result of the defendant’s use of the claimant’s name. Another example of a situation where the importance of the timing of the disclaimer is exemplified is in Associated Newspapers v. Insert Media.'*! It will be recalled that by placing advertising inserts inside the claimant’s newspaper without 124° Slazenger & Sons v. Feltham & Co. (1889) 6 RPC 531, 538. In Parker Knoll v. Knoll International [1962] RPC 262, 290 Lord Devlin questioned the basis of the rule stating that ‘it is not easy to see why the defendant’s own estimate of the effect of his representation should be worth more than anybody else’s. It seems probable that the rule is steeped in history rather than in logic.’ 125 United Biscuits (UK) v. Asda Stores [1997]

RPC 513.

126 Chivers v. Chivers (1900) 17 RPC 420. 127 Consorzio del Prosciutto di Parma v. Marks & Spencer [1991] RPC 351, 371 (Nourse LJ); 374 (Balcombe

LJ); 379 (Leggatt LJ). 128 The public can be surprisingly easily confused, for example, by confusing “Elderfower Champagne’ with champagne: Taittinger SA v. Allbev [1993] FSR 641. 129 Norman v. Bennett [1974] 1 WLR 1229, 1232 (a case on the Trade Descriptions Act 1968); Clark v. Associated Newspapers [1998] RPC 261, 272.

150 [1911] AC 693. 131 [1991] 3 All ER 535.

MISREPRESENTATION

715

their permission or knowledge that the defendants were held to be liable for passing off. In response, the defendants indicated that they would be prepared to include on their inserts a statement to the effect that the material did not appear with the approval or knowledge of the newspaper publishers. Browne-Wilkinson V-C said this would not nullify the misrepresentation. The reason for this was that the inclusion in the insert of a disclaimer of that kind would be most unlikely to come to the attention of a person reading the advertisement contained on the insert. It is just inappropriate in this field for the matter to be corrected by a disclaimer which is unlikely to come to the attention of the reader and may well confuse him further if it does come to his

attention.!** A disclaimer may also fail for the simple reason that it is likely to become detached from the misrepresentation and as a result will be unable to nullify the misrepresentation.!*? 4.5.7 Parody One area where special considerations may apply is where the defendant sets out to parody or satire the claimant’s goods or services (or some more general target).!*4 In these cases, the owner of the goods that have been parodied may bring a passing off action. The key problem here is that for a parody or satire to be effective the audience needs to understand that the defendant’s aim is to ridicule the original. If a parody is effective, there will normally be no misunderstanding and hence no possibility of confusion. This can be seen from Miss World v. James St Productions.'*° The claimants

in this case, who were the proprietors of goodwill in the “Miss World’ beauty contest sought to prevent the showing of a film Miss Alternative World, which was described as a spoof with sadomasochistic overtones of the Miss World pageant. The Court of Appeal declined to intervene on the ground that there was no danger that ordinary members of the public would be confused. However, any confidence that parody will not amount to passing off must now be shaken by the Alan Clark case.'°° It will be recalled that in this decision the politician and author Alan Clark wished to prevent the Evening Standard from publishing a satirical column called “Alan Clark’s Secret Diaries’ that bore Alan Clark’s name and photograph. The main issue was whether Clark could establish that there had been a misrepresentation or a ‘false attribution’.'*” In turn this required Clark to establish 132 [1991] 3 All ER 535, 542. 133 In Reckitt & Colman (Products) v. Borden [1990] RPC 341, 423 (per Lord Jauncey) the label was not

effective to prevent misrepresentation because it would easily be detached from the product. 134 Por consideration of parody in the context of copyright and trade-mark infringements see Chs. 8 and 36. For reflections, see M. Spence, ‘Intellectual Property and the Problem of Parody’ (1998) 114 Law Quarterly Review 594.

135 [1981] FSR 309. 136 Clark v. Associated Newspapers [1998] RPC 261. 137 Clark also based his claim on CDPA s. 84 (false attribution of authorship). On this see pp. 242—4 above. It is interesting to note that the constituents of false attribution in s. 84 were treated as different from those under the law of passing off, with s. 84 requiring consideration.

716

TRADE

MARKS

AND

PASSING

OFF

that a substantial number of readers of the Evening Standard had been or were likely to have been misled in a manner which was more than momentary and inconsequential. Looking at the column and having regard to the evidence of the witnesses, Lightman J held that a substantial body of readers would be misled. The countermessages (or disclaimers) which appeared on the column, such as the use of the word ‘secret’ and the statement that ‘Peter Bradshaw imagines how the great diarist might record’, were said not to be sufficiently forthright to counteract the suggestion that the claimant was the author of the column. As one commentator rightly observed as a result of this decision, ‘[t]he author of even the most obvious parody cannot assume that his work is [not] a misrepresentation under the law of passing off.’!°

5 PROVIDING

DECEPTIVE

INSTRUMENTS

MEANS

OR

OF FRAUD

It is important to note that an action for passing off can not only be brought against a person who carries out the act of misrepresentation, but also against someone who provides the means or facilities which enables the passing off to take place in the first place. This can be seen, for example, in Lever v. Goodwin,'*° where the claimant sought relief against a defendant who had been selling soap in a similar get-up. The problem confronting the claimant was that while consumers may have been deceived by the similarity of the get-up, the defendants did not sell the soap directly to the public. Instead, they only sold the soap to retail buyers who, in turn, sold the soap to members of the public. The problem for the claimant was that the retailers were not deceived about the origin of the goods: they knew exactly what they were purchasing. The defendants argued that, as they did not sell the soap directly to the public and that the retailers were not confused, they were not liable for passing off. Chitty J, whose judgment was approved on appeal, denied that a defendant could escape liability in this way. What a manufacturer did in these circumstances, he explained, was to put ‘an instrument of fraud’ into the retailer’s hands. In these circumstances it was necessary to ask, have the defendants ‘knowingly put into the hands of the shopman. . . the means of deceiving the ultimate purchaser’?'*° On the facts, he found that they had. A recent example of this type of secondary action is provided by the One In A Million decision."! In this case, the Court of Appeal held that persons who registered

138 See M. Spence, ‘Intellectual Property and the Problem of Parody’ (1998) 114 Law Quarterly Review 594, p99:

139 (1887) 4 RPC 492, 498. i20SIbid: 141

[1998] 4 All ER 476. For criticism of the reasoning see M. Elmslie, ‘The One in a Million Case’ [1998]

Ent LR 283, 285; and C. Thorne and S. Bennet, ‘Domain Names— Internet Warehousing: Has Protection of Well-Known Names on the Internet Gone Too Far?’ [1998] EIPR 468 (referring to One in a Million as ‘a policy

decision rather than a straight application of the law of passing off).

MISREPRESENTATION

717

and dealt in Internet domain names such as were likely to be restrained. This was on the basis that they were ‘equipped with or intending to equip another with an instrument of fraud.’'4” Aldous LJ said that a ‘name which will, by reason of its similarity to the name of another, inherently lead to passing-off is an instrument of fraud.’'** Even if a name does not inherently lead to passing off, Aldous LJ said that it may nevertheless be an instrument of fraud. In deciding whether this is the case, the court should consider ‘the similarity of the names, the intention of the

defendant, the type of trade and all the surrounding circumstances.’'“* Aldous LJ added that if the court concluded ‘that the name was produced to enable passing off, is adapted to be used for passing off, and, if used, is likely to be fraudulently used, an injunction will be appropriate.’ On the facts it was held that the domain names in question were ‘instruments of fraud’. This was because any ‘realistic use of them as domain names would result in passing off .'*° As the value of the names lay in the threat that they would be used in a fraudulent way, the court held that the ‘registrations were . . . made for the purpose of appropriating the respondent’s property, their goodwill, and with an intention of threatening dishonest use by them or another’.'4” In contrast, in French Connection v. Sutton'*® Rattee J refused to grant summary

judgment to French Connection (UK) against a defendant who had registered . The judge reasoned that (in contrast with the examples in One in a Million) the defendant might succeed in establishing a defence at trial, namely, that the domain name was not registered with a view to passing off, but was registered for ‘use by himself of what he thought would be a useful Internet and E-mail name.’ According to Rattee J, this was not an ‘incredible’ argument, because the letters FCUK were widely used by Internet users as an alternative to the word ‘fuck’, usually to access sites containing pornographic material. As is clear from this, much will turn on when a court is willing to infer potential legitimate use of the name. 142 143 144 145 146 147 148

[1998] Thid. Thid. Thid. [1998] [1998] [2000]

4 All ER 476, 493.

4 All ER 476, 497. 4 All ER 476, 498. ETMR 341.

34 DAMAGE The third and final element that a claimant must prove to sustain a passing off action is that they have suffered, or are likely to suffer, damage as a result of the defendant’s misrepresentation.' After looking at the third limb of the passing off action, we turn away from the classic passing off action to consider the notion of extended passing off and then ‘unfair competition’.

1 HEADS

OF DAMAGE

There are four types of damage that have been recognized by the courts. These are loss of existing trade and profits, loss of potential trade and profits, damage to reputation, and dilution.* In each case, there must be more than trivial or minimal damage. Where the damage to reputation relates to future losses, the damage must also be reasonably foreseeable.*

1.1

LOSS

OF EXISTING

TRADE

AND

PROFIT

One of the most common forms of damage is where the misrepresentation diverts trade and thus profit from the claimant to the defendant. This will occur where the misrepresentation generates confusion about the source or origin of the goods or services. In this situation, the damage is self-evident: it is the loss of profit on the sale of goods or services that the claimant suffers. This type of damage will only occur where the claimant and the defendant deal in similar goods or services or operate in similar fields.

! 731, 2 >

A requirement of damage is specified in both Lord Diplock and Lord Fraser’s fifth ‘probanda’ ([1979] AC 742, 756) and the third branch of Lord Oliver’s classical trinity. H. Carty, ‘Heads of Damage in Passing Off [1996] EIPR 487. Lord Fraser’s reference, at [1979] AC 731, 756, to ‘substantial’ damage was reinterpreted in this way by

Peter Gibson LJ in Taittinger SA v. Allbev [1993] FSR 641, 664. 4 Not ‘hypothetical’ or ‘far-fetched’: Mothercare v. Penguin Books [1988] RPC 113, 116.

DAMAGE

1.2

LOSS

OF POTENTIAL

TRADE

AND

719

PROFIT

The courts have also recognized that a claimant may incur damage where the misrepresentation leads to a loss of future profit. This will occur, for example, where a

defendant trades in a field or geographical area into which the claimant intends to expand in the future. In this situation the damage suffered arises through the potential trade that is lost rather than the existing trade that is diverted.° Importantly, the loss of potential profits includes the loss of a chance to expand into a new field. This can be seen, for example, in Lego v. Lemelstrich, which was an action brought by LEGo, the well-known manufacturer of children’s building blocks, against Lemelstrich who sold brightly coloured plastic garden sprinklers marketed under the name, LeGo. On the basis that LeGo’s reputation extended beyond children’s toys to include garden sprinklers, Falconer J found that the defendant’s use of the LEGo name in relation to garden equipment was likely to damage LEGO’s goodwill. Given that the LEGo goodwill extended to garden equipment, the claimant would have had the potential to use their name to operate in the field of garden equipment or to have licensed or franchised other traders in that field.®

1.3

LOSS

OF LICENSING

REVENUES

Loss of future profit may also include situations where the defendant’s conduct undermines the claimant’s ability to license their own mark and thus brings about a loss of potential licensing revenues. The recognition of the loss of future licensing revenue as a relevant form of damage may enable celebrities to use passing off to prevent the misappropriation of their image or personality. (Without this form of damage, celebrities face the problem that if they had not already licensed their image, they would have difficulties in proving the requisite damage.) In Mirage Studios v. Counter-Feat Clothing,’ Browne-Wilkinson V-C held that the creators of the Teenage Mutant Ninja Turtles (fictitious humanoid cartoon characters), suffered damage when the defendant licensed others to reproduce the cartoon characters on clothing. This was because they would lose the royalties that would otherwise have been paid to them to use the images. This line of reasoning has been criticized on the basis of its circularity.* The reasoning is said to be circular because a person is only entitled to licensing revenue if they have the legal ability to control the use that is made of their image (etc.). In turn, this only arises where the unauthorized use amounts to a passing off. While this criticism may be technically correct, 1t overlooks the fact that parties may enter into licensing schemes even though there is no legal requirement to do so.’ Despite doubts about the impact of passing off on character and personality 5 LRC y. Lila Edets [1973] RPC 560 (use of same name, in a similar style, on toilet tissue as claimant used

for household gloves and nappies caused damage because claimant was planning to move into the field). © Lego v. Lemelstrich [1983] FSR 155, 194. See also Dunhill v. Sunoptic [1979] FSR 337.

7 [1991] FSR 145. 8 H. Carty, ‘Heads of Damage in Passing Off [1996] EIPR 487, 490.

9 Wadlow (1995), para. 5.41, p. 309.

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merchandising, it remains a profitable business. As long as the courts only recognize damage through loss of royalties where licensing is likely to take place, it is difficult to see that the circularity objection carries much force. This must be contrasted with Stringfellow v. McCain.'° The defendant in the case manufactured a new brand of long, thin oven-ready chips called srRINGFELLOwsS. The television advertisements for the defendant’s chips featured a choreographed disco number set in a kitchen, with a boy and his two sisters singing ‘Stringfellows from McCains’. The claimant was the owner of a well-known nightclub called stRINGFELLows. The London nightclub consisted of a restaurant and a discotheque: the latter being described in the decision as a place ‘where people move their bodies in strange ways to even stranger music’.'' The claimant argued that the defendant’s misrepresentation was likely to prejudice their future chances of exploiting the goodwill associated with the name sTRINGFELLOwS. The court refused to grant relief on the ground that it was unlikely that the misrepresentation would cause Stringfellow any damage. While Stringfellow might have been able to exploit his name (for example through the establishment of franchises), Slade LJ did not find that the television advert preju-

diced his ability to do so. In part, Slade LJ was influenced by the fact that there was no evidence that Stringfellow had any intention to exploit his name. Stephenson LJ said that in a case such as this there must be clear and cogent proof of actual damage or real likelihood of damage. Along with Slade LJ, he said that where there is a tenuous

overlap between the fields of activity of the protagonists, he doubted whether damage in the form of loss of future franchising or merchandising revenue was ever recoverable.”

1.4

DAMAGE

TO

REPUTATION

The courts have also recognized that damage may occur where the misrepresentation has a negative impact on the claimant’s reputation.'* This form of damage is particularly important where the misrepresentation is made in respect of non-competing goods or services. While the claimant may not lose any trade, the misrepresentation may nonetheless have a negative impact upon the claimant’s reputation. This is particularly so where the claimant deals in high-quality goods or services. As we explained above, damage from loss of existing or potential trade arises where the public is confused about the origin of the goods or services. In contrast, damage to reputation arises where the defendant’s misrepresentation leads the public to believe that the goods or services of the claimant and the defendant are somehow related. The resulting damage arises from the negative impact that this has upon the claimant’s 10 [1984] RPC501. 11 [1984] RPC 501, 504. —

2 [1984] RPC 501, 546-7.

13 But cf. Harrods v. Harrodian School [1996] RPC 697, 718: ‘damage to reputation without damage to goodwill is not sufficient to support an action for passing off, so that even if the School had a poor reputation it would not rub off on the store.

DAMAGE

721

reputation. As Warrington LJ explained in Ewing v. Buttercup Margarine Co., to ‘induce the belief that my business is a branch of another man’s business may do that other man damage in various ways. The quality of goods I sell, the kind of business I do, the credit or otherwise which I enjoy are all things which may injure the other man who is assumed wrongly to be associated with me.’!* Another example of the way reputation may be damaged is offered by Associated Newspapers v. Insert Media.'° The claimants in this case were the publishers of two national newspapers. The defendant arranged with retail newsagents to have advertising materials inserted into the papers, without the publisher’s knowledge or consent. The Court of Appeal held that since there was a real risk that the newspapers would be thought to be responsible for the accuracy and honesty of the inserts, there was an obvious, appreciable risk of loss of goodwill and reputation by the publishers. One situation where damage to reputation may be important is where the claimant deals in high-quality goods and the defendant acts in a way that undermines that reputation. This would be the case, for example, where the defendant trades under the same name as the claimant, but in a market in which the claimant would never operate. In these circumstances, the defendant’s misrepresentation would not impact upon the claimant’s sales. The reason for this is that the claimant would never have made the sales in the first place. Nonetheless, the courts have recognized that the defendant’s conduct may damage the claimant’s reputation. This can be seen, for example, in Annabel’s Berkeley Square v. Schock'® where a well-known London club called ‘Annabel’s Club’ was granted relief to prevent the defendant from trading as ‘Annabel’s Escort Agency’. The court accepted that the defendant’s use of the name ‘Annabel’s’ could have tarnished and thus undermined the claimant’s reputation. Another situation where a misrepresentation may damage a claimant’s reputation is in relation to the unauthorized use of the name, image, or likeness of a celebrity. Where the name or image of a celebrity is used without permission, and the celebrity can show that the public (incorrectly) thought that they had endorsed the use of their image, this may damage the celebrity's reputation. This would be the case, for example, where the picture of a sports star who has a reputation for healthy living is used to advertise a brand of cigarettes. Damage to reputation may also be important

in relation to character merchandising. For example, in Mirage Studios v. Counter-Feat Clothing,” the claimants brought an action against the defendant for licensing the reproduction of images of Ninja Turtles on T-shirts and clothing. Browne-Wilkinson V-C said that since the public ‘associates the goods with the creator of the characters, the depreciation of the image by fixing the Turtle picture to inferior goods and inferior materials may seriously reduce the value of the licensing right.’'® A similar approach was adopted by the Supreme Court of New South Wales in Henderson v. 14 [1917] 2 Chl, 14.

15 [1991] FSR 380. 16 [1972] _

RPC 838. See also British Medical Assn. v. Marsh (1931) 48 RPC 565.

7 [1991] FSR 145, 156.

18 Tbid.

f22

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MARKS

AND

PASSING

OFF

Radio Corporation.'? It will be recalled that in this case the unauthorized use of a photograph of two ballroom dancers on a record cover was held to be a misrepresentation that the dancers had endorsed the product. On the basis that the ‘wrongful appropriation of another’s professional or business reputation is an injury in itself, the court found that the misrepresentation had caused the requisite damage. This was

because it had deprived the dancers of the right to bestow recommendations at will.”° Whether this is really a case of damage to reputation or a loss of an opportunity to profit is questionable.

1.5

DILUTION

The final form of damage recognized by the courts is where the misrepresentation dilutes the claimant’s goodwill. This occurs where the defendant’s misrepresentation causes the claimant’s sign to become familiar or commonplace and, as a result, undermines the ability of the sign to summon up particular goods or values. That is, the defendant’s misrepresentation dilutes the pulling power or goodwill of the claimant’s sign. Importantly, this applies where the public is not confused about the source or origin of the goods or where it is unlikely that the reputation will be damaged. The notion of damage through dilution was acknowledged in English law in Taittinger v. Allbev.*' The claimant was a member of a group of producers from the Champagne district who made a naturally sparkling wine, which had long been known in the UK as ‘champagne’. Notably, the claimant’s champagne was produced by a process of double fermentation from grapes grown in the Champagne district. The claimant brought an action against the producer of a non-alcoholic sparkling beverage called ELDERFLOWER CHAMPAGNE that was produced in England. At first instance, it was held that the claimant’s had goodwill in ‘champagne’ and that the labelling of the defendant’s product amounted to a misrepresentation. However, the Court found that while a small number of people might be confused by the defendant’s misrepresentation, the claimant had not established that there was any real likelihood of serious damage if the defendant continued to sell their product as ELDERFLOWER CHAMPAGNE. On appeal, the Court of Appeal overturned the first instance decision, finding that the defendant was liable for passing off. While the Court of Appeal agreed with the Judge’s findings at first instance in relation to goodwill and misrepresentation, it disagreed as to the question of damage. In particular, the Court of Appeal held that the defendant’s use of ‘champagne’ had caused the requisite damage to sustain a passing off action. Importantly, the Court of Appeal found that the relevant injury to the Champagne House’s goodwill occurred under a head of damage not considered at 19 (1960) [1969] RPC 218. 20 [1969] RPC 218, 236. 21 A number of earlier cases had referred to a trader’s interest in maintaining the exclusivity of their signs: Lego v. Lemelstrich [1983] FSR 155; Dalgety Spillers Food v. Food Brokers [1994] FSR 504; Peter Waterman v.

CBS [1993] EMLR 27.

DAMAGE

723

first instance. The damage arose from the fact that there would have been blurring or erosion of the uniqueness associated with the name ‘Champagne’ which would have debased the claimant’s reputation. The use of the name champagne for the elderflower drink brought about ‘a gradual debasement, dilution or erosion of what is distinctive’.?* This was because, as Cross J explained in another context, [If people were allowed to call sparkling wine not produced in Champagne ‘Champagne’ even though preceded by an adjective denoting the country of origin, the distinction between genuine Champagne and ‘champagne-type’ wines produced elsewhere would become blurred; that the word ‘Champagne’ would come gradually to mean no more than ‘sparkling wine’ and that part of the plaintiff's goodwill which consisted in the name would

be diluted and gradually destroyed.” The explicit recognition of dilution as a form of damage was greeted enthusiastically by many commentators, especially in light of similar extensions in trade mark law.** However, the status of dilution as a head of damage in passing off has subsequently been thrown into doubt by Harrods v. Harrodian School.”> In this decision, Millett LJ said that while ‘erosion of the distinctiveness of a brand name has been

recognized as a form of damage to the goodwill of the business with which the name is connected in a number of cases, particularly in Australia and New Zealand ... unless care is taken this could mark an unacceptable extension of the tort of passing off.’*° Millett LJ also said that he had problems with an action based on confusion that recognized a distinct head of damage that did not depend on confusion.””? On the facts, Millett LJ held that it was highly unlikely that, as a result of the defendant’s activities, the Harrods name would lose its distinctiveness or become a generic term to

refer to shops that sold luxury goods. As such, the passing off action failed.”* As a result of the Harrods decision there is now some uncertainty over the extent to which dilution will be recognized as a distinct head of damage. One view treats dilution as an appropriate form of damage only in extended passing off cases. This, at least, seems to be the position recently taken by Laddie J in Chocosuisse.”? Other authorities, however, have been willing to accept dilution in the context of classic passing off. In British Telecommunications v. One In A Million*®® the Court of Appeal

22 [1993] FSR 641, 670, 674, 678 (‘singularity and exclusiveness ofthe description Champagne’). 23 Vine Products v. Mackenzie [1969] RPC 1, 23. 24 TMA s. 10(3) discussed below at pp. 828-38. 25 [1996] RPC 697. 26 [1996] RPC 697, 715-16. 27 See Wadlow (1995), para. 3.24, pp. 174-7. 28 Sir Michael Kerr, in a dissenting judgment, applied the dilution doctrine from Taittinger. 29 Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury [1998] RPC 117, 127 (damage by dilution only in case of famous yet descriptive marks). H. Carty, “Heads of Damage in Passing Off [1996] EIPR 487 advocates caution in extending the heads of damage. See also H. Carty, ‘Passing Off at the Crossroads’ [1996] EIPR 629, 631; H. Carty, ‘Dilution and Passing Off: Cause for Concern’

(1996)

112 Law

Quarterly Review 632. 30 [1998] 4 All ER 476, 497. See also, Pontiac Marina Private v. Cdl. Hotels International [1998] FSR 839

(‘anything which dilutes the distinctiveness of MILLENIA causes damage’).

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AND

PASSING

OFF

held that persons who registered and dealt in Internet domain names, such as , were liable for passing off. This was because ‘registration of the domain name including the words Marks & Spencer is an erosion of the exclusive goodwill in the name which damages or is likely to damage Marks & Spencer.’*!

2 EXTENDED

PASSING

OFF

As should be clear by now, the classic passing off action contains a host of subcategories and subrules. The courts have developed one variant, known as ‘extended passing off, that deserves special attention. The extended form of passing off was first recognized by Danckwerts J in the Bollinger decision,” in which the claimants, who were

champagne producers, brought a successful action to prevent the defendant calling its product ‘Spanish Champagne’. The action for extended passing off represents a radical departure from the classic form, which is based on misrepresentation as to source.** As Laddie J said in Chocosuisse, although extended passing off grew from passing off roots, it displays marked differences to the classic form of the cause of action.** These differences are best looked at in terms of the three elements of the action: goodwill, misrepresentation, and damage.

2.1

GOODWILL

The first point to note about extended passing off is that it recognizes that a class or group of traders may share goodwill in a name (or some other indicator) that is distinctive of a particular class of goods, such as ‘advocaat’, ‘champagne’, or ‘Scotch whisky’. This can be seen, for example, in the Bollinger decision** where the claimants were members of a group of producers from the Champagne district in France who made a naturally sparkling wine, which had long been known in the UK as ‘Champagne’. The claimants’s champagne was produced by a process of double fermentation from grapes grown in the Champagne district. The claimants brought a passing off action against the defendant for selling a product called ‘Spanish Champagne’. They did so on the basis that as the defendant’s drink was made in Spain and/or from 31 [1998] 4 All ER 476, 497. 32 Bollinger v. Costa Brava Wine Co. [1960] RPC 16. 33 See S. Naresh, ‘Passing Off, Goodwill and False Advertising: New Wine in Old Bottles’ (1986) 45 Cambridge Law Journal 97, 98. 34 [1998] RPC 117, 124; on appeal, [1999] RPC 826, 830, Chadwick LJ focused on two differences—the

shared nature of the goodwill; and the fact that the class of traders was capable of continued expansion. 35 Bollinger v. Costa Brava Wine Co. [1960] RPC 16. See also Vine Products v. Mackenzie [1969] RPC 1 (sherry—wine produced by the solera process in the province ofJerez de la Fontera in Spain); John Walker & Sons v. Henry Ost [1970] RPC 489 (Scotch whisky—blended whisky distilled, but not necessarily blended, in Scotland); Taittinger SA v. Allbev [1993] FSR 641 (champagne); Consorzio del Prosciutto di Parma v. Marks & Spencer [1991] RPC 351; Consorzio del Prosciutto di Parma v. Asda Stores [1988] FSR 697 (parma ham).

DAMAGE

725

grapes grown in Spain, it did not qualify to be called ‘champagne’. Danckwerts J reviewed the cases concerning geographical expressions as trade descriptions and the cases on shared goodwill. He said that passing off would restrain a trader who sought to attach to their product a name or description with which they have no natural association, ‘so as to make use of the reputation and goodwill which has been gained by a product genuinely indicated by the name or description’.*° Danckwerts J added that it did not matter ‘that the persons truly entitled to describe their goods by the name and description are a class producing goods in a certain locality, and not merely one individual.’ In essence, the court recognized that the claimants, along with the other members of the class, had the requisite goodwill in the name ‘champagne’. This was because the name—champagne— indicated a sparkling wine that came from the Champagne district in France, was made by a particular method, and from grapes sourced from the Champagne region. As such, champagne had a distinctive reputation which could only be used by producers from that region. The extended form of passing off was approved and elaborated on in Warnink v. Townsend.*’ In this decision the House of Lords held that extended passing off was not confined to drinks, nor to indications of geographical origin. Instead, the action applied equally where any product had a particular characteristic or quality. In this case the claimant produced “advocaat’, a drink manufactured from eggs and a spirit called brandewijn. The defendant sold its drink, made out of eggs and wine, under the name ‘advocaat’. The House of Lords held that this amounted to a passing off. Previous case law had been confined to cases where a particular product had been manufactured in a particular way using ingredients from a particular geographical source, such as champagne or Scotch whisky.** In Warnink, no such geographical connection was claimed. Instead, the claimant based its case on the association that existed between the name—viz. ‘advocaat’—and a particular product with particular ingredients— viz. a drink manufactured from eggs and brandewijn. Lord Fraser said that it was not necessary that the class of traders should be defined by reference to the locality in which the product was produced. Instead, the crucial thing was that the name was distinctive of a particular class of goods. He added that the name must have a ‘definite meaning’ so that its use in relation to a different product was a misrepresentation.” In a similar vein Lord Diplock said the name must

denote ‘a product endowed with recognizabie qualities which distinguish it from others of inferior reputation that compete with it in the same market.’* Lord Fraser’s sentiment that the crucial thing in relation to extended passing off

was that the name was distinctive of a particular class of goods was echoed in 36 [1960] RPC 16, 31-2. 37 [1979] AC 731. 38 For example, in the Bollinger case ‘champagne’ was taken to refer to a drink made from grapes from the Champagne region which was produced by the champenois process. In Walker v. Ost [1970] RPC 489, ‘Scotch whisky’ referred to a blended whisky where the ingredients were all whiskies distilled in Scotland. 39 [1979] AC 731, 754. 40 [1979] AC 731, 744.

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Chocosuisse v. Cadbury,*' where Laddie J recognized that the Swiss Chocolate Industry Association had collective goodwill in the term ‘Swiss chocolate’. The Swiss body argued that by introducing a chocolate product called swiss cHALET, Cadbury had made a misrepresentation to the public that the product was made of Swiss chocolate. Laddie J (whose judgment was affirmed by the Court of Appeal) said that for a claimant to succeed, it was necessary for them to show that ‘a significant part of the public took the words ‘Swiss chocolate’ to indicate a particular group of products having a discrete reputation as a group. On the evidence, he held it had: a significant part of the public understood the words ‘Swiss chocolate’ to denote a group of products of distinctive reputation for quality. The fact that the public could not define

what those distinctive features were, was of little relevance.” In many ways, the concept of goodwill recognized in extended passing off is similar to that recognized in the so-called ‘classic action. In both cases, to establish goodwill a claimant must establish that the name in question is distinctive. The shared goodwill that underpins the extended passing off action is similar to goodwill that is jointly owned by a number of parties. There are, however, a number of differences. Where classic goodwill is owned jointly, each owner cannot prevent other owners from using the particular sign. All joint owners may, however, prevent others from using the sign. However, the goodwill recognized by extended passing off differs in that other traders may participate in the shared goodwill without the consent of existing owners.” In determining whether a claimant has the requisite goodwill to bring an extended passing off action, a distinction is drawn between establishing the distinctiveness of the descriptive term in the minds of the public and establishing who is entitled to use the term. This distinction was brought out clearly in the Chocosuisse decision.“ It will be recalled that in this case, the Swiss Chocolate Industry Association established that to a significant part of the British public the words ‘Swiss chocolate’ denoted a group of products which had a distinctive reputation for quality. This was the case éven though the public could not define the features that made that designation distinctive.” Acknowledging that different manufacturers who called their chocolate ‘Swiss chocolate’ employed very different recipes, the Court of Appeal said that this did not prevent them from collectively acquiring a reputation for quality. Equally, it did not matter that the public did not know or appreciate the identifying characteristics of the class.*° All that was required was that the designation ‘Swiss chocolate’ was taken bya significant section of the public to indicate a particular group of products (chocolate made in Switzerland) having a discrete reputation distinct from other chocolate.*”

41 42

[1998] RPC 117; [1999] RPC 826. [1998] RPC 117, 133. See also H. P. Bulmer and Showerings v. J. Bollinger SA [1978] RPC 79, 119.

43 As Lord Diplock noted in Warnink v, Townsend [1979] AC 731, 744, the size of the class of traders will

influence the scope of the goodwill.

44 [1998] RPC 117 (Laddie J); [1999] RPC 826 (Court of Appeal). 45 See also H. P. Bulmer and Showerings v. J. Bollinger SA [1978] RPC 79, 119.

46 47

[1999] RPC 826, 849. 11999] RPC 826, 832.

DAMAGE

727

Despite the assistance provided by the Chocosuisse case, a number of issues are unclear in relation to the operation of collective goodwill. One issue that is uncertain relates to the question: how extensive must the trade of an individual be for them to participate in the collective goodwill? That is, what does an individual trader need to

do to establish that they are a member of a class? According to Warnink v. Townsend, the mere fact that a person has begun to trade in relation to a particular product does not mean that they are therefore entitled to share in the extended goodwill. As Lord Diplock noted: As respects subsequent additions to the class, mere entry on to the market would not give any right of action for passing off; the new entrant must have himself used the descriptive term long enough on the market in connection with his own goods and have traded

successfully enough to have built up a goodwill for his business.*® This requirement has recently been doubted at first instance in Chocosuisse.” There, Laddie J said that the courts would allow a joint action by new users without inquiring into how extensive their trade has been. The Court of Appeal made no comment on this issue when affirming Laddie J’s decision. A second question that remains unclear is exactly how the courts are to define the class of persons who are to participate in the goodwill. In many cases this will be uncontroversial, because the reputation will have arisen in relation to a discrete class of traders who are themselves subject to regulatory control. However, the potential for difficulty of definition can be seen from the Chocosuisse case. There, the claimants had proposed a definition of the class based on the recipes used to manufacture

Swiss chocolate.’ However, Laddie J rejected this on the ground that

it excluded a number of those who were already using the designation and were represented by the Association. Instead, Laddie J took the defining feature of “Swiss chocolate’ to be that the chocolate was made in Switzerland, according to Swiss

food regulations. However, on appeal, the Court of Appeal held that the group of traders entitled to use the goodwill was that identified by the claimant, that is, those who made chocolate in Switzerland, other than those who made chocolate with vegetable fat as an ingredient.*! Since none of the claimants supplied a product with such added fat, nor wished to do so, Chadwick LJ said he saw no reason to

define the product in less precise terms. Since, on either view, Cadbury’s chocolate was not entitled to share in the goodwill (as it was made in England), the finding

did not matter. However, had the dispute been with a Swiss producer of chocolate who added vegetable matter, the court would have been called on to locate its own

basis for defining the product.

48 [1979] AC 731, 744. Lord Fraser [1979] AC 731, 754, said ‘[a] new trader who begins to sell the genuine

product would become a member of the class when he had become well enough established to have acquired a substantial rightof property in the goodwill attached to the name.’ 49 Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury [1998] RPC 117.

50 [1998] RPC 117, 133-5. 51

[1999] RPC 826, 840.

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OFF

A third question relates to the extent to which the participants in the shared goodwill can themselves decide to modify the criteria by which the class is defined. If the majority of champagne makers decided to abandon the double fermentation process, perhaps because it was discovered to be unhealthy, would they then be able to exclude others, who continued to do so, from using the term ‘champagne’?

2.2

MISREPRESENTATION

In establishing misrepresentation in an extended passing off action, the critical factor is what the public understands by the way the name is used. As with classical passing off, this is a question of fact. Although extended passing off and classical passing off both require the claimant to show that there has been a misrepresentation, there are important differences between the way this is approached in the two actions. In relation to extended passing off, ‘protection is given to a name or word that has come to mean a particular product rather than a product from a particular trader.’ It follows from this that the descriptiveness of the term will not be sufficient to defeat the action. Moreover, there will be no misrepresentation if the defendant uses the

distinctive term accurately. Rather, the misrepresentation ‘lies in marketing the goods in a way which will lead a significant section of the public to think that those goods have some attribute or attributes which they do not truly possess.’? Another difference relates to the use that the owner of the goodwill can make of the distinctive name. In conventional passing off a trader can change the quality of the goods or services that they offer under a particular sign. However, in extended passing off an existing user is not able to use the ‘sign’ on products for which it is not a correct designation.** Thus an individual champagne producer would not be able to use ‘champagne’ to describe another product. Each trader within the class is, however, able to use their own trade name in association with the distinctive name shared by the class of traders. This will not prejudice their right to share in the goodwill associated with the product. Thus, there is no problem with Bollinger using its name in association with champagne, nor with Warnink using its name in relation to Advocaat.

2.3

DAMAGE

A final feature of the extended form of passing off worth observing is the treatment of damage. The most relevant form of damage is the reduction of the distinctiveness of the descriptive term, that is dilution. While doubts have been raised about the ongoing relevance of dilution in the classic passing off action, it seems that it will continue to 52 Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury [1998] RPC 117, 125. See also [1999]

RPC 826, 832.

°3 [1999] RPC 826, 837. °4 The points are all drawn from Laddie J’s analysis in Chocosuisse Union des Fabricants Suisses de Chocolat v. Cadbury Ltd [1998] RPC 117, 124-6.

DAMAGE

729

operate in relation to extended passing off.°° While likelihood of damage remains a prerequisite of extended passing off, it is not essential for a claimant to demonstrate that they would have been damaged individually.*°

2.4

ACTIONS

RELATED

TO EXTENDED

PASSING

OFF

It is worth observing that the use that is made of names that designate the geographical origin or quality of goods is regulated by a number of regimes other than passing off. For example, a person’s ability to use an incorrect designation of origin or quality may lead to criminal liability under consumer protection laws such as the 1968 Trade Descriptions Act.*” The European Community has also adopted a number of Council Regulations dealing with geographical ‘designations of origin’ (PDOs) and ‘geographical indications’ (PGIs) for wines,* spirits, agricultural products, and food.® The types of things that have been registered include the French crustaceans “Coquille St. Jacques Des Cotes D’Armor’ as a PGI, and ‘Cornish clotted cream’ as a

PDO.°! The EC has also entered into a number of bilateral treaties that ensure the mutual recognition of geographical indicators in other countries.” Given that most of the well-known names of wines and spirits are European in origin, for the most part this mainly involves the protection of European names in the other jurisdictions. TRIPs requires member states to provide certain levels of protection for geographical indicators. More specifically, Article 24 of TRIPs requires member states to enter into negotiations aimed at increasing the protection of geographical indications. As a result, further changes in this area are likely.

Finally, it is worth noting that marks that designate the geographical origin or quality of goods can be registered in the UK as ‘certification’ or ‘collective’ trade

> Ibid., 126-7, 143. 56 [1979] AC 731, 756. 97 In general, these do not impose statutory duties which give rise to civil liability: Bollinger v. Costa Brava Wine Co. [1960] RPC 16, 34 (claim under the Merchandise Marks Acts 1887-1953).

°8 Council Regulation 823/87 (implemented in the UK by the Common Agricultural Policy (Wine) Regulations 1992 (SI 1992/672) ) which was, in addition to passing off, a basis for injunctive reliefin Taittinger SA v. Allbev [1993] FSR 641, 672-3, 674, 678-9. See now Regulation 2392/89. 59 Council Regulation (EEC) 1576/89. 60 Council Regulation 2081/92. Discussed in Consorzio Del Prosciutto Di Parma v. Asda Stores [1999] 1 CMLR 696 (CA); and the ECJ in Consorzio per la Tutela del Formaggio Gorgonzola v. Kaserei Champignon Hofmeister, Case C-87/97 [1999] ECR I-1301 (concerning ‘Cambozola’).

61 Use of the name may be accompanied by a standard logo. Although not explicit, it seems that the Regulations do not give private law rights to producers: Consorzio Del Prosciutto Di Parma v. Asda Stores

[1999] 1 CMLR 696. 62 Agreement between the European Community and Australia on trade in wine OJ L 086/3, 31/03/1994.

Multilateral agreements include the Madrid Agreement for the Repression of False or Deceptive Indications of Source on Goods 1891 and the Lisbon Agreement for the Protection of Appellations of Origin and their International Registration. The former has 31 (including the UK) and the latter 18 signatories. 63 TRIPs Art. 22 (geographical indications), and Art. 23 (wines and spirits). See R. Knaak, ‘The Protection of Geographical Indications according to the TRIPs Agreement’ in Beier and Shricker, 117.

730

marks, goods or products goods or

TRADE

MARKS

AND

PASSING

OFF

or as Community Collective marks.® Certification marks indicate that the services meet certain standards. This mechanism has been used to protect such as ‘Stilton’ cheese.®” In turn, Collective marks serve to distinguish the services of the members of relevant associations.

3 UNFAIR

COMPETITION

In the final part of the chapter, we consider the principles of unfair competition and their relevance in the UK. Many countries have granted protection well beyond the confines of passing off under the more general rubric of unfair competition law. At its broadest, unfair competition provides general, open-textured rules against competitive acts that contravene trade mores. For example, the 1909 German Act Against Unfair Competition® declares that ‘anyone who for the purpose of competition commits acts in the course of trade that infringe good mores, is liable to incur injunctions or damages.’ It should be noted that generalized rules of this nature are not confined to civil law jurisdictions: the USA has recognized a notion of unfair competition

through its case law. The notion of unfair competition law is enshrined tions. Notably, Article 10 bis of the Paris Convention assure ‘effective protection against unfair competition’ any ‘act of competition contrary to honest practices

in the International Convenobliges member countries to which, in turn, is defined as in industrial or commercial

matters’. Article 10 bis(3) then specifies three particular acts that will be treated as

being unfair. These are: 1. All acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor; 2. False allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor; 3. Indications or allegations the use of which in the course of trade is liable to

64 N. Dawson, Certification Trade Marks: Law and Practice (1988); Annand and Norman (1994), ch. 13.

65 CTMR Art. 64. See Annand and Norman (1998), ch. 11. There is no Community certification mark.

66 TMA s. 50. 67 Stilton Trade Mark [1967] RPC 173. 68 Gesetz gegen den unlauteren Wettbewerb—UWG. See W. Rowland, ‘Unfair Competition in West Germany’ (1968) 58 TM Rep 853; Knight, ‘Unfair Competition: A Comparative Study of Its Role in Common Law and Civil Systems’ (1978) 53 Tulane Law Review 164; A. Kamperman Sanders, Unfair Competition Law: The Protection of Intellectual and Industrial Creativity (1997) ch. 1; P. Kaufman, Passing Off and Misappropriation (IIC Studies, Vol. ix) (1986) (discussing Netherlands, West Germany, France, and the USA).

© The earliest recognition of a general doctrine of unfair competition in the USA occurred in the famous Supreme Court decision in International News Service v. Associated Press, 248 US 215 (1918). The doctrine has

been characterized as having had a ‘sickly growth’. See J. Adams, ‘Unfair Competition: Why a Need is Unmet’

[1992] EIPR 259.

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731

mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods.”° In some countries, the protection offered by unfair competition extends beyond the level specified in the international provisions to include dilution of another trader’s indications (a form of ‘free riding’), slavish imitation, and misleading advertising.”!

3.1

UNFAIR

COMPETITION

FOR

THE

UK?

During the 1970s and 1980s, courts in the UK were developing passing off in a way that looked as if it was evolving into a general tort of wrongful trading.” In particular, the developments associated with extended passing off were seen by many as heralding the judicial recognition of unfair competition. For example, in Vine Products,” Cross J said that the Spanish champagne case was not a passing off action, but a ‘new fangled tort called unfair competition’. Moreover, in Warnink v. Townsend Lord Diplock characterized passing off, along with conspiracy to injure a person in their trade and slander of title, as separate labels that had been attached to particular forms of ‘unfair trading’. He also noted that the forms of unfair trading ‘will alter with the ways in which trade is carried on and business reputation and goodwill acquired.’”* While it seemed in the 1970s and 1980s that British law was on the verge of acknowledging a general action for unfair competition,” the judicial tendency was subsequently reversed.”° In Cadbury Schweppes v. Pub Squash’’ the Privy Council made it clear that there is no cause of action for misappropriation as such.”* There, it will be recalled, relief was denied to the claimant against the defendant who had imitated aspects of the claimant’s advertising campaign for its soto soft drink. This was despite the fact that the court acknowledged that the defendant had set out in a deliberate and calculated fashion to take advantage of the claimant’s past efforts. Lord Scarman explained that the claimant had failed to establish a misrepresentation. He also added that while passing off was a developing body of law that 70 Art. 39 of TRIPs requires member states to protect undisclosed information under Art. 10(2) of the Paris Convention. 71 WIPO, Protection against Unfair Competition (WIPO Pubn. 725(E) )(1994). 72 For the position before that, see W. Morison, ‘Unfair Competition at Common

Law’ (1951-3) 2 Uni-

versity of Western Australia Law Review 34; W. Cornish, ‘Unfair Competition: A Progress Report’ (1972) 12 Journal of the Society for the Public Teachers of Law 126. 73 Vine Products v. Mackenzie [1969] RPC 1, 28. 74 [1979] AC 731, 740.

73 G. Dworkin ‘Unfair Competition: Is the Common Law Developing a New Tort?’ (1979) EIPR 295, 244. 76 A. Kamperman Sanders, Unfair Competition Law: The Protection of Intellectual and Industrial Creativity (1997) 202.

77 [1981] RPC 429. 78 The lack of clarity, if any, arises from the Privy Council’s decision not to consider the ‘unfair competition’ argument which the claimant had raised, on the grounds that it had been ‘withdrawn’. See G. Dworkin, ‘Passing Off and, Unfair Competition: An Opportunity Missed’ (1981) 44 Modern Law Review 564, 567

(optimistically saying that it was not clear what decision might have been reached on this point—but the tenor is enough to suggest the Privy Council was not about to develop such a tort).

Yx2

TRADE

MARKS

AND

PASSING

OFF

[It] is only if the plaintiff can establish that a defendant has invaded his ‘intangible property right’ in his product by misappropriating descriptions which have become recognized by the market as distinctive of the product that the law will permit competition to be restricted. Any other approach would encourage monopoly. The new, small man would increasingly find his entry into an existing market obstructed by the large traders already well known as

operating in it.”

The implications of the case were that the courts had gone far enough in Warnink v. Townsend and that the Lords were not interested in developing passing off into a tort of unfair competition.*° The approach taken by the Privy Council was echoed by a strong judgment of the Australian High Court and more recently by the UK courts specializing in intellectual property.*' In rejecting a claim to passing off in relation to the sale of similar-looking therapeutic cushions in Hodgkinson & Corby Ltd. v. Wards Mobility Services Ltd.,® Jacob J said that there ‘is no tort of copying. There is no tort of taking a man’s customers ... There is no tort of making use of another’s goodwill as such. There is no tort of competition.’ Similarly, in Chocosuisse,*> Laddie J observed that ‘the common law does not recognise a general right in one trader to complain of damaging dishonest trading practices by his competitors.’

3.2

SHOULD

THE

UK

RECOGNIZE

UNFAIR

COMPETITION?

While the UK may not currently be in the process of developing a broad tort of unfair competition, debates still continue as to whether it should do so. The parties to these debates tend to divide between those who seek to expand the common law by reference to the ethical and juridical principles of unfair competition,** and those who wish to contain passing off (and related actions) within clearly defined paths.* Those who favour the introduction of a general principle of unfair competition tend to argue that: 7 [1981] RPC 429, 496, 80 J. Adams, ‘Is There a Tort of Unfair Competition? The Legal Protection of Advertising Campaigns and Merchandising’ [1985] Journal of Business Law 26, 32; J. Lahore, ‘The Pub Squash Case. Legal Theft or Free Competition?’ [1981] EIPR 54; S. Ricketson, ‘Reaping without Sowing: Unfair Competition and Intellectual

Property Rights in Anglo-Australian Law (1984) University of New South Wales Law Journal 1, 30.

81 Moorgate Tobacco v. Phillip Morris [1985] RPC 219. But the extension of passing off to cover ‘dilution’ and character merchandising has been seen by others as moving English law towards unfair competition: H. Carty, “Dilution and Passing Off: Cause for Concern’ (1996) 112 Law Quarterly Review 632; S. Chong and S. Maniatis, ‘The Teenage Mutant Hero Turtles Case: Zapping English Law on Character Merchandising Past the Embryonic Stage’ [1991] EIPR 253.

82 [1995] FSR 169. 83 [1998] RPC 117, 127. 8* P. Burns, ‘Unfair Competition—A Compelling Need Unmet’ [1981] EIPR 311; J. Lahore, ‘Intellectual Property Rights and Unfair Copying: Old Concepts, New Ideas [1992] EIPR 428; W. Gordon, ‘On Owning Information: Intellectual Property and the Restitutionary Impulse’ (1992) 78 Virginia Law Review 149, 223 (arguing for recognition of a tort of ‘malcompetitive copying’). 85 e.g. M. Spence, ‘Passing Off and the Misappropriation of Valuable Intangibles’ (1996) 112 Law Quarterly Review 472.

DAMAGE

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(i)

the action is desirable because the law should promote honest and conscionable conduct in the marketplace;*°

(ii)

the action is desirable because it provides incentives to those who expend time and effort developing products which are easily copied;*”

(iii) that the courts are already giving effect, albeit surreptitiously, to such a principle through existing intellectual property rights. Consequently it would be desirable to make that analysis explicit and thereby help to preserve the integrity of the existing concepts;** (iv)

the action is recognized in international conventions and in other jurisdic-

tions and, to better effect harmonization of standards, unfair competition should be adopted in the UK;*?

(v)

sut generis legislative responses (such as unregistered design right) which are built on existing property models, confer too strong protection on the owners of those rights and inhibit free and fair competition;””

(vi) a general law of unfair competition would add a much needed flexibility to UK law. This would be particularly useful in the context of developing technologies and business practices;?! and (vii) the concept of fairness is one which is well understood and applied by judges in other areas such as fair dealing with copyright works, unfair contract terms, and unfair dismissal. Those who are more sceptical about the need for unfair competition respond that: (i)

unfair competition is not justified on principle;””

(ii)

it is inappropriate and unconstitutional for the courts to develop a general action in a field where the legislature has enacted carefully drafted specific rights;”’

(iii) in most situations of unfair copying, passing off is flexible enough to provide 86 G. Dworkin, ‘Unfair Competition: Is the Common

Law Developing a New Tort?’ (1979) EIPR

Pheey

87 J. Reichman, ‘Legal Hybrids between the Patent and Copyright Paradigms’ (1994) 94 Columbia Law Review 2432.

88 S. Ricketson, ‘Reaping without Sowing: Unfair Competition and Intellectual Property Rights in AngloAustralian Law (1984) University of New South Wales Law Journal 1, 30.

89 H. Brett, ‘Unfair Competition—Not Merely an Academic Issue’ [1979] EIPR 295; A. Horton and A. Robertson, ‘Does the UK or the EC Need an Unfair Competition Law?’ [1995] EIPR 568.

90 J. Reichman, ‘Legal Hybrids between the Patent and Copyright Paradigms’ (1994) 94 Columbia Law Review 2432.

91 H, Brett, ‘Unfair Competition—Not Merely an Academic Issue’ [1979] EIPR 295. 92 M. Spence, ‘Passing Off and the Misappropriation of Valuable Intangibles’ (1996) 112 Law Quarterly Review 472.

93 Cheney Bros. v. Doris Silk Corp. (1929) 35 F (2d) 279 Judge Learned Hand; Victoria Park Racing v. Taylor (1937) 58 CLR 479, 509; Moorgate Tobacco v. Phillip Morris [1985] RPC 219.

734

TRADE

MARKS

AND

PASSING

OFF

a remedy.” As such, to develop a general ‘unfair competition’ law would be a disproportionate response to those cases which cannot so be accommodated; (iv)

in so far as wrongs are being committed which fall outside the scope of the existing laws, these should be remedied if at all by sui generis legislative action;

(v)

the action for unfair competition is too general to provide any guidance to judges in applying it to particular scenarios;”° and is therefore an ‘invitation to judicial idiosyncrasy’;”°

(vi)

unfair competition is inappropriate in a common law, adversarial” system;

(vii) unfair competition laws lead to undue interference by the judiciary in the workings of the marketplace;”* and (viii) unfair competition laws open floodgates to litigation.” While much ink has been spilled debating the merits of unfair competition law, it seems unlikely that British judges are going to develop the existing regimes into a generalized action for unfair competition. Moreover, the domestic legislature has signalled a reticence about legislating in this field, either generally or in response to specific issues (such as look-alike brands).! As this is an area of law on which it will be difficult to reach commonly agreed principles, European harmonization also appears unlikely in the near future. For the time being, then, those who complain about unfair competitive practices will have to continue to bring their grievances within existing causes of action. °4 Lego v, Lemelstrich [1983] FSR 155, 185-6; C. Morcom, ‘Developments in the Law of Passing Off [1991] EIPR 380, 385.

°° M. Spence, ‘Passing Off and the Misappropriation of Valuable Intangibles’ (1996) 112 Law Quarterly Review 472, 476-7. For a sophisticated attempt to make unfair competition more palatable to common lawyers through principles drawn from ‘unjust enrichment’, see A. Kamperman Sanders, Unfair Competition Intellectual and Industrial Creativity (1997). Law: The Protection of 96 Moorgate Tobacco v. Phillip Morris [1985] RPC 219; Mogul v. McGregor (1889) 23 QBD 598, 615. 97 J, Adams, ‘Unfair Competition: Why a Need is Unmet’ [1992] EIPR 259. But cf. L. Harms, ‘Unfair

Competition in an Adversarial System’ [1993] EIPR 74 (observing that the South African system of procedure is adversarial, but it operates an unfair competition law).

°8 H. Carty, ‘Dilution and Passing Off: Cause for Concern’ (1996) 112 Law Quarterly Review 632, 665;

P. Kaufman, Passing Off and Misappropriation (IIC Studies, Vol. ix) (1986).

°° White v. Mellin [1895] AC 154. 100 e.g. Copyright and Designs Bill 2000. See Hansard (HL) (17 Mar. 2000), cols. 1885 ff.

a2 TRADE

MARK

REGISTRATION

1 INTRODUCTION In this chapter we look at trade mark registration focusing in particular on the process by which registered trade marks come into being. While registering a trade mark is a costly and time-consuming process, it confers on the proprietor certain exclusive

rights to use a particular sign in relation to specified commercial activities. In contrast with the law of passing off, registration enables traders to protect their marks before they are put on the market. Registration is also advantageous in that once a mark is registered there is a presumption, though not a guarantee, that the registration is valid. A third advantage of the registration of a trade mark is that it reduces the possibility of disputes, and confers on the trade mark proprietor increased certainty, because the registration determines the scope of the property protected as a trade mark. The process of registration attempts to delineate what sign is protected and in which commercial spheres it is to be protected. The Register, which is open to the public, also acts as an important source of information.'

There are three possible routes UK traders might take to register a trade mark: national, Community,

or international. A national registration system for trade

marks has existed in the UK since 1875. The UK registry, which is based in Newport in Wales, provides successful applicants with rights in the UK in relation to the sign as registered. Registration at the Community level involves a single application to the Office for Harmonization

in the Internal Market (OHIM)

which is based in

Alicante in Spain. A successful application to the OHIM results in the grant of a single trade mark which operates throughout the Community. The Community trade mark is not mutually exclusive to a national registration: different routes suit different needs. In contrast to registration at a national or community level, the international filing systems merely facilitate the acquisition of national marks. International registration, which is administered by the International Bureau of WIPO at Geneva, will be carried out either under the Madrid Agreement or the Madrid Protocol. The main advantage of the international system is administrative: instead of traders having to file separate applications in the countries where they would like protection, the international ! TMA s. 63(3)(a).

736

TRADE

MARKS

AND

PASSING

OFF

system enables traders to obtain protection in a number of different jurisdictions via a single application. While there has been a degree of standardization of trade mark procedure at both the regional and international levels there are many important differences between the three regimes. In particular, although the procedures and documentation needed for national, regional, or international applications are similar, there are significant variations in the way applications are examined.”

2 REGISTRATION

IN THE

UNITED

KINGDOM

A registration system for trade marks was introduced in the United Kingdom in 1875. Earlier attempts to introduce a registration system had been resisted on the basis that it would have been complicated, expensive, and unnecessary. Eventually, the benefits of registration were seen to outweigh the potential disadvantages. In particular, it was thought that a registration system would help to reduce the difficulties that traders faced in proving reputation (which was necessary to sustain an action for passing off). It was also thought that a trade mark Registry would enable third parties to discover whether other traders had claimed the right to use a particular sign and, where necessary, to locate the proprietor of the sign. The introduction of a registration system also helped to relieve the pressure that foreign powers were exerting on the British government to introduce a registration system for trade marks. It is common for applicants to use trade mark agents in the drafting and processing of applications. While trade mark agents emerged in the UK late in the nineteenth century, the professional association that governs them, the Institute of Trade Mark Agents, was not formed until 1934.* While few restrictions were placed on who could act as an agent until recently, the Trade Marks Act 1994 now places strict limits on the use of the title ‘registered trade mark agent’.° The registration process in the UK can be divided into four stages: (i) the filing of the application, (ii) examination, (iii) publication, observation, and opposition, and (iv) registration (see Figure 35.1).

2.1

FILING

OF THE

APPLICATION

Any person (natural or legal) can apply for the registration of a trade mark. Section 32 of the 1994 Act provides that an application for a trade mark must contain:® * For example under the TM Dir. Recital 5, procedural matters are left to member states, See A. Kur, “Harmonization of Trade Mark Law in Europe: An Overview’ (1997) 28 IIC 1, 8.

3 See e.g. A. Ryland, Trade Marks. Registration Essential to Successful Litigation (1862). 4 It has a website at http://www.itma.org.uk. > TMA ss. 82-6. J. Gyngell and A. Poulter, A User’s Guide to Trade Marks and Passing Off, ch. 16.

© TMA s. 32.

TRADE

MARK

REGISTRATION

VEY)

UK Filing ($.32)

strane

fs

Appeal

Publication in Trade Marks Journal

ewe

Within 3 Months

-e] [Refusal] Refusal| Y

Registration

—qd---

Appeal

Fig. 35.1 Registering a trade mark in the UK (i)

arequest for registration, including the name and address of the applicant;

(ii) a statement of the goods or services for which the mark is to be registered; (ili) a representation of the mark; and

(iv) a declaration that the mark is being used or that there is a bona fide intention to use the mark.’ Since there is now only a single UK Register, there is no need to specify whether registration is sought in “Part A’ or ‘Part B’ as was required previously. The filing date of the application (which is the date from which things such as duration are calculated) is the date on which (i)—(iii), but not (iv), are provided to the Registrar.’ It may be possible to claim a priority date from an earlier application elsewhere.'” This may 7 TMA s. 32(3). 8 Transitional provisions are contained in TMA, Sched. 3.

9 TMA s. 33. See Ty Nant Spring Water [2000] RPC 55, 60-1 and PAC 5/99 Change of Registry Practice: Marks which are not clearly Defined. 10 TMA s. 35, TMR r. 6. Paris Art., 4(A)(1), 4(C)(1) (6 months).

738

TRADE MARKS AND PASSING OFF

be important where there are independent conflicting applications for the same trade mark. 2.1.1 The statement (or specification) of the goods or services

A trade mark application must precisely define the goods and services for which protection is sought.'! This is because the statement shapes the scope of the rights in the registered mark. As with the drafting of patent and design applications, the way statements are formulated is subject to a process of self-regulation. On the one hand, the applicant may wish to register the sign for a wide range of goods and services. At the same time, however, applicants should be mindful that as a result of an action for revocation, a broadly defined statement may subsequently be limited to the goods or services for which the registrant can demonstrate actual use. The list of goods and services may also be restricted to avoid an objection to the validity of the mark.!? The need to ensure that the specification is confined to the fields in which the applicant intends to operate is particularly important given that under the 1994 Act the rights conferred on trade mark owners extends to ‘similar’ goods or services and, in some cases, ‘dissimilar’ goods or services. As Laddie J explained in Mercury Communications v. Mercury Interactive (UK):!° In my view there is a strong argument that a registration of a mark simply for ‘computer software’ will normally be too wide. In my view the defining characteristic of a piece of computer software is not the medium on which it is recorded, nor the fact that it controls a computer, nor the trade channels through which it passes but the function it performs. A piece of software which enables a computer to behave like a flight simulator is an entirely different product to software which, say, enables a computer to optically character read text or design a chemical factory. In my view it is thoroughly undesirable that a trader who is interested in one limited area of computer software should, by registration, obtain a statutory monopoly of indefinite duration covering all types of software, including those which are far removed from his own area of trading interest. If he does, he runs the risk of his registration being attacked on the ground of non-use and being forced to amend down the specification of goods. 2.1.2 Classification

Section 34 of the 1994 Act provides that goods and services shall be classified for the purposes of registration according to a ‘prescribed system of classification’.!* The classification system, which is based in the international system adopted at Nice in 1957, has thirty-four classes of goods and eight classes of services. It is possible for an

'! For the relevance of TMA s. 3(6) that applications should be made in good faith, see below at pp.

807-10. But cf. OHIM practice which permits broad registrations, and regulates undue scope through the provisions on revocation for non-use.

12 See e.g. Mister Long Trade Mark [1998] RPC 401, 407. 13 [1995] FSR 850, 865. See also Avnet v. Isoact [1998] FSR 16.

14 TMA s. 34; TMRr. 7.

TRADE

MARK

REGISTRATION

739

application to relate to a number of classes.'° The Registrar, whose decision is final, resolves any doubts over how the goods and services are to be classified.'° The purpose of the classification process is primarily administrative: viz., to facilitate the searching of earlier competing marks.'’ In contrast with the specification, which helps to define the boundaries of trade mark protection, the way in which a mark is classified does not ordinarily impact upon substantive matters such as the scope of the rights given to the trade mark owner. Thus, the fact that a mark is used by a competitor on goods or services in a different class from those of the registered proprietor does not necessarily mean that it is not being used on ‘identical’ or ‘similar’ goods or services (which is the test for infringement). Having said that, there are some situations where the way a mark is classified may impact on the scope of the proprietor’s rights. This will be the case where in their statement of the goods and services, an applicant makes reference to the classes used at the Registry:'® that is, where applicants tie the list of goods or services claimed to the bureaucratic categories used at the Trade Mark Registry. 2.1.3 Representation of the sign The trade mark applicant is also required to provide a representation of the sign, and before an application is accepted that representation must be ‘adequate’.!? This reflects the fact that the trade mark registration system is built around a notion of ‘representative representation.” That is, rather than depositing an actual sample of the mark, applicants are required to deposit a representation of the mark.*' This representative representation has a number of rationales (as well as having some significant effects). One function of the representation (which might be called the ‘property function, and is analogous to the role of patent claims) is to define the scope of the trade mark owner’s rights and delineate with a degree of precision exactly what sign is protected. A second function of graphic representation (which might be called the ‘information function’) is to enable publicity to be given to the fact that applicant is seeking registration, the publicity being provided by publication in the Trade Marks Journal. In particular, it helps to ensure that third parties are able to search the register and to ascertain things such as the scope of existing marks and to 15 TMR r. 8.

16 See Cal-U-Test Trade Mark [1967] FSR 39, 44. Note also PAC 4/00, Classification of On-Line and Internet Services and Associated Goods: UK Practice as at Feb. 2000. 17 Cal-U-Test Trade Mark [1967] FSR 39, 45; Carless Capek & Leonard v. Pilmore-Bedford & Sons (1928) 45 RPC 205. 18 See GE Trade Mark [1969] RPC 418, 458 (‘electrical apparatus (included in this class)’ did not cover switches, not because they were not electrical but because switches had never been treated as falling within the class). See also Avnet v. Isoact [1998] FSR 16 (examining the relationship between the list and ‘classification’).

19 The furnishing of a representation of the mark is one of the few elements necessary to obtain a filing date. The applicant is given 2 months to remedy any inadequacies. 20 Sherman and Bently, 180-93. 21 The Community system employs a more restrictive interpretation of what counts as ‘graphic representation’. CTMIR r. 3(2) specifies that when a mark is not a word mark but a three-dimensional, colour or other

type of mark, a reproduction of the mark must be submitted on a sheet of paper.

740

TRADE

MARKS

AND

PASSING

OFE

determine whether a fresh application conflicts with earlier marks. A third and related function of the graphic representation requirement (which might be called the ‘administrative function’) is to make the bureaucratic dealing with the sign, its classification and comparison with other signs, more manageable.” While each of these functions demands different things, in effect, for a graphic representation to be adequate it must fulfil all three goals.”> As the UK Registry Work Manual explains, a sign is graphically represented when:”4

(a) it is possible to determine from the graphical representation precisely what the sign is that the applicant uses without the need for supporting samples etc.; (b) the graphical representation can stand in the place of the sign used or proposed to be used by the applicant because it represents that sign and no other; and

(c) it is reasonably practicable for persons inspecting the register, or reading the Trade Marks Journal, to understand from the graphical representation what

the trade mark is.”°

There are a number of different techniques that applicants may use to graphically represent their marks. These include words and images (such as line drawings and photographs). With the vast majority of marks, the process of graphic representation is straightforward: ‘word marks’ are written, and device or ‘figurative’ marks are represented by pictures.*° However, difficulties arise because, as we will see, since the Trade Marks Act 1994 liberalized the definition of marks it is now possible to register various ‘exotic’ marks, such as sounds, shapes, colours, smells, etc., and in these cases graphic representation can be more problematic. In a number of applications, sounds have been represented by conventional notation or described in words; and, in the case of smells, it has been suggested that applicants might rely upon more esoteric forms of technology (such as high-performance liquid chromatography or flow-injection analysis) to help them describe their marks. The particular mode of description that is used will vary according to the type of mark in question. It has been held that a verbal description of a shape or packaging— such as ‘vacuum packing’ or ‘a chewy sweet on a stick’—will rarely ever be 22 Orange Personal Communication Services/Orange R 7/97-3 [1998] OJ OHIM 5/640; [1998] ETMR 343. 23 Antoni & Alison’s Application/Vaccum Packing R 4,97-2 [1998] OJ OHIM 3/180; [1998] ETMR 460 (requirement of graphic representation was imposed to safeguard the interests of the general public and ‘those interested in determining the scope of protection of the mark and those involved in searching activities.’ It required that applicants present a clearly defined image oftheir mark). *4 At the Community Trade Mark Office the test whether or not the description gives clear enough information to those reading it to walk away with an immediate and unambiguous idea of what the mark is when used in connection with the goods or services. Vennootschhap Onder Firma Senta/The Smell of Freshly

Cut Grass R 156/1998-2 [1999] ETMR 42, 23. TMR Work Manual, ch. 6, pata, 2.3: 26 Colour is presumed not to be an element ofa trade mark unless the application contains a statement to that effect and specifies the colour: TMR r. 5(3); CTMIR r. 3(5). Similar rules operate under Madrid Art. 3 and Madrid Prot. Art. 3(3).

TRADE

MARK

REGISTRATION

741

satisfactory,” because it will not convey the precise appearance of the sign:* rather design drawings or photographs will be necessary.”” The problems that arise where an applicant simply relies upon words to represent more unusual marks can be seen in Swizzels Matlow’s Trade Mark Application, where an application to register a shape mark was rejected. In the application, the description of the mark read: ‘[t]he trade mark consists of a chewy sweet on a stick for non-medicated confectionery.’ The Trade Mark Registry rejected the application, primarily on the basis that it was neither possible nor practicable for anyone inspecting the register to determine what the trade mark was from the description. More specifically, the Registry found that the representation failed to define the mark with sufficient precision so that infringement rights can be determined. This was because the words ‘chewy’, ‘sweets’, and ‘sticks’ could be interpreted very widely and, in combination, covered “an infinite variety of

marks’. Moreover, the description could not stand in place of the mark without the benefit of supporting material, namely, samples of the goods. One area where trade mark law has long had problems is in relation to colour marks. Indeed, the reason why colour marks were initially not registrable was because the technology did not exist to enable colour marks to be reprinted in the Trade Mark Journal.*' It has been said that applications in the UK to register colours represented in words, such as ‘the colours brown and red’, will be regarded as too vague to form a graphical representation of the sign.*” Similarly, the Board of Appeal of the OHIM refused an application which simply stated in words that the mark comprised the colour ‘orange’ because such a representation was too imprecise, since innumerable

colour shades would fall under such a broad generic term.*’ However, it is also clear that a scientific description such as ‘a blue bottle of optical characteristics such that if the wall thickness is 3 mm. the bottle has, in air, a dominant wavelength of 472-474 nanometres, a purity of 44-48 per cent, an optical brightness of 28-32 per cent’ is inadequate because it does not give immediate and unambiguous idea of what the mark is, since a spectrometer is required to carry out such an analysis.** On the whole

it is necessary to represent colour marks graphically by relying upon external

27 UK practice allows for the possibility that a verbal description might be satisfactory, whereas the OHIM Implementing Regulations do not: see Swizzels Matlow’s Trade Mark Application (Love Hearts) [1999] RPC 879, 884-5. 28 Antoni & Alison’s Application/Vaccum Packing R 4.97-2 [1998] OJ OHIM Hozelock/Yellow and Grey R 208/1998-2 (29 June 1999) (para. 13)

3/180 [1998] ETMR 460;

29 Likewise, an application which includes a representation of a three-dimensional image will not be treated as relating to the three-dimensional form unless the application contains a statement to that effect: TMR r. 5(2); CTMIR r. 3(4).

30 [1998] RPC 244.

31 See Sherman and Bently, 190. 32. TMR Work Manual, ch. 6, para. 2.3.5. 33 Orange Personal Communications Services /Orange R 7/97—3 [1998] OJ OHIM 5/640; [1998] ETMR 343; Hozelock/Yellow and Grey R 208/1998-2 (29 June 1999) (paras. 13-18) (OHIM rules require a reproduction,

that is a sample). 34 Ty Nant Spring Water [1999] RPC 55, 59 (no evidence that this is standard test using standard equipment).

742

TRADE

MARKS

AND

PASSING

OFF

standards or benchmarks (which are the trade mark equivalent of the metric standard). As far as the UK Registry is concerned, as long as the colours are properly defined by a widely known and readily available colour standard,’ it is unlikely that a mark will be refused. It is also possible for colour marks to be represented graphically by means of ‘a two-dimension optical reproduction of the shade claimed, such as a strip of colour on a sheet of paper’.** One of the main problems with this mode of representation is that the colour may fade.*” Another possible mode of description, which should greatly enhance the efficiency of the registers if it is adopted, is to represent the mark digitally. As the Board of Appeal of the OHIM explained, since ‘data may nowadays be stored electronically, it is now no longer necessary to specify a colour code, which would otherwise be needed, in order to preserve the colour shade indefinitely without deterioration over time.’ A more generous attitude has been taken towards graphic representation of sounds and smells: for sounds, it seems that either musical notation is acceptable to the UK Registry,” and the OHIM has accepted verbal descriptions (such as ‘click’);*° and, as regards smells, while scientific techniques such as chromatography are probably inadequate given that they fail to give an immediate and unambiguous idea of what

the mark is,*! OHIM has treated a verbal description as sufficient. In Vennootschhap

Onder Firma Senta/The Smell of Freshly Cut Grass,2 the Board explaining that ‘[t]he smell of freshly cut grass is a distinct smell which everyone immediately recognizes from experience. For many, the scent or fragrance of freshly cut grass reminds them of spring, or summer, manicured lawns or playing fields, or other such pleasant experiences.’ It is unlikely that the UK Registry will be so generous,” and the Senta decision does not seem to have been followed even at the OHIM. 2.1.4 Bona fide intention to use

A UK application must also contain a declaration that the mark is being used or that

there is a bona fide intention to use the mark.*4 According to section 3(6), a trade

mark shall not be registered if or to the extent that the application is made in bad faith.” While we examine this ground of invalidity in detail later,*° the declarati on °° Such as the Pantone standard, see TMR Work Manual, ch. 6, para. 2.3.5. 36 PAC 2/00 Acceptable Forms of Graphic Representation, para. 9.

37 Wrigley Jr/Light Green R 122/98-3 [1999] ETMR 214 para. 18. 38 Wrigley Jr/Light Green R 122/98-3 [1999] ETMR 214, para. 18. 3° PAC 2/00 Acceptable Forms of Graphic Representation, para. 19; Guidelines concerning Proceedings before the Office forHarmonization in the Internal Market, part B, 8.2. John Lewis’s Application (19 Dec. 2000). 40 Qlicksmart Application/Click Sound R 1/98—2

[1999] ETMR

190, 335. For speculation on the UK

position, see Lord Strathclyde, Hansard (HL) Public Bill Cttee. 18 Jan. 1994, col. 34, 41 D, Lyons, ‘Sound, Smells and Signs’ [1994] EIPR 540, 42 R 156/1998-2 [1999] ETMR 429. 43 See TMR Work Manual, ch. 6, para. 2.3.8. See John Lewis’s Application (19 Dec. 2000). “4 TMA s. 32(3). This is not required by the OHIM. 45 Pursuant to optional provision in Art. 3(2)(d) of the Directive; there is no corresponding provision in

the CTMR Art. 26. But n.b. Art. 51(1)(b).

46 See below at pp. 807-10.

TRADE

MARK

REGISTRATION

743

operates to warn the applicant that the UK Trade Marks Register is only intended to confer rights on persons who genuinely intend to use the particular mark in trade: it is not to be used for bogus applications in order to get in the way of opponents, blocking registrations or ghost registrations.” In addition, the UK Registry has used the objection to induce applicants to restrict the specifications to a more limited range of goods and services. The Registry has, however, recently indicated that it will make sparing use of section 3(6) to limit specifications, so as to bring the UK approach more closely into line with that at the OHIM. 2.1.5 Series of marks

It is possible to register a series of marks in a single registration, thereby saving expense.*® A ‘series of marks’ is defined as ‘a number of trade marks that resemble each other as to their material particulars and differ only as to matters of a nondistinctive character not substantially affecting the identity of the trade mark.’ The application should include a separate representation of each mark in the series.” Individual marks may be deleted from the series at any time.

2.2

EXAMINATION

Once the filing process has been completed, the Registrar conducts a search”? and an examination of the application®! to ensure that the proposed mark satisfies the various requirements set out in the Act. In particular the Registrar will ensure that the application complies with section 1(1), and that none of the absolute grounds of refusal apply. In addition (and in contrast to the OHIM), the Registrar may object to the application on the basis that it conflicts with earlier marks or that the applicant does not have a bona fide intention to use the mark. The applicant is required to respond and if they fail to do so, the application will be refused.” If the Registrar has no valid objections to the application, it will be accepted. Unlike the position prior to the 1994 Act, the Registrar does not have a general discretion to reject applications: if an application satisfies the requirements set out in the Act, it must be accepted.°° Acceptance of the application is not the same as registration. It merely marks the end of the ex parte procedure: registration only occurs after the period for opposition has elapsed.

47 See Origins v. Origin Clothing [1995] FSR 280, 285 (Jacob J). Michaels, para. 3.9. ao

9 TMRr. 21(1). ° TMA s. 33(2).

ok

51 TMA

s. 33.

52 TMA s. 37(4); Postperfect Trade Mark [1998] RPC 255. 53 White Paper, Reform of Trade Marks Law, Cm. 1203 (1990) para. 3.11 ([A]dministrative discretion is . . . out of place in a modern trademark law’).

744

2.3

TRADE MARKS AND PASSING OFF PUBLICATION,

OBSERVATIONS,

AND

OPPOSITION

Once an application has been accepted by the Registrar, it is published in the Trade Marks Journal.* In the three-month period following publication, there is an opportunity for third parties to comment on the application. This will either take the form of ‘observations’ on, or ‘oppositions’ to, the application. Any person may make observations to the UK Registry which are forwarded to the applicant.°° It seems that third-party observations may prompt the UK Registry to reconsider the registrability of an application. Alternatively, third parties may formally oppose the registration.°° This must be lodged within three months of the publication of the application and should specify the grounds of opposition. Where an opposition is made, it sets in play a procedural process which may lead to a hearing and a determination by the Registrar.*”

2.4

CHANGING

THE

APPLICATION

AS FILED

While applicants should take great care in the way applications variety of reasons, an applicant may wish to make alterations to filed. This may be in response to the results of the examination, to vations and oppositions, or to changes in circumstances. There are in which an application may be changed: the most common being

are drafted, for a the application as third-party obsera number of ways by way of amend-

ment, division, merger, or disclaimer.® Before looking at these, it should be noted that

many of these changes, such as amendment, may occur either before or after grant. Other techniques, such as disclaimers, may be included in the initial application or added later. 2.4.1 Pre-grant amendment

Section 39 provides that that an applicant may, at any time, amend the application in such a way as to restrict the goods or services covered by the application. Applications may also be amended to correct the name or address of the applicant;” to alter errors of wording or copying; or to correct obvious mistakes. Such amendments are only °4 TMA s. 38; TMR r. 12, r. 65; TMA s. 67(2) prohibits the Registrar from publishing details prior to publication. °° TMR r. 15. At the OHIM, observations may be made by ‘any natural or legal person and any group or body representing manufacturers, producers, suppliers of services, traders, or consumers. ’ © °° TMA s. 34(2). TMA s. 38(2) (any person may oppose). >? TMRr. 13. Although not initially present the procedure now gives a time period, the so-called ‘cooling off period—in which it is hoped the parties will reach an amicable settlement. °8 TMA s. 37(3). An applicant is confined to the possible amendments contained in TMA s. 39 and CTMR Art. 44. It might be argued a general power to amend is implicit in TMA s. 37. However, it seems that the power to amend was deliberately limited: Michaels, para. 3.17, p. 57; White Paper (Cmnd. 2103) (1990), para.

4.09.

59 TMA s. 39(2). According to a Practice Notice, the Registry takes the view that correcting the name of a proprietor is a serious matter. On changing classes, see PAC 2/99 Adding a class or classes to an application. 69 CTMR Art. 44. See Blueco/Blue Water R 117/1998-1 [1999] ETMR 394,

TRADE

MARK

REGISTRATION

745

permissible where they do not substantially affect the identity of the mark or extend the goods or services covered by the application. An amendment that affects the representation or specification must be published and an opportunity provided for objections.° 2.4.2 Division

It is also possible for an applicant to transform a single application into several ‘divisional applications’.* At any time before registration an applicant may request that their application be divided into two or more separate applications, with each relating to different goods or services. The main reason for dividing an application up in this way is to isolate the problematic parts of an application. In so doing, it increases the chances of the uncontroversial parts being registered. Divided applications have the same filing date as the original application. Where division occurs after the application has been published, any objections to the original application apply to each of the divisional applications. 2.4.3 Merger

A corresponding facility exists for the merger of separate applications. Applicants will normally merge marks to simplify a trade mark portfolio and to save on fees. Merger only occurs if the applications are for the same mark, and have the same application date, and the same proprietor.® If two or more marks have already been registered, those registrations can also be merged so long as they are in respect of the same trade mark. If one of the registrations is subject to a disclaimer or limitation, the merged registration is restricted accordingly. Similarly, if they bear different dates, the date applicable for the merged registration is the latest date.

2.5

DISCLAIMERS

Section 13 of the 1994 Act enables applicants (or the proprietor) to disclaim any right to the exclusive use of specified elements of the trade mark. Applicants are also able to agree that the rights conferred by the registration shall be subject to a specified territorial or other limitation.“ Where the registration of a trade mark is subject to a disclaimer or limitation, the rights conferred on the proprietor are restricted accordingly. Use of disclaimers may assist an applicant in overcoming a potential objection to registration. The practices relating to disclaimers expose the limitations of the registration system as an effective mechanism for defining the boundaries of intangible property rights. The courts have recognized that disclaimers are of limited value because they 61 TMA s. 39(3); TMR r. 18. 62 TMA s. 41; TMRr. 19. 63 TMR r. 20. 64 The Registrar cannot impose a disclaimer: Patron Calvert Cordon Bleu [1996] RPC 94, 103.

65 e.g. Diamond T (1921) 38 RPC 373; Laura Ashley’s Trade Mark [1990] RPC 539, 549.

746

TRADE

MARKS

AND

PASSING

OFE

only appear on the Register and do not follow goods into the market. Consequently, because consumers and competitors would normally be unaware that aspects of a mark had been disclaimed, a disclaimer will often not save a mark from objection.” On this basis it has been said that the Registrar ‘should not register a mark under conditions in which there would exist such a strong probability that the rights of the registered proprietor would be misconceived by the public.’ In a related vein it has been said that where elements of a mark are obviously non-distinctive or unregistrable, it is not necessary to disclaim them since the only effect that this would have

would be to ‘clutter the Register’. 2.6

REGISTRATION

In the absence of an effective opposition, the Registrar should register the trade mark.”° The registration is then published in the Trade Marks Journal.”! The date of

registration of the trade mark is the application date. This is the date from which matters such as duration are calculated” and the rights of the proprietor are enforceable against third parties.”> While registration in the UK lasts for ten years, trade marks may be renewed for further ten-year periods.” One characteristic which differentiates trade marks from other forms of intellectual property is that there is no maximum period of protection. So long as they are renewed, trade marks can potentially last forever. As with patents and designs, the reason why renewal is required is to ensure that the only marks which are on the Register are those which proprietors have some interest in.” Proprietors are normally provided with some leeway for late renewal’° and, in certain circumstances, are able to restore lapsed _registrations.”” Alteration of registered marks is generally not permitted.’® The Registrar may, however, allow the proprietor’s name or address to be altered. This is only permissible where the alteration does not ‘substantially affect the identity of the mark’.”” 6° Granada Trade Mark [1979] RPC 303, 308. 67 Moreover, in composite marks the disclaimer may mean that it is no infringement to use just the disclaimed component, but the disclaimed component is still one element of the composite whole: Granada Trade Mark [1979] RPC 303, 306. Consequently matter which is disclaimed is not necessarily disregarded when questions of possible confusion are being decided. Cf. Paco/Paco Life in Colour [2000] RPC 451, 467. 68 Ford-Werke’s Application (1955) 72 RPC 191, 195.

6° COS Trade Mark [1993] RPC 67, 70. 70 TMA, s. 40. 71 TMRr. 16.

7 TMA s. 40(3). 73 TMA s. 9(3) explains that the rights have effect from the date of registration, ice. filing, but no infringement proceedings may be begun before the date on which the mark is in fact registered, and no criminal liability is incurred for acts done before the date of publication of the registration.

74 79 76 7” 78 79

TMA TMA TMA TMA TMA TMA

s. 42; CTMR Art. 47; Madrid Prot. Art. 7(1). s. 43(2); TMR r. 27. s. 43(3). s. 43(5); TMR r. 30. s. 44. s. 64; TMR r. 38.

TRADE MARK REGISTRATION

2.7

THE

TRADE

MARK

SYMBOL

Although the trade mark symbols ™ and ® are requirement that proprietors use these symbols to registered. Criminal liability does however exist for the word ‘registered’, or any other word or symbol registered when, in fact, it is not.®°

2.8

VALIDITY

AND

747

used widely, there is no legal indicate that a mark has been anyone who uses these marks, which suggests that a mark is

REVOCATION

Once a mark is registered there is presumption, though not a guarantee, that the

registration is valid.*! As with all forms of registered intellectual property, it is possible for trade marks to be withdrawn after they have been registered. This may be because the mark should not have been registered in the first place, or because changes in circumstances mean that it should no longer be registered. The grounds on which a registered mark may be challenged by third parties are set out in sections 46 and 47 of the 1994 Act. Section 46(1) sets out the grounds on which a mark may be revoked. A trade mark registration may be revoked where it has not been used for five years, where as a result of the way it has been used it has lost its distinctiveness, or where as a result of the way it has been used the further use of the mark has become likely to ‘mislead the public’. In addition a mark which should never have been registered can be declared invalid under section 47. A registration will be liable to be declared invalid where it should not have been registered on absolute grounds because of a potential objection under section 3 (for example because it lacks distinctiveness) and where relative grounds for refusal existed under section 5. These issues are dealt with in later chapters.

3 REGISTRATION

OF COMMUNITY

TRADE

MARKS

Registration at the Community level involves the filing of a single application to the Office of Harmonization in the Internal Market (OHIM) which is based in Alicante in

Spain.®? The OHIM began receiving applications on 1 April 1996.** In contrast with the procedure for European patents (where the EPO issues a series of national patents), a successful application to the OHIM results in the grant of a single trade mark which operates for the whole of the European Community.** The main benefit of the Community system is that it enables traders to protect their marks throughout

80 TMA s. 95. See below at p. 1035.

81 TMAs. 72. 82 CTMR Art. 2. 83 Strictly speaking, that was the date of opening and applications could be submitted from 1 Jan. 1996.

84 CTMR Art. 1(2).

748

TRADE

MARKS

AND

PASSING

OFF

the Community on the basis of a single application, rather than having to file separate applications in each of the member states. While the procedure at the OHIM differs in certain respects from the procedure at the UK Office, there is close similarity between the two regimes. As is the case with the

UK Registry, traders who wish to have their signs protected as Community trade marks often rely upon the expert advice of trade mark agents. Legal representation before the OHIM is more strictly prescribed than in the UK. Although legal representation is not required in all cases,°° businesses that are not domiciled and do not have

their principal place of business in the Community must be represented before the OHIM. Representation before the OHIM can only be undertaken by a legal practitioner qualified in a member state or a professional representative recognized by the OHIM.®** To be duly recognized, a representative must be a national of a member state with a place of business in the Community. In addition, they must be entitled to act as an agent before the Trade Marks Office of the member state in which that business is located.*”

3.1

THE

APPLICATION

The application for a Community trade mark may be made directly to the OHIM in Alicante or to a national Registry, which is obliged to forward the application to the OHIM within two weeks.** One important difference between registration in the UK Office and at the OHIM relates to the issue of qualification. Unlike the position in the UK where anyone can apply to register a mark, only a limited class of people is able to apply for a Community trade mark. To apply for a Community trade mark, a person must be a national of or domiciled in an EC state or a country which is party to Paris or WTO,” or be a national of a state which accords reciprocal protection (see Figure SDs

An application for a Community trade mark may be filed in any of the official languages (English, French, German, Italian, or Spanish). The applicant should also specify a second language in which opposition proceedings may be conducted. As in the UK, an application for a Community trade mark must include a request for registration; the name and address of the applicant; a list of the goods or services for which the mark is to be registered; and a representation of the mark.®! The date of filing is the date on which these documents are furnished to the OHIM. As in the UK, it may be possible to claim a priority date from an earlier application elsewhere.” 85 CTMR Art. 88(1). 86 CTMR Art. 89. 87 CTMR Art. 89(2). 88 CTMR Art. 25(2). There were 41,000 applications in 1999.

89 CTMR Art. 5. 0 Council Regulation 3288/94 of 22 Dec. 1994 [1994] OJ L 349/83. 91 CTMR Art. 26; CTMIR r. 1. °2SsoF CTMR Arts. 29-31. Communication no. 10/99 of the President of the Office of 8Dec. 1999,

TRADE MARK REGISTRATION

CTM

749

Filing

Search of Community Marks

Examination

Submission to National Offices for Search

on

Absolute Ground

Inform Proprietors of Community Mark

Registration

Fig. 35.2 Registering a Community trade mark

Three slight differences are worth observing. First, as regards the goods or services for which a mark is registrable, it seems that the OHIM are more generous, permitting applications, for example, relating to ‘all goods in class x’.?? Secondly, and related, there is no requirement that an applicant state that they intend to use the marks. Third, practices as to graphic representation differ slightly. These have already been discussed.

93 Annand and Norman (1998).

750

3.2

TRADE

SENIORITY

MARKS

AND

PASSING

OFF

AT OHIM

Applicants who seek registration of a Community trade mark may claim the seniority of earlier national registrations of the same mark of which they are the proprietor.” Seniority can be claimed either before or after registration of the Community trade mark.”° To apply for seniority, an applicant must be able to show that the earlier national mark is for the same sign, the same goods and services, and has the same

proprietor as the Community trade mark.”° The effect of a seniority claim is that even though the national registration ceases to exist (because of lack of renewal or because it was surrendered), the proprietor of the Community trade mark continues to have the same rights as if the national mark had continued to be registered. Effectively, it allows the Community trade mark owner to let the national registration lapse without being prejudiced in any way.” As the Board of Appeal at the OHIM said, seniority is a useful way of encouraging proprietors of national marks to use the Community system and thereby consolidate the management of their national marks.” As a result of its popularity, problems have occurred in processing seniority claims and many have been let through without formal examination.”

3.3

EXAMINATION

Once the filing process has been completed the application is then examined. It is at this point that the procedure at the OHIM differs most from those at the UK Trade Marks Office. While UK applications are examined for both absolute and relative grounds for refusal, examination at the OHIM is restricted to an inquiry as to whether the application complies with the absolute grounds for refusal.!°° The absolute grounds for refusal will apply to the mark across the whole Community, even if they only arise in one member state.'°’ Where the application fails to comply with the absolute grounds for refusal, the application may be amended or withdrawn.'! The

94 CTMR Art. 34. 99 CTMR Art. 35.

°6 CTMR Art. 34(1) (so called ‘triple-identity rule’). The OHIM only examines the question of identity of signs: Communication no. 2/00 of the President of the Office of 25 Feb. 2000 concerning the examination of seniority claims. On identity of signs, see International Business Machines Corp/Thinkpad R 10/1998-2 (15 July 1998) para. 15. On identity of the specification, see Communication no. 1/97 of the President of the Office of 17 June 1997 concerning the examination of seniority claims. On identity of proprietorship see BatMark, Inc./Viceroy R 5/97-1 [1998] ETMR 449.

°7 CTMR Art. 34(2). 98 BatMark, Inc./Viceroy R 5/97-1 [1998] ETMR 449, 455-6. °° Examination of seniority claims which was suspended has now resumed, but is confined to comparison of marks: Communication no. 2/00 of the President of the Office of 25 Feb. 2000 concerning the examination of seniority claims. 100 CTMR Art. 38; CTMIR r. 11. Absolute grounds are set out in CTMR Art. 7(1).

101 CTMR Art. 7(2). 102 CTMR Art. 38(3), Art. 44; CTMIR r. 13.

TRADE

MARK

REGISTRATION

751

Office may request that the applicant disclaim any exclusive right in a particular

element.!” The key difference between the Community regime and the UK national one relates to the approach taken towards the relative grounds of refusal (that is those relating to conflicts with existing registrations or rights).'°* In the UK, the Registrar is able to refuse registration where the application conflicts with earlier marks. Adopting a less interventionist approach, the OHIM will not reject an application on relative grounds. Instead, the relative grounds for refusal can only be raised by third parties in opposition proceedings. The upshot of this is that while in the UK the obligation falls upon the Registrar to police applications for relative grounds, the onus of ensuring that a Community application complies with the relative grounds is placed upon third parties. That is, the obligation is placed upon the holders of prior rights who may be affected by the registration of the mark at the OHIM. While the OHIM may not examine applications to see if the relative grounds of refusal apply, it does provide third parties (and applicants) with some assistance. In particular, the OHIM searches the Community Register for similar marks and asks

member states to do the same.!°° These national searches are returned to the OHIM within three months and a cumulative search report is dispatched to the applicant. The results of the search are also sent to the owners of any rival registrations that are found. The search does not, however, lead to an examination on relative grounds. Instead, it is left up to the holders of prior rights to bring opposition proceedings'” or, if the mark has been registered, cancellation proceedings.!

3.4

PUBLICATION,

OBSERVATIONS,

AND

OPPOSITION

Once an application has successfully been examined, it will then be published in the Community Trade Marks Bulletin.'°? Publication takes place one month after the applicant is provided with the search report. To encourage opposition, the OHIM informs proprietors of earlier Community trade marks (but not holders of prior national rights) of the publication.''? At the same time, the application file, which is previously closed, is opened up for public inspection.'!! Following publication, there is an opportunity for third parties to make ‘observa103 CTMR Art. 38(2). Cahill May Roberts’s Application for a Declaration of Invalidity/Medicine Shoppe International’s Trade Mark, C 172734/1 [2000] ETMR 794, 780.

104 And set out in CTMR Art. 8.

105 CTMR Art. 39. 106 See FE. Gevers and D. Tatham, ‘Opposition Procedure in the Community Trade Mark System’ [1998] EIPR 22, 23.

107 CTMR Art. 42. 108 CTMR Art. 52. 109 CTMR Art. 40; CTMR Art. 85. 110 Informing proprietors of national rights is a matter for national office, but none appear to take any action: see E. Gevers and D. Tatham, ‘Opposition Procedure in the Community Trade Mark System’ [1998] EIPR22; 23;

111 Prior to publication, the file cannot be inspected without an applicant’s consent: CTMR Art. 84.

752

TRADE

MARKS

AND

PASSING

OFF

tions’ on and ‘opposition’ to the proposed registration of the application. While a Community trade mark covers the whole Community, a single objection to the application can result in the entire application being refused. Third parties may make ‘observations’ explaining why the trade mark should not be registered under Article 7 (which are the absolute grounds for refusal). Although the Regulation states that the observations are to be communicated to the applicant ‘who may comment on them’, the OHIM has indicated that where observations raise serious doubts about registrability, the Office will re-examine the application.!!* Within three months of publication, the application may be opposed on relative grounds.'!’ Opposition at the OHIM differs to the process in the UK in a number of ways.’ First, only a limited set of persons is entitled to bring opposition proceedings, namely, the proprietors of earlier trade marks and their licensees, the proprietors of trade marks, and the proprietors of earlier marks or signs.'!° Secondly, the grounds of opposition are limited to the ‘relative grounds of refusal’. A person wishing to object on absolute grounds must do so by way of observations. Thirdly, the processing of opposition proceedings at the OHIM is designed to encourage the parties ‘to make a friendly settlement’.'!° As opposition is intended to be a forum for dispute resolution between two interested parties, the protection of the public is only a minor consideration. Finally, oral hearings will only occur rarely. While it was anticipated that oppositions at the OHIM would be very common, it seems that they only affect about one-fifth of all applications. If the application to the OHIM is rejected or withdrawn, it may be converted back into a series of national applications which retain the filing date used at the OHIM."”” Conversion is not possible, however, in those member states where the grounds of refusal of the Community trade mark relates to that state.!!® As with UK applications, it is possible for applications for a Community trade mark to be changed or amended after they have been lodged. While the way this is done at the OHIM is similar to the techniques used in the UK,’ one important difference is that whereas disclaimers are

used voluntarily by UK applicants, they are imposed (or rather ‘requested’) by the OHIM ‘as a condition’ of registration.'”° Despite this, the examination guidelines at the OHIM suggest that disclaimers will be used infrequently.!*! 112 CTMR Art. 41(2); Communication no. 1/00 of the President of the Office of 25 Feb. 2000 concerning observations under Article 41 of the Community Trade Mark Regulation. ‘13 For analyis of the grounds, see Ch. 38. 114 See F. Gevers and D. Tatham, ‘Opposition Procedure in the Community Trade Mark System’ [1998] EIPR 22. Opposition proceedings must be in one of official languages: English, French, German, Italian, Spanish.

11S CTMR Art. 42.

116 CTMR Art. 43(4). Most opposition proceedings are in fact abandoned before hearing, either by withdrawal of the application or withdrawal of the opposition. Recently the UK adopted similar provisions providing for a ‘cooling off period.

117 118 119 120.

CTMR CTMR CTMR CTMIR

Art. 108; CTMIR r. 44. Art. 108(2)(b). Art. 38(3), Art. 44. tr. 1(3).

121 OHIM Guidelines, para. 8.13.1. See Annand and Norman (1998), 78.

TRADE

3.5

MARK

REGISTRATION

753

REGISTRATION

In the absence of an effective opposition, the mark will be registered.'”* The date of registration is the filing date, which is the date from which matters such as duration are calculated.'* As regards the Community trade mark, a proprietor is only entitled to ‘reasonable compensation’ for acts occurring between publication of the application and publication of the registration.'* Registration at the OHIM lasts for ten

years.’ A Community trade mark may be renewed for further periods of ten years.'° Alteration of registered marks is generally not permitted.'”’ As in the UK, it is possible for a Community trade mark to be revoked or declared invalid after it has been registered—and this may occur either as a counterclaim in proceedings in a Community trade mark court, or by application to the Cancellation Division of the OHIM.!”®

4 INTERNATIONAL

FILING

The third way in which traders in the UK are able to protect their marks is via the international filing systems established under the 1891 Madrid Agreement and the 1989 Madrid Protocol. It should be noted at the outset that international registration does not lead to something such as an ‘international mark’, so much as facilitate the acquisition of national marks. The main advantage of international registration is that instead of trade mark holders having to file a series of applications in each of the jurisdictions where they would like protection, they are able to obtain protection in a range of jurisdictions with a single application.

41

THE

MADRID

AGREEMENT

The oldest international filing system is the 1891 Madrid Agreement.'”? Under the Agreement—to which the United Kingdom is not a party—it is possible to register a trade mark at a national level and then to apply to have the mark recognized by the WIPO in Geneva as an ‘international registration’. Despite being over 100 years old, only a relatively small number of countries have signed up to the Agreement.!°°

122 CTMR Art. 45; CTMIR r. 23.

123 CTMR Art. 46. 124 CTMR Art. 9(3). 125 CTMR Art. 46.

126 CTMR Art. 47. 127 CTMR Art. 48; CTMIR r. 25. 128 Cahill May Roberts’s Appn. for a Declaration of Invalidity/Medicine Shoppe International’s Trade Mark, C 172734/1 [2000] ETMR 794 (Cancellation Division of same status as Examining Division).

129 Madrid Agreement Concerning the International Registration of Marks of 14 Apr. 1891. 130 The Madrid Agreement covers only 49 countries. The USA and Japan are not members.

754

TRADE MARKS AND PASSING OFF

To apply for international registration, the applicant must have a trade mark registered in its country of origin, which must be a contracting state of the Agreement. Applications must be in French and include: the name and address of the applicant; information about the registration in the country of origin; a reproduction of the mark; and a statement of the goods and services to which the mark is applied.'*! The application should also nominate the countries of the Agreement where the applicant wishes the mark to be protected.'** The Madrid Agreement can only be used by a person or business that has headquarters or a real and effective establishment in a country that is a party to the Agreement. Given that the UK is not a party to the Madrid Agreement, UK businesses will only be able to take advantage of the system where they have a base outside the UK.’* Once the national office of the country of origin is satisfied that the application is complete, it sends the international application to the International Bureau in Gen-

eva. On receiving the international application, the International Bureau examines the application to ensure that it complies with various formalities: there is no substantive examination of the application. An application that satisfies the procedural requirements is immediately registered.'** The registration date is the date when the International Bureau receives the completed application. The International Bureau then sends applications to the National Offices nominated by the applicant. Article 4 of the Agreement provides that from the date of the international registration, the application is to be treated in each of the designated countries as if it had been filed directly at that country’s national office.!*° Upon receipt of the international registration, the national offices have the opportunity to reject the application. Registration under the Madrid Agreement lasts for twenty years and is renewable for further twenty-year periods.!*° One of the major problems with the Madrid Agreement is that it provides for the possibility of a ‘central attack’.!*” This means that if, within five years from the date of international registration, the mark is declared invalid or otherwise lost in the country of origin, all the national registrations that are based upon it are also lost. At the end of the five-year period, the opportunity for central attack ends. From this point, the non-country of origin registrations are not dependent upon the fate of the mark in the country of origin.

131. Madrid, Art. 3(2). 132 Madrid, Art. 3 bis. 133 G, Souter, ‘The Rights of Nationals of Non-Madrid Union Countries to Own International Registrations’ [1995] EIPR 333.

134 Madrid, Art. 3(4). 135 Madrid, Art. 4. 136 Madrid, Arts. 6-7(1).

137 Madrid, Art. 6.

TRADE

4.2 THE MADRID

MARK

REGISTRATION

755

PROTOCOL

The Madrid Protocol'** was established in 1989 to provide an alternative mechanism to the Madrid Agreement for the international filing of marks. In particular, it was hoped to overcome some of the perceived shortcomings of the Agreement that have led to the membership being so small.'*? Given that there are currently thirty-one members of the Protocol (as distinct from fifty-six of the Agreement), the Protocol has, at least in this regard, been a success. While the Protocol and the Agreement are similar there are, as we will see, some important differences. The UK became a party

to the Madrid Protocol on 1 December 1995!“ and the Protocol became operational on | April 1996. The system established under the Protocol is run by WIPO in Geneva.

4.2.1 Application In order to apply for international registration for a mark under the Protocol, an application for registration must have been made in a country party to the Protocol.'*’ The pre-existing registration or application provides the ‘national basis’ which grounds the Protocol application. Applications for international registration are filed in the office where the national basis was filed:'** the WIPO will not accept applications that are filed directly to it.'*° For British traders, this would normally be the UK Trade Mark Office. International applications governed exclusively by the Protocol may be either in English or French (the Office of origin may, however, restrict the applicant’s choice to one of these languages). An international application can also be based upon an application or a registration at an ‘intergovernmental organization’.'** It has been proposed that the OHIM take advantage of the provision made in the Protocol for intergovernmental organizations to become party to the Madrid Protocol.'* When effective, both applicants and 138 Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks (as signed at Madrid on 28 June 1989).

139 |, Kaufman, ‘Madrid Agreement: Will Reform Proposals Attract more Members?’ [1990] EIPR 407; G. Kunze, ‘The Madrid System for the International Registration of Marks as Applied under the Protocol’ [1994] EIPR 223.

140 Tn order to give effect to its obligations under the Protocol, the UK has passed delegated legislation in the form of the Trade Marks (International Registration) Order (SI 1996/714). 141 Madrid Prot. Art. 2(1).

142 On fees, see ibid., Art. 8.

143 Tbid., Art. 2(2). 144 Thid., Art. 14(1)(b). '45 On 25 July 1996 the Commission presented two proposals: a proposal for a Council Decision (EC) approving the accession of the European Community to the Protocol relating to the Madrid Agreement concerning the international registration of trade marks, COM(96)

367 final CNS0190;

OJ C 293, 5 Oct.

1996; a proposal for a Council Regulation (EC) amending Council Regulation (EC) no. 40/94 of 20 Dec. 1993 on the Community trade mark to give effect to the accession of the European Community to the Protocol relating to the Madrid Agreement concerning the international registration of trade marks adopted in Madrid on 27 June 1989, COM(96) 372 final CNS96/0198; OJ C 300, 10 Oct. 1996. On 16 May 1997 the Parliament

approved the Commission’s proposal without amendment. There are a number of reasons why the linkage is currently stalled: see (Dec. 1998) Trademark World 8.

756

TRADE

MARKS

AND

PASSING

OFF

holders of Community trade marks will be able to apply for international protection of their marks through the filing of an international application under the Protocol. Conversely, holders of international registrations under the Madrid Protocol will be able to apply for protection of their marks as a Community trade mark. The National Office examines the international application to ensure that the international application corresponds to the basic application or registration, that is, it is for the same mark, has the same owner as, and covers the same goods and services as the ‘basic application’.'*° An application for international registration must also designate the countries in which the mark is to be protected. Although this should be done at the application stage, further countries may subsequently be added.!*” Once it is satisfied that the formalities have been complied with, the National Office will then forward the application to WIPO which examines the application to ensure that it complies with the Protocol. Once it is satisfied that an application is in order, the International Bureau then places the mark on the International Register of Trade Marks, advertises the mark, and passes on details of an application to each of the designated countries listed in the application.'** As with the Madrid Agreement, the application is treated in each of the designated countries as if it had been filed directly at that country’s national office.'*” Each designated country then examines the application against its own criteria for registration. Any such refusal can only be based on the grounds which would apply under the Paris Convention.!™ Countries normally have up to twelve months to notify the WIPO of any objections.!°! However, in accordance with a special provision, the UK has declared that the time limit to notify a refusal of protection is eighteen months.'*? Where a refusal to protect results from an opposition to the granting of protection, such refusal may be notified after the expiry of the eighteen-month time limit. Such a refusal is notified to WIPO which then sends notification of the refusal to the international registrant, who is able to contest, amend, and appeal the decision.!*> Where a Registry fails to notify WIPO of a decision to refuse registration within the relevant time limit, the mark is deemed to be protected as if it had been registered by the authorities of that country.!*4 Registration under the Protocol lasts for ten years,'*° with the possibility of being renewed for further ten-year periods.!°° Where a mark that is the subject of a national or regional registration is the subject of a later international registration and both 14 a

Madrid Prot. Art. 3(1).

14

Ibid., Art. 3 bis. Ibid., Art. 3(2). WIPO advertises an applicant’s mark in the WIPO Gazette of International Marks.

14 on

149 150 191 — 152

Madrid Prot. Art. 4. Tbid., Art. 5(1). bid) Art?5(2), Tbid., Art. 5(2)(b)-(c).

153

Thid., Art. 5(6).

Ww

154 Tbid., Art. 4(1)(a). 155 OnTbid., Art. 6(1).

156 Ibid., Art: 7(1). lon

TRADE

MARK

REGISTRATION

G57

registrations stand in the name of the same person, the international registration is deemed to replace the national or regional registration, without prejudice to any rights acquired by virtue of the latter.'°” This is only done if all the goods and services listed in the national or regional registration are also listed in the international registration in respect of the said contracting party. Rights in all the countries can then be renewed by a single transaction. 4.2.2 Central attack

Under the Madrid Agreement, the fate of the international registration (and all the subsidiary registrations made under it) depends on the fate of the trade mark registered in the country of origin: if it is lost, all the other registrations are also lost. While an international registration under the Protocol is vulnerable to a central attack (most obviously where the basic application is refused by the national authority),'°* the consequences of a successful attack are not as drastic as they are under the Agreement. As we saw above, a successful attack under the Agreement means that all of the national registrations made in pursuance of the international registration are also lost. Where

a central attack is successful under the Protocol, however, it is

possible to transform the international registration into a series of national or regional applications.!°? Under this provision, if within three months of cancellation the person who was the holder of the international registration files an application for the registration of the same mark with the Office of any of the designated territories, that application shall be treated as if it had been filed on the date of the international registration. This only takes place, however, if the goods and services listed in the application correspond to the list of goods and services contained in the international registration. The fresh application must comply with the requirements of the applicable law.

5 DECIDING

WHICH

ROUTE

TO TAKE

Because of the interaction between these systems an applicant is faced with a complex array of possible avenues through which he can acquire trade mark protection. The most obvious of the existing routes are as follows: (i)

application directly to UK;

(ii)

application to a Paris Convention country, then to the UK;'®

157 Thid., Art. 4 bis. 158 Tbid., Art. 6(3).

159 Tbid., Art. 9 quinquies. 160 Under the “Telle quelle’ provision contained in Paris, Art. 6 quinquies, a member ofthe Paris Convention is obliged to accept for registration any trade mark which has been duly registered in its country of origin.

758

TRADE

MARKS

AND

PASSING

OFF

(ili) application to the OHIM leading to a CTM; (iv) application to a Paris Convention country, then to the OHIM;

(v) application to a Paris Convention country, then international registration designating UK; In due course, two further avenues will be available:

(i)

application to a Paris Convention country, then international registration

designating the OHIM; or

(ii) application to the OHIM followed by international application. Decisions to register, and the choice of routes, are likely to involve commercial judgements as to the likely markets in which protection is desired compared with the cost of obtaining registrations for such territories. Probably the most significant factor determining choice of application process is the cost. If trade mark protection is required in several countries, it may be cheaper to use the Community trade mark or the Madrid Protocol than to make national applications in each country.!*! As well as savings with Office fees, associated savings can be achieved by using the Madrid Protocol in terms of lower costs of trade mark agents. There are also obvious advantages to the OHIM or Madrid in terms of the simplicity of completing the OHIM or Madrid forms rather than numerous national forms in various national languages. One of the advantages with the regional and international systems lies in the fact that they avoid the obligations to submit applications in the language of each country where protection is sought. Moreover, in the long term, maintenance of regional or international marks will be easy, requiring only one renewal at each instead of several. Finally, the application of the substantive or procedural law might be perceived as being more favourable at the OHIM than in the local Registry.!© Another current benefit with using the Madrid system relates to the speed at which applications are processed. Since strict time limits operate, the Madrid system can be quick, whereas the OHIM was not adequately prepared to cope with the numbers of applications it received initially and has built up something of a backlog.!® That is not to suggest there may not be reasons (especially for small enterprises) to use national registration systems.'® It may be difficult to find appropriate marks to operate in all countries: trade mark lawyers love to tell anecdotes about word marks adopted in one country and transported to another without considering what the

mark suggests in that territory. Moreover, it is foreseeable that valid- marks will be

harder to obtain at the OHIM

than in some national registries, given the broader

‘6! Michaels, para. 3.91, p. 74 (basic fee for CTM about £1660, whereas UK national fee £225). 162 QHIM permits broad specifications, and is more accepting of geographic marks, and marks comprising surnames.

163 See Annand and Norman (1998), 60-1. It has been suggested that the potentially high proportion of oppositions at OHIM

Kes Sibid:

will render the process slow and expensive: see Michaels, para. 3.90.

TRADE

MARK

REGISTRATION

759

field in which the mark has to operate. Words which are distinctive in the UK may lack distinctiveness at the Community level (for example, because the word is a description in a foreign language or indicates a geographical origin). In addition, the number of similar marks in use or already registered, which form the potential basis of opposition, are likely to be substantially greater as regards Community marks than national marks. One consequence of this will be that those who are seeking protection quickly might prefer to seek national registrations, rather than begin with a filing to the OHIM, because of the substantial risk that the mark will be rejected or prove invalid at the Community level.

36 SUBJECT

MATTER

1 INTRODUCTION The first requirement that a sign must satisfy to be validly registered or, if it is already registered, to ensure that it is not subsequently declared invalid, is that it must comply with the definition of a trade mark in section 1(1)/Article 4 CTMR. In particular, it is

necessary to show that there is: (i)

a sign;

(ii) which can be represented graphically; and (iii) which is capable of distinguishing the goods or services of one undertaking from those of other undertakings.

Failure to comply with any of these requirements means that the sign will not be

registered (this is one of the absolute grounds for refusal set out in section 3(1)(a) ).

Alternatively, if a mark is incorrectly registered, the registration of the mark may be declared invalid under section 47(1).

Before looking at these three elements in more detail, it is important to recall that the requirement that the sign must possess the qualities of a trade mark that are set

out in section 1(1)/Article 4 CTMR, is only the first of three general limitations which

are placed on what can be registered as a trade mark. In addition, it is also necessary to ensure that the mark is not excluded by one of the absolute grounds of refusal found in section 3/Article 7 CTMR.! It is also necessary to show that the mark is not excluded by any of the relative grounds of refusal found in section 5/Article 8CTMR2

2 WHAT IS A SIGN? For a trade mark to be validly registered it is necessary to show that it consists of a ‘sign’. No statutory definition is given as to what is meant by this term. Indeed, one of the notable features of the current law is that there are very few a priori restricti ons ! See Ch. 37.

2 See Ch. 38.

SUBJECT

MATTER

761

placed on what may be registered as a trade mark, the one notable exception being in relation to shapes.’ As the Board of Appeal at the OHIM said recently, the notion of a sign ‘is to be interpreted as a very broad, open, and general term encompassing all conceivable types of marks (including, for example, sound marks and _threedimensional marks).’* One of the consequences of the open-ended and flexible approach adopted under the 1994 Act and the CTMR is that the focus of attention has shifted away from the question of what is a sign to the other requirements of registrability. The starting point for considering what may be protected as a sign is section 1, which provides a non-exhaustive list of the types of signs that may be protected as trade marks.

These

include words

(including personal

names),

designs, letters,

numerals, or the shape of goods or their packaging. As in the past, protection will be given to slogans such as I CAN’T BELIEVE IT’S YOGURT.° While most of these are self-explanatory, one aspect of the list that is noteworthy is that it expressly states that a trade mark may consist of the shape of goods. The registration of shapes had not been allowed under the 1938 Act on the basis that a mark meant something other than the goods themselves.® As a result of the changes in the 1994 Act, things such as the shape of the coca-cora bottle, the TOBLERONE chocolate bar, and the min1 automobile have been registered as trade marks.’ It should, however, be noted that the registration of shape marks is subject to a number of restrictions, which are discussed below. While not mentioned in section 1, it is clear that colours are prima facie registrable where they are used as a trade mark (the main problem will be showing that the mark is distinctive). Examples of such marks include colours applied to pharmaceuticals,® stripes on toothpaste,’ single colours (such as purple for cleaning fluids; and pink for fibrous insulation).'° Another change brought about by the 1994 Act is that it is possible to register what have oddly been referred to as “sensory marks’; that is, smells,

sounds (musical jingles for MR SHEEN and PC worLD, and the ‘beeps’ on the British Telecom’s speaking clock),'’ gestures and possibly taste. The more open style of approach adopted under the new trade mark regime has been welcomed by trade mark owners. It has also been welcomed for the fact that by 3 The new definition of what constitutes a trade mark is to be contrasted with the restrictive definition formerly found in TMA 1938, s. 68.

4 Wm. Wrigley/Light Green R 122/98-3 [1999] ETMR 214, para. 17. In a similar vein it was said by Jacob J in Philips Electronics BV v. Remington Consumer Products {1998| RPC 283, 298 that a sign is ‘anything which can convey information’. > See Trade Mark Registry, Practice Amendment Circular 9/00. 6 Re Coca-Cola Co. [1986] 2 All ER 274. 7 Annand and Norman (1998), 29.

8 Smith Kline and French’s Trade Mark [1975] 2 All ER 57. ° Unilever’s Application [1984] RPC 155. 10 The Boards of Appeal at OHIM have accepted that colours per se may be registered: see Orange Personal Communications Services/Orange R 7/97-3 [i998] ETMR 343; Wim. Wrigley Jr. Co./Light Green R 122/98-3 [1999] ETMR 214, paras. 12-17.

11 Annand and Norman (1998), 29.

762

TRADE

MARKS

AND

PASSING

OFF

increasing the features of products which may indicate source, it benefits consumers from different cultural backgrounds and with varying standards of literacy.’ Some, however, have questioned whether the potential problems that are raised by some of the more exotic marks are justified by the benefits that they confer on their

owners.!°

2.1

LIMITS

ON

THE

REGISTRATION

OF SHAPES

While in extending trade mark protection to the shape of goods trade mark law took account of the realities of consumer-buying habits, it also gave rise to a problem that has long bedevilled other areas of intellectual property law: viz. the potential for the same creation to be protected by different forms of intellectual property. Here it is the protection given to shapes by patents, designs, and copyright. As the Court of Appeal said recently, to enable monopolies granted in respect of patents, registered designs and the like to be extended by trade mark registrations would be contrary to the public interest." In the case of shapes, the problem of overlap is exacerbated by the fact that trade mark protection is potentially unlimited in duration. The response to this problem was to exclude shapes that are thought unlikely to function as trade marks. To this end, section 3(2)/CTMR Article 7(1)(e)'? provide

that a sign shall not be registered as a trade mark if it consists exclusively of a shape which: (a) results from the nature of the goods themselves; (b) is necessary to obtain a technical result; or (c) gives substantial value to the goods.

To be excluded the sign must consist ‘exclusively’ of an excluded shape. Therefore, if any non-trivial feature of a shape falls outside the scope of the exclusions, the shape will be prima facie registrable.’* It should be noted at the outset that the precise scope of much of section 3(2) remains unclear. In part, it was this uncertainty that recently

promoted the Court of Appeal in Philips Electronics v. Remington to refer a number of questions relating to the scope of section 3(2) to the European Court of Justice for determination. In due course, we will hopefully know more about the scope of the exclusions.

12 G. Dinwoodie, ‘Reconceptualising the Inherent Distinctiveness of Product Design Trade Dress’ (1997) 75(2) North Carolina Law Review 471, 561.

13 B. Elias, ‘Do Scents Signify Source—An Argument against Trade Mark Protection for Fragrances’ (1992) 82 TM Rep. 475 (arguing such extension is misguided). 14 Philips Electronics NV y. Remington Consumer Products [1999] RPC 809, 816. R. Burrell, H. Beverley Smith, and A. Coleman, ‘Three Dimensional Trade Marks: Should the Directive be Reshaped?’ in N. Dawson

and A. Firth, Trade Marks Retrospective: Perspective on Intellectual Property, Vol. vii (2000) 139, especially at 158-60 (discussing perceived problems of overlapping regimes). 15 TM Dir. Art. 3(1)(e). Cf. TRIPs Art. 15(1). 16 Is it implicit that packaging is not subject to section 3?

SUBJECT MATTER

763

2.1.1 Where the shape results from the nature of the goods themselves Section 3(2)(a)/Article 7(1)(e)(i) CTMR provide that a sign shall not be registered

where it consists exclusively of a shape which results from the nature of the goods themselves. While the need to identify the nature of the goods may create a number of difficulties,'’ the logic of the section is relatively straightforward. If the shape results from the nature of the goods, the shape cannot possibly distinguish the product of one trader from another: any trader who sells goods of that type would necessarily have to use the same shape. They would have no choice as to the shape that the product took. To allow the registration of ‘basic shapes’ or ‘shapes which are indispensable to the manufacture or distribution of products’'® would greatly inhibit the ability of competitors working in the same field. It would also permit traders to control the respective goods themselves.'? This would be the case, for example, where a trade mark was given for the round shape for balls. (i) What are the ‘goods themselves’? One question that is raised by the exclusion is what is meant by the phrase, ‘the goods themselves’? The way this question is answered is important given that the more narrowly the ‘goods themselves’ is defined, the more likely it is that the shape will correspond to the goods in question and thus be excluded. The question of what is meant by the ‘goods themselves’ was considered in Philips v. Remington both at first instance and by the Court of Appeal,”° where the issue was whether the shape of a three-headed rotary shaver fell within the scope of section 3(2)(a). At first instance, Jacob J said that it was possible for the “goods themselves’ to be

defined

either

as ‘three-headed

rotary shavers’, ‘electrical

shavers’, ‘mechanical

shavers’, or ‘shavers’ as such. While the way the goods were classified provided a useful starting point for determining what the ‘goods themselves’ were, Jacob J stressed that the question was not to be decided merely by reference to the way the applicant had categorized the goods in their specification. Rather, it was necessary to ask “what are the goods as a practical business matter?’ The answer to this question depended on how the goods were viewed as articles of commerce.”! On the facts, Jacob J concluded

that the goods were ‘electrical shavers’, since in business practices they were viewed as a single type of commercial article. While agreeing with Jacob J that the goods in question were electrical shavers, the

Court of Appeal placed more reliance on the way the mark was classified than on the way the goods were viewed as articles of commerce. As Aldous L) said, ‘the words

“the goods” refer to the goods in respect of which the trade mark is registered. Those are the goods which it must be capable of distinguishing and in respect of which the '17 The provisions presuppose that the goods have certain, almost platonic, essential characteristics which cannot be protected. 18 Annand'and Norman (1998), 44.

19 Philips Electronics NV v. Remington Consumer Products {1999| RPC 809, 820. 20 Thid. [1998] RPC 283; [1999] RPC 809.

21 Ibid. [1998] RPC 283, 305.

764

TRADE

MARKS

AND

PASSING

OFF

proprietor obtains, on registration, the exclusive right to use the trade mark’.2? However, Aldous LJ added the caveat that the ‘purpose of the subsection is to prevent traders monopolizing shapes of particular goods and that cannot be defeated by the skill of the applicant when selecting the class of goods for which registration is sought’.??

(11) When does a shape ‘result from’ the nature of the goods? The next question to ask is when does the shape result from the nature of the goods? It seems that the exclusion will only apply where the designer of a product has no real or effective choice as to the shape that the product can take. This can be seen in Philips v. Remington, where an important factor in the Court of Appeal’s decision that the shape of the razor did not

fall foul of section 3(2)(a) was the fact that there were a number of different ways in

which the shape of a three-headed razor could have been designed. As there were a number of shapes other than the one in question that a three-headed electric shaver

could have taken, this meant that the shape ‘did not result from the nature of the

goods themselves’ (i.e. electric shavers). As Aldous LJ explained, the reason why the

trade mark was not excluded by section 3(2)(a) was that there ‘is no one shape, let alone that depicted in the trade mark, which results from the nature of such shavers.’24

Consequently, it seems that if the applicant can demonstrate there are other shapes of

the same goods on the market, no objection under section 3(2)(a) will be sustainable.

In Procter & Gamble v. OHIM, the CFI held that a waisted bone shape was, in principle, registrable for soaps explaining that the fact that there are other shapes of soap bar in the trade without those features showed that the shape did not result from the nature of the goods.” While it is clear that a shape which is dictated by the nature of the goods will fall

foul of section 3(2)(a), it is not yet clear what degree of correlation there must be

between the nature of the goods and the resulting shape. It is important to note that if the exclusion only applied in situations where there is no alternative shape that a

product could realistically take, this would greatly limit the ambit of section 3(2)(a).

Indeed, as Aldous LJ said in Philips v. Remington, it is difficult to envisage shapes which would fall within the scope of the section, ‘except those that are produced in nature, such as bananas’.”* In this overly narrow formulation,” it is only in nature that

shape and goods have the appropriate causative link. The interpretation of ‘nature’ as ‘biological’ stands in contrast to the preferable position of the Registry which,

22 Philips Electronics NV v. Remington Consumer Products [1999] RPC 809, 820.

23 Tbid. See also Procter & Gamble

Co. v. OHIM,

Case T-122/99

[1999]

specification for ‘soaps in class 3’, goods themselves were ‘soap bars’). 24 Philips Electronics NV v. Remington Consumer Products [1999] RPC 809, 820.

2 CMLR

1442

(although

*5 T-122/99 [1999] 2 CMLR 1442.

26 Philips Electronics NV v. Remington Consumer Products [1999] 27 See R. Burrell, H. Beverley Smith, and A. Coleman, ‘Three Directive be Reshaped?’ in N. Dawson and A. Firth, Trade Marks Property, Vol. vii (2000) 139, 165 (describing this as interpreting the

RPC 809, 820. Dimensional Trade Marks: Should the Retrospective: Perspectives on Intellectual exclusion out of existence),

SUBJECT MATTER

765

recognizing that ‘goods’ are culturally constituted artefacts, has tended to focus on whether there is a ‘normal’ or conventional shape of the goods.”* 2.1.2 Where the shape is necessary to obtain a technical result The second limitation on the types of shapes that can be registered as trade marks is set out in section 3(2)(b)/Article 7(1)(e)(ii) CTMR.” These provide that a sign shall not be registered where it consists exclusively of a shape which is necessary to obtain a technical result. In many ways section 3(2)(b) is very similar to section 3(2)(a). As

Aldous LJ explained in Philips v. Remington,*° the purpose of section 3(2)(b) ‘is to exclude from registration shapes which are merely functional in the sense that they are motivated by and are the result of technical considerations . . . It is those types of shapes which should not be monopolized for an unlimited period by reason of trade mark registration, thereby stifling competition.”*! The courts have not directly considered the question of what is meant by ‘technical result’. While section 3(2)(b) prevents trade mark protection from being used to extend protection to inventions beyond the limited period of the patent monopoly, it is not confined to the situation where the shape has already been patented.” As such, the meaning given to ‘technical result’ should not be limited to the meaning given to it in patent law. In line with this, the Registry Work Manual suggests that ‘technical result’ should be interpreted broadly to include shapes which facilitate convenient storage or transportation of the goods, or which provide the purchaser with ‘convenience features’. (i) When is a shape ‘necessary’ to achieve a technical result? The key issue in relation to section 3(2)(b)/Article 7(1)(e)(ii) is when is a shape necessary to achieve a technical

result? Ultimately, the impact that the section has upon what may be registrable as a trade mark depends on how this question is answered. It is clear that if all the significant aspects of the shape applied for are necessary for the achievement of a technical result, the sign will fall foul of section 3(2)(b). In these

cases, ‘what one sees is essentially an engineering artefact which . . . does not properly perform a trade mark function.” This would be the case, for example, where the application was for the round shape of a wheel.** Other features may be constrained 28

TMR

Work Manual, ch. 6, s. 8 (p. 174).

29 TM Dir. Art. 3(1)(e).

30 Philips Electronics NV v. Remington Consumer Products [1999] RPC 809, 821. 3! R. Burrell, H. Beverley Smith, and A. Coleman, ‘Three Dimensional Trade Marks: Should the Directive be Reshaped?’ in N. Dawson and A. Firth, Trade Marks Retrospective: Perspectives on Intellectual Property, Vol.

vii (2000) 139, 156-8. 32 Cf. White Paper, Reform of Trade Marks Law, Cm. 1203 (1990), para. 2.20, which appears to treat the exclusions as designed to prevent extension of protection where the applicant has already had the benefit of a statutory monopoly. 33 Philips Electronics NV v. Remington Consumer Products [1998] RPC 283. 34 Annand'and Norman (1988), 44-5. TMR

Work Manual, ch. 6, s. 8 (p. 175). The OHIM

examination

guidelines give the example of a plug, explaining that while the pins in an electric plug are necessary for the plug to work the overall shape of the plug is not determined by this technical requirement (Guideline 8.6, OJ

OHIM 9/96, p. 1331).

766

TRADE

MARKS

AND PASSING OFE

by engineering considerations, such as the shape that produces the most strength/least potential fracture points and/or uses the least material. Another example of a shape which is necessary to achieve a technical result is given in Swizzels Matlow’s Trade Mark Application, where the Registry refused an application relating to sweets on sticks on the basis of section 3(2)(b). The Registry observed that such sticks were

clearly intended to assist consumers in holding the confectionery and to prevent them from getting their hands dirty while eating the product. He concluded that the provision of a stick as part of the confectionery item must ‘be entirely functional in that it assists the consumer to eat the product with a minimum of mess.’ On this basis the application was rejected. The scope of section 3(2)(b) was further considered in Philips v. Remington, where

it was argued by Philips that because the function that the razor was to perform (viz. providing a close and effective shave) could be achieved by shapes other than that shown in the representation, the shape did not fall foul of section 3(2)(b). More

generally, Philips argued that ‘provided the trade mark owner can show that some other shape will also do the job, their sign will not fall within this exclusion no matter how functional it may be’. That is, if it were possible for the same result to be achieved by a different shape, then the shape in question would not fall within the exclusion.*° Drawing on experiences from design law, Jacob J rejected this view as being too narrow. In part, this was because there are hardly any objects which must be of a particular shape to perform a particular function.2’ As such, if Philips’s argument had been accepted, it would have meant that the section would have been all but redundant.

Jacob J added that it was unlikely that in promulgating the Directive the Council and Commission intended to ‘make it possible to obtain permanent monopolies in matters

of significant engineering design — which ’ would have been the case if he had accepted Phillips’s arguments. Jacob J’s conclusions are also reinforced by the TMR Work Man-

ual which says that the fact that there may be two or more shapes that could perform

the same function, does not, of itself, mean that one of those shapes can be registered.**®

It is clear that evidence that the technical result can be achieved by one additional

shape (other than the shape in question) may not be sufficient for section 3(2)(b) to

be invoked. At the other extreme, it is also clear that if a wide range of shapes can

perform the same function then the shape will not be excluded by section 3(2)(b).3° What is unclear, however, is where and how the dividing line is to be drawn between

these two extremes. The way this issue is determined is important because it will influence the extent to which patentable inventions may be protected as trade marks. 3° [1998] RPC 244, 247. See also Procter & Gamble Co.’s Application R 74/1998-3 [1999] ETMR 776, 780 (if function could not conceivably be achieved in any other way, the shape is necessary to obtain a technical

result).

3© As was accepted by the Swedish court in Ide Line Aktiebolag AG v. Philips Electronics NV [1997] ETMR

oes 37 Tn particular, Amp v. Utilux Proprietary [1972] RPC 103 (the only example was that of a lock and key). See Ch. 26.

8 TMR Work Manual, ch. 6, s. 8 (p. 175). 39 Thid.

SUBJECT MATTER

767

As Jacob J pointed out, if the threshold is set at a low level then it will provide permanent property rights in subject matter not traditionally protected as trade marks. Given the importance of this issue, it is not appropriate that decisions about where the dividing line is to be drawn should be made merely on the basis of the number of alternative shapes which can achieve the same technical result. It is hoped that the European Court of Justice will provide some guidance on this issue. (ii) The perspective from which ‘necessity’ is to be judged. Another issue that arises in this context relates to the perspective that ought to be adopted when asking—is the shape necessary to achieve a technical result? This question was discussed in the first instance decision of Philips v. Remington, where it was suggested that shape marks should only be refused under section 3(2)(b) where they are ‘solely motivated by the

technical result’. Jacob J rejected this on the basis that it implied that the question is subjective, thus involving an inquiry into the purpose the designer had in mind when creating the shape. Instead, he said the question to ask was whether the shape solely

achieves a technical result.*° When the matter went on appeal, however, a different approach was adopted. While not directly referring to or overruling Jacob J, the Court of Appeal said that the purpose of section 3(2)(b) ‘is to exclude from registration shapes which are merely functional in the sense that they are motivated by and are the result of technical considerations .. . All that has to be shown is that the essential features of the shape are attributable only to the technical result.’*' It is unclear what difference, if any, this reading of the section will have upon the scope of section 3(2)(b). Given the pro-

visional nature of the Court of Appeal’s decision,” it is difficult to draw any definite conclusions. It is hoped that this issue will be addressed by the European Court of Justice when deciding the questions referred to it by the Court of Appeal. 2.1.3 Where the shape gives substantial value to the goods The third restriction placed on the types of shapes that may be registered as trade marks is found in section 3(2)(c)/Article 7(1)(e)(1ii) CTMR. These provide that a sign

shall not be registered where it consists exclusively of a shape which gives substantial

value to the goods.* The first point to note about the exclusion is that the value attributable to the shape in its operation as a trade mark should not be taken into account when considering whether it falls within the scope of section 3(2)(c). As

Jacob J said in Philips v. Remington,“ good trade marks add value to goods—that is 40

Philips Electronics NV v. Remington Consumer Products [1998] RPC 283, 308. Accordingly, shapes with

trivial embellishments or variants are not outside the exclusion. 41 Tbid., [1999] RPC 809, 821.

42 The court stayed the decision for reference to the European Court of Justice. See now the Opinion of Advocate-General Colomer of 23 Jan. 2001.

43 The section has been described as ‘difficult territory’: Re Dualit ’s Trade Mark Application [1999] RPC 890, 903.

44 Philips Electronics NV v. Remington Consumer Products [1998] RPC 283; approved on appeal [1999] RPC 809, 822.

768

TRADE MARKS AND PASSING OFF

one of the things they are for. So one must not take this exclusion too literally. This means, for example, that while the RoLLs-royce grille adds value to a ROLLS-ROYCE, it does so primarily because it signifies RoLLS-RoycE and not because of its inherent shape. As such, it would not fall foul of section 3(2)(c). Section 3(2)(c) therefore excludes shapes which exclusively add some sort of non-

trade mark value to the goods. The question of the type of non-trade mark value that section 3(2)(c) is concerned with was considered by the Court of Appeal in Philips v. Remington. In overruling Jacob J on this point, the Court of Appeal said that section 3(2)(¢):

was aimed at preventing a trader from monopolizing by way of a trade mark registration shapes which added a substantial value to the goods over other shapes, e.g. a lampshade, a telephone designed to appeal to the eye. Such designs should be protected as registered designs or the like protection, not by trade mark registration ... There may be overlap between [section 3(2)(c)] and [section 3(2)(b)] which excludes shapes necessary to obtain a

technical result, but the purpose is different. The latter is intended to exclude functional shapes and the former aesthetic-type shapes. Thus the fact that the technical result of a shape is excellent and therefore the article can command a high price does not mean that it is excluded from registration by subsection (c).*°

The decisive question is therefore whether the shape performs a trade mark function, or whether the contribution the shape provides (i.e. its value) is limited to aesthetic considerations, such as enhancing the beauty of the product in a way that does not function as a trade mark. This means, for example, that ‘goods which are purchased primarily because of the eye appeal of the shape—such as the shape of novelty soap, or the shape of an ornament or figurine for those goods—will fall foul of this provision’. One way to test whether a shape gives value to a product is to compare the price of the product made to the relevant shape with the price of an equivalent product which is not made to that shape. Thus, to determine the value of the shape of the coke bottle, one could compare the price of a can of coxE with the price of a bottle of coxg (discounting the comparative cost of glass and aluminium). Such an approach was taken by the Amsterdam Court of Appeal, where it was held that differences in price between two crackers which were of equivalent taste and cost the same to manufacture could be attributed to the differences in the shape.*” While the market offers one way of determining the value of the shape, there will be some situations where the courts will need to rely on other techniques to ascertain the value that the shape provides to the good. The question whether the value provided by the shape is substantial is a question of degree. As Aldous LJ said, this ‘requires a comparison ... to be made between the shape sought to be registered and shapes of equivalent articles. It is only if the shape sought to be registered has, in relative terms, substantial value that it will be excluded ‘© Philips Electronics NV v. Remington Consumer Products [1999] RPC 809, 822. 46 TMR Work Manual, ch. 6, s. 8 (pp. 175-6). 47 Bacony [1989] NJ 835.

SUBJECT MATTER

769

from registration’.** It seems that in the normal run of things a container will seldom give substantial value to a product. If the position were otherwise, the provision would exclude many shapes even though they operate to indicate source.

3 CAPABLE

OF BEING

REPRESENTED

GRAPHICALLY

The second general hurdle that must be met for a trade mark to be validly registered under section 1(1)/Article 4 is that the sign must be ‘capable of being represented graphically’. This requirement which is relevant to validity (being one of capacity) is less onerous than the procedural requirement that a registration in fact be represented graphically. Consequently, it probably adds nothing to the procedural matters discussed in the previous chapter (at pp. 739-42).

4 CAPACITY

TO DISTINGUISH

The third and final hurdle that must be met for a trade mark to be validly registered under section 1(1)/Article 4 is that the sign must be ‘capable of distinguishing the goods or services of one undertaking from the goods or services of another.’ As the ability to distinguish the goods and services of different traders is one of the defining characteristics of a trade mark, section 1(1) effectively excludes from registration

signs that do not have the features of a trade mark.”’ As such, the provisions help to ensure that trade marks function to guarantee to the consumer or end-user the identity or origin of the product to which it is applied.°° Before looking at the scope of the provisions in more detail, it should be recalled that section 3(1)(a) provides that

failure to comply with any of the requirements of section 1(1) is one of the absolute grounds under which a sign will not be registered. The first question to ask in this context is what is meant by the phrase “capable of distinguishing’? This question was raised in AD 2000 Trade Mark where it was held to mean ‘no more than “not incapable” of distinguishing the applicant’s goods from those of others.”*! In a number of decisions that have applied this definition, the courts have 48 Philips Electronics NV v. Remington Consumer Products [1999] RPC 809, 822.

49 Ibid., 817. 50 Bach Flower Remedies v. Healing Herbs [2000] RPC 513; Philips Electronics BV v. Remington Consumer Products [1998] RPC 283, 299-300 (does the sign only convey the message ‘here are a particular trader’s goods’?).

51 AD2000 Trade Mark [1997] RPC 168, 173; Philips Electronics NV v. Remington Consumer Products [1999] RPC 283, 301-2. But in Wm. Wrigley Co.’s Application/Light Green R122/1998-3 [1999] ETMR 214 a

different test was suggested, namely, was it a sign that could ever be distinctive ‘in any given hypothetical or conceivable circumstance’, that is, for any goods?

7/O

TRADE

MARKS

AND

PASSING

OFE

effectively replicated the provisions found in sections 3(3)(b)—(d), (ie. they have

asked whether the sign is descriptive of the goods or services or generic) (which we discuss in detail later).** This gives rise to the question what is the difference, if any, between the third limb of section 1(1)/section 3(1)(a) and section 3(1)(b)—(d). The uncertainty that surrounds the relationship between section 1(1)/section

3(1)(a) and section 3(1)(b)°? is exacerbated by the fact that when read together the words of section 1 and section 3(1)(b) appear to be self-contradictory. On the one

hand, section 1(1) provides that an applicant may only register a sign that is capable of distinguishing the goods or services of one undertaking from those of others. At the same time, section 3(1)(b) provides that a sign may be refused protection on the basis that it is devoid of distinctive character. The sections thus seem to presuppose that a sign that is capable of distinguishing may at the same time also be devoid of distinctive character.*4 One of the reasons why it is important that the relationship between the two sections be clarified is because the consequences of failing to comply with sections 1(1)/3(1)(a) are more serious than those which arise where someone fails to comply with section 3(1)(b)—(d). If a mark is non-registrable by virtue of section 1(1)/

3(1)(a), it cannot be saved. In contrast, if a mark is non-registrable by virtue of

section 3(1)(b)—(d), it is still possible for the mark to be registered. This is because the

Proviso to section 3 states that a trade mark shall not be refused registration under

section 3(1)(b)—(d) if the trade mark has in fact acquired a distinctive character as a result of the use made of it. That is, while a mark may be inherently non-registrable, it

is possible for it to become registrable through use.

While there is degree of overlap between section 1(1)/3(1)(a) and section 3(1)(b)— (d), as a result of recent decisions it has become clear that there are a number of

notable differences. One point of difference is that compliance with section 1(1)/ 3(1)(a) is a preliminary issue that ought to be addressed before considering whether a

mark falls within the scope of section 3(1)(b)—(d).55 Another difference between section 1(1)/3(1)(a) and sections 3(1)(b)—-(d) arises

from the fact that signs will only lack the capacity to distinguish ‘in extreme cases’. As the Third Board of Appeal at the OHIM explained in Wrigley Jr. Co./Light Green>®

52 See pp. 777-97. This seems to be most pronounced in Bach Flower Remedies v. Healing Herbs [2000] RPC 513 where the test of whether it is inconceivable that the mark will ever become distinctive seems to be replaced with one of whether the sign is distinctive at the time of application. 53 CTMR Arts. 4 and 7(1)(b)-(d). See Procter & Gamble v. OHIM case C-383/99P (Advocate-General Jacobs, 5 Apr. 2001).

°4 ‘This seems, and indeed is, confusing’: Philips Electronics NV v. Remington Consumer Products [1998]

RPC 283, 299. °° Ibid., [1999] RPC 809, 819; Bach Flower Remedies v. Healing Herbs [2000]

RPC 513, 525 (per Morritt LJ),

532 (per Chadwick LJ). See also Wm. Wrigley Co.’s Application/Light Green R122/19983 [1999] ETMR 214. 56 Wm. Wrigley Co.’s Application/Light Green R122/1998-3 [1999] ETMR 214. In some cases the Board of Appeal at OHIM has simply asked ‘is it the sort of sign that can distinguish the goods of one undertaking from those of another’, so that, words, numbers, shapes automatically overcome an objection under CTMR

Art. 4. See Caterham Car Sales & Coachworks Application/Numeral 7 R 63/1999-3 [2000] ETMR 14, 17 (para.

13).

SUBJECT

MATTER

TT

while ‘capacity to distinguish’ is a distinct ground of objection, it was one that was easily met. Under this approach a sign will only fall within the third limb of section 1(1) where, for example, it ‘overwhelmingly performs a descriptive or technical function” or where it is ‘overwhelmingly generic’. In these cases, even if it had been shown that there was some trade mark recognition, it is clear that such recognition is trivial compared to the overwhelmingly descriptive meaning of the words. ‘soap’ for soap has been frequently suggested as an example of such an overwhelmingly descriptive sign. Similarly, the word ‘BANANa’ could not be a trade mark even if all sources of the fruit were controlled by a single company.°* The reason for this is that words such as banana and soap ‘are words so commonly used to describe a product that they could never be capable of distinguishing the goods of one undertaking from the goods of another undertaking.’ As Chadwick LJ observed, such ‘words cannot fulfil the

function of a registered trade mark which is to guarantee the trade mark as an indication of origin.’ Aldous LJ offered a similar explanation in Philips v. Remington

when he said:°° The more the trade mark describes the goods, whether it consists of a word or shape, the less likely it will be capable of distinguishing those goods from similar goods of another trader. An example of a trade mark which is capable of distinguishing is wELDMESH, whereas WELDED MESH would not be. The former, despite its primary descriptive meaning, has sufficient capricious alteration to enable it to acquire a secondary meaning, thereby demonstrating that it is capable of distinguishing. The latter has no such alteration. Whatever the extent of the use, whether or not it be monopoly use and whether or not there is evidence that the trade and the public associate it with one person, it retains its primary meaning, namely, mesh that is welded. It does not have any feature which renders it capable of distinguishing one trader’s welded mesh from other traders’ welded mesh. While there are a number of differences between section 1(1)/section 3(1)(a) and section 3(1)(b)—(d), the question remains, what function, if any, do section 1(1)/ section 3(1)(a) perform above and beyond section 3(1)(b)—(d)? Given that the pro-

viso to section 3 does not apply to section 1(1)/3(1)(a), if a sign is excluded under section 3(1) this means

that it can never become registrable through use. When

combined with the fact that the requirement that signs be capable of distinguishing will only be used in extreme cases, it seems that the section operates to ensure that certain signs, such as the words soap and BANANA, should never be allowed to be taken from the public domain. One problem with this approach is that it seems to go against the idea that ifa mark

functions as a mark, then it should be prima facie registrable. As Jacob J explained in 57 Jeryl Lynn Trade Mark [1999] FSR 491. Similarly, in Philips Electronics NV vy. Remington Consumer Products [1999] RPC 809, 819, it was held that because the registered mark contained no feature which had

trade mark significance which could become of distinctive character, it was not registrable because it did not come within TMA s. 1(1).

38 Jeryl Lynn Trade Mark [1999] FSR 491, 504. 59 Bach Flower Remedies v. Healing Herbs [2000] RPC 513, 533. 60 Philips Electronics NV v. Remington Consumer Products [1999] RPC 809, 818.

WH

TRADE

MARKS

AND

PASSING

OFF

British Sugar v. Robertson,°! ‘if a mark on its face is non-distinctive (and ordinary descriptive and laudatory words fall into this class) but is shown to have a distinctive character in fact then it must be capable of distinguishing.’ Another problem with this reading of section 1(1)/section 3(1)(a) is that it freezes the meaning of signs. As Laddie J said words never completely lose their malleability. Their meaning can change with time. Even the word ‘Soap’ ... could at one time have been pressed into service as a trade mark. However when it was invented it was used to indicate a type of product rather than a particular trade source and so it has remained (although even it has now acquired an additional meaning indicating a particular type of television programme).

In a later case, Bach Flower Remedies v. Healing Herbs, the Court of Appeal has rejected the idea that the test of capacity to distinguish must be applied in a way which treats the meaning of signs as forever set in stone. However, in so doing, the Court of Appeal appears to have given much greater content to the section 1 threshold—on one reading, at least, rendering it a test of as great significance as those in section 3(1)(b)—(d). The case concerned whether the words BACH FLOWER REMEDIES were

capable of distinguishing the homoeopathic products marketed by the claimant, given that other products on the market employed the teachings of Edward Bach. At first instance the mark had been held to be descriptive, and, on appeal, it was sought to overturn that finding in the light of evidence of use. However, the Court of Appeal said it was first necessary to see if the mark had ‘Capacity to distinguish’. In contrast with the views of Aldous LJ in Philips v. Remington, Morritt LJ said this was not merely an abstract question involving examination of the sign of itself, but must take into account the usage of the sign, for its meaning is dependent on its usage. BACH FLOWER REMEDIES, initially capable of distinguishing, had by use become the common name in the trade for the product in question. As a result, it was said, it could not be a ‘capricious addition’. Consequently, according to Morritt LJ, the term BACH FLOWER REMEDIES had no ‘capacity to distinguish’. But the test which he adopted, namely, whether as a result of usage, the sign would be understood by those engaged in the relevant trade or activity, usually the (reasonably informed, reasonably observant, and circumspect) consumer, as descriptive of the product, seems in sub-

stance no different from the test employed under the proviso to section 3(1)(b)—(d) . Likewise, Chadwick LJ said:®

The test of capacity to distinguish ... is whether the average consumer of the category of products concerned would recognize the words as distinctive—that is to say, as a guarantee of origin. For that purpose the average consumer is deemed to be reasonably well informed and reasonably observant and circumspect.

Given that the Bach Flower Remedies case does not appear to disapprove the general approach taken in Philips v. Remington, the most sensible interpretation of it must be 61 [1996] RPC 281, 305. 64 [2000] RPC 513, 526.

62 Jeryl Lynn Trad Mark [1999] e FSR 491, 498. 65 [2000] RPC 513, 534,

63 [1999] RPC 1.

SUBJECT

MATTER

773

one consistent with the latter case. Bach Flower Remedies may be understood as merely indicating that in certain limited circumstances a word can become used in such a way that it is inconceivable that, without further capricious addition, it will ever be able to

acquire distinctiveness. BACH FLOWER REMEDIES had become as inseparably linked with a product as ‘soap’ had with ‘soap’. In the case of the majority of signs, the sign will be capable of distinguishing and the critical tests to be applied will be those in section 3(1)(b)—(d) coupled with the proviso. Hopefully, when the European Court

of Justice hears the questions referred to it by the Court of Appeal in Philips v. Remington, the nature of the provisions will become clearer.

4.1

CAPACITY

TO DISTINGUISH:

THE

MARK—PRODUCT

DICHOTOMY

A further limitation on what can be registered as a trade mark may be implicit in the requirement that the sign must be ‘capable of distinguishing the goods or services of one undertaking from the goods or services of another.’ This requirement seems to imply that the sign must be at least conceptually distinguishable from the goods. Under the previous law, Lord Templeman had explained that the word ‘mark’ describes ‘something which distinguishes goods rather than the goods themselves’, before making the mental leap to conclude that ‘a bottle is a container not a mark’. While that conclusion can no longer stand given the wording of section 1, the sentiment seems to continue to have some applicability. Although, as we have seen, there are special limitations with regard to the registrability of shapes, the requirement that a sign be ‘something which distinguishes goods rather than the goods themselves’, may operate to prevent the registration of smells of perfume or sounds of records or

colours of paint where the smell, sound or colour is the good which is being purchased.°”

5 THE

PROTECTION

OF RETAIL

SERVICE

SERVICES

AS

MARKS

Service marks, that is, signs which are used in connection with the provision of

services, first became registrable in the UK as a result of the 1984 Trade Marks (Amendment) Act. Service marks are treated in the same way as trade marks by the

1994 Act. This enables the providers of professional, financial, commercial, or 66 Coca-Cola’s Application [1986] RPC 421, 457. 67 S. Maniatis, ‘Scents as Trademarks: Propertisation of Scents and Olfactory Poverty’ in L. Bently and L. Flynn, Law and the Senses: Sensational Jurisprudence, 217 (1996). See also B. Elias, ‘Do Scents Signify Source— An Argument against Trade Mark Protection for Fragrances’ (1992) 82 TM Rep. 474 (distinguishing between product scents and primary scents, e.g. perfumes, and arguing that as regards the latter trade mark protection is particularly inappropriate because smell is the essential selling feature of a perfume and as such is necessary to compete).

774

TRADE

MARKS

AND

PASSING

OFF

personal services to obtain the same statutory protection for their goodwill as is given to the manufacturers and sellers of goods. One question that has arisen in this context is whether service marks protect the ancillary services that retailers provide such as childcare, car-parking, telephones, or toilet facilities. The question of the standing of retail services as service marks was considered in Re Dee Corporation’s Application.® In that case, the Court of Appeal held that retail services could not be registered as service marks under the (1984

amendments to the) 1938 Act. The reasoning turned, in the main, on the definition of

service mark as a mark used in relation to services provided “for money or money’s worth’. It was argued that the costs of providing customer services, car parks, child care, toilet facilities, and a congenial shopping environment were indirectly passed on to the customers through the cost of their purchases. This was rejected on the basis that as the services were not separately charged for, they were not provided ‘for money or money’s worth’. Despite considerable lobbying, the service mark provisions were not extended under the 1994 Trade Marks Act to include retail services, One change that was made under the 1994 Act which may affect the protection offered to retail services was that the ‘for money or money’s worth’ requirement was removed from the definition of service mark. As a result, the question has arisen as to whether retail services are now protected under the 1994 Act. While this question was alluded to but not decided in one case,”” a number of reasons suggested that the substantiv e position remains unchanged. One reason which suggested that the conclusions of Re Dee stood was that when the 1994 Act and the CTMR were passed, there was no obvious intention to expand the notion of services to encompass retail services. For example, the Annexe to the Community Trade Mark Regulation says that retail services are not registrable at the OHIM.”' Similarly, during the passage of the 1994 Act an amendment to protect retail services was defeated.” In addition to the view that the Registry is not specifical ly equipped to deal with retail services,”> it remained arguable that the very notion of retail services has self-contradictory. Since retailing involves the sale of goods, it was argued that a shop that wishes to protect retail services should simply register trade marks for the relevant goods that it sells. Another factor that weighed against retail services being protected as service marks was that even though the main basis for the Re Dee’s decision has been removed, it was supported by other subsidiar y grounds that remained valid. This was particularly the case in relation to Stocker LJ’s comment that an applicant for a service mark had to be in the trade of providing services. This 68 [1990] RPC 159. 6 [1990] RPC 159, 180. 70 Avnet v. Isoact [1998] FSR 16, 20. 7! ‘The Council and the Commission consider that the activity of retail trading in goods is not as such a service for which a community trade mark may be registered under this regulation .’ ’2 Hansard (HL), Public Bill Committee, 13 Jan. 1994, cols. 3—10. 73 There is no class for retail services, though Class 42 and Class 35 are possible candidates.

SUBJECT MATTER

TS

meant that services that are incidental to, or an adjunct of, retail sales of goods are not

services that it is the business or trade of the applicant to provide.” Rather surprisingly, in Giacomelli Sport SpA, the Second Board of Appeal at the OHIM has allowed a registration of a figurative mark for “Bringing together for the benefit of others, of a variety of goods ... to enable consumers to view and buy the products’ in Class 35 (which encompasses advertising, business management, business administration and office functions).”> The Board held that this was a ‘service’,

rejecting the Examiner’s objection that it was an activity ancillary to the sale of products in the interest of the applicant alone. The Board rejected the relevance of the Joint Statement of the Council and Commission, on the ground that it did not enjoy legal status within Community law. The Board then explained that the idea of a service was the provision of something, more in the form of labour than of goods, to meet a particular need or want. Given that the Board took it to be a matter of common experience that consumers prefer the services provided by some shops over those of others, so that the activity of retailing was mutually beneficial to the retailer and the consumer, it could see no reason to exclude the activity from the concept of

service. However, it did explain that the rules required that the service be described with sufficient clarity, and this would demand a reference to the field in which the service is rendered, for example, ‘retail services in the field of sports goods’. Following Giacomelli Sport SpA, and a subsequent meeting between representatives of the UK Office and the OHIM, the UK Trade Mark Registry has indicated that it has changed its practices with respect to applications relating to retail services.”° From 2000, the Registry will permit applications related to services where the sector is

specified, as, for example, with retailing of sports clothes, retailing of books, and so forth. 74 [1990] RPC 159, 183; see also 180 per Slade LJ (applicants are not actually trading in the relevant services, but the services provided by them are merely ancillary to their principal trading activities); 184 per Bingham LJ.

75 R 46/1998-2 [2000] ETMR 271. 76 PAC 13/00; [2001] RPC 33.

Dele ABSOLUTE GROUNDS REFUSAL

FOR

1 INTRODUCTION In this chapter, we explore what are commonly referred to as the absolute grounds for refusing to register a trade mark. The absolute grounds for refusal, which are set out

in section 3 of the 1994 Act (Article 3 of the Directive and Article 7 of the Regulation)

are important in that they determine the types of signs that will be registered as trade marks. They are also important because one of the grounds on which a registered mark may be declared invalid is that it was registered in breach of one of the absolute grounds of refusal.! The absolute grounds for refusal can conveniently be grouped into three general categories. The first is concerned with whether the sign falls within the statutory

definition of a trade mark found in sections 3(1)(a) and 3(2). The second category of grounds, each of which is contained in section 3(1)(b)—(d), excludes from registrabil -

ity marks that are non-distinctive, descriptive, and generic. The third and more eclec-

tic category, which covers the absolute grounds of refusal set out in section 3(3)—(6),

provide that trade marks shall not be registered if they are contrary to public policy or morality, if they are likely to deceive the public, if they are prohibited by law, or if the application was made in bad faith. Special provisions also exist for specially protected emblems. We will deal with each of these general categories in turn.

2 SUBJECT

MATTER

Section 3(1)(a) provides that a sign which does not satisfy the requirements of a trade mark as set out in section 1(1)(a) will not be registrable. The types of signs that are potentially registrable are further restricted by section 3(2) that provides special rules ' TMA s. 47. Lack of distinctiveness is a ground of invalidity, and so a registered mark may be challenged at any stage by any person, by application to the UK Registrar or before the Cancellati on Division at OHIM,

(CTMR Art. 55) or as a counterclaim to an action based on a national or Community mark (CTMR Arts 51, 92, and 96).

ABSOLUTE

GROUNDS

FOR

REFUSAL

VIL

in relation to the registration of shapes as trade marks. As these topics were dealt with in Chapter 32, it is not necessary to look at them again here.

3 NON-DISTINCTIVE

MARKS

The second category of absolute grounds of validity relate to what can be described as non-distinctive, descriptive, and generic marks. More specifically, section 3(1)(b)—(d) and Article 7(1)(b)—(d) of the Regulation provide that the following trade marks shall

not be registered: (b) trade marks which are devoid of any distinctive character;

(c) 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 the rendering of the service, or other characteristics of the goods or service; (d) trade marks which consist exclusively of signs or indications which have become

customary in the current language or in the bona fide and established practices of the trade. While these provisions are interpreted separately,’ they will often be applied cumu-

latively.* Before examining each in detail it is worth noting a number of general matters which apply equally to section 3(1)(b), (c), and (d) and therefore can be

conveniently discussed at the outset.

3.1 THE AIMS OF SECTION 3(1)(B)—(D) The absolute grounds of validity in section 3(1)(b)—(d) perform two related tasks.

The first is that they help to ensure that trade marks function as indicators of origin. In order to act as an indicator of origin, it is necessary for consumers to be able to make a connection between a sign and a particular source or trader. For this to occur, consumers must be able to distinguish between the signs and thus the goods and services of rival traders. By limiting registration to marks which are distinctive, section 3(1)(b)—(d) helps to ensure that protection is only granted to signs which con-

sumers are likely to perceive as a designation of source. The reason for this is that one factor that section 3(1)(b)—(d) shares in common

is that it helps to ensure that

registered marks are, in some broad sense, individual or idiosyncratic. In the same way in which the idiosyncratic nature of a fingerprint, a signature, or a DNA segment 2 This language, taken directly from the Directive, is, in turn, derived from Paris Art. 6 quinquies(2). See also TRIPs Art. 15(2). 3 Harbinger Corp. v. OHIM

T-345/99

(2 Oct. 2000)

(CFI) (para. 31) (each ‘has its own

sphere of

application and they are neither interdependent nor mutually exclusive’). 4 Proctor & Gamble’s Trade Mark Applications [1999] RPC 673, 678-9 (TMA s. 3(1)(c) and (d) constitute

individual or more specific or simple characteristic cases, and thus explain and clarify the concept of lack of distinctive character referred to in s. 3(1)(b) ).

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helps to identify a person, the idiosyncratic nature of registered marks means that it is possible for consumers to distinguish competing goods.° The absolute grounds for refusal in section 3( 1)(b)-(d) also perform a second

important role. In particular, they help to minimize the negative impact that the grant of trade marks may have upon traders working in the same or related fields. If trade marks law permitted one trader to obtain property protection over non-distinctive, descriptive, or generic marks it could have a dramatic impact upon other traders. For example, if one greengrocer was given trade mark protection over the word ORANGE or FRUIT it would interfere with the ability of other greengrocers to convey information about their goods or services.° By denying protection to signs that are nondistinctive, descriptive, or generic, trade marks law ensures that competitors are able to use terms which are deemed to be ‘essential’ in the trade in describing their own goods. While the grant of trade marks necessarily restricts the use that third parties can make of signs, the absolute grounds for refusal in section 3(1)(b)-(d) play an

important role in striking a balance between signs which can be taken from the public domain and those which cannot.

3.2

THE

GUIDING

PRINCIPLES

In determining whether a trade mark falls within the scope of section 3(1)(b)—(d)

(and equivalent provisions under the 1938 Trade Marks Act), the courts have been guided by these two general considerations. Under the 1938 Act, when considering whether a mark was registrable the courts found it useful to consider the impact that monopolization of that sign would have on other traders.’ That is, they applied the second general principle outlined above. Although English tribunals have continued

to refer to the ‘needs’ or desires of other traders,® as indeed had the OHIM,?’ the

European Court of Justice has recently indicated that when determining whether a

trade mark falls within the scope of section 3(1)(b)-(d), the tribunal should be

primarily concerned with how the particular sign would be interpreted by the relevant consumers.'° In Windsurfing Chiemsee v. Attenberger the question before the ECJ was whether the word curemsee, the name of a lake in Bavaria, could be a trade mark for sports clothing or whether such a mark fell within Article 3(1)(c) of the Directive.!!

More specifically, the ECJ was asked to consider whether the application of Article 3(1)(c) depends on whether there is a ‘real, current, or serious need to leave the sign > Procter & Gamble’s Trade Mark Applications [1999] RPC 673, 678-9. ® Harcourt Brace’s Application/Ideal R 130/1999-1 [2000] ETMR 382, 389. (Any undertakin g is entitled to

describe its services as IDEAL.)

” Most classically, Lord Parker’s test in W. & G. Du Cros’s Application [1913] AC 624, 635.

8 e.g. Eurolamb Trade Mark [1997] RPC 279, 281.

® e.g. Monsanto Co./Enviro-Chem R 87/98-1 [1999] ETMR 845, para. 15. '© For a different interpretation, see A. Fox, ‘Does Trade Mark Harmonization Directive Recognise a Public Interest in Keeping Non-Distinctive Signs Free for Use?’ [2000] EIPR 1 (emphasizing that the EC] referred to the public interest in keeping geographical designations free). 'l Joined Cases C-108/97 and C-109/97 [1999] ECR I-2779.

ABSOLUTE GROUNDS FOR REFUSAL

779

or indication free’. The Court acknowledged that one of the aims of Article 3(1)(c) of

the Directive was to protect the public interest by keeping descriptive signs or indications free for use by all traders.'* However, the ECJ indicated that the critical question was not whether there is a need for the sign to be left free, but whether the sign

designates “a place which is currently associated in the mind of the relevant class of persons with the category of goods concerned, or whether it is reasonable to assume that such an association may be established in the future.’'? The emphasis is on whether the geographical name is ‘capable, in the mind of the relevant class of persons, of designating the origin of the category of goods in question.’ If it was capable of designating geographical origin it was, in the absence of acquired distinctiveness, unregistrable. The primary inquiry then is predictive, requiring the tribunal to focus on the anticipated performance of the mark in relation to the goods or services for which it is proposed to be used and to guess what the relevant class of consumers would understand from the sign. In particular the tribunal should ask: will the sign be perceived as an indication that goods or services come from a single source,'* in other words, as a ‘badge of trade origin’? Applying such a test, invented words such as KODAK, PEPSI, Or EXXON are likely to be inherently distinctive, because it is unlikely that consumers would perceive the sign to be anything other than an indication of origin. In contrast, TREAT would be understood as describing the fact that the product was especially good, and EUROLAMB would be understood as describing the fact that the product was a particular type of meat from a particular place. In between these extremes is a huge array of signs, not wholly descriptive but partly suggestive of a product quality: in such cases the tribunal will have to make a judgement as to how consumers will interpret the sign. While certain types of marks (such as surnames or simple combinations of letters, numbers, or descriptions) will normally be non-distinctive, there will be some situ-

ations where they will be distinctive. The upshot of this is that care must be taken about making broad generalizations on the basis of previous decisions. It also means that it is not possible to formulate general rules about whether types of marks will be distinctive with any precision. Another consequences of the factual nature of the distinctiveness inquiry is that it is a “subject on which different minds may well take different views’.'° In one of the first cases considered by the Board of Appeal on the issue of distinctiveness, the First Board expressed its views as follows:'° The assessment of the distinctiveness of a trade mark is a complex exercise which involves a combination of objective and subjective elements. [I]n each case the examiner enjoys a certain margin of discretion and that the decision on distinctiveness depends to some extent 12 [1999] ECR I-2779, I-2824 (para. 30).

13 Tbid. I-2825 (para. 31). 14 4D2000 Trade Mark [1997] RPC 168. 15 Procter & Gamble/Naturals R 39/98—2 [1999] ETMR 425, para. 11 (judging distinctiveness is not ‘an exact science’).

16 USA Detergents/Xtra R 20/97-1 [1998] ETMR 562, para. 18.

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on the examiner’s subjective appraisal. It is inevitable therefore that certain decisions will be perceived by some observers as reflecting a more restrictive approach than others.

In applying the test, the relevant class to whom the sign must be distinctive has been defined as comprising ‘the trade and ... average consumers of the category of goods’.'” In turn, the relevant consumers have been construed as ‘reasonably wellinformed and reasonably observant and circumspect’.!® These characteristics of the presumed consumer enable the Registries to develop certain routinized practices. The UK Registry describes its own routines in the Registry’s Work Manual.

3.3 WHAT

IS THE TRADE MARK?

In order to decide whether a sign is excluded under section 3(1)(b)—(d) it is first

necessary to decide what the sign is. In many ways this is straightforward: we have seen that the sign is that for which registration is sought. This task is made somewhat easier by the fact that the applicant has to submit documentation identifying the mark, and indicating whether protection is sought as a word mark, a figurative mark, a colour mark, or a three-dimensional mark. Nevertheless, the tribunal must interpret the application (as the notional consumer would). This process of interpretation will take into account that the mark will normally be used not only in its represented form. Importantly, the protection conferred on the owner will extend to such uses. Consequently the mark will be interpreted in terms of the overall impression it has on the average consumer—orally, conceptually, and visually. As a result of this process of interpretation, the following three ‘doctrines’ can be identified.

3.3.1 The doctrine of grammatical etc. equivalents First, because the courts have tended to concentrate on the way consumers would

understand the mark in question, the courts have extended the scope of the exclusions beyond a literal reading of the sign to include obvious and immaterial variations, as well as ‘variants common in the trade’.!° For example, if word mark is not registrable, it does not become so by adding hyphens or exclamation marks (such as FisH! for restaurant services), or the omission of grammatical features.2° Similarly, if a word mark is not registrable, it does not become so by the addition of commonplace borders or motifs. This reason for this is that the consumer continues to understand the sign as the word.”! In the same way, a sign that is unregistrable will not become '7 Ford Motor’s Application/Silver Facia Panel R 704/1999-3 (30 June 2000), para. 19 (emphasizing that relevant public was not confined to dealers but included the common consumer who sought to purchase

motor land vehicles). 18 Bach Flower Remedies v. Healing Herbs [2000]

RPC 513.

'9 Indeed the language of the cases is replete with terms such as ‘obviousness’: Medtronic Inc./Maxima R 51/98-1 [1999] ETMR 504, para. 17. See also Eastman Photographic Materials Appn. (1898) 15 RPC 476, 487 per Lord Shand.

20 Messe Munchn v. OHIM T-32/00 (5 Dec. 2000). 21 In re Fanfold (1928) 45 RPC 325 (word ‘FANFOLD’ in heavy type, arched and underpinne d by scroll motif

unregistrable); Laura Ashley’s Trade Mark [1990] RPC 539, 549 (oval border and floral addition).

ABSOLUTE

GROUNDS

FOR

REFUSAL

781

registrable just by being employed in an ungrammatical way (such as employing nouns for verbs, adjectives as nouns, etc.). Since the consumer would almost certainly read the ungrammatical version as being equivalent to the grammatical version, the tribunal is likely to conclude that if the signs in their proper grammatical form are unregistrable, they are equally in their ungrammatical form. For example, grammatically TASTEE-FREEZ makes little sense because ‘tasty’ is an adjective and ‘freeze’ is a verb. However, TASTY ICE CREAM OF TASTY AND FROZEN would be blatantly unregistrable for ice lollies, because they are descriptive phrases.”* Since the ungrammatical version will be read in the same way, it is unlikely to be registrable. Another situation where the tribunal will have to assess how the ‘reasonably circumspect’ consumer interprets a sign is where an applicant combines, shortens, or telescopes two (or more) unregistrable terms. Although consumers tend to interpret signs as a whole rather than dismembering them into their components parts,” certain combinations or abbreviations may be immediately translated back into their (non-registrable parts).** Thus, EUROLAMB would immediately be interpreted as EUROPEAN LAMB and thus, being descriptive, be unregistrable. The point at which such creations become registrable is a matter a degree: much will depend on how devoid of distinctiveness the component units are and how drastically they have been altered. For example, the Board of Appeal at the OHIM has held rast prep (for surgical apparatus), CHEMFINDER (for software for use in chemical searching) and PoLypaps (for pads for saddles) were unregistrable. In contrast oI1LGEAR (for hydraulic machines), and ENviRO-cHEM (for chemicals to test pollution) were accepted.” The Court of First Instance, too, upheld the finding of the OHIM that COMPANYLINE was devoid of distinctive character in relation to insurance and financial affairs, explaining that coupling two generic words together ‘without any graphic or semantic modification does not imbue them with any additional characteristic such as to render the sign, as a whole, capable of distinguishing the applicant’s services from those of other undertakings.’”°

22 Tastee-Freez’s Appn. [1960] RPC 255. See also In re Keystone Knitting Mills (1928) 45 RPC 421 (cHARM for hosiery descriptive even though it did not mean ‘charming’). But cf. Procter & Gamble v. OHIM Case C383/99P (5. Apr. 2001) (BABY pry registrable for diapers). 23 Accutron Trade Mark [1966] RPC 152, 158 (‘it is not right to pull the word to pieces’); USA Detergents/ Xtra R 20/97-1 [1998] ETMR 562, para. 18. 24 Miliken/Comfort plus R 66/98-1 [1999] ETMR 575. Cf. Whisqueur Trade Mark (1949) 66 RPC 105 (registration of WHISQUEUR was permitted).

25 Tilia International/Foodsaver R 57/98-1 [1999] ETMR 191; Alpha Therapeutic Corp./Fast Prep R 111/98-1 (29 Oct. 1998); Chemfinder Cambridgesoft’s Application/CHEMFINDER R 211/1998-2 [2000] ETMR 251; PI Associates/PolyPads R 68/98-3 [1999] ETMR 234; The Oilgear Co./Oilgear R 36/98—2 [1999] ETMR 291; Monsanto/Enviro-chem R 87/98-1 [1999] ETMR 845. 26 DKV Deutsche Krankenversichecherung AG v. OHIM T 19/99 [2000] ECR II-1. See also Harbinger v. OHIM T-345/99 (2 Oct. 2000) (CFI), paras. 36-7 (TRUSTEDLINK a coupling of generic word and a word

indicating desired quality thereof was devoid of distinctive character as regards goods and services relating to electronic commerce).

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3.3.2 Phonetic equivalents

Second, because consumers use signs both orally and visually, it is usually the case that a word that is phonetically equivalent to an unregistrable word will be unregistrable. Thus, in pre-1994 case law, ELECTRIX was treated as equivalent to ‘electrics’ (and

hence unregistrable for such appliances), and pHIL-THE-caT as equivalent to ‘fill the cat’ and hence unregistrable for pet food.” However, if the sign is only appreciated and employed visually, then phonetic similarities will take second place to visual differences when assessing distinctiveness.** The principle has yet to be affirmed

under the 1994 Act.?°

3.3.3 Foreign equivalents

Thirdly, because the consumer is also presumed to be ‘reasonably informed’ and may thus be familiar with other languages, the tribunal is likely to be reluctant to permit the registration of foreign translations of unregistrable words.>° The Registry and the courts will take into account the extent to which the mark is recognized in its original language, how widely the language spoken is in the United Kingdom, how familiar the word is, and how common it is for foreign words to be used in that trade. For example, prior to 1994, the word MADAME

(French for Mrs) which is known to

ordinary English people was held not to be registrable for cigarettes, but sMITSVONK, being Dutch for “Smith’s Spark’, and xiKu being the Japanese word for chrysanthemum, were accepted for electric spark-producing apparatus and perfume respectively.?! The question of foreign equivalence is particularly important in relation to Community marks. Article 7(2) of the Community Trade Marks Regulation provides that the exclusions apply notwithstanding that ground of non-registrability only operates in part of the Community. In deciding whether the grounds apply, the Board of Appeal of the OHIM takes into account the principle of the ‘equivalence of Community languages’. Where words are known in a variety of languages, the use of those words in a descriptive manner will be unregistrable. This was the case with NATURALS which is a word known in four Community languages.” It has also been held that although a word is only descriptive in a particular language, those words will nevertheless be unregistrable if they are widely known throughout the Community. This 27 Electrix’s Appn. [1959] RPC 283, 286 (HL); British Fish Canners [1984] IPD 1063. 28 In some areas of trading, the oral use of a word may be so rare that visual differences are overriding: Exxate Trade Mark [1986] RPC 567, 570.

2° Cf. Froot Loops Trade Mark [1998] RPC 240 (where the applicant conceded that rrRoot Loops should

be treated as if it was FRUIT Loops but the Appointed Person said this is a significant issue which would,

eventually, require determination under the 1994 Act). The principle of phonetic equivalence seems to operate, to a certain extent, at the OHIM: USA Detergents/Xtra R 20/97-1 [1998] ETMR 562. 3° E. Gredley, ‘Foreign Language Words as Trade Marks’ in N. Dawson and A. Firth, Trade Marks Retrospective: Perspective on Intellectual Property, Vol. vii (2000), 85. 31 Madame

Trade Mark [1966] RPC 541; Smitsvonk Trade Mark (1955) 72 RPC 117; Kiku Trade Mark

[1978] FSR 246 (Supreme Court of Ireland). 32 Procter & Gamble/Naturals R 39/98-2 [1999] ETMR 425.

ABSOLUTE GROUNDS FOR REFUSAL

783

was the case with commonly used English words such as COMPLETE and siTE*’ and would also apply to non-English words such as OLE, DANKE, or PETIT. Although most non-English speakers would not be aware of a word such as paps, these words will not be registrable when used in a descriptive manner, given that the English and Irish populations constitute a ‘substantial part of the Community’.** However, a word such as MAXIMA, which was only descriptive in Portuguese was registrable, despite the fact that words like ‘maximumY are common to a number of Community languages.*° One consequence of this is that it will be harder to register English signs at the OHIM, as opposed to signs which are only descriptive in smaller parts of the Community. Certain national offices may, however, accept such signs.

3.4

THE

APPLICANT S EVIDENCE

Distinctiveness is assessed by the Registrar or OHIM at the time of examination, or as regards a United Kingdom application, in response to opposition or observations.*° Distinctiveness is assessed as of the date of application.*’? Where an application is made and it is held that the sign lacks distinctiveness for certain goods but not others, it should be refused only as regards the goods for which it lacks distinctiveness.*® 3.4.1 Prior registrations Applicants often attempt to support their case for registration by showing that similar

marks have already been registered. While such evidence is often submitted in support of applications, the courts have stressed that marks always need to be considered on their own merits. It has also been stressed that the Registries are autonomous bodies and that each must decide issues of registration for itself. That is, they should not merely rubber stamp decisions made elsewhere.*’ In a number of recent cases, British courts have gone one step further and said that evidence about ‘other marks on the Register is in principle irrelevant when considering a trade mark tendered for registration’.*° Nevertheless, it seems that prior registrations may still support an application

for a mark that is being added to a family of marks.*! A rather less cavalier approach has been adopted by the Boards of Appeal of

the OHIM where evidence of previous registrations, both within and outside the Community, is still considered to be relevant.* The Board of Appeal has suggested

that, in order to achieve consistency, the examiners should take into account existing 3w

3

Procter & Gamble/Complete R 116/98—3 [1999] ETMR 664. PI Associates/PolyPads R. 68/98—3 [1999] ETMR 234. Medtronic Inc./Maxima R 51/98-1 [1999] ETMR 504.

3)

TMA s. 38(2). Opposition at OHIM exists only on relative grounds.

3

Soflens Trade Mark [1976] RPC 694, 699. TM Dir. Art. 13; Mister Long Trade Mark [1998] RPC 401. Miliken/Comfort plus R 66/98-1 [1999] ETMR 575, para. 18. British Sugar v. James Robertson & Sons [1996] RPC 281, 305; AD2000 Trade Mark [1997] RPC 168.

3

3 3 4 4

See Practice Amendment Circular 7/00. USA Detergents/Xtra R 20/97-1 [1998] ETMR 562, para. 20.

4WwW UO oOo NY, A ON A

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registrations at the OHIM, but must nevertheless treat the application on its merits. Moreover, the Board has indicated that registration of an identical sign for identical

goods or services in a member state (after implementation of the Approximation Directive) gives rise to a presumption that an application for a Community mark should be successful. This presumption, however, will only apply if the circumstances of registration are the same. It also seems that the presumption will be stronger if the sign has been accepted by a national registry ‘to whose linguistic area it belongs’.*° This means that the registration of an English mark in the UK Registry will give rise to a strong presumption that the mark will be distinctive throughout the Community. In contrast, the registration of an English language mark in the Greek Registry would be less persuasive.*°

3.5

‘NATURE

AND

NURTURE : THE

PROVISO

The final matter of importance (which unites the grounds of absolute refusal in section 3, and, at the same time, distinguishes them from subject matter) relates to the

fact that section 3(1)(b)—(d) are all subject to a proviso, namely, that a sign which falls

within any of the provisions (i.e. is non-distinctive, descriptive or generic) is not to be

treated as invalid if it has, as a result of use, ‘acquired distinctive character’. In other words, the objections in section 3(1)b)—(d) apply to the ‘inherent’ characteristics of

the sign, and can be overcome if the sign comes to be understood by consumers as in fact communicating that the particular goods or services in relation to which the sign is used come from one particular trade origin. Sometimes this distinction between inherent and acquired characteristics of a sign is likened to the characteristics which an individual has from ‘nature’ and those he or she acquires as a result of ‘nurture’.7 A word perceived by consumers as intrinsically empty or meaningless (such as

ANDREX, NOXEMA, Of MARMITE) will be innately distinctive from its ‘nature’, whereas a descriptive word (Lemsip (for lemon drink), sHAKE-AND-VAC (for carpet-cle aning powder), Ka (for motor vehicles) for example), will only acquire ‘distinctive char-

acter’, if at all, if there has been such use as to educate the public that the sign operates to distinguish the goods of one undertaking from those of another. With these general principles in mind, we now turn to examine in detail the exclusions from what may constitute a valid trade mark, that is those signs which are intrinsically or innately lacking distinctiveness, are descriptive or customary. After looking at these three heads, we then turn to consider how signs can be shown to have acquired distinctive character through use.

42 Ibid, 562: “4 PI Associates/PolyPads R 68/98-3 [1999] ETMR 234, para. 14. 45 Procter & Gamble/Lasting Performance R 34/983 (27 July 1998), para. 17.

“© CNS’s Application/Breathe RightR 114/1999-1 [2000] ETMR 609, para. 12. 47 Harcourt Brace’s Application/Ideal R 130/1999-1 [2000] ETMR 382, 389-90. This approach has a long pedigree in the UK, but not in Europe.

ABSOLUTE

3.6

DEVOID

OF DISTINCTIVE

GROUNDS

FOR

REFUSAL

785

CHARACTER

Section 3(1)(b)/Article 7(1)(b) CTMR provide that trade marks which are devoid of

any distinctive character shall not be registered.** At the end of the day, the distinctiveness of a mark is always depends on whether it exhibits the sufficient degree of individuality to differentiate it from competing signs (thus enabling consumers to identify the source or origin of the goods or services in question). This ensures that consumers will be able to identify the source of the goods and services and to distinguish them from others. By ensuring that the only marks that are (validly) registered are those that are distinctive (thus increasing the chance that the marks are identifiable), the law helps to ensure that trade marks function as indicators of origin. In so doing the distinctiveness requirement helps to ensure that both the source and guarantee functions of trade mark law are fulfilled. 3.6.1 Simple signs: letters, numbers, and grammatical signs In most cases single letters, numbers, and grammatical signs will be treated as ‘devoid of distinctive character’. This is because consumers would not be able to assume that such signs indicated one particular source.*° This reasoning is sometimes extended to combinations of letters and numbers, abbreviations, or initials.*! When predicting how consumers would react, the Registry and the courts have taken into account factors such as the length of the series of initials, the way the combination would be pronounced, and whether they are presented as initials.°* Where numbers, letters, and dates might be taken by average consumers to indicate catalogue numbers, sizes, model numbers, date of production, etc., they will be unregistrable.** In AD2000 Trade Mark,” an application to register AD2000 was rejected on the basis that it was ‘devoid of distinctive character’. While it was recognised that a combination of two letters and a four-figure numeral could be distinctive if it was an ‘idiosyncratic combination’, the

48 The OHIM has said if there is 1 or 2 per cent distinctive character, the sign is not ‘devoid’. In fact, the Boards of Appeal at the OHIM seems to have a narrower understanding of ‘devoid’ than the British Registry and courts. For example, laudatory words, which are treated by British courts as ‘devoid’, are rather seen by the Boards at the OHIM as falling under Article 7(1)(c) or (d). Guidelines concerning Proceedings before the Office forHarmonization in the Internal Market, part B, para. 8.3. 49 Practice Amendment Circular, PAC 5/00, Letters and Numerals, para. 13. Simple letters, initials, and such might become distinctive if presented in some peculiar or individual manner: Alfred Dunhill’s Trade Mark Application [1982] RPC 145. °° Note Caterham Car Sales & Coachworks’s Application/Numeral 7 R 63/1999-3 [2000] ETMR 14, 17 (number not registrable because it belongs in the public domain and forms part ofthe store of signs available to all traders).

>! Apparently, following Fuji Photo Film’s Application [1998] ETMR 343, the OHIM accepts two-letter marks unless they are descriptive, and the UK Registry has brought its practice into line with that of the OHIM: Practice Amendment Circular 5/00, para. 9. 52 BP y. European Petrol [1968] RPC 54, 62. 53. Caterham Car Sales & Coachworks’s Application/Numeral 7 R 63/1999-3 [2000] ETMR 14, 19 (use of 7 on car would be taken to be model number); see also Ford Motor’s Application/Tddi R 33/1999-1 [2000] ETMR 679; Faro Technologies/ CAM2 R 430/2000-1 (15 Sept. 2000).

?4/(1997] RPC 168.

786

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MARKS

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PASSING

OFF

court held that ap2000 did not meet this threshold. This was because ap2000 refers to the year which ushers in a new millennium and did not communicate the fact that the goods were those of one particular undertaking. 3.6.2 Simple pictorial marks

Applicants have also found it difficult to establish that simple pictorial marks are distinctive. In the past, UK tribunals have refused to register pictorial marks for things such as scrolls, laurel wreaths, crowns, seals, circles, and diamonds.» The Board of

Appeal at the OHIM has stated that a single line, a square, or a colour would be devoid of distinctive character. The same principle is applicable to mixed word and device marks: if a word mark is not itself registrable, it does not become so by the addition of commonplace borders or motifs.*° 3.6.3

Colour marks

The Board of Appeal has said that applications relating to colours should be subject to critical analysis, otherwise the colours available to competitors might become rapidly depleted.*” In deciding whether colour marks are distinctive, a distinction tends to be drawn between complex colour combinations or patterns, which are more likely to be distinctive and simple colours, which are not. In Wrigley Jr./Light Green,”* the Board of Appeal of the OHIM held that an application to register the colour light green as a trade mark for chewing gum was devoid of distinctive character. The Board added that a colour per se normally lacks capacity to indicate origin because customers are not accustomed to using such signs, as opposed to graphic or textual elements, as indicators of source. A colour would only be distinctive, in the absence of use, where it was a shade which is extremely unusual and peculiar in the relevant trade or where it is to be used for very specific goods for very specific clientele.” Since chewing gum is a low-priced, widely marketed product which is targeted at consumers in general, and since the shade in question belonged to the domain of basic colours, it was held to lack the minimum distinctive character necessary for protection (to overcome Article 7(1)(b) of the CTMR).

3.6.4 Shapes

Another area where the exclusion relating to marks that are ‘devoid of distinctive character’ may have an important impact is in relation to shape marks. Where a shape is functional (irrespective of section 3(2) ), it is likely to be treated as inherently nondistinctive. This is because the relevant consumers looking at the shape would not think it indicative of a particular trader’s goods. In Philips v. Remington, the Court of Appeal said that to overcome an objection on this basis the mark must have a °° Laura Ashley’s Trade Mark [1990] RPC 539; Alfred Dunhill’s Trade Mark Application [1982] RPC 145. °© Laura Ashley’s Trade Mark [1990] RPC 539, 549 (oval border and floral addition).

°7 Wm. Wrigley Jr./Light Green R 122/98-3 [1999] ETMR 214, para. 30.

°8 Tbid., 214

52-Paran 2h:

ABSOLUTE

GROUNDS

FOR

REFUSAL

787

character which enables it to be distinctive of one trader’s goods in the sense that it has a meaning denoting the origin of the goods. However, the primary meaning of the three-headed rotary shaver was ‘a three-headed rotary shaver of the design shown’ and there was no evidence that it had any other meaning.® Moreover, even where the shape is not purely functional, it seems, it will be devoid of distinctive character: in Re Dualit, Lloyd J held that an application which related to the shape of a toaster lacked distinctive character: there was nothing about the shape alone which, apart from evidence of use, makes it inherently distinctive as a badge of origin of the applicant’s products.®’ It is now difficult to conceive of any circumstances in which the Registry will accept a shape which has not been used as being other than devoid of distinctive character.” 3.6.5 Get-up and trade-dress Although it is not possible to say that the overall packaging of a product (‘get-up’ or ‘trade-dress’) can never be inherently distinctive, in most cases these matters will be devoid of distinctive character.® This is for the simple reason that average consumers do not treat the majority of packaging or get-up as indicating source, rather they treat it as comprising protective material which has decorative, attractive, or eye-catching features.“ In part, of course, this is a matter just of current social practice— consumers have for so long been invited to focus on the literature on packaging as indicating source that it is only rarely that the overall look of the get-up is taken as doing so. In Proctor & Gamble v. Registrar of Trade Marks, Robert Walker LJ confirmed the rejection by the Registrar of applications for registration of a three-dimensional bottle bearing a label for floor-cleaning products in Class 3. The hearing officer described the application as having three component parts, namely, the shape of the bottle, the pattern on the label, and the colours applied to both. Having concluded that none of the three components was individually distinctive, the hearing officer observed of the combined effect that: The shape appears in relation to the label exactly as the shape of any container for these goods would appear in relation to the label. The position of the label is precisely where one would expect it to be. Neither of these elements are [sic] any more distinctive together than 60 [1999] RPC 809, 819. 61 Re Dualit’s Trade Mark Application {1999} RPC 890. 62 R. Burrell, H. Beverley Smith, and A. Coleman, “Three Dimensional Trade Marks: Should the Directive be Reshaped?’ in N. Dawson and A. Firth, Trade Marks Retrospective: Perspective on Intellectual Property, Vol. vii (2000) 139, 151-6, 166—70 (defending a presumption against such distinctiveness on policy grounds).

63 According to Robert Walker LJ, ‘Get-up’ is ‘a convenient (though imprecise) expression for the characteristic style of a product which may be produced by the use of colouring, typography, materials, finishing

and all other elements—apart from the text itself—that go into modern commercial design.’ Proctor & Gamble v. Registrar of Trade Marks [1999] RPC 673, 676. 64 In New Zealand Lotteries Commission/TeieBingo R 37/98—3 (13 July 1998), para. 13, it was held that an excessively complex sign ‘which merely decorated the product’ lacked any capacity to indicate source or origin.

788

TRADE

MARKS

AND PASSING OFE

they are apart. Similarly, there is nothing distinctive about the fact that the devices indicating the sparklingly clean floor appear on the label. What remains is the arrangement of the colours red, yellow and green on the label and the appearance of these colours against the yellow and red of the container itself. I have already commented on the very small number of colours suitable for use on containers for these products. Given this small number of colours, I believe that this particular arrangement of them is not particularly novel and no less likely to be wanted by other traders than any other arrangement. The fact that alternative colour arrangements might be found does not assist.©

Affirming the Registry’s conclusion, Robert Walker LJ emphasized that in order to overcome

an objection based on section 3(1)(b) the applicant’s trade mark

must constitute ‘a visible sign or combination of signs which can by itself readily distinguish one trader’s product—in this case an ordinary, inexpensive household product—from that of another competing trader. Product A and Product B may be different in their outward appearance and packaging, but if the differences become apparent only on close examination and comparison, neither can be said to be distinctive.’ Here the combination was not distinctive but typical of the get-up of products used for cleaning different kitchen and bathroom surfaces. A similar approach to packaging can be seen in British Petroleum Co. plc/Oil pack large minale (3-D Mark)® where the Second Board of Appeal of the OHIM rejected an application to register a three-dimensional shape of an oil container. An important factor in the decision was that the sign was only marginally stylized and was devoid of any significant graphical peculiarities or additions. On this basis, the Board took the view that consumers would understand the mark as an oil container, noting that where a mark shows no elements beyond the technical or functional features of the product, then it lacks the capacity to attribute the product to a particular company. That is, it does not function to indicate the origin of the goods or services. The Board

also noted that the addition of arbitrary features would not be such to render the container distinctive. For this to occur, there must be something ‘conspicuously different about the shape that distinguishes it from the shape of other oil containers and results in it being regarded by consumers of such oil products and the like as serving primarily as an indication of origin.’®” The Second Board of Appeal added that just as word marks will be unregistrable where competitors might need to employ them to describe their goods or services, so ‘an undertaking may not generally be granted the exclusive right to the use of material containing utilitarian or functional features which its competitors and others need for their goods.’ Consequently where a sign comprises the shape of an everyday item like a bottle or container, the OHIM

6 Procter & Gamble v. Registrar of Trade Marks [1999] RPC 673, 680 per Robert Walker LJ. See also S. M. Jaleel’s Trade Mark Application [2000] RPC 471 (Appointed Person assessing shape of ‘Chubby’ bottle as ‘visually unsurprising’ and therefore lacking inherent distinctiveness).

6 R 60/98-2 [1999] ETMR 282.

67 Para. 24.

ABSOLUTE

GROUNDS

FOR

REFUSAL

789

demands the applicant show ‘a very high degree of distinctiveness’ to be entitled to

registration. However, this does not mean that such get-up will never be distinctive. Indeed, in Valigeria Roncato SpA’s Application, the OHIM held that a three-dimensional shape used as a tag with bags was inherently distinctive: the Board said that the question was whether the sign was capable of creating in the minds of consumers the necessary link between the products and a particular enterprise. It denied that the shape was nondistinctive merely because it had ornamental qualities. Moreover ‘it is unnecessary to hold the sign in question free for general use since it is not, under any circumstance, descriptive of the products or necessary for their functions.’ 3.6.6 Names and signatures Traditionally surnames have been considered to be non-distinctive and thus unregistrable.” In part the decision to exclude surnames was motivated by the inconvenience that the grant of a right would have upon other traders who shared the same name. The courts also stressed that third parties who made legitimate use of their names ought not to be forced to rely on a defence equivalent to that contained in section 11(2).”1 However, under the 1994 Act more emphasis is likely to be placed on the explanation that in the case of common

forenames or surnames, consumers

are

unable to assume that the name operates to indicate one particular supplier. In determining whether a surname is distinctive, the Registry and courts have taken into account how common the surname is.” (Here domestic and international tele-

phone directories and electoral rolls have proved useful resources.) In addition, the tribunals have also taken into account the types of goods or services for which registration was sought. In certain fields, such as with solicitors or coach companies, the

use of surnames is common and the Registry sees this as indicating that common surnames will not distinguish. Similar rules apply to forenames. In certain fields, such as hairdressers, cafés, beauty salons, and massage services, forenames are very commonly used: so CATH’s Or ALI’s for restaurant services, TONI’s or Guy’s for hairdressing services, would be unregistrable in the absence of acquired distinctiveness through use.’*> However, full personal 68 See also H. J. Heinz Co.’s Application/Bottle R 488/1999-2 (3 Aug. 2000), para. 25 (acknowledging that there is a limited supply of bottle shapes, having regard to size, packaging, storage, and other considerations). In Procter & Gamble’s Application/Green & White Wash Tablet R 718/1999-1

(20 June 2000), para. 21 (shape

and visual appearance cannot perform any sort of trade mark function if they are commonplace, banal, and ordinary).

69 R 164/98-1 [2000] ETMR 46, paras. 11-12.

70 Morcom et al., para. 5.40 ff.; Elvis Presley Trade Marks [1997] RPC 543, 558. The OHIM has not adopted the practice of objecting to surnames as being ‘devoid’: see Morcom et al., para. 5.47. 71 Cadbury Bros’s Appn. (1915) 32 RPC9, 12.

72 Fantastic Sam’s Telephone Directory, will not regard names 73 PAC 6/00, para.

Service Mark [1990] RPC 531, 532 (sam which appeared only 13 times in London not a ‘surname’). According to Practice Amendment Circular 6/00, para. 7 the Registry that appear less than 200 times as surnames. 17; Fantastic Sam’s Service Mark [1990] RPC 531.

790

TRADE

MARKS

AND

PASSING

OFF

names are more likely to be treated as distinctive, unless they are extremely common (such as JOHN SMITH).

One peculiarity should be noted here: a full name of a famous personality may well be devoid of distinctive character. In Elvis Presley Trade Mark,” the Court of Appeal refused to allow registration of ELvis and ELVIs PRESLEY for toiletries, perfumes, cosmetics, soaps. It had been argued by the applicants that as a result of changes in public awareness about character merchandising, that consumers seeing the name ELVIS would assume that the product to which it was attached was ‘genuine’. That is, it

would be assumed that the goods originated with Elvis’s estate or from someone with rights granted by the estate. Laddie J was not willing to accept that this was an accurate portrayal of how the general public thought about the use of the names of celebrities, and the Court of Appeal affirmed that view: people treat the name as part of the product which they are purchasing not as a feature that differentiates the goods of one trader from those of another. For consumers, the goods were memorabilia or mementos of which the name was an essential component, rather than being a differ-

ent class of consumable commercial goods which people purchased because they came from a specific trader.’° In those cases where a name itself lacks distinctiveness, registration may nevertheless be obtained where registration is of the name in conjunction with a device or is ‘represented in a special or particular manner’ so that it is ‘out of the common, so as to strike the eye as peculiar, and thus render the mark distinctive.’ Perhaps the most obvious example of this is where the name takes the form of a person’s signature. Signatures were specifically treated as registrable under the 1938 Act because they were seen as ‘a substantially unique and frequently highly distorted way of writing the author’s name. They are in a sense a private graphic tied to one person.’ Under the 1994 Act a ‘signature’ may be registrable even if it is not written in a distinctive graphic style—a simple cursive rendition of Elvis’s signature ‘Elvis A. Presley’ would probably be distinctive;”” and perhaps even if it is not authentic.” 3.6.7 Portraits and photographs

In the same way that a signature is often treated as one of the most distinctive embodiments of an individual’s personality, so too it is said that a person’s face captures their individuality. In Rowland v. Mitchell,” the Court of Appeal rejected the 74 Elvis Presley Trade Marks [1999] RPC 567; [1997] RPC 543, 558. See also Corsair Toiletries’s Appn.

(Opposition by Jane Austen Memorial Trust) [1999] ETMR

1038 (JANE AUSTEN

lacked distinctiveness for

toiletries).

75 [1999] RPC 567, 585. Morcom et al. criticize the decision and emphasize it was decided under the 1938 Act and may not apply under the 1994 Act. 76 In re Fanfold (1928) 45 RPC 325, 333.

77 Elvis Presley Trade Marks [1999] RPC 567. Cf. Barry Artist TM [1978] RPC 703, 711 (illegible signatures

registrable).

78 Elvis Presley Trade Marks [1999] RPC 567, 586 (though note that it was presumed to be authentic at 576;

and was refused on relative grounds, 587). 79 (1897) 14 RPC 37.

ABSOLUTE

GROUNDS

FOR

REFUSAL

791

submission that a photograph of a human being could not be distinctive. Russell CJ said that ‘it is difficult to suppose anything could be more distinctive than the portraiture of the man who was professing to be the manufacturer of that particular article.’ However, if a person has become closely associated with an article or service, a portrait of the person may not be registrable, on the basis that it has become generic.*? And, presumably, if the person is a celebrity, the picture loses its distinguishing quality.

3.7

DESCRIPTIVE

MARKS

The second category of exclusion from registration relates to what may be called ‘descriptive marks’. More specifically, section 3(1)(c)/Article 7(1)(c) CTMR excludes

from registration trade marks which consist exclusively of signs or indications which may serve, in trade, to designate the (i) kind, quality, quantity, (ii) intended purpose, (iii) value, (iv) geographical origin, (v) the time of production of the goods or of the rendering of the service, (vi) or other characteristics of the goods or service. Before looking at each of these subcategories in more detail, it is necessary to make a few general comments. While a number of different types of marks are excluded from protection by section 3(1)(c), they all consist exclusively of signs that characterize or describe goods or

services. Although, as with most of the absolute grounds of refusal, the exclusion of marks which characterize goods or services is in part motivated by a desire to protect traders,*' the primary reason why the various marks are excluded, is that they would not of themselves be taken or understood by consumers to indicate the origin of the goods. As Lord Simonds explained, ‘the more apt a word is to describe the goods of a manufacturer, the less apt it is to distinguish them from the goods of others.’* 3.7.1 Exclusively Trade marks are only excluded from registration by section 3(1)(c), if they consist exclusively of signs which characterize the goods and services. This gives rise to the question: what is meant by ‘exclusively’? One possible reading of ‘exclusively’ is that it means that to be excluded the whole of the mark must be descriptive. The converse of this is that if it can be shown that part of a mark is non-descriptive, then it will fall outside the remit of the section, as long as that part is not de minimis.’ Thus, marks that are made up of descriptive and

80 Re Anderson LR (1884) 26 Ch D 409, Chitty J (Liebig, the name ofthe inventor of amethod of extracting meat extract, was generic and so was portrait of Baron Liebig). 81 Procter & Gamble/Naturals R 39/98—2 [1999] ETMR 425, para. 14; Joseph Crosfield (1909) 26 RPC 837,

854 (analogy to enclosure of the great commons of the English language); In re Eastman Photographic

Material Co.’s Appn. (1898) 15 RPC 476, 484. 82 Lord Simonds, Yorkshire Copper Work’s Trade Mark Application (1954) RPC 150, approved by Laddie J in Elvis Presley Trade Marks [1997] RPC 543, 552.

83 See the earlier discussion of ‘equivalents’ at pp. 780-2.

792

TRADE

MARKS

AND

PASSING

OFF

non-descriptive matter may be protected. For example, puBositK would not be treated as being ‘exclusively’ descriptive of silk goods because while s1xx is descriptive, DuBO is invented.** However, a mark would not become registrable by the mere addition of trivialities, such as the addition of the word ‘rHr’ to the geographical designation GLENLIVvET or the description KENNEL CLUB.®° Ultimately, in order to fall outside the scope of the section, it is necessary for there to be an additional element

that could be regarded as fanciful, imaginative, unusual, or peculiar.®* In effect, there must be some part of the mark (above and beyond the descriptive parts) that is ‘distinctive’. Here much will depend upon how descriptive the name is, and how elaborate or inventive the depiction is. A second way that ‘exclusively’ can be understood is as indicating that to be excluded the mark must be wholly descriptive. The upshot of this is that tribunals allow suggestive or allusive marks, that is, ones that are intended to arouse interest in and curiosity for the goods or services by giving the consumer a hint about the goods without describing them. Following this logic, the Board of Appeal of the OHIM held that NETMEETING was registrable for computer programs that provided multi-party multimedia communications over computer networks. The reason for this was that despite a skilful but covert allusion to its purpose, the sign was not wholly distinctive but retained a minimum distinctive character.8’ Thus, a descriptive sign may be registered ‘whenever it is applied to unrelated products, used in a fanciful way, affected by some alteration considered sufficiently distinctive or combined with one or more descriptive signs or indications to result in a new single word, as a whole, without a univocal meaning or understandable reference to specific goods or

services,°°

3.7.2 Multiple meanings

The requirement of ‘exclusivity’ does not mean that a sign is excluded only if all possible meanings of a sign fall within the exclusion. Consider, for example, a word with two meanings such as swaLLow (referring to a bird and a throat action). In assessing whether swaLLow would be registrable for alcoholic beverages, the tribunal should not be simply content to find that there is one signification—that of a bird— which is not excluded. If that were the case, then the existence of a single obscure meaning would render the mark not exclusively descriptive (and hence registrable).®° Rather, the tribunal should be interested in how consumers would understand the

84 Hallgarten (1949) 66 RPC 105, 106. 85 The Glenlivet [1993] RPC 461; James/The Kennel Club R 30/98—2 (17 Sept. 1998).

8° Procter & Gamble/Baby-dry R 35/98-1 [1999] ETMR 240, para. 17. 87 Microsoft/Netmeeting R 26/98-3 [1999] ETMR 386. See also The Oilgear Co./Oilgear R 36/98-2 [1999]

ETMR 291, para. suggestive).

10; Monsanto/Enviro-Chem

R 87/981

[1999]

ETMR

845, para.

14 (Enviro-Chem

88 Microsoft/Netmeeting R 26/98-3 [1999] ETMR 386. 89 Procter & Gamble/Naturals R 39/98-2 [1999] ETMR 425, para. 16; Procter & Gamble/Complete R 116/ 98-3 [1999] ETMR

664.

ABSOLUTE

GROUNDS

FOR

REFUSAL

793

word—in this case swaLLow—when used in relation to alcoholic beverages.” A mark is unregistrable if an average consumer would understand the sign immediately and without further thought as bearing a single meaning that describes the goods or services.” Applying this reasoning to a pictorial mark comprising a chart or graph, the Board of Appeal held that this would not immediately be understood as indicating business or advisory services, so the mark was registrable.” 3.7.3 Excluded significations With these general points in mind, we now turn to look at the categories of descriptive marks excluded by section 3(1)(c).

(i) Kind, quality, or those which consist quantity of goods explanatory. Under

quantity. The first group of marks excluded from registrability are exclusively of signs which serve to designate the ‘kind, quality, or and services. For the most part, these provisions are selfthe 1994 Act, TrEaT was considered laudatory, and thus descrip-

tive of desert sauces,’> FROOT LOOPS was treated as descriptive of cereals and the Board

of Appeal of the OHIM held that LastING PERFORMANCE for perfumes was descriptive because it referred to the characteristic of the goods (namely, its longevity). By contrast, when the same term was applied to soap, it was said not to be descriptive because continued cleanliness depended on the actions of the user after washing.” (Why similar logic would not apply to perfumes is unclear.) Likewise, NUCLEUs for graphic design services was held to be registrable because the word had no direct reference to the quality of the service.” (it) Intended purpose. A mark which describes what the product does, suggests what the consumer is to do with the product, or outlines what happens when the product is consumed will not be registrable. Consequently, a phrase such as DOWN THE HATCH would not be registrable for alcoholic beverages”® because competitors might wish to use the phrase when advertising their own products. Equally, PERFECT BROW was held unregistrable for cosmetics because it was descriptive of the intended purpose of those products, namely, ‘to render flawless the eyebrows, the eyelashes and the forehead.” A word which designates the intended purpose of the goods or services will be 9 tion sign 91

Acclaim Entertainment/Super Soccer League R 372/2000-1 (15 Sept. 2000) (emphasizing that the quesis how the typical consumer of the goods or services in question would react when they encounter the with some awareness of the context in which it is to be used). Procter & Gamble/Complete R 116/98-3 [1999] ETMR 664, para. 16; Richardson-Vicks/Natural Beauty R

40/98-3 [1999] ETMR 425, para. 16. Telefon & Buch v. OHIM T-357/99 (CFI, 14 June 2001), para. 31.

92 93 94 95 96 when

Saskeld’s Application/Graph R 535/1999-2 (17 May 2000). British Sugar v. James Robertson & Sons [1996] RPC 281. Procter & Gamble/Lasting Performance R 34/98-3 (27 July 1998), paras. 13 and 15. Nucleus Trade Mark [1998] RPC 233. Chin Chin (1965] RPC 136 (phrase CHIN CHIN an Anglo-Chinese phrase of salutation used by persons consuming alcoholic beverages was not a reference to the quality or character of the product but was

nevertheless not distinctive).

97 Procter & Gamble’s Application/Perfect Brow R 110/1998—3 [2000] ETMR 174.

794

TRADE

MARKS

AND

PASSING

OFF

caught by section 3(1)(c) even if the goods or services can also be used for other

purposes. Thus in a case at the OHIM, roopsaver was held to be descriptive of a vacuum-packing machine for preserving food even though the machine could also be used for safely storing clothes.** In looking at the intended purpose, the court considers the matter from the point of view of the average consumer, rather than taking into account more marginal viewpoints. Consequently, oompuHiEs, a term which was said to be suggestive of sex appeal, was registrable for shoes despite the fact that some ‘abnormal and morbid people get a peculiar excitement looking at women’s shoes’.

(1) Value. Trade marks which consist exclusively of signs that refer to the value of the goods or services will not be registrable. The reason for this is that consumers are unlikely to treat references to value as indications of origin. The provision also ensures that other traders are free to use common words and expression to refer to things such as price and value. On this basis, an application to register BUDGET for car rental services was held to indicate the value of the service and thus to be unregistrable.! In contrast, POUND PUPPIES was registrable on the basis that the words had ‘a catchy sound to them and are not by themselves the natural way that traders without an improper motive would describe toy puppies costing a pound.”!°!

(iv) Geographical origin. Trade mark law has long been reluctant to grant protection to signs that consist of geographical names and places." Lord Simonds LC summed up the traditional explanation for non-registration of geographical signs when he said, ‘[jJust as a manufacturer is not entitled to a monopoly of a laudatory or descriptive epithet, so he is not to claim for his own a territory, whether country, county, or town, which may in the future if it is not now, be the seat of manufacture of goods similar to his own.” In the past, the prohibition on protecting names of geographical origin has meant that references to continents, countries, cities, towns, rivers, and occasionally even streets have been refused.

While many marks that consist of geographical names have been refused registration, it should not be assumed that there is a blanket prohibition on the registration of all geographical names. As Rigby LJ noted over a century ago, ‘a word does not become a geographical name simply because some place upon earth’s surface has been called by it’! In Windsurfing Chiemsee the question before the ECJ was whether the word CHIEMSEE, the largest lake in Bavaria, could be a trade mark for sports clothing or whether such a mark fell within Article 3(1)(c) of the Directive.!%

The ECJ said that the tribunal must assess whether a geographical name designates a 8 Tilia International/FoodsaverR57/98-1 [1999] ETMR 19], para. 18. °° La Marquise’s Application (1947) 64 RPC 27. 100 Budget Service Mark [1991] RPC 9. 101 Pound Puppies Trade Mark [1988] RPC 530 (the ‘natural’ way of describing such puppies was said to be ‘Puppies—One Pound’ or ‘A Pound for a puppy’). 102 Morcom et al., para. 5.57—5.64.

103 Yorkshire Copper Work’s Trade Mark Application (1954) 71 RPC 150, 154. 104 Magnolia Metal’s Trade Mark [1897] 2 Ch 371, 14 RPC 621, 627.

105 [1999] ECR 1-2779.

ABSOLUTE

GROUNDS

FOR

REFUSAL

795

place which is currently associated in the mind of the relevant class of persons with the category of goods concerned, or whether it is reasonable to assume that such an association may be established in the future.'°° As the ECJ explained, the exclusion does not in principle preclude the registration of geographical names which are unknown to the relevant class of persons—or at least unknown as the designation of a geographical location—or of names in respect of which, because of the type of place they designate (say, a mountain or lake), such persons are unlikely to believe that the category of goods concerned

originates there.'”” If there is an established connection between the place and products of the sort in question, then registration will normally be refused. In the Windsurfing Chiemsee case, the EC] observed that the connection was not necessarily confined to a belief that the goods were manufactured in a particular place but ‘might depend on other ties, such as the fact that the goods were conceived and designed in the geographical location concerned.’!** For example, an application to register savILE ROW for spectacle frames was refused because of the proximity that spectacles had to the goods for which Savile Row in London is famous (namely, tailors’ services), both being fashion items.' One key factor in deciding whether a sign of geographical origin should be excluded is the size of the place, since this affects how consumers are likely to understand the sign (and, in turn, whether other traders are likely to want to use it).'!° The larger the place, the more likely it is that another trader would wish to use the name. Hence the reluctance to register EUROLAMB for meat'”' but the willingness to register MAGNOLIA (a town in the USA) for metal products, or FARAH (a stream in

Afghanistan) for clothes.'! Where a connection exists between place and products of the sort in issue, a realistic assessment should be made of the likelihood of other traders coming to trade in the locality. Thus, rHE GLENLIVET was deemed to be registrable for water on the basis that there were many other places where water bottlers could operate.'!? In contrast, where

there is no connection,

such as with TENERIFFE

for boiler plates,

MONTE ROSA for cigarettes, and SWEDISH FORMULA for cosmetics the signs will be registrable.''* Even the names of sizeable places may be registrable if there is no 106 [1999] ECR I-2779, 2824-5 (paras. 29-31).

107 [1999] ECR I-2779, 2825 (para. 33). 108 [1999] ECR I-2779, 2826 (para. 36). 109 Savile Row Trade Mark [1998] RPC 155. 110 According to the Practice Amendment Circular 7/99 the UK Registry has certain guidelines: a place in the UK with a population of under 10,000 is not usually treated as an indication of geographic origin; nor is a

place in a European country of under 100,000. 111 [1997] RPC 279. 112 Magnolia Metal’s Trade Mark [1897] 2 Ch 371, 14 RPC 621, 627; Farah Trade Mark [1978] FSR 234 (High Court of Ireland). 113. The Glenlivet Trade Mark [1993] RPC 461. Cf. Lord Simonds rather stricter formulation in Yorkshire

Copper Work’s Trade Mark Application [1954] RPC 150, 154 to the effect that ‘a geographical name can only be inherently adapted to distinguish the goods of Awhen you can predicate of it that it is such a name as it would never occur to B to use in respect of similar goods.’ 114 Crosfield (1909) 26 RPC 837, 856; Procter & Gamble/Swedish Formula R 85/98-2 [1999] ETMR 559.

796

TRADE

MARKS

AND

PASSING

OFE

realistic connection with the goods concerned: an example that has often been given is that of NorTH PoLe for bananas.'!!>

(v) The time ofproduction of the goods or the time of rendering of the services. While the precise scope of this exclusion is unclear, it seems that it might operate to prevent registration of marks meaning centuries,!'® decades (THE NINETIES),!!” years (AD 2000), seasons (AU PRINTEMPS DE PARIS for articles of clothing),!!® public holidays (HAPPY CHRISTMAS), and days of the week (such as suNpay for a newspaper). (vi) Other characteristics. The final part of section 3(1)(c) excludes signs which

exclusively serve to designate ‘other characteristics’ of the goods or service. While

the other subcategories of section 3(1)(c) are very broad, it seems that this residual

part of the section might exclude descriptions of flavour, shape, colour,'!? or packaging.

3.8

CUSTOMARY

Section

AND

3(1)(d)/Article

GENERIC

7(1)(d)

CTMR

MARKS

provide that ‘trade marks which

consist

exclusively of signs or indications which have become customary in the current language or in the bona fide and established practices of the trade’ shall not be registrable.'*® While the scope of the section has yet to be fully explored,!”! it seems that ‘exclusively’ will have a similar meaning here as it has in section 3(1)(c). It also seems that the section will have the greatest impact in relation to generic marks and common pictorial devices. It is important to note that while laudatory words, such as ‘best’, ‘perfect’, ‘supreme’, or ‘superfine’ are excluded from registrability in the UK on the basis of their non-distinctive character, at the OHIM they are excluded under Article 7(1)(d) on the basis that they are customary in the trade. 3.8.1 Generic marks

A mark, particularly a name mark, may be unregistrable because it designates a genus or type of product rather than a particular product originating from a particular source. In such circumstances it is usually said that the mark has become ‘generic’. Well-known examples include LINOLEUM, YO-YO, ASPIRIN, and CELLOPHANE. One of 'S British Sugar v. James Robertson & Sons [1996] RPC 281; Yorkshire Copper Work’s Trade Mark Applica-

t~ion (1954) RPC 150, 154, 156.

:

'© But cf. Century 21 Real Estate Corp.’s Appn. R 135/1998-2 [1999] ETMR 780 (SIECLE 21 was held to be

inherently distinctive for estate agent services).

'7 Network 90 [1984] 549, 555. 18 Au Printemps [1990] RPC 518. '9 Black N’ Red Trade Mark [1993] RPC 25, unregistrable for printed matter. '20 The terms of this category are not dissimilar to those of s. 46 on revocation (on which see below at pp. 854-7), though the differences are worthy of note. This ground covers not merely names but all marks, and customary in the ‘current language’ (which may not be confined to trade). Customary usage must relate to usage in the UK: Case 0/348/99 reported in (2000) CIPAJ 34. 121 See Re Merz & Krell Case 517/99 (Advocate-General Colomer’s Opinion, 18 Jan. 2001).

ABSOLUTE

GROUNDS

FOR

REFUSAL

797

the features of a generic mark is that it is incapable of distinguishing the goods or services of different traders. Where a word comes to describe a class of products, it can no longer be relied upon to separate the products in the class from each other. This

can be seen, for example, in Re Gramophone Company’s Application,'?? where the Gramophone Company’s application to register GRAMOPHONE as a mark for what were then known as ‘“disc-talking machines’ (i.e. record players) was rejected. The reason for this was that from the public’s (but not the trade’s)!** perspective, GRAMOPHONE was the general term used to describe ‘disc-talking machines’, rather than the

name of a particular machine made by a particular manufacturer. This was shown by the fact that GRAMOPHONE appeared in dictionaries, newspapers, patent specifications, and court decisions as a general term for “disc-talking machines’. Indeed, even the applicants used the word to describe the goods for which they sought coverage. 3.8.2 Customary pictures

Where a picture is made up of a conventional representation of the category or type of product, or a scene widely associated with its production, it is unlikely to be unregistrable. Thus, in a case under the 1938 Act, a mark for dairy products which was made up of a pastoral landscape scene was unregistrable.'** Other examples which would almost certainly be unregistrable under the 1994 Act include a picture of grapes and vine leaves for wine, flowers for perfume, and cats and dogs for pet food.

3.9

USED

MARKS:

ACQUIRED

So far in our discussions

DISTINCTIVENESS

of section 3(1)(b)—(d), we have been concerned

with

whether marks are inherently registrable. That is, we have been looking at marks in their ‘natural’ or unused state. In this section we turn to look at the ways in which a mark which may be inherently unregistrable can become registrable through use. As we mentioned earlier, while a mark may inherently be unregistrable because it is non-distinctive, descriptive, or generic, it is possible for it become registrable through use. As the proviso to section 3 under the 1994 Act states ‘a trade mark shall not be refused registration . . . if, before the date of application for registration, it has in fact acquired a distinctive character as a result of the use made of it.’ Similarly, section 47(1) provides that a mark which is wrongly entered into the Register (because it lacks inherent distinctiveness) shall not be declared invalid where the mark has acquired distinctiveness after registration. The result of these provisions is that even if a mark is 122 [1910] 2 Ch 423. 123 The trade considered the word to be the name of the article when made by the particular manufacturer (other manufacturers were using marks such as DULCEPHONE and CORONAPHONE). The difference in the understandings held by the public and the trade was largely explicable by the aggressive manner in which the company had asserted its rights against other traders. 124 Union Laitiere Normande’s Trade Mark [1993] RPC 87. In contrast, a stylized picture of a tooth was held to be registrable for pharmaceuticals: Fertin A/S’s Application R 382/1999-1 [2000] ETMR 652; and in James Trade Mark (1886) 3 RPC 340, 396, Lindley LJ said that a picture ofapig could be a distinctive mark for

lard or something made out of pig.

798

TRADE MARKS AND PASSING OFF

inherently lacking indistinctiveness, it is now possible to register a mark if it does in fact become distinctive.!° Consequently, the only question that needs to be asked where a mark has been used is: has the mark in fact acquired a distinctive character?!”° The inquiry in relation to used marks is exclusively concerned with customer perception: the needs of other traders are irrelevant.'”’ As a result, consumer recognition becomes the litmus test for

whether a mark is registrable.!** The primary goal is to minimize consumer confusion by preventing other traders from using a similar mark. To succeed in a claim that a mark has become registrable through use, an applicant must be able to show that irrespective of how the mark was perceived in its natural state, the mark now operates as a trade mark. That is, an applicant must be able to show that the primary significance of the word or sign indicates a source rather than, for example, merely describing or praising the product. It must have acquired ‘secondary meaning’. In Windsurfing,’ the ECJ explained that an unregistrable name (in that case a geographical one) ‘may be registered as a trade mark if, following the use which has been made of it, it has come to identify the product in respect of which registration is applied for as originating from a particular undertaking and thus to distinguish that product from goods of other undertakings.’ In effect, the trader must be able to show that they have appropriated the word and given it a new meaning. In this sense all that the law is doing is recognizing what has already happened in practice.

3.9.1 Displacement of the primary meaning The various authorities make it clear that to be registrable a sign must have become distinctive, but they have left unclear the precise relationship between meanings that must have emerged. At the most extreme some authorities seem to suggest that the new trade mark meaning must have completely replaced the original meaning. This seems to be what Jacob J required in Philips v. Remington’? when he said that ‘unless the word, when used for the goods concerned, has in practice displaced its ordinary meaning, it will not properly denote the trader’s goods and none other.’!2! However, 25 These provisions are to be strictly construed: Dr Robert Winzer Pharma’s Application to Cancel the Trade Mark of Alcon Pharmaceuticals, Case C 90134/1 [2000] ETMR 217; PC Connection Inc’s Appn. R 194/ 1998-3 [2000] ETMR 362. However, certain marks may never be registrable under the 1994 Act because they fail the test of capacity to distinguish: see above at pp. 769-73. '26 Note that it is not necessary to know the identity of the source, only that the product or service comes from a single source. This is sometimes termed the ‘anonymous source doctrine’. '27 Windsurfing Chiemsee Produktions v. Attenberger, C-108 and 109/97 [1999] ECR I-2779, I-2829 (para. 48). The competitive needs of traders are accommodated, if at all, through the few exclusions as regards shape marks and the defences to infringement contained in TMA s. 11. 128 The ability for marks to become registrable through use which is provided for under the 1994 Act is in marked contrast to the position under the 1938 Act, where it was held that certain marks could never become registrable irrespective of how distinctive they were ‘in fact’: York TM [1984] RPC 231.

129 [1999] ECR 1-2779, I-2829. 130 [1998] RPC 283.

131 Having said this a distinctive mark may contain other messages, such as suggestions or allusions as to quality or origin. As long as these are not deceptive, and thus contrary to TMA s. 3(3)(b), registration may proceed. See below at pp. 805-6.

ABSOLUTE

GROUNDS

FOR REFUSAL

799

to require that there be nothing left of the original meaning in any circumstances would be going too far (and, indeed would be inconsistent with the idea that allusive marks will be registrable as long as the immediate impression given to consumers is not exclusively descriptive). Other authorities acknowledge that a sign can have become distinctive even though the ‘primary meaning’ still exists. For example, in Windsurfing Chiemsee, the ECJ explained that where a geographical name has come to identify the product as originating from a particular undertaking and thus to distinguish that product from goods of other undertakings, the geographical designation ‘has gained a new significance and its connotation, no longer purely descriptive, justifies its registration as a trade mark.’!** The critical displacement of meaning is only that which operates when the sign is used with the particular goods or services and the question is whether the average consumer of the product immediately understands the sign as referring to source. In Bach Flower Remedies,'** the Court of Appeal explained that “distinctive character’ would not have been acquired where consumers remained ambiguous.!*4 3.9.2 Extent of recognition It is clear that for an unregistrable mark to become registrable, it is necessary for consumers to think about the sign as an indication of origin. One question that arises is how widespread must the consumer recognition be? In Windsurfing, the ECJ said that the question is whether ‘the relevant class of persons, or at least a significant proportion thereof, identify goods as originating from a particular undertaking

because of the trade mark.'* The ECJ made it clear that it is not possible to say whether a mark is distinctive by reference to predetermined percentages. This is because the evidence that is needed to support a claim that a mark has become

registrable through use (or where wrongly registered that it deserves to stay on the register) depends on how descriptive (etc.) the mark is in its ‘natural’ state. Thus, if the objections to the word are not strong, then it is likely that less evidence of acquired distinctiveness will be required. However, the more descriptive a mark is, the more convincing must be the evidence of acquired distinctiveness. In Windsurfing, the ECJ said that where a geographical name is very well known, it can acquire distinctive character only if there has been longstanding and intensive use of the mark by the undertaking applying for registration.'*° It seems that the way this question will be answered will vary depending on the reason why the mark was unregistrable in its ‘natural state’. In Unilever’s (Striped Toothpaste No. 2) Trade Marks,'*’ Hoffmann J considered whether images of 132 [1999] ECR I-2779, 2829 (para. 47).

133 [2000] RPC 513. 134 See also Ty Nant Spring Water’s Application R 5/1999-3 [1999] ETMR 974, 980, para. 26 (sign must have an unequivocal, certain, and definitive meaning in the minds of the relevant consumers). 135 [1999] ECR I-2779, 2830 (para. 52). 136 [1999] ECR I-2779, I-2830 (para. 50). 137 [1987] RPC 13.

800

TRADE

MARKS

AND

PASSING

OFF

red-and-white striped toothpaste, which were inherently non-registrable, had become distinctive through use.!* In evidence it was shown that the applicant had produced the striped toothpaste since 1960 and that over that period had mounted an extensive advertising campaign. Unilever also produced survey evidence which showed that 50 per cent of the sample population associated the stripes with siGNaL toothpaste. Hoffmann J indicated that this was not sufficient in itself to render the images registrable. The reason for this was that the evidence of association did not explain how the public would react ‘if a product with a similar feature came upon the market’. However, the judge said that ‘if the evidence can be treated as showing that for half the population the marks were distinctive of s1GNaL in the sense that they served to distinguish the s1cNax brand from other goods, that should be enough.’!°? While it was suggested in Unilever that 50 per cent recognition was sufficient for an inherently non-distinctive mark to become registrable through use, it seems that in other circumstances that this may not be enough. For example, in British Sugar v.

Robertson,'*° Jacob J had to decide whether the term TREAT, which was by its nature

laudatory, had become registrable through use. Jacob J explained that the question was whether the sign had acquired a sufficiently distinctive character was a question of degree. In particular he said that with laudatory, descriptive, or common words, it was

necessary to produce evidence of compelling rather than extensive use. More specific-

ally, Jacob J said that for a mark that was inherently non-distinctive to be registrable, it must have come to be recognized by a substantial majority of people. For Jacob J, if 90 per cent of people took the word to be a trade mark this would have been enough to say it had a ‘distinctive character’. However, in this case, British Sugar’s claim that 60 per cent of the public recognized rrear as a designation of source was not sufficient. 3.9.3 The relevant consumers

On general principles, distinctiveness needs to be acquired across the full range of goods or services for which registration is sought, so the fact that a descriptive sign acquires distinctiveness for some goods, does not lead to the conclusion that it is registrable for other goods. This principle may cause particular problems where a mark is used in relation to goods or services targeted at a niche market, because the sign might come to be known by an elite, but not by the mass of consumers of goods of the relevant type. For example in Salvatore Ferragamo Italia SpA,'* the applicant sought registration of a bow which it had used on its shoes for the previous twenty years. While there was plenty of evidence of use, and of advertising in elite magazines , it was by no means evident that ordinary purchasers of shoes would have been familiar with the mark. It would, however, be at odds with the aims of trade mark law to have confined the applicant’s specification to ‘luxury’ shoes, since clearly one of aims of giving protection would be to allow a proprietor to prevent others using the 198 While not exactly clear, it seems that this was because the mark was non-distinct ive. 1 AV1987) REG. 215

140 [1996] RPC 281. 141

R 254/1999-]

(14 Apr. 2000).

ABSOLUTE

GROUNDS

FOR

REFUSAL

801

sign (here the bow) on cheap versions of the product. As it was, the OHIM held that the mark had acquired distinctiveness, likening it to marks such as ROLEX and ROLLSroyce. The implication seems to be that the Board thought the bow had in fact become familiar not just to the elite purchasers of luxury shoes, but the broader public. As such, the decision leaves unclear the trickier position where evidence shows the mark is known only to the elite customers. Where an application for a Community trade mark is based on acquired distinctiveness, it is necessary to demonstrate distinctiveness in all relevant states where the mark is inherently non-distinctive. In Ford Motor’s Application/Options,'” the applicant sought to register options for (inter alia) insurance services. When the examiner objected that the sign was devoid of distinctive character in French and English, the applicant filed evidence of use in a number of countries, including the United Kingdom, but not France. The applicant asserted that acquired distinctiveness in the United Kingdom was sufficient to establish distinctiveness in a substantial part of the European Community, and that was all that was required under Article 7(3) of the CTMR. However, the Court of First Instance, affirming the opinion of the OHIM

refusing registration, held that in order to be accepted for registration a sign must possess distinctive character throughout the Community, and since the mark lacked distinctiveness in France, it was not registrable as a Community mark.!*° 3.9.4 Types of supporting evidence A number of different types of evidence may be used to support a claim for registrability through use. In Windsurfing Chiemsee,'** the ECJ listed the following considerations: the market share held by the mark; how intensive, geographically widespread and longstanding use of the mark has been; the amount invested by the undertaking in promoting the mark; the proportion of the relevant class of persons who, because of the mark, identify goods as originating from a particular undertaking; and statements from chambers of commerce and industry or other trade and professional associations.

(1) Evidence of use. A tribunal may be happy to infer distinctive character from evidence of the length of time the product has been on the market,'*° the volume of the goods marketed, or the extent of services provided.'*° Such evidence might be supplied by way of statutory declarations. Typically, examples of uses on packaging, marketing, and advertising, as well as details of expenditure will also be submitted. In order for a mark to become registrable through use, it is necessary to show that the public has come to think of the sign as designating origin. While there are a

142 T_-91/99 [2000] 2 CMLR 276. 143 T_91/99 [2000] 2 CMLR 276, 281 (para. 24). 144 [1999] ECR I-2779 I-2830 (para. 51). ‘45 Twenty years supported a finding ofdistinctiveness in Salvatore Ferragamo Italia SpA R 254/1999-1 (14 Apr. 2000); whereas six months was not enough in Re Dualit [1999] RPC 890, 898.

146 Pound Puppies [1988] RPC 530, 533.

802

TRADE

MARKS

AND

PASSING

OFF

number of ways by which this transformation can come about, there are three types of use that remain problematic. These are where the sign is used as an advertising slogan rather than as a trade mark, where the use is decorative, and where the use is in

combination with a dominant mark.

(11) Use as an advertising slogan. Where a sign is used as an advertising slogan, it is unlikely that this will transform an inherently unregistrable mark into one that is registrable. For example, in Have a Break Trade Mark,” an application by Rowntree Mackintosh to register HAVE A BREAK for chocolate biscuits was refused. This was despite the fact that the slogan had been used since 1957 in advertising and that survey evidence indicated a high degree of association between HAVE A BREAK and the products which the mark appeared on—xir Kats. Whitford J said that the mark in suit could not be accepted as a mark because the words were primarily used to advertise KIT Kats, rather than designate the origin of the goods. As such, Whitford J found that the use of the words, which were in their natural state non-distinctive, had

not made them distinctive. In contrast, in I CAN’T BELIEVE IT’s yocuRtT"® an application for 1 CAN’T BELIEVE IT’s yocurt for frozen yogurt products was successful. Jacob QC explained:

At one extreme a phrase may be no more than an exhortation to buy; a phrase used purely in an advertising sense and not in a trade mark sense at all .. . At the other extreme a phrase may be used as the trader’s name for his goods in which case it will probably be a trade mark, even if of an unusual kind. In between there may be phrases which serve both functions— these will probably be trade marks, but it may be necessary to show by evidence the branding function in addition to being an advertising slogan.!”?

(111) Decorative use. Where a name or image is primarily used for ornamenta l or

decorative purposes, it is unlikely that this will be sufficient to transform an inherently

unregistrable mark into a registrable one. This can be seen, for example, in Elvis

Presley Trade Marks:'”° a decision which has important ramifications for character and personality merchandising. In this case it was held that longstanding use of various ELVIS marks on soap products did not render them distinctive. As Laddie J explained, the names were understood not to indicate source but to refer to the superstar.

When a cup is offered for sale bearing the legend ‘Elvis Presley/1935-1977° the use of the musician’s name does not perform the function of enabling a customer to distinguis h that cup as a cup emanating from Enterprises from other memorabilia from other suppliers. It is not an indication of trade origin at all. (tv) Use in combination with other marks. It is much easier to establish distincti veness

through use where the mark is either the only mark, or is the most prominent mark adjoining the product or associated with the services. The reason for this is that if

there are a number

of marks that potentially identify source, it becomes

147 [1993] RPC 217. 149 [1992] RPC 533, 537.

148 [1992] RPC 533. '90 [1997] RPC 543 especially at 555.

more

ABSOLUTE

GROUNDS

FOR

REFUSAL

803

difficult to establish which amongst them operates as a trade mark. This is especially the case where the application is for an exotic mark such as shape or smell, which the public might not normally think of as indicating source. In Phillips v. Remington.'*! the longstanding use of the three-headed rotary shaver did not establish the shape as a distinctive trade mark. This was because the shaver was almost always marketed as the PHILISHAVE, So that it was this feature and not the shape of the three-headed shaver that was perceived as indicating source. Jacob J consequently referred to it as a ‘limping mark’ that required the crutch of a stronger primary mark.!** Similarly, in Caterham Car Sales & Coachworks Application,'** the OHIM refused to register the numeral ‘7’ for two-seater sports cars, despite evidence of lengthy use, because the use was usually accompanied by the sign Lorus or CATERHAM, and so conveyed the message: ‘This is one of the cars offered by the Company’ rather than functioning as a trade mark. (v) Advertising expenditure. Although the ECJ specifically stated that tribunals may take account of the amount invested by the undertaking in promoting the mark, British courts have been more sceptical as to the value of matters such as advertising expenditure or evidence of sales success as indicators of acquired distinctiveness. This is because evidence of use will not inevitably lead to a finding of distinctiveness through use. As Jacob J said in British Sugar v. Robertson,'** it is not the extent of promotional efforts so much as the effect on consumers that is crucial. Consequently, evidence that the word Treat had been used for five years did not, on its own, demonstrate that the mark had become a badge of trade origin. (vi) Evidence of the trade. Moreover, although the ECJ also refers to the relevance of

‘statements from chambers of commerce and industry or other trade and professional associations’, UK courts have treated these as only of marginal significance.'*> The reason for this is that the relevant class of persons is not trade buyers but the average customer of the product.'*° (vit) Consumer surveys. Since the inquiry is focused upon consumer attitudes to the sign, direct evidence from consumers and consumer surveys will most likely prove to be of value. The ECJ has stated that in this context ‘Community law does not preclude !51 Philips Electronics NV v. Remington Consumer Products {1998] RPC 283; [1999] RPC 809; Wickes ple’s Trade Mark Application [1998] RPC 698 (squarish shape of a book). See R. Burrell, H. Beverley Smith, and A. Coleman, “Three Dimensional Trade Marks: Should the Directive be Reshaped?’ in N. Dawson and A. Firth, Trade Marks Retrospective: Perspective on Intellectual Property, Vol. vii (2000), 139, 150-6. 152. Philips Electronics NV v, Remington Consumer Products [1998] RPC 283. On appeal, Aldous LJ preferred the description ‘supporting’ to ‘limping’. In Procter & Gamble’s Application/Green & White Wash Tablet R 718/1999-1 (20 June 2000) para. 21, the Board of Appeal referred to the possibility of the tablet being a ‘secondary trade mark’. See also H. J. Heinz’s Application/Boitle R 488/1999—2 (3 Aug. 2000).

153 R 63/1999-3 [2000] ETMR 14. 154 [1996] RPC 281.

'5S Recognition ofthose in the trade will not, ofitself, suffice: Wickes’s Trade Mark Application [1998] RPC 698.

156 Re Dualit [1999] RPC 890, 898, para. 33.

804

TRADE

MARKS

AND

PASSING

OFF

the competent authority, where it has particular difficulty in that connection, from having recourse, under the conditions laid down by its own national law, to an opinion poll as guidance for its judgment.’!5”

4 OTHER

ABSOLUTE

GROUNDS

OF INVALIDITY

The third and more eclectic category of absolute grounds of refusal are set out in

section 3(3)-(6)

of the 1994 Act. These provide that trade marks

shall not be

registered if they are contrary to public policy or morality, if they are likely to deceive the public, if they are prohibited by law, or if the application was made in bad faith. Special provisions also exist for specially protected emblems. 4.1

PUBLIC

POLICY

AND

MORALITY

Section 3(3)(a) provides that a trade mark shall not be registered if it is contrary to

public policy or to accepted principles of morality. The scope of the public policy exclusion was recently considered in Philips v. Remington where Jacob J said the

notion of ‘public policy’ was confined to the type of matters covered by the French legal term ordre publique, a matter involving some sort of question of morality. This meant that the public policy exclusion is not concerned with economic grounds of objection, such as the effect that registration would have on competition. An example of the kind of matter that might fall within the public policy objectio n is provided by Re Application by L. Edwards Trade Mark.'5* In that case, the registere d owner of JARDOx for disinfectants opposed the registration of JaARDEX for meat extracts on the basis that as the names were similar, there was a likelihood of confusion. While this argument failed, the Registrar nevertheless exercised his discretio n and refused to register JaRDEX. He did this on the basis that if someone confused the two products the consequences might be disastrous. The Registrar felt that although the likelihood of a mix-up was remote, the law should not do anything that might increase the possibility of such an error taking place. While the Registrar’s discretion has been removed under the 1994 Act, it seems that a similar conclusi on could be reached on public policy grounds. In the past, a number of trade marks were refused on the basis that the public

might believe that registration constituted some form of official sanction or approval. For example, in Vitasafe TM’ the application to register vrtasare for vitamin preparations was refused because some members of the public might have thought that — '57 Windsurfing Chiemsee Produktions v. Franz Attenberger, C-108 and 109/97 [1999] ECR -2779 , I-2830

(para. 53).

158 (1946) 63 RPC 19. 159 [1963] RPC 256.

ABSOLUTE

GROUNDS

FOR

REFUSAL

805

registration suggested official approval. Similarly, in Arthur Fairest’s Application'® an application to register ARTHUR FAIREST was refused because evidence showed it was intended to be used largely on lottery coupons which were at the time illegal in the UK. While this result was achieved via the now-abolished general discretion, it seems that a similar conclusion could be reached under the 1994 Act on the basis that the mark was contrary to public policy. The Registry will also refuse signs that contravene the accepted principles of morality.'°' The OHIM’s examination guidelines provide as examples swearwords, or images that are racist or blasphemous.!® In some cases it will be difficult to determine which marks contravene principles of morality and which are merely in poor taste. Under the previous law, the UK Registry refused to register the word HALLELUJAH (meaning ‘Praise the Lord’) for women’s clothing,'® because the applicant failed to convince the tribunal that the public had accepted non-religious use of such a term. In so doing, the tribunal emphasized that marks should only be refused where they offend the generally accepted mores of the time.!™ It also said that trade mark law should avoid being a censor, arbiter, or trendsetter. Instead, it should only follow where others have given a clear lead.!°

4.2

DECEPTIVE

MARKS

Section 3(3)(b) states that a trade mark shall not be registered if it is ‘of such a nature

as to deceive the public (for instance as to the nature, quality or geographical origin of the goods or service).’'®° This prohibition tends to be applied to marks which, though distinctive, contain some kind of suggestion or allusion that is inaccurate. Interpreting the equivalent provision of the Trade Marks Directive, the ECJ has intimated that the operation of the objection presupposes ‘the existence of actual deceit or a sufficiently

serious risk that the consumer will be deceived.’!® Consequently, a trade mark application will be refused if it relates to a sign which suggests that the goods are made of a particular material and they are not. This is particularly the case where the material would be a significant factor for a purchaser. In China-Therm Trade Mark,'® a case under the 1938 Act, Whitford J held that the 160 (1951) 68 RPC 197. 161 CTMR Art. 7(1)(f). 162 Para 8.7. For a lengthy account of the US case law, see T. Davis, ‘Registration of Scandalous, Immoral

and Disparaging Matter under Section 2(a) of the Lanham Act: Can One Man’s Vulgarity Be Another’s Registered Trademark?’ (1993) 83 TM Rep 863.

163 Hallelujah Trade Mark {1976] RPC 605. It might have been acceptable for religious music. The German Office refused to register sCHLUEPFERSTUERMER, meaning ‘panties invader’, for a rum liqueur: (1997) 28 IC 582.

164 Hallelujah Trade Mark [1976] RPC 605, 610. 165 Tbid., 607-8. A trade mark which contains a representation of one of the flags of the countries of the UK, the use of which would be ‘grossly offensive’ shall not be registered: TMA s. 4(2).

166 CTMR Art: 7(1)(g); TM Dir. Art. 3(1)(g). See below at pp. 857-9. 167 Fratelli Graffione SNC v. Ditta Fransa, Case C-313/94 [1996] ECR I-6039 (para. 24). 168 [1980] FSR 21. A brochure used to advertise the goods referred to their ‘china-like elegance’.

806

TRADE

MARKS

AND PASSING

OFE

mark CHINA-THERM should not be registered for plastic cups and tumblers, on the basis that consumers might be misled into purchasing the product as a result of the suggestion that it was made of china.'® If the misdescription is obvious and is such that it would immediately be corrected by further observations by the consumer, such misdescriptions will not render the sign invalid.!”° Thus, while at first blush the term POUND PupPIEs may have contained an inaccurate suggestion that the goods cost £1, on closer inspection the inaccuracy would have become apparent to the consumer. Another reason why a trade mark may be refused is if it gives rise to a real, but inaccurate, expectation that the goods come from a particular locality. For example, an application to register MCL PARFUMS DE PaRIs for toiletries including perfumes was refused by the UK Registry, on the grounds that the mark created an expectation that

the perfume would be manufactured in Paris, so that (if they were not) the trade mark

would deceive the public not only as to the geographic origin of the goods but also as to their nature and quality.'”! The refusal of signs involving geographical misdescriptions parallels the role of section 3(4) discussed below. However, the circumstances in

which the owner of a protected designation of origin can object to use of that designa-

tion or a similar one, may be broader than the situations in which a mark will be

treated as misleading.!”

4.3

MARKS

PROHIBITED

BY LAW

Section 3(4) provides that ‘a trade mark shall not be registered if or to the extent that

its use is prohibited in the United Kingdom by any enactment or rule of law or by any provision of Community law.’ Thus a mark will not be registered if it is unlawful

under statutes such as the Trade Descriptions Act 1968, Plant Varieties Act 1997;.or

the Hallmarking Act 1973.1” The illegality must be intrinsic or inherent in the mark, rather than in the goods for which its use is proposed.!”4 The reference to Community law prevents the registration of ‘protected designations of origin’ and ‘geographical indications’ for wines, spirits, agricultural products, and food.!75

16° In Italy, registration of ‘cotonelle’ was refused for paper goods on a similar basis: Fratelli Graffione SNC

v. Ditta Fransa, C -313/94 [1996] ECR I-6039.

170 [1988] RPC 530.

71 Madgecourt’s Application; Opposition by Federation des Industries de la Parfumerie [2000] ETMR 825.

See also Mohan Meakin Breweries vy. Scotch Whisky Association [1980] FSR 216 (H. Ct. of India).

172 Consorzio per la Tutela del Formaggio Gorgonzola v. Kaserei Champignon Hofmeister, Case C-87/97 [1999] ETMR 135. (Under Regulation 2081/92, Art. 13, protection of PDOs extends to any ‘evocation’, but an ; evocation will not, of itselfbemisleading.) ‘73 Madgecourt’s Application; Opposition by Federation des Industries de la Parfumerie [2000] ETMR

825.

'74" Arthur Fairest’s Appn. (1951) 68 RPC 197 (Lloyd Jacob). 175 See above at p. 729. CTMR Art. 7(1)(j) states that if the trade mark is for wine or spirits and consists of

or contains a geographical identification for wines or spirits and the wines or spirits in the application could be from a different source the examiner must object.

ABSOLUTE

4.4

BAD

GROUNDS

FOR

REFUSAL

807

FAITH

According to section 3(6), a trade mark shall not be registered if or to the extent that

the application is made in bad faith.'”° In a number of cases under the 1994 Act, it has been suggested that the concept of bad faith might be narrowly understood as requiring ‘dishonesty’ or more broadly interpreted as covering any application which is artificial or not genuine.'”” While the courts have yet to determine which is the correct construction, it should be borne in mind that the new harmonized regime introduces new concepts, notably the distinction between absolute and relative grounds of refusal. A broad interpretation of bad faith is likely to undermine the distinction, in so far as it introduces issues of priority between competing claims into the Registrar’s determination of absolute objections. While it “is not clear what is meant by bad faith in the context of section 3(6)’, there

appear to be three situations where a mark may be deemed to have been applied for in bad faith. These are where there is no intention to use the mark, where the applicant was aware that a third party intended to use the mark, or where the mark relates to a

well-known person. 4.4.1

No intention to use the mark

The first situation where a mark may be refused because it was applied for in bad faith is where the applicant had no intention of using the mark in trade. Such applications

are said to be in ‘bad faith’ because the applicant declares, under section 32(3), that the trade mark is being used or that the applicant has a bona fide intention to use the mark in relation to those goods or services. If there is no such intention, the

declaration is dishonest and the dishonesty taints the application.!”8 The most obvious situation of lack of intent to use occurs where a person applies to register a mark with the intent either of preventing a competitor registering the mark or selling (or “trafficking in’) the registered right. So for example, where an antique dealer realized that DEMON ALE was an anagram of ‘lemonade’ and applied to register DEMON ALE as a mark, with a view to selling the mark and with no intention of brewing, the Appointed Person held this was an application in bad faith.!” As well as regulating the ‘trafficking’ in marks, the requirement of good faith can be used to prevent the registration of ‘ghost marks’, that is, the registration of marks that are similar to an unregistrable mark which the trader is in fact using. This can be seen for example, in Imperial Group v. Philip Morris, a leading case on this point under the 1938 Act. While Imperial wished to market a cigarette called merit, their legal advisers warned them that such a mark was unregistrable. To protect themselves they decided to register NERIT as a ghost mark. This was done in the belief that they would 176 Pursuant to optional provision in TM Dir. Art. 3(2)(d). CTMR Art. 51 (registration liable to be declared invalid where application was made in bad faith).

177 Road Tech. Computer Systems v. Unison Software UK [1996] FSR 805. See also Postperfect Trade Mark [1998] RPC 255; Artistic Upholstery v. Art Forma (Furniture) [1999] 4 All ER 277, 290.

178 Demon Ale Trade Mark [2000] RPC 345. 179 Tid.

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be able to prevent competitors from using the mark MERIT on the ground that it would be so similar to NeRIT as to cause confusion. Imperial succeeded in gaining registration for NERIT and subsequently brought an action against Philip Morris to prevent it using the Merir mark. The Court of Appeal not only refused relief, but also

ordered that the merit mark be revoked. There was, according to Lawton LJ, neither a

trade mark which was ‘proposed to be used’ nor any bona fide intent to use the mark.

Brightman LJ explained that in order to maintain a trade mark there needed to be a

real intention to use the mark, not an uncertain or indeterminate possibility. As regards the notion of bona fide intent to use, he explained that this required genuine rather than honest intent.!®°

The requirement that a person intends to use the sign means that an application is

likely to be refused where a person applies to register a sign at a time when they are clearly unable to use that sign for the goods or services in question. For example, in Mickey Dees (Nightclub) Trade Mark,'*! Michael Dyer, an employee at a nightclub called MicKEy DEEs, was held to have lacked good faith when he registered the words MICKEY DEES for nightclub services. Given that the applicant did not own any nightclub, he could not show any realistic intent to provide nightclub services. However, the registration was allowed to stand as regards the provision of singing and musician services by an entertainer, because the applicant could in good faith intend to carry on such a trade. The final, and most common, circumstance in which a person will be held to have registered a mark with no bona fide intention to use it is where the specification of goods and services is unduly broad. In a number of cases, the UK Registry has used the objection to induce applicants to restrict the specifications to a more limited range of goods and services.'** While the Registry has recently revised its practice of objecting to overly broad specifications, it will continue to object to specifications in the form of “all goods/services in class X’, claims to ‘machines’, ‘electrical apparatus’, and ‘services that cannot be classified in other classes’.!®?

4.4.2 Knowledge of third-party claims The second situation where an applicant may be held to lack good faith is where the applicant is aware that a third party intends to use and/or register the mark. Here the rationale is that the applicant cannot claim, in good faith, to be the owner of the sign for the goods or services. However, because the Act has no concept of proprietorship prior to application, the notion of ‘owner’ here seems to find its basis in ideas of honest business practice. The most obvious of such circumstances in which an application may be treated as '80 Imperial Group v. Philip Morris & Co. [1982] FSR 72. 181 Mickey Dees (Nightclub) Trade Mark [1998] RPC 359. See also Rawhide Trade Mark [1962] RPC

133%

182 Nutritive Trade Mark [1998] RPC 621; Wickes’s Trade Mark Application [1998] RPC 698. 183 Practice Amendment Circular PAC 10/00, Examination of wide specificati ons and objections under Section 3(6) of the Act. See above at pp. 742-3.

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being in bad faith is where it is in breach of the terms of a relationship between the applicant and the third party and the registration would give rise to a breach of trust between them. This might be the case where the applicant is an employee or an agent.'** Moreover, it seems that the Registrar will use section 3(6) as a basis for rejecting an application even where such registration falls short of being a breach of any legal obligation:'* for example, to prevent a distributor registering a mark, or an employee from registering a sign which would be useful to his/her employer.'* In one case, where the applicant had come up with the name BLACK mix for a radio programme which, for a time, he produced, but which was edited and broadcast by the BBC, the Registry regarded the applicant’s application to register Mix FM BLACK MIX as lacking good faith.!*’ Another situation where an application may be rejected on the basis that it was made in bad faith is where the applicant copies a mark being used abroad with the intention of pre-empting the foreign user who intends to trade in the United Kingdom.’** This situation was dealt with under the 1938 Act either under provisions dealing with ‘the proprietor’ of the mark, or under the Registrar’s discretion.'®® As these notions no longer exist in the 1994 Act, there is a possibility that they may be dealt with under the good-faith requirement. In Kundry SA’s Application: Opposition by the President and Fellows of Harvard College,'** the UK Registry rejected an application to register JARVARD for clothing, on the basis that the application was an attempt to make use of the opponent’s reputation associated with the word ‘Harvard’. The applicant failed to produce any evidence to refute allegations of bad faith, and the Registry thought that the application should be refused. It is not clear, however, that such cases should be treated as examples of applications made in bad faith. While the application may savour of sharp practice, it is not clear why reliance on strict legal rights should be viewed as ‘bad faith’. Moreover, given that the Registry found that the two signs were not confusingly similar, to treat applications such as these as examples

'84 Casson’s Trade Mark (1910) 27 RPC 65 (employee); K Sabatier [1993] RPC 97 (distributor). Note also that there are certain special provisions that an application for registration of a trade mark by an agent or representative of a person who is the proprietor of the mark in a Convention country is to be refused if that proprietor opposes the application: TMA s. 60, which implements Art. 6s of the Paris Convention. Travel Pro Trade Mark [1997] RPC 864. CTMR Art. 8(3).

185 Gromax Plasticulture v. Don & Low Nonwovens [1999] RPC 367 (bad faith includes dealings which fall short of the standard of acceptable commercial behaviour observed by reasonable and experienced men in the field). 186 Mickey Dees (Nightclub) Trade Mark [1998] RPC 359 (manager of nightclub could not have claimed in

good faith to be the owner of the sign for nightclub services) (possibly a breach of his duty of fidelity); Gromax

Plasticulture v. Don

& Low Nonwovens

[1999]

RPC 367 (bad faith on part of distributor not

established).

187 Mix FM Black Mix Trade Mark O/084/00 (2000) CIPAJ 403. 188 See the notes on clauses prepared when the 1994 Act was being enacted, cited in Mickey Dees (Nightclub) Trade Mark [1998] RPC 359.

189 Brown Shoe’s Appn. [1959] RPC 29. 190 [1998] ETMR 178.

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of bad faith threatens to undermine the distinction between absolute and relative

grounds,|?!

4.4.3, Well-known persons

The third situation in which an applicant might be treated as lacking good faith is where the mark incorporates the name or image of a well-known person without his or her agreement.'” In such cases, consideration should also be given to whether the application lacks distinctiveness, and whether relative grounds of refusal might be available.

4.5

SPECIAL

EMBLEMS

Section 4 excludes from registration trade marks that consist of ‘specially protected emblems’.'”* These include various signs connected to the Crown (the Royal arms, the Royal crown and flags, any representation of any member of the Royal family, or any other sign suggesting that the applicant has Royal patronage); various national and international emblems and flags;!** and coats of arms. Sections 57 and 58 contain a similar list of excluded emblems, flags, etc. for other Convention countries.'95 '91 Cf. Re C. A. Sheimer’s Trade Mark Application (Opposition by Visa International) [2000] RPC 484 (where the Appointed Person asserted that an opposition based on section 3(6) for taking advantage of another's reputation would not add anything to an objection on relative grounds, because it was only if the relative grounds were sustainable that one could say the applicant was likely to achieve their aim of free-riding on the opponent’s reputation). 192 TMR Work Manual, ch. 6, para. 9.11. 193 Tn accordance with Art. 6 ter of the Paris Convention, TRIPs Art. 15(2); CTMR Art. 7(1)(h).

194 TMA s. 4(2) and (3).

195 R. Coombe, “Tactics of Appropriation and the Politics of Recognition in Late Modern Democracies’ (1993) 21 Political Theory 411 analyses the way these specially protected emblems are enforced or not so as to illustrate the political role of such symbols. Her analysis, however, has little to say about the interaction between such regimes and the general trade mark system.

38 RELATIVE GROUNDS FOR REFUSAL 1 INTRODUCTION In this chapter, we explore the relative grounds for refusing to register a trade mark. The relative grounds for refusal, which are set out section 5(1)—(4) of the 1994 Act

and Article 8 of the CTMR, are important in so far as they provide reasons why a mark may not be registered. They are also important because they can form the basis of an application to have a mark which has been registered declared invalid.! The relative grounds for refusal help to ensure that the protection given to trademark owners does not conflict with any pre-existing marks or with any rights that exist in the mark (or sign).* It does this by ensuring that a mark should not be registered if it is similar to a pre-existing mark, or if it conflicts with any legal rights that exist in the mark. If a trader was able to gain protection over a mark which was

already protected, it would undermine the protection given to the owner of the earlier trade mark. If dual protection was allowed in an identical or similar sign, it would also mean that trade marks would not be able to function to indicate origin. This is because if two traders had rights in the same mark, when consumers were faced with the mark attached to a product they would be unable to determine which of the two traders had made the product.’ In so far as the relative grounds for refusal stipulate that a mark will not be registered where it is the same as a pre-existing mark, they are similar to the novelty requirement in patent law. Another point of similarity with patent law is that the relative grounds for refusal mirror the provisions dealing with trade mark infringement. In particular, sections 5(1), 5(2), and 5(3) correspond to sections 10(1), 10(2),

and 10(3), which deal with trade mark infringement.‘ Effectively, the relative grounds for refusal enable the owner of an earlier mark (A) to prevent the registration of a sign by another (B) where the use of that sign would infringe the rights of the earlier mark ' TMA s. 47(2)(a)(b); CTMR Art. 51. 2 Corgi Trade Mark [1999] RPC 549, 559. 3 It should be noted that although a mark may fall foul of one of the relative grounds for refusal, TMA s. 5(5) provides that an owner of the earlier trade mark or other earlier rights in the mark or sign can always

consent to the registration of a later mark. 4 Balmoral Trade Mark [1999] RPC 297, 299.

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owner (A). As well as being sensible and convenient,> one of the consequences of this

symmetry is that much of the case law on infringement is relevant to the relative grounds for refusal.° As such, in this chapter we draw upon trade mark infringement cases where relevant. The relative grounds for refusal fall into two general categories: those concerned

with ‘earlier trade marks’ (sections 5(1)—(3) and Article 8(1) and (5) of the CTMR); and those concerned with ‘earlier rights’ (section 5(4) and Articles 8(4) and 52(2) of the CTMR). We deal with each in turn.

2 RELATIVE

GROUNDS TRADE

IN RELATION

TO EARLIER

MARKS

The relative grounds for refusal in relation to earlier trade marks are found in sections

5(1)—(3) and Articles 8(1) and (5) of the CTMR. These provide that a trade mark shall

not be registered if, when compared with an earlier mark, it is found that: (i)

the marks are identical and the goods or services are identical: section 5(1)/ Article 8(1)(a);

(ii) the marks are identical, and the goods or services are similar, and there is a likelihood of confusion, which includes the likelihood of association, with the earlier mark: section 5(2)(a)/Article 8(1)(b);

(iii) the marks are similar, and the goods or services are either identical or similar,

and there is a likelihood of confusion, which includes the likelihood of association, between the marks: section 5(2)(b)/Article 8(1)(b);

(iv) the marks are either identical or similar, and the goods or services are not similar, and where the earlier trade mark has a reputation and use of the

applicant’s mark would take unfair advantage of, or be detrimental to, the

distinctive character or the repute of the earlier trade mark: section 5(3)/ Article 8(5).

2.1 IDENTICAL MARKS AND IDENTICAL GOODS OR SERVICES: SECTION 5(1)/ARTICLE 8(1)(A) The first relative ground for refusal is found in section 5(1) and Article 8(1)(a) of the

CTMR. This provides that a trade mark shall not be registered if it is identical to an

> It should be noted that the symmetry is disrupted in relation to well-know n marks, which may be the basis of relative grounds of refusal in circumstances which would not amount to infringement under TMA s. 56(2).

© In the Matter of Kangol (6 Sept. 2000) (objections under TMA s. 5(2) are ‘conceptual ly indistinguishable’

from actions under s. 10(2) ).

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813

earlier trade mark and the goods or services for which the trade mark is applied for are identical to the goods or services for which the earlier trade mark is protected. As earlier trade marks are protected unconditionally as against a later application to register an identical mark for identical goods and services, there is no need to prove confusion.’ In considering whether a mark falls foul of section 5(1)(a)/Article 8(1)(a), three

questions arise: (1)

What is an ‘earlier trade mark’?

(ii) When are marks ‘identical’? and

(iii) When are the goods and services ‘identical’? 2.1.1 What is an earlier trade mark?

The first question to ask in relation to section 5(1)/Article 8(1)(a) is, what is an ‘earlier trade mark’? In the UK, an ‘earlier trade mark’ is defined as:

* a registered British mark, international trade mark (i.e. a mark registered under the Madrid Protocol designating the UK),° or Community trade mark which has a priority date earlier than the trade mark in question?—section 6(1)(a);

* a Community trade mark which has a valid claim to seniority from an earlier registered trade mark or international trade mark (UK)!°—section 6(1)(b);

* an application for marks which, when registered, would be an earlier trade mark!!—section 6(2); and

* atrade mark which is entitled to protection as a well-known trade mark— section 56(1). In contrast with the previous categories, such marks need not

be registered. Limitations exist as to who can qualify as the proprietors of well-known marks.” If the registration of a mark falling within the first two categories, viz. sections 6(1)(a) or (b) has lapsed, the mark can form the basis of an objection for a period of

one year after expiry. However, this will not be the case if the Registrar is satisfied that there was no bona fide use of the mark during the two years immediately preceding expiry.'? 7 The rationale for this is that confusion will necessarily result; TRIPs Art. 16(1); Balmoral Trade Mark [1999] RPC 297, 299.

8 TMA s. 53 9 TMAs. 51

10 TMA s. 6(1)(b). See above at pp. 737-50. 11 TMA s. 6(2). On procedure of the UK Office in relation to applications, see Practice Amendment Circular PAC 1/99 Conflicting earlier trade marks under section 5(2) of the Act—earlier marks still pending. 12 TMA s.56(1). Note the amendment by the Patents and Trade Marks (WTO) Regulations 1999 (SI 1999/

1899). See above at pp. 688-9. Paco/Paco Life in Colour Trade Marks [2000] RPC 451; Vzao Sojuzplodimport’s Application; Opposition by Latvijas Balzams no. 62/1999 [2000] ETMR 618 (mere fact that mark well known in Latvia not sufficient to oppose CTM application). 13 TMA s. 6(3). The concept of genuine use is explored at some length at pp. 849-50 in the context of revocation.

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In relation to Community trade marks, ‘earlier trade marks’ include trade marks

registered in member states, at the Benelux Trade Mark Office, and under the Madrid Agreement and the Madrid Protocol in a member state.!* While an earlier trade mark includes well-known marks, the ability of the owner of an earlier well-known mark to

oppose registration in relation to dissimilar goods or services is confined to situations where the mark has been registered.!> Finally, it should be noted that where an applicant for a Communty mark is faced with an opposition on relative grounds on the basis of an earlier trade mark registered more than five years earlier, the applicant can demand that the opponent produces evidence of use of the trade mark in the previous five years or proper reasons for non-use. If the opponent fails to do so, the opposition is to be rejected.! 2.1.2 Are the marks identical?

The second question to ask in relation to section 5(1)/Article 8(1)(a) is: are the marks

identical? In answering this question, it is necessary to compare the representation of the earlier trade mark contained in the registration certificate with the trade mark which has been applied for (or, in the case of infringement, that being used by the defendant). While few problems are likely to arise in determining whether marks are identical, two particular issues warrant consideration. The first question that needs to be addressed in this context is, ‘what is the sign’ for the purpose of comparison? The answer is that the comparison is between the earlier trade mark (as registered) and the sign in the applicant’s application.!” Although the two signs should be compared as a whole, in some cases, it seems, the tribunal will ignore or disregard added or extraneous matter in the later mark. For example, in British Sugar v. Robertson, Jacob J held

that the words ROBERTSON’S TOFFEE TREAT were identical to the claimant’s registered mark TREAT. The fact that Robertson used the word Treat with additional matter (ROBERTSON’S TOFFEE) did not make it a non-identical use.!® It should be noted that this was an infringement case, and the normal approach when considering relative grounds of refusal is to ask whether the added matter has a sufficient impact on the applicant’s sign to differentiate it from the earlier trade mark.!? For example, the Appointed Person has held that the applicant’s sign 10 ROYAL BERKSHIRE POLO CLUB was not even similar to POLO, because consumers would not realize it contained the word PoLo.”? 14 CTMR Art. 8(2). 'S CTMR Art. 8(5); TRIPs Art. 16(3).

16 CTMR Art. 43(2). 17 Disclaimed matter in the earlier trade mark will usually be ignored: Saville Perfume v. June Perfect and F.

W. Woolworth (1941) 58 RPC 147; The European v. The Economist Newspaper [1998] FSR 283, 289. 18 [1996] RPC 281, 293 approving Sir Wilfred Greene MR’s statement in Saville Perfume v. June Perfect and

FE. W. Woolworth (1941) 58 RPC 147, 161 ‘[o]nce a mark is shown to offend, the user of it cannot escape by showing that by something outside the actual mark itself he has distinguished his goods from those of the registered proprietor.’ See also, under the 1938 Act, Levi Strauss v. Shah [1985] RPC 371. 19 Beauty Shop Application; Opposition of Evora BV, Case B 1604 [1999] ETMR 20. 20 Royal County of Berkshire Polo Club Application; Opposition by Polo Lauren Co. (7 Sept. 2000).

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815

The second issue that arises in this context is whether marks that are slightly different may nonetheless still be treated as being identical for the purposes of section 5(1)/Article 8(1)(a). While specific provisions exist which prevent a mark that is

similar to an earlier mark from being registered, the reason why owners of earlier marks may wish to argue their case under section 5(1)/Article 8(1)(a) is that unlike

the other relevant relative grounds, there is no need to prove confusion. Given this, it would seem reasonable for the courts to construe section 5(1)/Article 8(1)(a) strictly.

Applying such a logic, it was held that orrGIN was not identical to or1GINs.?! In some cases, however, the courts have extended the scope of section 5(1)/Article 8(1)(a) to

include marks that are not exact replicas of each other. For example, in one case where the words weT WET WET were reproduced in different typefaces, the two marks were nevertheless held to be identical.” 2.1.3. When are goods or services identical? The third element that must be proved for a mark to fall foul of section 5(1)/Article 8(1)(a) is that the goods or services for which the mark is applied for must be

identical with the goods or services for which the earlier mark is protected. If the category of goods or services protected by an earlier trade mark is broader than, but includes, the category of goods or services to which the application relates, then the applicant’s goods are identical with those of the earlier mark. So, if an earlier trade mark relates to ‘broadcasting services’, a later application relating to radio broadcasting services would be understood as being identical.”* It is important to note that the section refers to the goods or services protected by the earlier trade mark. This language was chosen to ensure that the section covered well-known marks (which may not have been registered). In the case of other earlier marks, the use of the term ‘protected’ introduces an unfortunate ambiguity. This is because while one would have expected the comparison to be between the goods or services identified in the specifications, there is a possibility that the goods or services ‘protected by’ a registered mark might extend beyond those that are identified in the specification. The question of whether goods or services are identical presents few problems. The way in which this question is approached can be seen in British Sugar v. Robertson.” In that case, the claimant company, which had segistered TREAT for dessert sauce or syrup in Class 30, claimed that the defendant had infringed by using the mark on a toffee-flavoured spread. Jacob J held that although the spread might be used as a dessert sauce, a spread was not the same as a dessert sauce or syrup. Since Robertson’s spread was packed in a jam jar and placed on the shelves with jams, Jacob J held that 21 Origins Natural Resources v. Origin Clothing [1995] FSR 280, 284. 22 Bravado Merchandising Services v. Mainstream Publishing (Edinburgh) [1996] FSR 205, 214-15. See also Lifesystems Trade Mark [1999] RPC 851, 857. 23 Discovery Communications v. Discovery [2000] ETMR 516 (need to assume normal and fair use across whole of specification). 24 [1996] RPC 281.

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it was not identical to a dessert sauce. Jacob J found assistance in the classification

system to support his conclusion that the goods were not identical. In particular,

Jacob J’s conclusion was reinforced by the fact that while the claimant’s syrup was

registered in Class 30, the defendant’s spread would have fallen within Class 29.25 While the way the mark is registered may provide guidance in determining whether goods or services are identical, it is important that the language of the trade mark specification not be taken at face value. This is because although the goods or services may be described in the same terms, in some situations they may in fact cover different goods or services.”° In other cases, different terms may encompass similar goods

or services. As Jacob J explained, instead of construing the words literally, ‘when it

comes to construing a word used in a trade mark specification, one is concerned with how the product is, as a practical matter, regarded for the purposes of trade.’2”

2.2 IDENTICAL MARKS AND SIMILAR GOODS OR SERVICES; SIMILAR MARKS AND SIMILAR GOODS OR SERVICES: SECTION 5(2)/ARTICLE 8(1)(B) According to section 5(2)/Article 8(1)(b) (which correspond to Article 4(1)(b) of the Directive) a trade mark shall not be registered where it is: (i)

identical or similar to an earlier trade mark;

(ii) is to be registered for goods or services similar to those for which the earlier trade mark is protected; and (iii) there exists a likelihood of confusion on the part of the public, which includes the likelihood of association with the earlier trade mark.

In considering whether a mark falls foul of section 5(2)/Article 8(1)(b), a number of

questions arise. We have already considered what is meant by an ‘earlier trade mark’

and the situations where marks and services will be ‘identical’. As such, it remains

only to consider when are goods or services ‘similar’, when marks are ‘similar’, and what is meant by ‘likelihood of confusion’? Before looking at these in more detail, it is important to note that in Canon Kabushiki Kaisha v. Metro-Goldwyn-Mayer,® the European Court of Justice said the

various elements of Article 4(1)(b) of the Directive are interdependent. This means

that difficulties in proving one of the requirements may be offset by the way one of the 25 [1996] RPC 281, 289-90. See also Avnet v. Isoact [1998] FSR 16, 19. 26 Application ofMerri-Meyers Head (Trading as Comfort and Joy); Opposition of Jean Patou [1997] ETMR 577, 581 (luxury perfume is identical to cheap perfume). *7 [1996] RPC 281, 289. See also Beautimatic International v. Mitchell International Pharmaceuticals [1999] ETMR 912, 921 (‘skin-lightening cream’ and ‘dry-skin lotion’ were identical to earlier trade registration relating to ‘toilet preparations and cosmetics’); Beauty Free Shop Application; Opposition of Evora BV, Case B 1604 [1999] ETMR 20, 23 (‘dentrifrices’ not identical to ‘preparations for body care’).

28 Case C-39/97 [1999] 1 CMLR 77, 95. See also Marca Mode CV v. Adidas AG, Case C-425/98 {2000} 2

CMLR 1061, 1084.

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other requirements is met. For example, low levels of similarity between goods might be offset by high degree of similarity between marks. As a result of this interdependence, the various tribunals have insisted that section 5(2) should be understood as

posing a single composite question: are there similarities (in terms of marks and goods and services) which would combine to create a likelihood of confusion if the earlier trade mark and the sign subsequently presented for registration were used concurrently in relation to the goods or services for which they are respectively registered and proposed to be registered??? 2.2.1 Similarity of marks Having acknowledged that similarity of marks is always to be assessed as one element of a global question (are the marks and goods/services so similar as to be likely to cause confusion?), the case law provides some guidance on when marks will be treated as similar. The tribunal should take account of the degree of aural, visual, or con-

ceptual similarity, as well as the inherent or acquired distinctiveness of the mark.*° Of these, in Sabel v. Puma, the ECJ said that the most important factors to be taken into account when comparing marks were the distinctive and dominant components of the marks in question.*! Non-distinctive parts should be discounted.** The comparison is done from the point of view of the average consumer of the goods concerned. As a result, the signs are to be compared taking into account the various ways that consumers use and interpret them. In most cases when marks are being compared they will be looked at as a whole in the contexts in which they can foreseeably be used.** As the ECJ observed in Sabel v. Puma, the average consumer

normally

perceives a mark as a whole and does not proceed to analyse its various details.** One of the consequences of looking at the marks as a whole is that the courts will not necessarily examine the marks in too much detail. (1) Visual, aural, and conceptual similarity. The marks should be assessed from the

point of view of their visual, aural, and conceptual similarities. The relative importance of each sort of similarity will vary with the circumstances in hand. In the case of 22 Balmoral Trade Mark [1999] RPC 297, 301; Audi-Med Trade Mark [1998] RPC 863, 872 (similarity of marks must be considered globally with the other relevant factors, for otherwise the question of whether one mark is similar to another begs the question ‘similar enough for what?’).

30 Sabel BV v. Puma AG, Rudolf Dassler Sport, Case C-251/95 [1997] ECR I-6191, I-6224. (hereafter Sabel v, Puma).

31 Sabel v. Puma, Case C-251/95 [1997] ECR I-6191, I-6224 (para. 23) (but not extraneous matter such as disclaimers).

32, Loewe SA’s Application; Opposition by Logoathletic Inc., Case B 37889 [2000] ETMR 40 (OHIM, ignoring fact that both marks were ‘L’-shaped). 33 De Cordova v. Vick Chemical Co. (1951) 68 RPC 103, 106 per Lord Radcliffe (‘marks are remembered

rather by general impressions or by some significant detail than by any photographic recollection of the whole’). 34 Sabel v. Puma, Case C-251/95 [1997] ECR I-6191, 1-6224 (para. 23). But in some cases the consumers

will be very discerning: Stillwater Designs and Audio Inc’s. Application; Opposition of Ms Josefina Fernanez de la Fuenta Abellan, Case B 7049 [2000] ETMR 35 (in the case of durable goods such as computers which are

expensive and not bought on a regular basis the consumer will be generally attentive).

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device marks, visual similarity will usually be the most important factor, whereas in the case of composite marks there will often be a tendency to emphasize the textual elements.” In the case of certain kinds of goods, such as clothes, visual similarity between the marks in issue will be the most important form of similarity. In contrast, with restaurant services (where word-of-mouth recommendation is highly important), it is likely that phonetic similarity will be a key.*° Each case is therefore to be viewed in its own context. However, the ECJ has ruled that, in an appropriate case, mere aural similarity may make marks so similar as to be likely to cause confusion.?” When comparing marks, the courts also bear in mind that consumers may not be able to remember a mark perfectly (this is called the notion of ‘imperfect recollection’). The average consumer only rarely has the chance to make a direct comparison between marks, and so must place his trust in the ‘imperfect picture of them that he has kept in his mind’.** In many cases this means that while at first glance two marks may appear to be dissimilar, when the possibility of imperfect recollection is taken

into account, the marks may in fact be similar. While the courts have used the notion of imperfect recollection to expand the ambit of protection given to earlier marks, they are always mindful of the need for the marks to be similar. Thus, LirEsysTEM and

LIFESTREAM were held not to be similar. This was because the two marks were visually and phonetically different enough that they were unlikely to be confused, even when the possibility of imperfect recollection was allowed for.*° In another decision, POLACLIP was held not to be the same as poLarorp (even with imperfect recollection).*° When comparing marks aurally, tribunals have tended to take into account the particular importance of the first syllable (at least in the English language). So OHIM considered BECK and ISENBECK to be dissimilar because ‘experience has shown that the public attributes greater importance to the beginning of a word . . . than it does to the following components of the word.”*! OHIM also treated EUCERIN and BEUDERMIN as similar because of the common start, and the English High Court recently held VIAGRA and VIAGRENE to be similar.” In another case, however, it was held that ENER-CAP was not similar to either ENERRING Or ENERSEAL.*® 3° On the basis that ‘words “speak louder” than devices’ Oasis Stores’ Trade Mark Application [1998] RPC 631, 644; Fromex SA’s Application; Opposition of K. H. De Jong’s Exporthandel BV, Case B 43457 [1999] ETMR 989 (Victoria and cockerel device not similar to cog p’or and cockerel device).

3© Loewe SA’s Application; Opposition by Logoathletic Inc., Case B 37889 [2000] ETMR 40 (clothes); React and Device Trade Mark [1999] RPC 529, 535 (majority of public rely on visual means to identify trade origin of clothing). : °? Lloyd Schuhfabrik Meyer v. Klijsen Handel BV, C-342/97 [1999] 2 CMLR 1343. 38 Lloyd Schuhfabrik Meyer & Co. v. Klijsen Handel BV, C-342/97 [1999] 2 CMLR 1343, 1358-9 (paras. 22-6).

3° Lifesystems Trade Mark [1999] RPC 851, 857-8. 40 Polaclip Trade Mark [1999] RPC 282, 289. 41 Warsteiner Bauerei Haus & Co. KG’s Appn.; Opposition of Brauerei Beck & Co., Decision 57/1998 [1999]

ETMR 225.

42 ICART SA’s Application; Opposition of Beiersdorf AG,Case B 1794 [2000] ETMR 180; Pfizer v. Eurofood

Link (UK) [2000] ETMR 187.

43 Ener-Cap [1999] RPC 362; Pfizer v. Eurofood Link (UK) [2000] ETMR 187.

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Because similarity is assessed conceptually as well as visually and phonetically, in thinking about whether marks are similar, it is necessary to take account of the ideas that lie behind or inform the earlier mark. The important role that non-visual features may play in deciding whether marks are similar can be seen in Sir Terence Conran v. Mean Fiddler Holding.“ Sir Terence, who had registered the word zinc in respect of planning, design, and interior design of restaurants, brought an action for summary judgment against the defendant who had opened a wine bar called the zincBar (with the letters Zn located on one side of the facia on the premises). In granting relief, Robert Walker J explained that the chemical symbol for the element zinc, ‘Zn’ (as well as ‘ZN’), in addition to phonetic equivalents such as sinc and sync, were similar to ZINC.* (ii) Distinctiveness. The question of whether marks are similar will often be depend-

ent on the inherent or acquired distinctiveness of the mark. This has a number of effects. First, the less distinctive the earlier trade mark, the less literal or visual alteration is necessary to ensure that the later mark is not similar. For example, if the

earlier trade mark involves an adaptation of a descriptive word, it may well have a limited capacity to summon up source.*® This can be seen in The European v. The Economist Newspaper’’ which concerned a device mark comprising the words THE EUROPEAN. There were a number of notable features of the mark. These included the fact that all the letters of the title were in upper case; the word ‘the’ was in much less prominent print than the word ‘European’; a dove holding a copy of a newspaper in its beak appeared at the top of the letter ‘O’; and an image of the world appeared at the bottom of the letter “O’. In an action for infringement, the question arose as to whether the claimant’s mark was similar to the words THE EUROPEAN VOICE, which

the defendants used for their newsletter. Affirming the judgment of Rattee J,’° the Court of Appeal held the signs were not similar, chiefly because the only correspondence was in the descriptive term ‘European’.”” Another factor that influenced the court was the fact that whereas the claimant used the term ‘European’ as a noun, it was used by the defendant as an adjective (in conjunction with the word ‘voice’).*° The court rejected the claimant’s submission that the word ‘European’ constituted an essential feature of the registered mark.*! Although it was the most prominent part of the device, it was not a distinctive ‘made-up’ word. Instead, it was an ordinary word commonly used in the English language.’ Where the distinctiveness of the earlier 44 [1997] FSR 856. 45 See also Fountain

Trade Mark [1999] RPC 490, 495 (ronT FOUNTAIN

and FouNTAIN

both used in

relation to computer hardware and peripheral devices alluded ‘to the idea or image of a gushing jet or spray of water’). 46 Furnitureland v. Harris [1989] FSR 536, 543 (FURNITURE LAND and FURNITURE CITY not similar).

47 48 49 50

[1998] FSR 283. [1996] FSR 431. [1998] FSR 283, 293. Thid.

51 [1998] FSR 283, 289. 52 [1998] FSR 283, 292.

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trade mark is very low, the later mark will have to be in close proximity for it to be similar, as with THERMAWEAR and THERMAWARM.™

Second, if the earlier mark is highly distinctive, then a mark that has been substantially modified might nonetheless still be similar.54 In De Cordova v. Vick Chemical Co.,”° the claimant was the proprietor of a device mark consisting of the words vicKs VAPORUB SALVE and a triangle with the words vicKs CHEMICAL COMPANY printed on the sides. They were also owners of a word mark, vaporus. The Privy Council held that the appellant had infringed the first of the claimant’s marks by importing and marketing jars of ointment under the name KARSOTE VAPOUR RUB. Lord Radcliffe explained that vaporus was (at least at the time of registration) a fancy word, and evidence established that the public treated vapoRUB as being synonymous with VICKS VAPORUB.”° As VAPORUB was an essential feature, or a material or substantial element, of the trade mark, the marks were similar. Third, the chance of there being a likelihood of confusion on the basis of the idea (or concepts) that underlie a mark is particularly influenced by the distinctiveness of the earlier mark:”’ in Sabel v. Puma, which concerned two images of bounding felines, the EC) held that because the earlier mark was not very well known by the public and the image of the puma was not very imaginative, the fact that the marks were conceptually similar was not sufficient to give rise to a finding of a likelihood of confusion. (See Fig. 38.1 on p. 824)°8

2.2.2 When are goods or services similar? The question of whether goods or services are similar depends on the facts of the case. When deciding whether a trade mark application falls foul of one of the relative grounds for refusal, the comparison is normally between the goods or services for which the earlier mark has been registered and the goods or services to which the application relates. This is largely a paper exercise. However, where a mark has been used the court will usually compare the defendant’s goods as they have actually been used with the goods in the claimant’s specification. This requires the court to interpret the specification and then to characterize the defendant’s goods or services to see if they fall within the specification. In Canon Kabushiki Kaisha v. Pathé Communications, the Japanese company, Canon, opposed MGM’s registration of the sign CANNON for films in the German Trade Mark >3 See Thermawear v. Vedonis [1982] RPC 44, 55-6 (VENDONIS THERMAWARM similar to claimant’s regis-

tered mark THERMAWEAR for underwear).

:

54 Sabel v. Puma, Case C-251/95 [1997] ECR 1-6191, 1-6224 (para. 24); Lloyd Schuhfabrik Meyer & Co. v.

Klijsen Handel BV, C-342/97 [1999]

2 CMLR

1343, 1357-8 (paras. 21-2); Canon Kabushiki Kaisha, Japan v.

Pathé Communications, Case C-39/97 [1999] 1 CMLR 77, 95 (paras. 17-18). Cf. Kundry SA’s Application [1998] ETMR 178, 185 (JARVARD not similar to HARVARD even given the latter’s reputation). 55

(1951) 68 RPC 103.

© (1951) 68 RPC 103, 106. Approved in Wagamama v. City Centre Restaurants [1995] FSR 713, 733. 57 Sabel v. Puma, Case C-251/95 [1997] ECR I-6191, I-6224 (para. 24). See also Herbalife International’s

Application; Opposition by Haka Kunz, Case B 52037 [1999] ETMR 882, 885 (even though marks were conceptually similar, visual and phonetic differences meant that overall they were not similar). 8 Sabel v. Puma, Case C-251/95 [1997] ECR I-6191, I-6225 (para. 25).

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Registry. The opposition was based upon Canon’s registration of CANON for ‘still and motion picture cameras and projectors, television filming and recording devices, etc.’ The German Bundespatentgericht held that the goods were not similar. On appeal, the Bundesgerichtshof asked the ECJ for a preliminary ruling on the interpretation of Article 4(1)(b) of the Directive (which is the equivalent of section 5(2)(a)/Article 8(1)(b) ). In response, the EC] explained that when the tribunal assesses the similarity

of the goods or services concerned, “all the relevant factors relating to those goods and services themselves should be taken into account. Those factors include, inter alia,

their nature, their end users, and their method of use and whether they are in competition with each other or are complementary.’ Moreover (and in contradiction to the approach that had been taken in the UK courts), the tribunal should also take into account ‘the distinctive character of the earlier trade mark, and in particular its

reputation’ when determining whether the similarity ‘between the goods or services covered by the two trade marks is sufficient to give rise to the likelihood of confusion.’ British Sugar v. Robertson illustrates how the courts have applied the factors in the case of a non-distinctive mark (namely TREAT). There the question was whether a sweet syrup to be poured over desserts was similar to a sweet-flavoured spread. Jacob J concluded that the goods were not similar,°! explaining that the goods were used differently (the spread could be used on desserts but would generally not be); were not in direct competition; were located in different places in supermarket (the spread with jams, the dessert sauce with desserts); were physically different (the spread was more viscous than the sauce); and were treated differently by market researchers. In contrast, in Balmoral Trade Mark, whisky and wine were held to be similar goods: although the two products have very different producers, it is common to find them being bought and sold by the same merchants, and sold through the same outlets. It is clear that the fact that goods or services are registered in different classes does not inevitably mean that they are not similar. For example, the OHIM has held that ‘buckles for footwear and garments’ in Class 26 are similar to ‘boots and shoes’ in

°° Canon Kabushiki Kaisha v. Metro-Goldwyn-Mayer, Case C-39/97 [1999] 1 CMLR 77, 95 (para. 17). In Zanella SNC’s Application; Opposition by Zanella Confezioni SpA, Case B 42053 [2000] ETMR 69, 72 the OHIM added ‘the origin of the products and the channels ofdistribution and sale’; and in Verify International NV’s Application; Opposition of Jorg Pohlmann, Decision 110/2000 [2000] ETMR 716, 718 ‘the purpose of the goods, their manufacturers, the respective potential customers as well as the pertinent distribution channels

and sales outlets.’ 60 [1999] 1 CMLR77, 95 (para. 18). In Pfizer v. Eurofood Link (UK) [2000] ETMR 187, Simon Thorley QC

came to the conclusion product, viAGRA. The potentially stimulating love-life. 61 [1996] RPC 281,

that a herbal beverage sold as vIAGRENE was similar to the claimant’s pharmaceutical court was influenced particularly by the defendant’s marketing of the beverage as the libido of its drinkers, so that, like viAGRA, VIAGRENE would enhance a person’s 297. From a European perspective it seems this was ‘a very narrow construction’: A.

Kur, “Harmonization of Trade Mark Law in Europe—An Overview (1997) 28 IIC 1, 22.

62 Balmoral Trade Mark [1999] RPC 297, 302. Note also Loewe SA’s Application; Opposition by Logoathletic Inc., Case B 37889 [2000] ETMR 40, 43 (OHIM treating footwear and clothing as similar because frequently manufactured by same enterprises, serve similar purposes and both destined for public at large).

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Class 25, because the products were ‘logically connected’ in the sense that they are meant to be or could be viewed by the average consumer as operating within the same market. The fact that the signs relate to different classes is irrelevant because the way the goods or services are classified is an administrative matter, whereas the question of whether goods or services are similar is an issue for substantive law. It is also clear that if an earlier trade mark relates to goods whereas the applicant’s mark relates to services, they may nonetheless still be similar (and vice versa). In one case, an application for the sign BALMORAL for wines was rejected because of the existence of

an earlier trade mark BALMorRAL for bar services.© 2.2.3 Likelihood of confusion

The final, and critical, element that has to be shown for a mark to fall foul of section 5(2)/Article 8(1)(b) is that (as a result of the similarities) there is ‘a likelihood of

confusion on the part of the public, which includes the likelihood of association with the earlier trade mark.’

(1) Standpoint of interpretation: who must be confused? The likelihood of confusion is considered from the point of view of the average consumer of the products con-

cerned, comparing the marks as a whole. As the ECJ observed in Sabel v, Puma,® ‘the

average consumer of the type of goods or services in question plays a decisive role in the global appreciation of the likelihood of confusion.’ In subsequent decisions the ECJ has said that the average consumer is reasonably well-informed and ‘reasonably observant and circumspect’.©’ Community law therefore applies its own understanding of the consumer, rather than focusing on the realities of actual consumers (who may be ignorant or uninterested). There is no confusion if only a minority of particularly inattentive consumers might possibly be confused.® Beyond this, however, there has been as yet little discussion of the characteristics that ought to be attributed to the average consumer.

(i) What must the public be confused about? The next question to consider is what is

meant by ‘likelihood of confusion’ in section 5(2)/Article 8(1)(b)? In its ‘classic’ form,

consumers must be confused about the source or origin of the goods or services—that is, confused as to the designer, manufacturer, selector, or supplier of the goods or services. In other words, classic confusion is concerned with the situation where consumers believe that the goods or services emanate from one organization, but they, 63 Zanella SNC’s Application; Opposition by Zanella Confezioni SpA, Case B 42053 [2000] ETMR 69, 72. 64 The characterization of adefendant’s activities may be such that it can be said that he is using the sign in relation to both goods and services. For example, a garage which advertises that it repairs BMW vehicles can

be seen as using the sign BMW in relation both to cars and repairing services: Bayerische Motorenwerke AG v. Ronald Karel Deenik, Case C-63/97 [1999] 1 CMLR 1099, 1122-23 (paras. 38-42).

6° Balmoral Trade Mark [1999] RPC 297, 301.

66 Sabel BV v. Puma AG, Case C-251/95 [1997] ECR I-6191, 6224 (para. 23), 67 Lloyd Shuhfabrik Meyer v. Klijsen Handel BV, Case C-342/97 [1999] 2 CMLR 1343, 1358 (para. 26). 68 See also Marca Mode CV v. Adidas AG, Case C-425/98 [2000] All ER (EC) 694, para. 30 (Advocate General).

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in fact, come from a different independent organization. This classic form of confusion has been extended so as to accommodate broader understandings of the source of goods or services. Consequently, a person will be confused for the purposes of section 5(2) if they incorrectly assume that there is some broader kind of economic connection between the users of marks, for example, that the goods are being provided by a subsidiary or licensee of the trade mark owner.” For example, if the use of a sign leads consumers to believe that a person’s repair business is ‘authorised’ by the trade mark owner, that would seem to be sufficient.”! In considering whether there is a likelihood of confusion, the tribunals must con-

sider whether there is a genuine and properly substantiated likelihood of confusion:” it is not enough that confusion is hypothetical and remote.”? The term ‘likelihood’ indicates probability rather than possibility.’* However, it should be noted that while the English version of the Directive refers to ‘likelihood’ the other language versions use the terms ‘risk’ or ‘danger’. In Marca Mode the Advocate General suggested that little would turn on these different terminologies and, giving judgment, the EC) indicated that the mere inability to rule out the possibility of confusion was not sufficient.’° (iii) Is ‘mere association’ confusion? Perhaps the most hotly contested issue since the adoption and implementation of the Directive has been the question of what Article 4(1)(b) of the Directive/section 5(2) means when it says that ‘likelihood of confusion includes the likelihood of association with the earlier trade mark’? In particular, the

debate focused on the question of whether likelihood of association is a separate ground of objection, that the proprietor of an earlier mark can rely on to oppose a

later application, even where they cannot demonstrate a likelihood of confusion as to origin.” The proponents of the view that mere association would suffice suggested that the provision needed to be construed via the Directive, through the EC Council Minutes,” and back to its origins in European law, particularly to Benelux trade mark 69 Canon Kabushiki Kaisha, Japan v. Metro-Goldwyn-Mayer, Case C-39/97 [1999] 1 CMLR77, 95. See also, Grupo Grifols SA’s Application; Opposition by Glaxo Group, Case 41/98 [1999] ETMR 507 where the Opposition Division at the OHIM held that the opponent had failed to establish that the public would consider the two signs as indicating that goods originated from the same undertaking or undertakings having a ‘juridical, organisational, economic, or other kind oflink between them’. 70 In Kangol’s Appn., (6 Sept. 2000) the Appointed Person said that ‘a belief in the existence of a licensing or joint venture arrangement would seem to satisfy this requirement.’ 71 Opinion of Advocate General Jacobs in Bayerische Motorenwerke AG v. Ronald Karel Deenik, Case C-63/

97 [1999] 1 CMLR 1099, 1111-12 (para. 45). 72 Lloyd [1999] 2 CMLR 1343, 1358 (para. 24). 73 Lloyd [1999] 2 CMLR 1343, 1357 (para. 20). 74 Peintures Du Lauragaise’s Appn., O/430/99 (Appointed Person) (2000) CIPAJ 188. The requisite degree of risk was formerly described as that of‘serious danger’: Ravenhead Brick Co. v. Ruabon (1937) RPC 341, 349. 75 Marca Mode CV v. Adidas AG, Case C-425/98 [2000] 2 CMLR 1061, 1084 (paras. 40-2). 76 The debate flared particularly intensely around the decision in Wagamama. See e.g. P. Prescott, “Has the Benelux Trade Mark Law been Written into the Directive?’[1997] EIPR 99; P. Harris, ‘UK Trade Mark Law: Are You Confused?’ [1995] EIPR 601; A. Kamperman Sanders, “Back to the Dark Ages of Trade Mark Law’ [1996] EIPR 3 and ‘The Return to Wagamama’ [1996] EIPR 521.

77 ©. Gielen, ‘European Trade Mark Legislation: The Statements’ [1996] EIPR 83; (1996) 5 OJ OHIM 607.

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law.”® When section 5(2)(a) is interpreted purposively, it is said to lead to the conclu-

sion that a mark could be rejected in situations where there was merely a conceptual association between marks, even though the consumers may not have been

confused.”

The issue came before the European Court of Justice in Sabel v. Puma,®° an Article 177 reference to the Court by the German Bundesgerichtshof. Sabel had applied to the German Registry to register a picture mark of a ‘bounding feline’ with the word saBEL beneath it for leather products and clothing. Puma opposed the application on the basis that they were the proprietors of an earlier pictorial mark that had been registered in Germany for ‘leather and imitation leather, goods made therefrom (bags) and articles of clothing’. It was common ground that Puma’s mark was not particularly well known (this was not the familiar Puma mark used on sportswear). While the Bundesgerichtshof provisionally considered that no likelihood of confusion existed between the two marks, they sought to ascertain from the ECJ the importance to be given to the idea or concept that the image conveys (in the present case, a ‘bounding feline’) in

Fig. 38.1 Sabel v. Puma Case 78 See Annand and Norman (1984), pp. 98-9. 79 e.g. C. Gielen, ‘Harmonization of Trade Mark Law in Europe: The First Trade Mark Harmonization Directive’ [1992] EIPR 262, 266-7; C. Gielen, ‘Likelihood of Association : What Does it Mean?’ (Feb. 1996)

Trademark World 20; A. Kamperman Sanders, ‘Some Frequently Asked Questions Concerning the Trade

Marks Act 1994’ [1995] EIPR 67, 69-70; Annand and Norman (1994), 154-6.

89 Case C-251/95 [1997] ECRI-6191.

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determining the likelihood of confusion. More generally, they asked the ECJ to consider whether in the absence of likelihood of confusion, a mark could nonetheless still be refused under Article 4(1)(b)/section 5(2) merely on the basis of the conceptual

association that the public might make between the two marks. The question, in short, was whether a mark could be refused on the basis that there was a likelihood of association but no likelihood of confusion between the marks. After considering submissions from a number of member states, and particularly influenced by the fact that the tenth recital to the Directive states that ‘likelihood of confusion ... constitutes the specific condition for such protection’, the European Court of Justice held ‘that the concept of likelihood of association is not an alternative

to that of likelihood of confusion, but serves to define its scope’. Although, the ECJ’s conclusion was relatively clear in its tenor,*! the proponents of

the argument that association might constitute a distinct basis for opposition (or infringement) took heart from paragraph 24 of the judgment where the Court said that, in the case of a particularly distinctive mark, it is not impossible that the conceptual similarity resulting from the fact that two marks use images with analogous semantic content may give rise to a likelihood of confusion.*? However, following the EC) decision in Marca Mode, it has been made crystal clear that paragraph 24 in no sense tempers the fundamental principle that the mere existence of association will not suffice in the absence of genuine and substantiated likelihood of confusion. In particular, the existence of a likelihood of association between two marks does not give rise to a presumption of confusion.® (iv) Proving confusion. The question of whether consumers are likely to be confused is an issue that is to be decided by the tribunal. As Sir Raymond Evershed MR said in Electrolux Limited v. Electrix Limited,** the question of whether a mark is likely to be confused with another mark is ‘a matter upon which the judge must make up his mind and which he, and he alone, must decide. He cannot, as it is said, abdicate the

decision in that matter to witnesses before him’.®° The nature of the inquiry into whether there is a likelihood of confusion will vary depending on whether the mark has been used. Normally (although not necessarily), where the relative grounds are heard by the Registrar the mark will not have been used, thus there will be no evidence of actual confusion. In contrast, where it is argued

that a mark should be revoked after registration because it falls foul of a relative ground for refusal, it is highly likely (as with an infringement action) that the mark will have been used and thus there ought to be evidence of actual confusion. In the absence of evidence, the tribunal makes an intuitive and speculative judgement about whether there is a likelihood of confusion. In so doing, the tribunals 81 A. Carboni, ‘Confusion Clarified’ [1998] EIPR 107 (describing the judgment as United Kingdom Benelux 0); C. Pickering, Trade Marks in Theory and Practice (1998), 23-24.

82 C, Gielen, ‘A Benelux Perspective’ [1998] EIPR 109.

83 Marca Mode:CV v. Adidas AG, Case C-425/98 [2000] 2 CMLR 1061, 1084 (paras. 40-2). 84 (1954) 71 RPC 23, 31. 85 (1954) 71 RPC 23, 3; The European v. The Economist Newspaper [1998] FSR 283, 291.

1,

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assume that the marks are used in a normal and fair way (as was the case under the 1938 Act).*° The reason for assuming normal and fair use is that [unless] one assumes notional use of the earlier mark, the answer to the question of whether a later trade mark gives rise to a likelihood of confusion on the part of the public will always be no. If the public have never seen the earlier mark the later mark cannot cause confusion. Thus it is necessary to assume use of the earlier mark (and the later mark) when considering

the likelihood of confusion.*’

In situations where the mark has been used, the courts will usually be able to draw

on different forms of evidence to help them decide whether there is confusion. For example, the tribunal might be informed by evidence of actual confusion where the applicant has used the mark prior to the application, or in a revocation action postgrant. In some cases, the absence of evidence of actual confusion may also be probative. For example, in Baywatch the judge was strongly influenced by the fact that there was no evidence that the public had confused the BAYwWaTCH series with the BABEwaTcH adult channel series.** It should be noted that an inability to produce evidence of confusion is not always fatal to an action. As Millett LJ said in The European v. The Economist Newspaper,” the ‘[a]bsence of evidence of actual confusion is rarely significant, especially in a trade mark case where it may be due to differences extraneous to the plaintiff's registered trade mark.’®° Such extraneous reasons include the possibility that the market conditions are such that actual instances of confusion are unlikely.”! There is also a possibility that the confusion has been so complete that customers are not conscious of their mistakes. In other cases, the appropriate evidence may simply be too difficult to obtain. The evidence presented to the courts may take a number of different forms. A claimant will be in a strong position if they can produce testimony of a reasonably prudent purchaser who was in fact confused, or examples of conduct probative of actual confusion (such as telephone calls to the registered proprietor about the defendant’s goods or services,” or misdirected letters). The courts are also likely to be faced with expert evidence. The extent to which such evidence is admissible is unclear. It has long been held that expert evidence must not relate to the key question of whether the use is confusing. Instead, it should be confined to factual explanations of things such as how the trade is structured. However, doubt was thrown on this in Guccio Gucci SpA v. Paolo Gucci? when Sir Nicolas 8° See Smith Hayden & Co.’s Appn. (1946) 63 RPC 97.

87 React and Device Trade Mark [1999] RPC 529, 532. 88 Baywatch Productions v. Home Video Channel [1997] FSR 22.

89 [1998] FSR 283. 90 [1998] FSR 283, 291.

°1 As where the purchase of washing soap was rationed, but detergent could be bought freely: Lever Bros.,

Port Sunlight v. Sunniwite Products (1949) 66 RPC 84, 91.

°2 The evidence of calls to the claimant’s office did not demonstrate confusion, partly because it was not clear why the callers had called and when the caller was told that he or she was speaking to The European newspaper, he or she knew that this was not the same as European Voice and hung up. 93 [1991] FSR 89.

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Browne-Wilkinson V-C said that the court may rely on evidence from experts where the court requires specialist knowledge. This was because it is ‘the function of the expert to instruct and inform the court as to those things which the court would otherwise not know’.” The Vice-Chancellor said that where the case concerns an area of which the judge is ignorant (in this case Browne-Wilkinson V-C had little knowledge of the designer-label market), it was legitimate to produce evidence of the likelihood of confusion from experts.”° While this approach was largely approved in The European v. The Economist Newspaper,” doubts were raised about the admissibility of expert evidence on the critical question of whether the marks were confusingly similar. At first instance, Rattee J was

presented with evidence from people in the newspaper trade (including two editors and a former editor of national newspapers) that members of the public were likely to be confused into thinking that THE EUROPEAN and EUROPEAN VOICE were associated (or that the latter was a supplement of the former). The Court of Appeal said that this evidence was almost entirely inadmissible. This was because it related to the question of whether the marks were confusingly similar, rather than explaining the ‘special features of [the] market of which the judge may otherwise be ignorant’.”” It is therefore unclear the extent to which Browne-Wilkinson V-C’s view that trade evidence is admissible in areas with which a judge is unfamiliar, even if it pertains to the issue of confusing similarity,” remains good law. Parties often also lead survey evidence as to whether marks are confusingly similar. The courts have not been consistent in their assessment of the relevance or weight to be given to such evidence. It should be noted that the rules of evidence apply in application proceedings before the Registrar as much as in the courts.” A particular problem that arises in relation to survey evidence is that it may be excluded on the basis that it is hearsay.'°° If proper procedures are followed, however, survey evidence is normally not excluded because it is hearsay. The fate of the evidence often depends on the nature of the survey, and the courts are conscious of the difficulties in formulating, executing, and interpreting such surveys.'°!

94 [1991] FSR 89, 91.

> Ibid. 96 [1998] FSR 283. See also, George Ballantine v. Ballantyne Stewart [1959] RPC 273 (witness may explain how the business is conducted and practices of trader or customers).

97 [1998] FSR 283, 291 per Millett LJ. 98 [1991] FSR 89, 91. 99 Registrar’s Practice Direction of 20 June 1995 [1995] RPC 381, following St Trudo’s Trade Mark [1995] RPC 350.

100 Oasis Stores’ Trade Mark Application [1998] RPC 631, 637. 101 Bor example, in Imperial Group plc v. Philip Morris [1984] RPC 293, 310. The courts have been sceptical about other techniques used to measure confusion. These have been treated as largely irrelevant to a determination that it is said is concerned with the realities of the marketplace. See e.g. Laura Ashley v. Coloroll [1987] RPC 1, 10 ff. (rejecting evidence obtained by using ‘tachistoscope’).

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DILUTION

The third absolute ground for refusal is found in section 5(3)/Article 8(5) CTMR.

Section 5(3) implements the optional Article 4(4)(a) of the Directive." The section recognizes the concept of ‘dilution’, perhaps for the first time, in English law.'° Dilution has been described as

the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use upon non-competing goods. The more distinctive or unique the mark, the deeper is its impress upon the public consciousness, and the greater its need for protection against vitiation or dissociation from the particular product in connection with

which it has been used.!4

In its modern incantation, the notion of dilution not only encompasses the erosion of a mark’s distinctiveness by its use on the goods of another (what is referred to as blurring’), but also the related concept of ‘tarnishment’, whereby the repute or goodwill associated with a mark becomes tainted by its use in connection with products of an unsavoury quality, or as a consequence of being portrayed in an unwholesome context. We will return to these concepts in the course of this chapter. Section 5(3)/Article 8(5) provide that a trade mark will not be registered where:

(a) the later mark is identical with or similar to an earlier mark;

(b) the later mark is to be registered for goods or services which are not similar to those for which the earlier mark is protected; (c) the earlier trade mark has a reputation in the UK, or in the case of a

Community trade mark, in the European Community; (d) the use of the later mark must either take unfair advantage of, or be detrimental to, the distinctive character or the repute of the earlier trade mark; and (e) the use of the later mark is without due cause.

While we have already addressed some of the issues raised by section 5(3)/Art icle

8(5) (such as what is an earlier trade mark, and the situations where marks may be

identical or similar), the section introduces some new issues yet to be considered. These are: (1) When are goods or services not similar? 102 General Motors Corporation v. Yplon, Case C-375/97 [1999] 3 CMLR 427, 443 (para. 29).

103 T. Martino, Trademark Dilution (1996), ch. 12. The doctrine of dilution is, however, often said to have

its inspiration in cases such as Eastman Photographic Materials Co. v. John Griffiths Cycle Corporation (1898) 15 RPC 105 (Kopax confusing on bicycles); and Hack’s Application (1914) 58 RPC 91 (Proprietor of BLACK MAGIC registered for chocolates succeeded in opposing an application to register the same mark for ‘laxatives

other than laxatives made with chocolate’).

104 F Shechter, ‘The Rational Basis of Trademark Protection’ (1927) 40 Harvard Law Review 813, 825. In

Marca Mode CV v. Adidas AG, Case C-425/98 [2000] All ER (EC) 694, 707, para. 44, the Advocate General

describes dilution as ‘the blurring of the distinctiveness of a mark such that it is no longer capable of arousing immediate association with the goods for which it is registered and used.’

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(2) When does a mark have reputation? (3) When will use of a mark (i) take unfair advantage of, or (ii) be detrimental to

the distinctive character or reputation of the mark? (4) When is a mark used with ‘due cause’?

2.3.1 Dissimilar goods Once it has been shown that the later mark is similar to, or identical to, the earlier

mark, the next question to ask is whether the later mark is to be registered for goods or services that are not similar to those for which the earlier mark is protected. The question of what is meant by ‘goods or services that are not similar’ has not received much consideration. In those cases where the issue has arisen, it has been defined

negatively: if the goods are neither ‘identical’ nor ‘similar’, then they are dissimilar. 2.3.2 Reputation The next requirement that must be satisfied for a mark to fall foul of section 5(3)/ Article 8(5) is that it has to be shown that the earlier trade mark has a ‘reputation in

the UK or in the case of a Community trade mark, in the European Community’. The concept of ‘reputation’ is a new one to British trade mark law. With many marks, such

as AUDI,'’° EVER-READY,|” viaGrRA,! visa,!” and TyPHoO,!” as well as Adidas AG’s ‘three-stripe mark’,''' there will be few problems in establishing reputation. In other cases, however, it may prove to be more problematic.!!” The task of ascertaining whether a mark has reputation has been made somewhat easier as a result of the decision in General Motors Corporation v. Yplon,''’ where the Court of Justice responded to a reference from Belgium asking how the concept of reputation was to be interpreted. The reference was prompted by an application by General Motors, the proprietor of the sign cHEvy for motor vehicles, to restrain Yplon from using the identical sign for detergents. The Court stated that ‘reputation’ involved some kind of knowledge threshold, so that ‘a mark would have a reputation

where it was known by a significant part of the public concerned by the products or

105 One issue that has yet to be explored is whether the concept of ‘dissimilar goods’ includes similar goods or services. If so, the section is interpreted as covering proposed use by the applicant on any goods or services even though/despite the fact that they are dissimilar. See Sabel BV v, Puma AG, Rudolf Dassler Sport, Case C-251/95 [1997] ECR I-6191, I-6223 (para. 20); Marca Mode CV v. Adidas AG, Case C-425/98 [2000] 2 CMLR 1061, 1077-8 (paras. 45-6) (Advocate General).

106 AUDI-Med Trade Mark [1998] RPC 863 (for cars). 107 Oasis Stores’ Trade Mark Application [1998] RPC 631 (for batteries). 108 Pfizer v. Eurofood Link (UK) [2000] ETMR 187. 109 CA. Sheimer (M.) Sdn Bhd’s Trade Mark Application [2000] RPC 484, 504 (a well-known mark with a distinctive character and reputation in the UK).

110 Premier Brands UK v. Typhoon Europe [2000] FSR 767. '1l Inlima SL’s Application; Opposition by Adidas AG [2000] ETMR 325. 112 Q/437/99 (2000) CIPAJ 238 (reputation of opponent’s mark remMe tempered because it had been invariably used with a house mark).

113, Case C-375/97 [1999] 3 CMLR 427.

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services covered by the trade mark.’''* It was only when there was a ‘sufficient degree of knowledge of the mark that the public, when confronted with the later trade mark may possibly make an association between the two trade marks, even when used for non-similar products or services, and that the trade mark may consequently be damaged.’ The Court also said that a realistic assessment of whether a mark had a reputation could not simply be based on quantitative criteria, such as the number of people who are aware of the mark. Instead, the question of whether a mark has reputation should

be determined on the basis of a number of different criteria. These included ‘the market share held by the trade mark, the intensity, geographical extent, and duration of its use, and the size of the investment made by the undertaking in promoting it.”!!° The Court also made it clear that while the reputation must exist in the member state, it need not exist throughout the territory: it is sufficient if the reputation exists in a substantial part of it.

One question that has arisen in this context concerns the relationship between a mark with reputation and a mark that is distinctive or well known.'"” It seems that reputation requires something more than distinctiveness which is a qualifying requirement for registrability. At the very least, the notion of reputation implies actual use (rather than mere registration) of the earlier trade mark—though not necessarily use in the UK.1!8 The difference between marks with reputation and marks that are well known is less easy to clarify.'"” On one interpretation, reputation should have a higher threshold than is applied to well-known marks.'”° This is what the UK Government indicated when the provision was adopted,'*! and would help to make sense of the restrictive understanding of ‘association’ in Wagamama.'” Others have said that reputation imposes a related but different standard from that which applies to well-known 114 General Motors Corporation v. Yplon, Case C-375/97 [1999] 3 CMLR 427, 442 (para. 22).

15 Case C-375/97 [1999] 3 CMLR 427, 442-3 (para. 23).

116 Case C-375/97 [1999] 3 CMLR 427, 443 (para. 27). '17 A, Kamperman Sanders, ‘Some Frequently Asked Questions Concerning the Trade Marks Act 1994’ [1995] EIPR 67, 72-4; T. Martino, Trademark Dilution (1996) 93-102 (interpreting the provision in the light

of the ‘accumulated historical baggage’ of passing off, and concluding it requires factual distinctiveness, and hence use).

118 See the discussion of reputation and goodwill at pp. 679-88 above. 119 See e.g. Marca Mode CV v. Adidas AG, Case C-425/98 [2000] 2 CMLR 1061, 1083 (para. 36), where the EC] refers to TM Dir. Art. 5(2) as establishing a form ofprotection without confusion ‘for the benefit of well-

known trade marks’. 120 H. Carty, ‘Do Marks with a Reputation Merit Special Protection?’ [1997] EIPR 684, 685. '21 Tn that it was viewed as replacing the defensive registration provision of TMA 1938, s. 27, which applied only to invented and well-known marks. See White Paper, Reform of Trade Marks Law (Cmnd. 1203), para. 3.1719.

122 The ‘absurdity’ that Wagamama is alleged to produce, namely, that there might be infringement by use of amark on dissimilar goods when there would be no infringement by its use on similar goods, is avoided by confining the operation of s. 10(3) to a very narrow category of famous marks, so that use on similar goods would always produce association confusion. See P. Prescott, ‘Think Before You Waga Finger’ [1996] EIPR 317; “Has the Benelux Trade Mark Law been Written into the Directive?’ [1997] EIPR 99.

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marks: the latter being concerned with the quantity of consumer knowledge, whereas reputation refers to a qualitative criterion that has been described as ‘symbolic

character’.!*’ A third interpretation, based upon the Dutch version of the Directive, treats reputation as involving a significantly lower threshold than well-known marks: the former having the meaning of ‘known’, the latter ‘generally known’.!** While not rejecting the second approach, the latter view received the approval of Advocate General Jacobs when he said ‘although the concept of a well-known mark is itself not clearly defined, a mark with “reputation” need not be as well known as a wellknown mark.’!*° In its judgment, however, the Court of Justice did not consider

explicitly the relationship between the concepts of ‘reputation’ and being ‘well known’. 2.3.3 Unfair advantage or detriment The third requirement that must be met for a mark to fall foul of section 5(3) is that it must be shown that the use of the later mark either. (i)

takes unfair advantage of the earlier trade mark;

(ii) is detrimental to the distinctive character of the earlier trade mark; or (111) is detrimental to the reputation of the earlier trade mark. We will deal with each of these in turn. Before doing so, it is important to note that for a mark to fall foul of section 5(3)/Article 8(5), it is necessary to show that its use

harms the earlier trade mark in one of the three ways listed in the section. Consequently, while other uses may harm the later mark, unless they fall within one of these three categories, the mark will not be refused on the basis that it dilutes the

earlier mark. Put simply, other forms of damage are irrelevant. For example, in the case of a widely licensed mark (such as the virGIN mark), the trade mark owner may be able to show that use of a later (identical) mark brings about a loss of potential licensing revenue. However, if it cannot be shown that the use impacts on either the

earlier mark’s distinctiveness (for example, because the mark is widely licensed) or its reputation (because the later user’s goods are reputable), the later mark would not be refused under section 5(3)/Article 8(5).!?° (i) Unfair advantage. One way in which section 5(3)/Article 8(5) can be invoked is by

showing that the use would take ‘unfair advantage’ of the earlier mark. The need to show unfair advantage prevents a later mark from taking a free-ride on the reputation

123A, Kur, ‘Well-known Marks, Highly Renowned Marks and Marks Having A (High) Reputation: What’s it All About?’ (1992) 23 IIC 218.

124 C, Gielen and B. Strowel, ‘The Benelux Trademark Act: A Guide to Trademark Law in Europe’ (1996) 86 TMR 543 (repute is not a very severe criterion); T. Martino, Trademark Dilution (1996) 97, n. 99,

125 Case C-375/97 General Motors Corporation v. Yplon [1999] 3 CMLR 427, 434-5, 436 (Advocate General, paras. 32, 33, and 37).

126 Opinion of Advocate General Jacobs in Case C-63/97 Bayerische Motorenwerke AG v. Ronald Karel Deenik [1999] 1 CMLR 1099, 1112 (para. 47).

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of the earlier mark.!”” Consequently, in deciding whether use of a later mark takes unfair advantage of an earlier mark, the intention of the applicant (or infringer) is likely to be an important factor. If there is no plausible reason for an applicant to use the mark other than its apparent connection to the earlier trade mark, then it may be reasonable to assume that the applicant intends to take a free-ride. However, if the

earlier and later marks are descriptive or suggestive, it should not be assumed that the applicant intends to take a free-ride. Instead, the unfair advantage would need to be established by other means. It is possible to think of relatively straightforward cases where use of a later mark would take unfair advantage of an earlier mark. This would occur, for example, where a person advertises ‘the Rolls-Royce of lawnmowers’ or perhaps ‘next to Marks & Spencer’s’.!”8 In other cases, however, it may be more difficult to establish that the use brings an unfair advantage to the later

mark.!”?

A number of points need to be kept in mind when thinking about whether the use of a later mark would take unfair advantage of the distinctive character or reputation of the earlier trade mark. The first is that it is necessary for an opponent to show that the unfair advantage or benefit that the later mark derives from the earlier mark is ‘significant’.'*° The second point to note is that mere non-origin association is not sufficient to establish unfair advantage. Simply being reminded of a similar trade mark with a reputation for dissimilar goods does not necessarily amount to taking unfair advantage of the repute of that mark.'! In Oasis Stores the opponents, who were the proprietors of the EVER READY mark for batteries, argued that the applicant would be taking advantage of their reputation by selling condoms under the EvERREADY mark. This was because most people seeing the applicant’s mark would think of the opponent. The Registrar rejected this argument. In so doing he said, ‘[s]ection 5(3) was clearly not intended to have the sweeping effect of preventing the registration of any mark which was the same as, or similar to a trade mark with reputation.”!*2 The Registrar added that the opponents would have had a greater chance of success if they could have pointed to an aspect of their reputation for batteries, etc. which was likely to benefit the applicant’s, mark to some extent.'°3 To establish that the applicant has benefited from the earlier mark (which is treated as the equivalent of showing unfair advantage), it is necessary to point to some specific conceptual connection between the reputation of the earlier mark and the 127 For speculations, see T. Martino, Trademark Dilution (1996) 103-15. 128 Kamper v. C&A (1976) 7 IIC 427 (Court of Appeal of Amsterdam). 129 Tn his opinion in General Motors Corporation v. Yplon, Case C-375/97 [1999] 3 CMLR 427, 437 (para.

42) Advocate General Jacobs emphasized that in applying Art. 5(2) it was important to give full weight to each of the elements. 130 Oasis Stores’ Trade Mark Application [1998] RPC 631, 649. 131 Thids

132 Tbid.; approved in C. A. Sheimer (M.) Sdn Bha’s Trade Mark Application [2000] RPC 484, 505 (where it was held the seller of condoms might gain attention by using the visa mark, but in the absence of a marketing advantage this was not an ‘unfair advantage’). 133 Oasis Stores’ Trade Mark Application [1998] RPC 631, 649.

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goods in respect of which the applicant’s mark is to be used.!*4 For example, where an applicant proposed to sell drinks in a bottle shaped as a football boot which bore the opponent’s well-known ‘three-stripe mark’, the fact that the applicant’s specification would cover isotonic drinks helped to establish a ‘sporting connection’ such that consumers would be likely to believe that there was some connection in trade between the parties.'*? Moreover, the Registry took the view that the applicant’s get-up was calculated to bring the opponent’s mark to mind, and so was ‘precisely the sort of parasitic use that secton 5(3) was intended to provide protection against.’ In contrast, in Audi-Med Trade Mark,'*° Audi opposed the registration of AuDI-MED for hearing aids on the grounds that it would take unfair advantage of the distinctive character or reputation of the aup1 mark. The opponents said that the advantage resulted from the association of aup1 with high technology. Rejecting their claim, the Registry said that even if the mark did have a reputation, it would not easily transfer from cars to deafness aids.'*” The Registrar added that it would be especially difficult to show an ‘unfair advantage’ where the marks were both utilizing ordinary as opposed to invented words. In such circumstances the applicant, like the opponent, is better seen as taking advantage of words in the public domain, rather than taking advantage of the distinctive character of the opponent’s mark.!** (ii) Detrimental to the distinctive character of the earlier mark. Another option available for an opponent is to show that the use of the later mark would be detrimental to the distinctive character of the earlier mark. This is usually referred to as ‘blurring’.!*” The rationale for this is that the use of the mark on different goods may erode the distinctiveness of the earlier mark. In so doing, the unauthorized use on similar products may undermine an established trade mark’s uniqueness and thus its selling power and ‘commercial magnetism’. As Schechter said, ‘if you allow Rolls Royce Restaurants, and Rolls Royce cafeterias, and Rolls Royce pants and Rolls Royce candy, in ten years you will not have the Rolls Royce mark any more’.!*° While the idea of damage to distinctiveness has an intuitive appeal and has been accepted elsewhere,'*’ 141 it is nonetheless controversial. Indeed, there are many who

13@ Thid: 135 Inlima SL’s Application; Opposition by Adidas AG [2000] ETMR 325.

136 [1998] RPC 863. 137 [1998] RPC 863, 874. 138 Oasis Stores’ Trade Mark Application [1998] RPC 631, 649. 139 Premier Brands UK v. Typhoon Europe [2000] FSR 767, 787 (blurring occurs where the distinctiveness of a mark is eroded). One example of detriment primarily relevant to infringement concerns uses of a

proprietor’s mark to describe products or as verbs rather than to indicate their source. Such uses are liable to lead to a mark becoming generic and thus damaging its distinctive character. Where the use is in newspapers, dictionaries, and other literature, a national (as opposed to Community) trade mark owner will often have to rely on the dilution provision to protect the mark from use as a generic description: T. Martino, Trademark Dilution (1996), 115-19.

140 Hearings before the House Committee ou Patents, 72nd Cong., Ist Sess. 15 (1932) cited, inter alia, in T. Martino, Trademark Dilution (1996).

141 Colgate Palmolive v. Lucas Bols Claeryn/Klarein (1976) IIC 420.

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deny that in the absence of confusion or tarnishment any real or verifiable damage would occur, for example, if the ROLLS Royce mark were used for restaurants.!42 The

assumption that the use of ROLLS Royce for restaurants dilutes the earlier mark suggests that all uses on dissimilar goods ought to be prohibited by the owner of a mark with reputation. As the Registrar said in Oasis Stores, [a]ny use of the same or similar mark for dissimilar goods or services is liable, to some extent, to dilute the distinctiveness of the earlier mark. [Section 5(3)] is clearly not intended to have the sweeping effect of preventing the registration of any mark which is the same as, or similar to, a trade mark with a reputation. It is a matter of degree.!*

For an opponent to establish that the distinctive character of the earlier mark has ~ been diminished, the applicant must propose to use a mark that is identical or similar to the earlier mark.'** It also needs to be shown that the earlier mark has a reputation for a limited category of goods, so that if consumers heard the name they would automatically assume the person was referring to a particular product (for example, ROLLS-ROYCE for a luxury car, or TIFFANYs for jewellery). In these instances, dilution by blurring might occur because the owner of the earlier trade mark would no longer be able to rely on the singularity of that association. In Oasis Stores, the Registrar stressed that the question to ask was whether registration and use of the applicants’ mark would have a detrimental effect on the distinctive character of the opponents’ mark for the goods in respect of which it enjoys a reputation.'* In the ROLLS-RoycE example, this would mean that the question would be

whether the use of ROLLS-RoycE for restaurants had a detrimental effect on the distinctiveness of ROLLS-ROYCE for cars. It is difficult to see how it could do so. It is not surprising, therefore, that the Registrar concluded that even if the use of EVERREADY for condoms became widespread, EVER READY would ‘remain just as distinctive for batteries as it ever was’. The Registrar reached a similar conclusion with respect to the impact of auDI-MED for hearing aids on the distinctive character of aupi for cars (which were the goods and services for which the mark enjoys a reputation).'“6 The Registrar’s reasoning means that it will be very difficult to establish detriment through blurring. Indeed, it seems that the classic examples of dilution, such as the use of LEGo for irrigation equipment or CHAMPAGNE for perfume, would fail the test. This is because these uses would not reduce the ability of the earlier mark to distinguish children’s toys or sparkling wines. In effect, the Registry seems to have reincorporated a confusion requirement into the concept of detriment.!4” '42 T. Martino, Trademark Dilution (1996), ch. 8. Martino’s own proposal, for a limited category of marks to receive such protection and for a special register, is outlined at pp. 82-5. '43 Oasis Stores’ Trade Mark Application [1998] RPC 631, 649. '44 Tn cases of similar marks, such as TyPHOO and TyPHOON, blurring is even more difficult to establish: Premier Brands UK v. Typhoon Europe [2000] FSR 767, 802. 145 Oasis Stores’ Trade Mark Application [1998] RPC 631, 650.

'46 Audi-Med Trade Mark [1998] RPC 863, 873. '47 Tn Oasis Stores’ Trade Mark Application [1998] RPC 631, 649, it was said that in considering the question of detriment, it was appropriate to consider the inherent distinctiveness of the earlier trade mark;

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(iii) Damage to reputation. The third option for an opponent is for them to show that the use of the later mark would be detrimental to the repute of the earlier mark. As the Registrar explained in Oasis Stores, for a mark’s reputation to be damaged, the mark must be ‘affected in such a way so that the value added to the goods sold under the earlier trade mark because of its repute is, or is likely to be, reduced on a scale that is

more than de minimus.’'** Damage to reputation, which is often called ‘tarnishment’, exists if the subsequent use reflects badly on the earlier mark.'4? This would be the case where the mark is used on poor-quality or ineffective goods,’ but there might equally be damage to reputation where a mark is used so as to be at risk of it becoming ‘the butt of misplaced humour and even ridicule’.'*! This would also be the case if the mark of a prestigious restaurant such as MEZZO was adopted for escort services, or if a mark of reliability such as vw was used on shoddy goods.'*” In these circumstances, the reputation of a mark may be damaged because consumers come to believe that the products or services are connected. It should be noted that it is not necessary for consumers to think that marks are actually connected for the use to damage the reputation of a mark. If, for example, the use of MEZzo (for escort services) gives rise to a negative image, the reputation of the earlier mark is damaged even though consumers do not believe that the two products are linked in any way. An often-cited example from Benelux jurisprudence is helpful. The owner of CLAERYN for gin was able to object when Colgate attempted to use the phonetically identical kKLAREIN for detergent. The possibility that consumers would thereafter think of detergent when purchasing or consuming gin was sufficiently detrimental to the earlier mark.’* The reason for this was that ‘no one likes to be reminded of a detergent when drinking their favourite tipple. In time the reputation

the extent of the reputation that the earlier mark enjoys; the range of goods or services for which the earlier mark enjoys a reputation; the uniqueness or otherwise of the mark in the marketplace; whether the respective goods/services, although dissimilar, are in some way related or likely to be sold through the same outlets; and whether the earlier trade mark will be any less distinctive for the goods/services for which it has a reputation than it was before. 148 Oasis Trade Mark {1998] RPC 631, 650. '49 In Premier Brands UK y. Typhoon Europe [2000] FSR 767, 798 Neuberger J referred to tarnishing, where the attraction and the capacity of the mark to stimulate the desire to buy is impaired. See T. Martino,

Trademark Dilution (1996), 60-3 (describing this as the judicially favoured facet of dilution, but arguing that ‘tarnishment’ is doctrinally confused); R. Moskin, ‘Dilution or Delusion: The Rational Limits of Trade Mark

Protection’ 83 TMR 122 (most cases of tarnishment assume the consumers draw a link between trade mark owner and the unwholesome product). 150 Pfizer v. Eurofood Link (UK) [2000] ETMR 187. 151 Oasis Stores’ Trade Mark Application [1998] RPC 631, 652. In Corgi Trade Mark [1999] RPC 549, 559

the Appointed Person linked the concept of detriment to ‘discredit’ and ‘denigration’. !52 The European Court of Justice recognized the possibility of damage in this way in Parfums Christian Dior SA v. Evora BV, Case C-337/95 [1997] ECR I-6013 (para. 43).

'53 Colgate Palmolive v. Lucas Bols Claeryn/Klarein (1976) IIC 420. Referred to with seeming approval in British Sugar ple v. James Robertson & Sons [1996] RPC 281, 295; Premier Brands UK v. Typhoon Europe [2000] FSR 767, 787; Oasis Stores’ TM Appn. [1998] RPC 631, 651.

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of the earlier mark may have suffered to the extent that it no longer added the same degree of value to the goods as it did before.”!™4 The owner of the earlier trade mark must establish that the negative association will be real, not fanciful. For example in Oasis Stores!®> the Registry accepted the EVERREADY mark for contraceptives for registration, despite an opposition by the owner of a similar mark for batteries. The Registrar said that in order to succeed under section 5(3) the earlier trade mark owner needed to show that its reputation would be ‘damaged or tarnished’. Although the purchase of condoms may once have been a source of embarrassment, the Registrar thought that the stigma associated with condoms had decreased. As a result, it was implausible to believe that a significant number of people would be so embarrassed by the fact that EVERREADY was used as a trade mark for contraceptives that they would be less likely to choose EVER READY batteries.!°° The Oasis Stores decision should be contrasted with C. A. Sheimer (M.) Sdn

Bhd’s Trade Mark Application,'*’ where the Appointed Person allowed VISA International’s opposition to the applicant’s mark visa for condoms on the ground that it would ‘burden VISA International’s own use of its earlier registered mark with connotations of birth control and sexual hygiene that would alter perceptions of the mark negatively from the point of view of a provider of financial services ... Visa International should not have to carry the burden of advertising condoms and prophylactics at the same time as it promotes its own services.’

2.4 WITHOUT ‘DUE CAUSE’ Once an opponent has established that its earlier mark has a reputation, and that use of the applicant’s mark will take unfair advantage of, or be detrimental to, the earlier mark, the obligation then falls upon the applicant to show that the use would not be ‘without due cause’.!°* While some individual instances of use might be justifiable (particularly in relation to an action for infringement),!® it is difficult to imagine many situations where registration of a mark would be justifiable in the face of an accusation that it fails to comply with section 5(3). In Premier Brands UK v. Typhoon Europe,'® Neuberger J held that the phrase ‘without due cause’ required an applicant (or in the case of an alleged infringer, the defendant) to show some justifiable reason 154 Oasis Stores’ Trade Mark Apllication [1998] RPC 631, 651. 155 [1998] RPC 631. 156 Oasis Stores’ Trade Mark Application [1998] RPC 631, 651. In Premier Brands UK v. Typhoon Europe [2000] FSR 767, 799-801 Neuberger J held that the mark TyPHoo was not tarnished by the use of ryPpHOON on kitchenware, because it was unlikely that this would trigger an unfortunate connection with the destructive force of typhoons. But Adidas’s three-stripe mark would be tarnished by its use in connection with alcohol: Inlima SL’s Application; Opposition by Adidas AG [2000] ETMR 325, 336.

157 [2000] RPC 484, 506-7.

158. Premier Brands UK v. Typhoon Europe [2000] FSR 767, 792. !59 One example of a situation where a mark might be used without due cause is where there has been longstanding use.

160 [2000] FSR 767, 789-92.

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for using its sign in relation to its goods even though this was unfair or detrimental to the earlier mark. The decision to select a particular mark in good faith would not justify its registration (or continued use). Consequently, assuming TEL’s use of TYPHOON for kitchenware took unfair advantage of the claimant’s registered mark TYPHOO, the fact that TEL selected the sign in good faith did not mean its use was with “due cause’. This was, in part, because TEL had failed to conduct searches.

Under Benelux law an earlier mark is only used with due cause where it can be shown that the defendant needed to use the mark and that suitable alternatives were not available. In Colgate Palmolive v. Lucas Bols Claeryn/Klarein,'*! the court said that for this to occur the user of the mark must be ‘under such a compulsion to use this very mark that he cannot honestly be asked to refrain from doing so regardless of the damages the owner of the mark would suffer from such use, or that the user is entitled

to the use of the mark in his own right and does not have to yield this right to that of the owner of the mark.’ On this basis the court rejected Colgate’s claim that due cause exists when the user of the registered mark has a just interest in such use. The fact that in Belgium the word KLAREIN was particularly well-suited to be used as a mark for a detergent was not a justifiable reason for diluting the claimant’s CLAREYN mark for gin.

2.5

A NEED

FOR

CONFUSION?

It is necessary to leave the statutory formula and ask whether it is necessary to demonstrate a likelihood of confusion for an application to be rejected under section 5(3)/Article 8(5). Given that there is no mention of such a requirement in the section,

the answer may seem self-evident. However, this was not the answer provided in BASF vy. CEP'® and in Baywatch Production v. The Home Video Channel.!© In BASF v. CEP’ the claimant company, which was the owner of the mark opus for pesticides, moved for an interlocutory injunction to prevent CEP from publishing a directory of farming supplies under the name, FARMING opus. Given that the goods were dissimilar, the action was based on section 10(3), which is a mirror of section

5(3). Refusing the relief sought, Knox J said that in the absence of confusion it was not possible to say that the defendant had taken unfair advantage of the claimant’s mark. Given his view that neither the distinctive character nor the reputation of the claimant’s mark is adversely affected when there is no risk of relevant confusion, Knox J

said that the claimant did not have an arguable case. While the BASF decision might have been confined to situations where there was no evidence of detriment or unfair advantage, it was used to buttress a more contro-

versial proposition in Baywatch Production v. The Home Video Channel.'® The claimant was the producer of BAywATcH, a weekly television programme about a team of

lifeguards who patrol the Santa Monica beaches. As the court noted, the key female 161 (1976) IIC 420. 164 [1996] ETMR51.

162 [1996] ETMR 51. 165 [1997] FSR 22.

163 [1997] FSR 22.

838

TRADE MARKS AND PASSING OFF

character in the programme, which the claimants described as a ‘light entertainment family programme with a strong moral theme’, was the actress Pamela Anderson-Lee who ‘has an hour glass figure and long blond hair’. As proprietor of the word mark BAYWATCH for video tapes and discs,'® the claimant sought an injunction to prevent the defendant broadcasting an adult entertainment television channel entitled BABEwaTcH which contained sexually explicit material. The claimant argued that BayWATCH was a mark with reputation, that BABEWATCH was a similar mark, and that

although BABEWaTCH was being used on dissimilar goods, the use took advantage of and tarnished the claimant’s mark. Dismissing the application, Judge Crystal QC held that the concept of similarity in section 10(3)(a) (and thus also section 5(3)) intro-

duced a requirement of likelihood of confusion into the section. This was on the basis that it would have been illogical if the section gave greater protection to non-similar goods or services by dispensing with the ingredient of a likelihood of confusion, than it afforded to similar goods under section 10(2).'°” Judge Crystal QC found support for his view in the judgment of Knox J in BASF v, CEP.'® While the Baywatch decision could be criticized on a number of grounds,!® it is unnecessary to elaborate on these given that it is unlikely to be followed in the UK. This is because the European Court of Justice has indicated that confusion is not a prerequisite to liability under Article 5(2) of the Directive (the infringement counterpart to Article 4(4)(a) ).'”° In particular, when interpreting Article 4(4)(a) in Sabel v. Puma,'”' the Court acknowledged that Articles 4(3), 4(a), and 5(2) of the Direct-

ive do not require proof of likelihood of confusion.'”? More emphatically, in General Motors Corporation v. Yplon,\”* the Advocate General said that ‘there is no requirement under Article 5(2) of a likelihood of confusion on the part of the public.” The UK Trade Mark Registry has since indicated that it does not consider confusion to be a requirement of section 5(3),'* and the High Court in Pfizer v. Eurofood Link (UK)

(the Viagra case), and Court of Appeal in British Telecommunications ple v. One in a Million came to the same conclusion.'”° As aresult, while BASF and Baywatch have yet to be formally overruled, they can safely be disregarded. '66 It did not have a registration for television programmes or anything to do with broadcasting.

167’ [1997] FSR 22, 30. 168 [1997] FSR 22, 31.

169 Most obviously for introducing a concept into s. 10(3) that is clearly not present in the statute; but also for introducing the absurdity that where a case on s. 10(3) is based on an ‘identical’ sign (as opposed to a j similar one), no confusion need be proved. 170 Sabel v. Puma [1997] ECR 1-6191, I-6223 (para. 20).

171 Tbid., I-6208 (para. 48). '72 Tbid., 1-6223—4 (paras. 20-1). See also Marca Mode CV v. Adidas AG, Case C-425/98 [2000] 2 CMLR.

1061, 1083 (para. 36), where the ECJ refers to Trade Mark Directive Art. 5(2) as establishing a form of

protection whose implementation does not require the existence of a likelihood of confusion.

173 Case C-375/97 [1999] 3 CMLR 427.

'74 Oasis Stores’ Trade Mark Application [1998] RPC 631, 646-8; Audi-Med Trade Mark [1998] RPC 863;

Corgi Trade Mark [1999] RPC 549, 558; C. A. Sheimer (M.) Sdn Bhd’s Trade Mark Application [2000] RPC 484, 504.

75 [2000] ETMR 187; [1999] FSR 1; Premier Brands UK v. Typhoon Europe [2000] FSR 767, 788-9.

RELATIVE

GROUNDS

3 EARLIER

FOR

REFUSAL

839

RIGHTS

In addition to refusal on the basis of earlier trade marks, a mark may also be rejected on the basis that it conflicts with ‘earlier rights’. The relative grounds for refusal in relation to earlier rights are found in sections 5(4)(a) and 5(4)(b), and Articles 8(4)

and 52(2) respectively.'”° These provide that a trade mark shall not be registered where the use of the applicant’s mark would be restrained under the law of passing off—section 5(4)(a)/Article 8(4)—or by some other right, such as copyright—section 5(4)(b)/Article 52(2). We consider each in turn.

3.1

UNREGISTERED

MARKS

Section 5(4)(a) provides that a trade mark shall not be registered if, or to the extent

that, its use in the United Kingdom is liable to be prevented by virtue of any rule of law (in particular, the law of passing off) protecting an unregistered trade mark or other sign used in the course of trade. It seems this section is intended to implement Article 4(4)(b) of the Directive, though that provision uses the narrower language of

‘rights to a non-registered trade mark’.'”” It is clear from the wording of the Directive that the right to prevent use of a later mark under section 5(4)(a) must have existed prior to the date of application

or, where appropriate, the date of priority claimed. Section 5(4)(a) will cover passing off,'”* if the requisites of goodwill, misrepresentation, and likely damage can be established.'”” In the case of Community trade marks, the owners of rights in unregistered marks may only oppose registration if the sign is ‘of more than mere local significance’.'*? The burden of proving the existence of the earlier right falls upon the opponent. In this context it is important to note that ‘in an action for passing off the likelihood of misrepresentation and the prospect of damage to goodwill must be sufficiently real and substantial to warrant the intervention of the cour

3.2

COPYRIGHT,

DESIGN

RIGHT,

AND

REGISTERED

DESIGN

RIGHT

Section 5(4)(b) states that a trade mark shall not be registered if, or to the extent that,

its use in the United Kingdom is liable to be prevented “by virtue of any earlier right ...in particular by virtue of the law of copyright, design right or registered designs.’ This provision is permitted by, but does not take complete advantage of, Article 176 Art. 52(2) is not a relative ground for refusal, but a ground for invalidity.

177 Wild Child Trade Mark [1998] RPC 455, 457. See also CTMR Art. 8(4). 178 These used to be dealt with by TMA 1938, s. 11. 179 See Chs. 32+4 above.

180 CTMR Art. 8(4). 181 Corgi Trade Mark [1999] RPC 549, 557.

840

TRADE

MARKS

AND

PASSING

OFEF

4(4)(c) of the Directive.'** In contrast, there is no provision for opposition at the OHIM on this ground. Article 52(2) of the CTMR does, however, recognize conflict

with earlier rights as a ground of invalidity. If someone owns copyright in the design of a device, the effect of section 5(4)(b) is that the applicant cannot obtain protection for the device as a trade mark without their consent. For example, in Karo Step Trade Mark,'** an applicant succeeded in having a registered proprietor’s device mark cancelled on the basis that they owned artistic copyright in the mark.'** Similarly, in Oscar Trade Mark!® the Academy of Motion Pictures successfully opposed the registration of a device mark comprising a silhouette of the famous Oscar statue given out at the annual Academy Awards. Graham J held that the statue was protected by copyright as a sculpture and that the silhouette device had been copied from it.'** It should be recalled that because single invented words and short phrases do not ordinarily provide information, instruction,

or literary pleasure they are not usually protected by copyright as literary works.!*7 Section 5(2)(b) will not therefore enable the creator of a word or short phrase to

prevent someone else from using the word or short phrase as a trade mark.!8°

4 OVERCOMING

THE

RELATIVE

GROUNDS

FOR

REFUSAL Where there is a conflict between an application and an earlier mark or right, the Registry will normally refuse registration. This is not the case, however, where the proprietor of the earlier mark or right consents to registration.'®? A conflicting later mark may also be registered where an applicant can show that there has been honest concurrent use of the trade mark.

4.1

CONSENT

Section 5(5) provides that although a mark may fall within the scope of one of the relative grounds for refusal, the later mark may nonetheless still be registered if the owner of the earlier trade mark or other earlier rights consents to the registration. '82 In particular, there is no ground of objection in UK law based on a person’s right to ‘names’ or ‘personal portrayal’ because such rights have not received recognition as doctrines separate from passing off. 183 [1977] RPC 255. 184 [1977] RPC 255, 273. See also Hutchinson Personal Communications v. Hook Advertising [1996] FSR

549; Team Lotus Ventures’s Application; Opposition of Group Lotus [1999] ETMR 669. For further discussion,

D. Lyons, ‘Copyright in Trade Marks’ [1994] EIPR 21. 185 Oscar Trade Mark [1980] FSR 429.

186 Tbid., 439, 440. 187 See above at pp. 54-6

188 But see TMA s. 3(6), discussed at pp. 807-10 above.

189 TMA s. 5(5).

RELATIVE

4.2

HONEST

CONCURRENT

GROUNDS

FOR

REFUSAL

841

USE

While an application that conflicts with an earlier mark or earlier rights will normally fall foul of one of the relative grounds for refusal, section 7 creates an exception in situations where there has been an ‘honest concurrent use’ of the mark. Honest concurrent use, which is neither required by nor alluded to in the Directive, recognizes that two parties might innocently use competing marks on similar goods and services for a period of time before either or both seek to register the mark. It should be noted that the provision is more limited in scope than it was in the past.!* It should also be noted that the exception does not apply to absolute grounds for refusal.'°' The section will cease to apply should an order be made under section 8 (which confers on the Secretary of State the power to order that the relative grounds only be raised by proprietors of earlier trade marks or other rights in opposition proceedings).!” The obligation falls upon the applicant to convince the Registrar that there has been an ‘honest concurrent use’. ‘Honest concurrent use’ is defined in section 7(3) as

a use that would have formerly amounted to an honest concurrent use for the purposes of section 12(2) of the 1938 Trade Marks Act. Under the 1938 Act, the Registrar was given a discretion to permit the registration of identical or confusingly similar marks for the same goods in the case of honest concurrent use (or other special circumstances). It seems that the applicant must demonstrate that the use was honest and concurrent (either with the existence of the earlier trade mark or its

use).'”* In considering whether there has been an honest concurrent use, the criteria that were taken into account under the 1938 Act (and therefore continue to be relevant) include: (a) the length of use;!”° (b) the amount of use; (c) the area in which the mark was used; (d) the degree of confusion (present, absent, or likely);

(e) ‘the honesty of the concurrent user’;!”° (f) the existence of actual confusion;

(g) ‘the degree of likely confusion’; and (h) the impact that registration would have on the public.

190 See Annand and Norman (1994), 107-8. 191 TMA s. 7(4)(a). \o

192 TMA s. 7(5). 193 See Alexander Pirie & Sons’s Application (1933) 50 RPC 147. 194 Origins Natural Resources On v. Origins Clothing [1995] FSR 280, 287. 195 Buler Trade Mark [1975] RPC 225.

196 Note that while knowledge of the earlier registration is relevant, it is not necessarily conclusive of dishonesty by the applicant: Bali Trade Mark (No. 2) [1978] FSR 193.

842

TRADE

MARKS

AND

PASSING

OFF

The operation of section 7 is likely to be of comparatively minor significance. This is because it only applies as between applicants and the Registrar. If the owner of the earlier trade mark or earlier right objects to an application after it has been accepted and published, then the honest concurrent use will be of no assistance to the applicant. In these cases, the Registrar must refuse to proceed with the application.” Section 7(3) says that honest concurrent use does not affect the making of an application of a declaration of invalidity under section 47(2). As such, the owner of prior mark or right is still able to challenge registration under section 47(2) subject, however, to the defence of acquiescence. Any sympathy the tribunal has for an applicant is likely to be expressed in a finding that the likelihood of confusion was small. Alter-

natively, the tribunal might adapt the doctrine of acquiescence so as to estop the opponent from objecting to the registration. 197 Road Tech Computer Systems v. Unison Software (UK) [1996] FSR 805, 813; CodaStrade Mark [2001] RPC 240.

39 REVOCATION

1 INTRODUCTION In spite of the examination process, the trade mark register is not a guarantee of the validity of trade marks.’ As such, a registered trade mark can always be removed from the register after registration. There are two reasons why a mark might be removed from the register. The first is if it is held to be invalid. The grounds for invalidity are set out in section 47 of the 1994 Act and Articles 51-2 of the CTMR. These provide that a mark may be declared invalid on the basis that it was registered in breach of one of the absolute or relative grounds for refusal: topics which were dealt with earlier.’ The second reason why a mark might be removed from the register, which is the focus of this chapter, is if it is ‘revoked’. There are four grounds for revocation and these are found in section 46 and Article 50 of the CTMR (which largely correspond to the provisions in Articles 10 and 12 of the Directive). Section 46/Article 50 provide that a mark may be revoked (in relation to all or some of the goods and services in respect of which they are registered)’ on the ground that: (i)

the trade mark has not been used for five years following the date of completion of the registration (non-use);

(ii) use of the trade mark has been suspended for an uninterrupted period of five years; (iii) the trade mark has become the ‘common name in the trade’ (generic); or

(iv) the trade mark has been used in a way so that it is liable to mislead the public (deceptive).*

Section 7(4) of the Act provides that an application for revocation may be made by any person, and may be made either to the Registrar or the court.? In many cases 1 TMA s. 70. 2 any 3 4

See Chs. 36-8. TMA s. 47(6) provides that where the registration of a trade mark is declared invalid to extent, the registration shall to that extent be deemed never to have been made. TMA 46(5); CTMR Art. 50(2). Under CTMR Art. 50 a further ground for revocation exists where the proprietor no longer satisfies the

requirements of CTMR Art. 5 as regards status.

5 Alternatively, an application for revocation may be made by way of counterclaim to an action for infringement: CTMR Arts. 50(1) and 95(1). Non-use can also be put in issue in opposition proceedings at the OHIM: CTMR Art. 43(2).

844

TRADE MARKS AND PASSING OFF

proceedings have a regrettable tendency to be drawn-out affairs. The that a mark should be revoked falls upon the party seeking revocation relation to revocation for non-use, however, section 100 modifies the by stating that the proprietor must show the use that has been made

onus of proving of the mark.® In general position of the registered

mark.’ It should be noted that, while the section appears to confer a discretion on the

Registrar to leave an otherwise revocable mark on the register (but not to remove a mark which is not revocable), the Registry has concluded that no such discretion exists.® Even if this conclusion turns out to have been mistaken,’ any discretion which does exist is likely to be exercised rarely.!° With these general points in mind, we now consider the grounds on which a registered mark may be revoked. It is convenient to deal with the two non-use grounds together.

2 NON-USE The first reason why a mark may be revoked is on the basis of ‘non-use’. Revocation for non-use reflects a traditional disapproval of the stockpiling of marks."! It also reflects the notion, now found in the law of passing off, that protection for marks is

justified as a result of their use.'? As a South African court explained, the general purpose of revocation:

is to restrict the monopoly and protection conferred by registration to the proprietor’s legitimate and actual trade requirements and to avoid the inconvenience, cost, oppression, and interference with trade that would result from allowing trade marks to be registered with the intention, not of using them, but merely of preventing other traders from using

them.!°

As there are a finite number of useful or valuable marks, revocation for non-use can 6 TMA s. 72. Nevertheless, it was held in Softa Trade Mark [1996] RPC 457 that where the registered

proprietor entered no defence that, prima facie, the application to remove is valid.

if Reversing Nodoz Trade Mark [1962] RPC 1, 5. But there is no equivalent in the CTMR: see Annand and Norman (1998), 142. 8 Zippo Trade Mark [1999] RPC 173, 184; Cabanas Havana (Device) Trade Mark [2000] RPC 26, 34;

Premier Brands UK v. Typhoon Europe [2000] FSR 767; A. J. & A. M. Levy’s Trade Mark (No. 2) [1999] RPC 38. ? The question has been referred to the ECJ: Scandecor Developments v. Scandecor Marketing (HL, 4 Apr.

2001, paras. 55 and 67).

10 Lyons’ Application [1959] RPC 120. 'l For an extreme example of such stockpiling, where 7-Up registered 138 alternative names, see S. Carter, .

‘The Trouble with Trademark’ (1989-90) 99 Yale Law Journal 759, 780 n. 84. 12 Imperial Group v. Philip Morris [1982] FSR 72, 80-1; Invermont Trade Mark [1997] RPC 125; Cabanas Havana (Device) Trade Mark [2000] RPC 26, 34. TM Dir. Recital 8 refers to a desire to reduce the number of

registered marks.

13, Distillers Corporation (SA) v. South African Breweries (1976) 3 SA 515 AD. Given that the OHIM allows

applications for very broad specifications, revocation is likely to play a very significant role in restricting the rights of trade mark proprietors within appropriate confines.

REVOCATION

845

also be explained on the basis that it helps to ensure that unused marks are recycled.'* Moreover, rather than operating as a defence to an action for infringement, the ability to revoke registrations for non-use recognizes the public interest in the purity of the register and the desire to maintain it as a reflection or mirror of

enforceable marks.!* 2.1

THE

RELEVANT

PERIOD

OF NON-USE

As indicated, there are two distinct grounds of non-use. The first ground for non-use is set out in section 46(1)(a)/Article 50(1)(a),'° which provides that a trade mark may

be revoked on the basis that ‘within the period of five years following the date of completion of the registration procedure it has not been put to genuine use in the United Kingdom, by the proprietor or with his consent, in relation to the goods or services for which it is registered, and there are no proper reasons for non-use.’ In order for a mark to be revoked under setion 46(1)(a), it is necessary to show that in

the five-year period after registration the mark has not been put to genuine use.!” The fact that the non-use must be for a five-year period recognizes that the registrant should be given a reasonably lengthy period in which to arrange the use of the mark. The second ground of revocation for non-use is found in section 46(1)(b). This

states that a mark may also be revoked where ‘use has been suspended for an uninterrupted period of five years, and there are no proper reasons for non-use.’ In order for a mark to be revoked on this ground, it is necessary to show that use of the mark has been suspended for an uninterrupted period of five years.'® The fact that the non-use must be for a five-year period recognizes that the goodwill built up from the use of a mark does not immediately disappear when the owner stops using the mark.” A mark will not be revoked on the basis of non-use if use is commenced or resumed after the expiry of the five-year period and before the application for revocation is made.’° Section 46(3) goes on to say, however, that the commencement or resumption of use is to be disregarded if it takes place ‘within the period of three months before the making of the application’. This provision will not apply, however, ‘where preparations for the commencement or resumption began before the proprietor became aware that the application might be made.’ The three-month cut-off '4 See S. Carter, ‘The Trouble with Trademark’ (1989-90) 99 Yale Law Journal 759 (arguing that the protection of marks that convey no information to consumers carries significant, but rarely mentioned, costs by depleting market language and raising substantial barriers to entry). For an alternative, consumer-oriented interpretation, see Davis, ‘Death of a Salesman’s Doctrine: A Critical Look At Trademark Use’ (1985) 19 Georgia Law Review 233, 234.

15 D, Vaver, ‘Summary Expungement of Registered Trade Marks on the Ground of Non-Use’ (1983) 21 Osgoode Hall Law Journal 17, 23; Imperial Group v. Philip Morris [1982] FSR 72, 84. 16 TM Dir. Art. 10(1). For the international standards limiting such powers, see Paris, Art. 5C; TRIPs Art. 19:

\7 TM Dir. Art. 12. 18 Tbid. 19 Note the corresponding rules in relation to passing off at pp. 682—3 above.

20 TMA s. 46(3).

846

TRADE

MARKS

AND

PASSING

OFF

period operates to prevent trade mark proprietors who have not used the mark from defeating an application for revocation for non-use by (re)-commencing use as soon as they get wind of the interest of the applicant. An applicant is thus theoretically able to write to the proprietor before they apply to have a mark revoked and ask whether there has been any use of the mark. In so doing, they will be safe in the knowledge that although their inquiry may prompt the trade mark proprietor to use the mark, this will not defeat their application for non-use. One question that has arisen is whether it was possible to register the same mark twice. If so, the further question arises: how does this impact on the five-year non-use rule? In Origins Natural Resources v. Origin Clothing! the claimant, who had taken an assignment of a mark registered for various clothes in Class 25, applied to register the same mark for a wider range of clothes. The defendant argued that this should not be allowed because it would undermine the five-year non-use rule. Jacob J disagreed,

saying [I]fa man were to keep registering the same mark with no genuine intention of using it then he would lose his mark . . . If, on the other hand, a man had registered a mark with a bona fide intention to use it and found himself unable to use it for a number of years so that the mark was removable . . . but he still had genuine plans to use the mark then I see no reason

why he should not apply again.”

This approach was affirmed under New Zealand law by the Privy Council in Cussons v.

Unilever.”

2.2

WHAT

IS USE OF THE

MARK?

The next question to ask in relation sections 46(1)(a)—(b)/Article 50(1)(a) is what is

meant by ‘use’ of the mark? One interesting point to note is that not all uses of a trade mark which would infringe (if done by a third party) amount to use for the purposes of defending an application for revocation. Consequently, it is now unclear whether uses of the registered sign which are not uses ‘as a trade mark’ in the sense of indicating trade origin of the goods or services in question count as use for the purposes of sections 46(1)(a)—(b). Under the 1938 Act, it was held that it was neces-

sary for a registered proprietor to show that the mark had been used as a mark. More specifically, it was held that where a mark was used as a corporate name, it was not sufficient to justify maintenance of the mark.?* However, as the requirement of use as a mark has been dispensed with in the context of infringement under the 1994 Act,25 it is unclear whether the law on this point is the same under the 1994 Act as it was under the 1938 Act. 21 [1995] FSR 280. 22 [1995] FSR 280, 284. 23 Cussons (New Zealand)

v. Unilever [1998] RPC 369 (though indicating that the Registrar might exercise

its discretion to refuse such a registration which was being made for no good reason). *4 Orient Express Trade Mark [1996] RPC 25, 42. 2° British Sugar v. Robertson [1996] RPC 281. See pp. 867-8.

REVOCATION

847

(i) Use via sale. The most obvious way a registered proprietor will be able to show use is by demonstrating sales of articles that are marked with the sign. It has been sug-

gested that a single sale may be sufficient to establish use.”° (ii) Use via advertising. Proprietors will not be able to claim they have used the mark

if they have merely advertised goods for sale without having goods in stock or taken steps to acquire such goods. In Revue Trade Mark,’ use of the mark REvuE in catalogues and on price lists, coupled with evidence that at least one set of binoculars bearing the mark had been made and that a substantial number of binoculars had been ordered, was taken to be sufficient to prevent revocation.** The hearing officer said that ‘{i]f the proprietor has, by the time an offer for sale is published, taken

positive steps to acquire goods marked with the trade mark, he has done enough for

his actions to constitute use.” (iii) Use via preparatory acts. Preparatory acts have been held to constitute use even though they may not indicate to other traders or inform the public at large that the mark was in use. For example, in Hermes Trade Mark’® the fact that the owner of

the mark HERMEs had asked manufacturers to supply dials for watches bearing the HERMES mark was sufficient to defeat an accusation of non-use. In this case, Falconer

J construed ‘use’ generously so as to protect proprietors who had spent time, money, and effort in preparing to relaunch the trade marked product. More specifically, Falconer J said that the section was wide enough to embrace the preliminary steps necessary for the production of goods, as well as the process of actually placing them on the market. (iv) Use via associated marks. Trade mark owners might wish to modify their trade

marks in accordance with changing fashions and styles. As long as the changes do not alter the distinctive character of the mark, the use of the modified mark will be recognized as use of the registered mark. Section 46(2) explains that “use of a trade mark includes use in a form differing in elements which do not alter the distinctive character of the mark in the form in which it was registered.’ The question of whether a change to a mark alters the distinctive character of a mark is one of ‘first impression’.*! Much will depend upon the type of mark (whether a word or device mark), the way the mark is typically used and understood (whether visually, aurally, or conceptually), and the way the mark is varied. To change the distinctive character of the mark, it is necessary to alter the identity or the

26 Nodoz Trade Mark [1962] RPC 1, 7.

27, [1979] RPC 27; 28 Under TMA

s. 10(4)(d) uses on invoices, delivery notes, and business paper constitute infringing

uses, though it is unlikely that they would have done under the 1938 Act: see Cheetah Trade Mark [1993] FSR 263.

29 [1979] RPC 27, 31. 30 [1982] RPC 425. See also Arlite Trade Mark [1995] RPC 504, 508. 31 Huggars Trade Mark {1979] FSR 310, 316.

848

TRADE

MARKS

AND

PASSING OFF

individuality of the mark. This is a question of fact.2? In one case, altering a single letter of a word was held to have substantially affected its identity, so that the use of HUGGERs on clothes could not support the maintenance of the registered HUGGARS.*? While noting there was no phonetic distinction, Mummery J observed that much of the use of the mark was visual and that it should be regarded primarily in such a context. Moreover, the concept suggested by the marks differed substantially with HUGGERS easily associated with clothing and HuGGaRs less obviously so.

(v) Use by a licensee. One question that arises in relation to the operation of section 46(1)(a)—(b)/Article 50(1)(a) is whether the proprietor of a mark can rely upon use

by a licensee to ensure that a mark is not revoked because of non-use. When confronted with the licensing of marks in the nineteenth and early part of the twentieth century,* the courts suggested that as licensing would deceive the public as to the origin of the goods, the licensed mark would be invalid. Under the 1938 Act, however, trade mark owners were given the power to assign their marks. Specific provisions were also introduced which enabled licensees to register their interests. When duly registered, licensees were known as ‘registered users’. Being listed as a registered user had a number of benefits, notably that the use of the mark by a registered user enabled the proprietor to resist an action for non-use. The registereduser agreements had to be submitted to and approved by the Trade Marks Registry: a requirement that not all trade mark owners knew about or wanted to comply with. As a result, the question arose as to whether the proprietor of a mark could rely upon use by an unregistered licensee to ensure that the mark was not revoked for non-use. In Radiation Trade Mark,*° the Comptroller-General held that use by subsidiaries in a group of companies was use which could be ascribed to the controlling company. In Bostich Trade Mark,** Lloyd Jacob J took the view that because the registered-user provisions were permissive, not mandatory, there was nothing ‘to justify the view that an arrangement between a registered proprietor of a trade mark and a party concerned to use such mark requires to be registered, still less that in the absence of registration, its affect upon the validity of the mark, if called in question, will be in any way different.’ Although non-use was not an issue in that case, it seems clear that the quality control exercised by the proprietor was such that use by the unregistered licensee would have been sufficient to justify maintenance of the registration.°” 32 In the Matter of Morny’s Trade Marks (1951) 68 RPC 55 and 131 (where a word mark was registered in

capitals, use in lower case was taken not to alter the distinctive character); Elle Trade Marks [1997] FSR 529; Cabanas Habana (Device) Trade Mark [2000] RPC 26, 31. :

33 Huggars Trade Mark [1979] FSR 310. 34 Bowden Wire v. Bowden Brake (1914) 31 RPC 385; see Scandecor Developments v. Scandecor Marketing

(HL, 4 Apr. 2001).

3° Radiation Trade Mark (1930) 47 RPC 37.

%6 [1963] RPC 183, 195. In Trooper Trade Mark [1994] RPC 26, 31, Mr Harkness interpreted Bostitch as indicating that ‘registration of a user is not necessary provided that the arrangements between the parties are such that registration could be effected if the parties so wished.’ A more restrictive approach was taken in McGregor Trade Mark [1979] RPC 36. 37 Cf. Job Trade Mark [1993] FSR 118 (insufficient control of registered users in relevant period meant use did not accrue to registered proprietor).

REVOCATION

849

The 1994 Act abolished the registered-user requirement. As well as bringing about a more liberal approach to licensing in general, the 1994 Act also increased the number of situations where licensing can count as a use by the trade mark proprietor. As the 1994 Act says that there must be use by the proprietor or with their consent, it seems that use by a licensee will be sufficient to ensure that a mark is not revoked for

non-use.**® 235

GENUINE.

USE

For a mark to remain on the register, it is necessary to show that it has been put to genuine use in the UK. As with the previous law,” the 1994 Act distinguishes between situations where a mark is only used to prevent it being revoked and situations where the mark has been put to genuine use in the UK. The factors that will support a finding that the use is genuine vary with the particular trade context, and include the number of goods which have been sold with the

mark attached,” as well as whether the goods are specially developed or the same as existing products in the trade mark owner’s range.* So long as the use is genuine and not merely colourable, it does not matter that the motive for the use was to enable the

owner to avail themselves of their rights.** In situations where there has only been a temporary use of the mark (which may suggest that the use was not genuine), the

courts will consider whether it was intended that the use be temporary,** or whether the use was meant to be permanent, but terminated because of unfavourable condi-

tions. Another factor that will be taken into account in determining whether a use is genuine is whether there was any prelaunch market research and launchmarketing (whether by advertising or at the point of sale).** It is important to note that the size of the launchis not determinative of whether it amounts to a genuine use. Thus, a small and unsuccessful launch may constitute a genuine use.* In

38 TM Dir. Art. 10(3); TRIPs Art. 19(2). 39 The idea of ‘genuine use’ had a place in pre-1994 case law concerning ‘bona fide use’. See Zippo Trade Mark [1999] RPC 173, 185; Istrad v. J. Floris O/465/99 (2000) CIPAJ 298. 40 Relative to the particular trade: Concord Trade Mark [1987] FSR 209, 226. Cf. Premier Brands UK v.

Typhoon Europe [2000] FSR 767, 805-6, where Neuberger J held there was genuine use even though, in all but two cases, the goods were given away. 41 In both Concord Trade Mark [1987] FSR 209 and Imperial Group v. Philip Morris [1982] FSR 72 the launchers used pre-existing cigarettes. In contrast, in Premier Brands UK Ltd. v. Typhoon Europe Ltd [2000] FSR 767, 807 the use was genuine ‘in that the goods were supplied, in part, for their own intrinsic merit and distributed with a view to making a profit.’ 42 Electrolux v. Electrix (1954) 71 RPC 23 (use was ordinary, genuine, and substantial even if proprietor’s motive was to commercially damage the defendant). 43 Levi Strauss v. Shah [1985] RPC 371. 44 Concord Trade Mark [1987] FSR 209 (no market research or advertising for launch of concorp cigar-

ettes); Imperial Group v. Philip Morris [1982] FSR 72. 45 Bon Matin Trade Mark [1989] RPC 537 (attempts to engage persons to distribute, even though nonextensive and not vigorous, were bona fide use).

850

TRADE

MARKS

AND

PASSING

OFF

contrast, a sizeable launch may not be genuine if it is merely a front for use of

another mark.*° In considering whether a use is genuine, the courts have frowned on the practice of ghost-marking, which is a technique used to provide indirect protection to nonregistrable marks. This may occur where a person discovers that for one reason or another, they cannot register the mark they have been trading under. One option in these circumstances is for the trader to continue to trade under the unregistrable mark and at the same time attempt to register a similar mark. Based upon the fact that trade mark protection includes marks which are similar, the trader would hope to be able to use the registered mark indirectly to protect the mark that they are actually trading under. For example, in Imperial Group Ltd v. Philip Morris,*’ the claimant company wished to market a cigarette under the name merit but had been warned by their legal advisers that the mark was unregistrable. To protect themselves, they registered NERIT as a ghost mark. The idea was that this would enable them to prevent competitors using MERIT on the ground that it would be so similar to NERIT as to cause confusion. In response to the introduction of a new brand of cigarette by the defendants under the name merit in first, the USA, and later, the United Kingdom, the claimant company, using an existing blend of tobacco, launched a brand of cigarette under the registered NeriT trade mark, distributing about one million cigarettes in all. The Court of Appeal ordered revocation of the mark on the basis that the use was not bona fide or genuine: ‘at the date of registration the plaintiffs were not using the mark Nerit. They proposed to use it, and did use it, in order to stop their rivals from using the mark Merit . . . They did not want any trade in NERIT Cigarettes, save as a means to an end.” In refusing relief, Shaw LJ explained:

Where a trader chooses, for whatever reason, to adopt as a mark a word which is an analogue of an ordinary word of description, that trader should be taken as having accepted the risk that others in the trade may use the ordinary word in a descriptive sense in relation to their goods. If any confusion ensues it is, after all, that trader who has promoted it. The use of ordinary language should not be inhibited by the adoption of an artificial variant which is the real origin of misidentification of the goods concerned.”

2.4 THE

USE

IN RELATION

MARK

TO THE

GOODS

OR

SERVICES

FOR

WHICH

IS REGISTERED

To ensure that a mark is not revoked because of non-use, the mark must be used ‘in

relation to the goods or services for which the mark is registered’. This raises two 46 Concord Trade Mark [1987] FSR 209 (one and a half million cigarettes a very small quantity by the . standards of the trade); Imperial Group v. Philip Morris [1982] FSR 72 (two periods of marketing cigarettes under the NERIT name where there was no press advertising, and the volume of sales was small when compared with a real launch was not ‘real commercial use on a substantial scale’ but a colourable stratagem lacking bona fide). 47 [1982] FSR 72. 48 Imperial Group v. Philip Morris [1982] FSR 72.

9 Tbid., 81-2.

REVOCATION

851

questions. First, does use on similar goods count as a relevant use? And secondly, what is meant by use in relation to goods and services? As regards the first question, the position appears to be that use in relation to similar goods is not use in relation to the goods for which the mark is registered. This represents a more restrictive approach than was adopted under the 1938 Act, where use of the mark in relation to ‘goods of the same description’ could assist an owner when attempting to resist revocation. It also raises a further question, namely, what are the goods for which a mark is registered? Where a specification is broader than the uses that have been demonstrated, the court can revoke the mark with respect to the goods for which it has not been used.°° The second question that arises here is: what is meant by the phrase use in relation to the goods or services for which the mark is registered? In particular, if a proprietor uses the registered mark on promotional goods, the question arises whether this amounts to use in relation to those goods or only in relation to the goods which are being promoted. This question was considered in Kodak Trade Mark,*' which related to the KoDAK trade mark registered for clothing. In response to an application to have the mark revoked on the basis of non-use, Kodak said that the fact that they had given away T-shirts bearing the logo po IT! USE KODAK FILMS AND PLATES, was proof of use. Despite the fact that the mark had been used on clothes, Paul Baker QC said that the

mark had not been used in relation to clothes. This was because the ‘sole purpose of the legend was to advertise films and plates’, rather than indicate the source of the T-shirts. That is, while the mark had been used on clothes, it had not been used as a trade mark in relation to clothes. In contrast, in Premier Brands UK v. Typhoon Europe, Neuberger J answered the question whether the use was ‘in relation to’ the proprietor’s good by looking at how consumers would understand the use (rather than by focusing on the proprietor’s purpose). In this containers resisted biscuit barrels, etc. the goods conveys

case, the proprietor of the rypHoo mark for domestic utensils and revocation by claiming it had used the mark on tea canisters, Neuberger J said the question was whether ‘the use of TyPHOO on to members of the public that the source of the well-known

TyPHOO mark for tea is responsible for and in some way guarantees, the quality of the goods?’ While the public would understand the use as promoting TyPHoo tea, the court said it did not follow that the public would not also assume that the goods had been marketed by or with the approval of the makers of rypHoo tea. Whether the public would understand that such approval has been given will depend on the facts of the case. Where a women’s magazine called ELLE gave away complimentary samples of perfumes bearing the name of another manufacturer, MONSOON, the magazine was unable to resist an application for revocation of the 50 TMA s..46(5); CIMR Art. 13. For problems, see Daimler v. Alavi (The Times, 16 Feb. 2001). 51 [1990] FSR 49. Annand and Norman (1994), 64, argues that the case may be decided differently under

the 1994 Act, given the change in the function of trade marks effected thereby. 52 [2000] FSR 767, 807. See also Daimler v. Alavi (The Times, 16 Feb. 2001).

852

TRADE

MARKS

AND

PASSING

OFF

mark exe which had also been registered for perfumes. Lloyd J explained that ‘the mark was used, if in any context at all other than the magazine, in relation to the promotion of the event and not the particular goods to be used or offered in

connection with the event.’*

2.5.

PLACE

OF USE

In relation to British marks, the relevant use must take place in the UK.*4 Use of a trade mark includes situations where the mark is affixed to goods or to the packaging of goods in the UK solely for export.** An advertisement released in a foreign jurisdiction may also constitute use, so long as the advertisement is available in the UK. For example, in Elle Trade Marks°* the proprietor of the mark ELLE for soap and perfume sought to rely on the fact that soaps and other cosmetics branded with ELLE had been offered for sale in the French edition of a well-known woman’s magazine of which the appellants were also proprietors. It was accepted that the French edition was sold in the UK and that it contained an advertisement for BLLE soap which could be obtained by readers in Britain either by going to Paris or by ordering it by phone. Although there was no evidence of actual sale, Lloyd J held that this was a genuine use within the relevant class of goods.

2.6

IN SEARCH

CONCEPT

OF A PRINCIPLE

UNDERPINNING

THE

OF USE

In many ways, the difficulties with interpreting the concept of ‘use’ reflect the fact that neither the statute nor the case law reveal any clear underlying principle. In thinking about what is meant by use, it may be helpful to set out three different principles on which the concept of ‘use’ might be based. The first principle that might be applied is to treat ‘use’ of the mark for the purposes of section 46, in the same way that use is understood in the context of infringement. If this were the guiding principle, one way

of testing whether a use satisfies the requirements of section 46(1)(a) would be to ask

the hypothetical question: if the act in question was carried out by a third party would it constitute an infringement? If yes, then the act in question should be treated as a relevant ‘use’. A second principle on which our understanding of use might be based is that the requirement of ‘use’ is to be understood as evidence of intention of the proprietor to retain ownership of the trade mark. If this principle were applicable, any act that reveals to the public an intention to use the mark should be sufficient to

constitute

a use. In effect, this is the intangible property equivalent of animus

53. Elle Trade Marks [1997] FSR 529. °4 In relation to Community trade marks, CTMR Art. 9 does not specify where the use should take place.

However, a minute of the Council of Ministers says that genuine use in one member state is to be treated as

genuine use in the Community. °° TMA s. 46(2). Cf. below at p. 863.

56 [1997] FSR 529. Cf. below at pp. 862-3.

REVOCATION

853

possidendi. A third principle might be that the requirement of use is intended to protect the registrant from having the mark revoked where they have acted in reliance on the registration. According to this principle, any non-trivial reliance by the trademark owner on the existence of the registration prior to the commencement of the revocation action should be sufficient to constitute a relevant use.

2.7

PROPER

REASONS

FOR

NON-USE

Section 46(1)(a)—(b)/Article 50(1)(a) provide that failure to use the mark will not

affect the fate of a mark if there are ‘proper reasons for non-use’.*” Under the 1938 Act a similar exclusion was made where non-use was attributable to ‘special circumstances in the trade’.°* While the cases decided under the 1938 Act are likely to inform the way the words ‘proper reasons for non-use’ are interpreted, as Mr Tuck said in Invermont Trade Mark” ‘in the matter of acceptable excuses for non-use ... it may well be the 1994 Act is more liberal than the 1938 Act. The tribunal may therefore . . . be able to find that disruptive situations in which the registered proprietor’s business, alone, is affected are nonetheless proper.’ In order for non-use to be justified, the owner must show that the reason why the mark was not used was ‘apt, acceptable, reasonable, and justifiable in all the circumstances.’®° In this context, the reasons for non-use should also include reasons for not

licensing the mark, as well as reasons for not using the mark in an amended form.°! The provision excusing non-use was ‘intended to cover abnormal situations in the industry or the market, or even perhaps some temporary but serious disruption affecting the registered proprietor’s business. Normal delays occasioned by some unavoidable regulatory requirement, such as the approval of a medicine, might be acceptable.”®* Non-use has also been justified where a mark could not be used because the technology had yet to develop; where a satisfactory system for manufacturing

57 TRIPs, Art. 19(1). °8 Aktiebolaget Manus v. R. J. Fulwood and Bland (1948) 66 RPC71, 79 (CA) (Evershed LJ, defining ‘special’ as ‘peculiar or abnormal and which are experienced by persons engaged in a particular trade as the result of the working of some external forces as distinct from the voluntary acts of any individual trader’). 59 [1997] RPC 125. See also Magic Ball Trade Mark [2000] RPC 439, 441-2.

6° Invermont Trade Mark [1997] RPC 125, 130. 61 Cabanas Habana (Device) Mark [2000] RPC 26, 33 (where use of the mark in a modified form, by

removing the word HABANA, was treated as relevant. M Foley said ‘if as it started, it is necessary to judge matters in a business sense, it is in my view wholly appropriate to take into account reasonable alternatives

that may have enabled the mark to be used, if those alternatives are commercially viable or established practice in trade’).

62 Invermont Trade Mark [1997] RPC 125, 130. But the registered proprietor should apply for authorization: Cabanas Habana (Device) Mark [2000] RPC 26, 33. 63 In the Matterof Trade Marks of the Columbia Gramophone Co. (1932) 49 RPC 621 (use of coLuMBIA

mark only in relation to gramophones and not films and soundtracks during 5 years preceding 1930 was justified for some of that time because talking pictures only developed as a commercial proposition in 1927. However, failure to use thereafter was not justified and represented an intention to confine themselves to their

existing system of trade and business).

854

TRADE MARKS AND PASSING OFF

the product had been subject to delays;*! where wartime restrictions imposed by the Ministry of Food limited the use of foodstuffs;®° and where post-war limitations on

the quantities of imports made marketing commercially impracticable. On the other hand, difficulties that are normal in the industry, such as delays in arranging marketing, have been held not to be proper reasons for non-use. This is because these are matters which are ‘within the businessman’s own control’, for which they should plan accordingly.” Similarly, non-use of a mark for cigarettes was not justified where health regulations merely limited the tar content of cigarettes, because such regulations did not prevent use of the mark on cigarettes in general.*® Moreover, if the circumstances which the trade mark proprietor claims justify non-use transpire not to be temporary, and may continue indefinitely (as with the US trade embargo on Cuba which was first imposed in 1962), those circumstances lose their capacity to justify non-use because they come to be ‘the normal conditions in the trade’. In order to defend an unused mark from revocation, it is necessary to show that the non-use resulted from the circumstances in question. For example, where a trade embargo on Cuban goods was imposed twenty-six years after registration of the mark in issue, and there was no evidence of use in the period leading up to the embargo, the Trade Marks Registry held that the embargo was not a ‘proper reason for non-use’ and ordered revocation.” It was necessary to show that the proprietor would have used the mark on the goods or services for which the mark was registered, had the restrictions not existed.”’ It is probably sufficient, however, if the relevant circumstances justifying non-use pertained only during some of that period.”

3 GENERIC

MARKS

The second reason why a mark may be revoked is because it has become generic. That is, it may have come to designate a genus or type of product rather than a particular 64 Magic Ball Trade Mark [2000] RPC 439. 65 Aktiebolaget Manus v. R. J. Fulwood and Bland (1948) 66 RPC 71, 78-9 (CA); In re Application of Thom (1946)

63 RPC

161; In re Application

by Ernest Marshall

(1943)

60 RPC

147.

For a more

considering the impact of the embargo between the USA and Cuba, see Cabanas Habana

recent

case,

(Device) Mark

[2000] RPC 26.

66 Bali Trade Mark [1966] RPC 387 (token import scheme, in place between 1947 and 1959 which limited

importation to a maximum of 40% of pre-war quantities, justified non-use of BALI for brassieres which had been used in the period from 1935 to 1939). 67 Invermont Trade Mark [1997] RPC 125.

68 K-2 Trade Mark [2000] RPC 413, 421. 6° Cabanas Habana (Device) Trade Mark [2000] RPC 26, 33.

70 Tid. 71 In re Trade Mark ofJames Crean (1921) 38 RPC 155 Sargant J (failure to use ALADDIN mark on soap was

not due to special circumstance of war because of lack of evidence that it would have been used had war not

intervened).

72 See In re Application by Ernest Marshall (1943) 60 RPC 147, 148; cf. the Columbia Gramophone case.

REVOCATION

855

product from a particular source.”* As section 46(1)(c)/Article 50(1)(b) says, a mark may be revoked on the ground ‘that in consequence of the acts or inactivity of the proprietor, it has become the common name in the trade for a product or service for which it is registered.’ Examples of marks that have become generic include GRAMOPHONE, * LINOLEUM, > SHREDDED WHEAT,”° and BACH FLOWER REMEDIES.

It has been argued that the revocation of generic marks is not justifiable. For example, Pendleton has suggested that the arguments for expungement of generic marks seem ‘weak but rarely examined’.”” Moreover, he argues that the rule is ‘an open invitation to commercial sharp practice through campaigns by a competitor to render a successful mark generic.’ In contrast, others have suggested that while the arguments for the revocation of generic trade marks may not have been well articulated,”* consumers and competitors would be harmed if generic marks were allowed to stay on the register. This is because where a mark has become generic, it loses its capacity to distinguish one trader’s goods or services from those of another. The harm to consumers lies in the possible responses that a seller would give if consumers asked for the trade-marked product by its generic name. If consumers are only offered the trade mark owner’s version of the product, consumers are not being offered the full range of prices, qualities, etc. that are available.

Another problem that arises where a mark becomes generic is that competitors are not legally able to use the term that most consumers use to refer to the product. While competitors may be able to develop alternative names for the product, explain the situation to the consumer, or take licences from the trade mark holder, these are potentially ineffective and costly.”

3.1

NAME

For a mark to be revoked on the basis that it has become generic, it is necessary to show that it has become the common name in the trade for a product or service for which it is registered. Given that marks that become generic are often name marks, the fact that section 46(1)(c)/Article 50(1)(b) is limited to ‘names’ is not surprising. It is

possible to imagine situations, however, where the use of certain colours on the 73 Trade Marks Directive Art. 12(2)(a). 74 [1910] 2 Ch 423 (refusal to register GRAMOPHONE as a trade mark on grounds it lacked distinctiveness because public perceived it as describing the goods not as indicating a particular origin/producer). 73 (1878) 7 Ch D 834 (passing off: no misrepresentation by use of generic term to describe goods). 76 (1940) 57 RPC 137.

77 M. Pendleton, ‘Excising Consumer Protection—The Key to Reforming Trade Mark Law (1992) 3 AIP] 110, 116.

78 R. Folsom and L. Teply, “Trademarked Generic Words’ (1980) 89 Yale Law Journal 1323, 1326 (suggesting that the courts and others ‘have long relied on broad assumptions and generalisations that do not satisfactorily articulate the harm caused by trade-marked generic words’).

79 Folsom and Teply argue that the question of whether a mark is generic should be decided by reference to any harm that may be caused. On this basis, the question would be whether ‘the challenged mark substantially increases ultimate consumer search costs or raises real entry barriers to new firms.’ R. Folsom and L. Teply, ‘Trademarked Generic Words’ (1980) 89 Yale Law Journal 1323, 1352.

856

TRADE

MARKS

AND

PASSING

OFEF

packaging of types of milk or varieties of crisps may become generic. It is also possible that as a result of the standardization of technology aspects of computer-user interfaces, such as icons, might become generic. While consumers and competitors would suffer if colours or images remained protected as trade marks despite being generic, as section 46(1)(c) only refers to ‘names’, it seems that such marks can not be revoked

on the basis that they have become generic.

3.2 COMMON IN THE ‘TRADE’ The second limitation on the scope of section 46(1)(c)/Article 50(1)(b) is that the

name must have become common in the trade—rather than amongst the public. The importance of this difference can be seen from In re Gramophone Company’s Application,® which concerned an application to register the mark GRAMOPHONE for sound-recording and reproducing instruments. Parker J explained that the public understood the word GRAMOPHONE to mean disk-talking machines operating disk recordings rather than the name of a particular manufacturer. This was shown by the fact that the word appeared in dictionaries, newspapers, patent specifications, and even court decisions as a general term for disk-talking machines. Indeed, even the applicants had used the word to describe the goods for which they sought coverage. Thus, when judged from the public’s perspective, the word had become generic. In contrast, the trade considered GRAMOPHONE to be the name of a disk-talking machine

made by the particular manufacturer (other manufacturers were using marks such as DULCEPHONE and CORONAPHONE). Thus, when looked at from the trade perspective, the mark would not have been generic.*! Given that the question of whether a mark is generic is decided from the perspective of the trade in question, this means that some of the more obvious ways of proving that a mark is generic, such as the appearance of the word ina dictionary, are probably of little significance in the UK.* Instead, evidence from trade members will be the primary form of evidence.

3.3

THE

REQUIREMENT

OF FAULT

Even if a mark has become the common name in the trade for a product or service for which it is registered, the mark will only be revoked if it has become generic as ‘a consequence of the acts or inactivity’ of the proprietor. This would be the case, for example, where a mark becomes the common name in the trade because the proprietor used the mark as a description of the product in their own advertising or labelling. Given this, owners need to be vigilant that they do not allow their trade marks to _ become the common name in the trade for the goods or services in question. Some80 [1910] 2 Ch 423. 81 The difference in the understanding held by the public and the trade was largely explicable by the aggressive manner in which the company had asserted its rights against other traders. 82 But note CTMR Art. 10.

REVOCATION

857

times it is said that the trade mark proprietor should ensure the mark is consistently used as an adjective and not as a noun. It is a moot point whether a failure to correct consumer, as opposed to trade, habits is a relevant form of inactivity. In certain respects it is difficult to see why such ‘policing’ should make any difference to whether a trade mark should remain on the register. For some commentators, money spent on policing is wasted and should be a factor in support of, rather than against, revocation.* In part this is because ‘from an economic perspective, such measures normally do not stimulate demand for a firm’s product and are therefore economically inefficient.’** However, the requirement of policing might be justified on the basis of the general principle that property should not be lost without acquiescence on the part of the owner.

4 MISLEADING

USES

The third reason why a mark may be revoked is on the basis that it has been used in a way which misleads the public. To this end, section 46(1)(d)/Art. 50(1)(c) CTMR says

that a mark may be revoked where: in consequence of the use made of it by the proprietor or with his consent in relation to goods or services for which it is registered, it is liable to mislead the public, particularly as to the nature, quality, or geographical origin of the goods or services.*° Section 46(1)(d) corresponds to the absolute ground of refusal in section 3(3)(b),

but recognizes that changes may occur after registration which mean that the mark becomes misleading.

4.1

REQUIREMENT

OF FAULT

In order for a mark to be revoked under section 46(1)(d), the mark must have become

misleading either as a result of the acts of the proprietor or as a result of acts done with his or her consent.*° Given that a mark can become misleading as a result of the conducts of third parties, it is good counsel for trade mark owners to include provisions in their licence agreements which ensure that the licensee does not misuse the mark in a way which might jeopardize the mark’s viability.

83 R. Folsom and L. Teply at 1354. 84 Tbid. 85 TM Dir. Art. 12(2)(b). See above at pp. 805-6

8° In Bostitch Trade Mark [1963] RPC 183, the licensee had begun selling certain articles of his own manufacture without the permission of the trade mark owner. Such actions would not be such as to render the proprietor’s mark liable to be expunged.

858

4.2

TRADE MARKS AND PASSING OFF

MISLEAD

THE

PUBLIC

In order for a mark to be revoked under section 46(1)(d), it must be shown that the

use misleads the public, particularly as to the nature, quality, or geographical origin of the goods or services. A mark may become misleading, for example, where a garment made entirely of wool, to which the mark orwoota is affixed, is subsequently manufactured with other materials (e.g. nylon): the connotation of an homogenous woollen garment arising from the verbal pronunciation of the mark (‘all wool’ with a meaningless suffix) is misleading as to the true nature of the goods.*” A mark may also be misleading where a proprietor alters the geographical location of their business in such a way that a mark that was formerly suggestive of origin becomes deceptive. In thinking about the situations where a use may be misleading, it is helpful to bear in mind Lloyd Jacob J’s comments in Bostitch’ Trade Mark:*8 There is nothing in the Trade Marks Act or in the principles of trade mark law which have been developed thereunder which requires a proprietor of a registered trade mark to refrain from introducing modifications or variations in the goods to which he applies his mark or in the manner in which they reach the market. If he should find it convenient to transfer manufacture from one locality to another, or procure his supplies from sub-contractors, or arrange for assembly of completed articles by someone of his choice in lieu of doing it himself, these and a vast number of other changes in procedure are his sole concern. His mark only becomes vulnerable in this connection if he permits its use in a manner that is calculated to deceive or cause confusion.

One question that arises in this context is whether a use which misleads the public as to the trade origin of the goods or services constitutes a misuse for the purposes of section 46(1)(d). If so, this gives rise to the further question of whether the very act of licensing a mark would justify removal under section 46(1)(d).8° These questions were considered by the House of Lords in Scandecor Developments AB v. Scandecor Marketing AB.” In that case, an international group of companies operated in a way

that afforded a degree of autonomy to its subsidiaries. While the international company held the marks, the local companies dealt with retailers. When

one of the

subsidiaries was sold off and the parent company refused to continue to license the mark to them, the (former) subsidiary argued (in a counterclaim to the claimant’s

action for infringement) that by allowing the defendants to affix the trade mark to their goods, the claimants had allowed the trade marks to become deceptive. More specifically, it was argued that the mark had come to acquire distinctiveness in relation to the defendant’s, rather than the claimant’s, goods. As trade marks operate as 87 Orwoola Trade Mark (1909) 26 RPC 683. 88 Bostitch Trade Mark [1963] RPC 183, 197. 8° It has been argued that ‘although misleading trade origin is not listed ... the wording ... could be interpreted to include such deception ... uncontrolled use will still render the mark deceptive as to trade origin (and so “liable to mislead the public”)’. H. Norman, “Trade Mark Licences in the UK’ [1994] EIPR 154m 158. 90 [1998] FSR 500; [1999] FSR 27; 4 Apr. 2001 (HL).

REVOCATION

859

indications of origin, the defendants therefore asserted that the claimant’s mark had

become misleading and should be revoked. The House of Lords held that it was not possible to reach a conclusion in the case without first receiving guidance from the EC]. In particular, it said that before it could decide whether the use by the proprietor of the mark was misleading as to the origin of the goods it was necessary to obtain guidance as to what criteria are to be applied in determining whether a trading relationship comprises a single ‘undertaking’. This was of importance because if the claimant and defendant were to be regarded as a single ‘undertaking’, then the use of the mark was probably not misleading as to the origin of the goods.

40 INFRINGEMENT

1 INTRODUCTION Although the registered trade mark regime started life as a formalized version of the law of passing off, there is no area where the two regimes diverge more than in their treatment of infringement. Indeed, the rights granted to the owners of registered trade marks have expanded to such an extent that it could be said that they now confer a form of quasi-copyright protection which protects traders rather than consumers. The rights of the owner of a British trade mark are set out in sections 9 and 10 of the 1994 Act and the rights conferred on the owner of a Community trade mark (which are largely the same as those given to UK trade mark owners) in Article 9 of the CTMR.' Community trade marks are enforced in national courts which have been designated as ‘Community trade mark courts’.? When dealing with the infringement of a Community trade mark, the national courts apply the Community Trade Mark Regulation supplemented where appropriate by national law.> When

sitting as a

Community Trade Mark Court, national courts are invested with the jurisdiction to grant relief in the territory of any member state.* Where an alleged infringement takes place in different member states, the appropriate forum is determined by jurisdictional rules which are similar to those operating under the Brussels Convention. Normally, it will be the state of the defendant’s domicile.> While trade mark infringement proceedings will normally be brought by the owner of the mark,° it is also possible for an action to be brought by an exclusive licensee.’ Where a licensee is not entitled to bring proceedings in his

! These provisions apply equally to marks that were registered under the 1938 Act. See Sched. 3, para. 4, subject to certain savings as regards ‘existing uses’. : ? Community Trade Mark Regulations 1996 (SI 1996/1908) (designating the High Court and Court of

Session).

> CTMR Art. 97. 4 CTMR Art. 99(2). > CTMR Art. 93. These matters are considered in detail at pp. 1000-6. © A co-proprietor may bring an action but must join other co-proprietors either as co-plaintiffs or defendants: TMA s. 23(5). A co-proprietor will not normally be liable for infringement: TMA s. 23(1). ’ TMA s. 31 (where provision is made to that effect in the licence). No provisions are made under the Directive, and national laws take diverging approaches: A. Kur, ‘Harmonization of the Trade Mark Laws in Europe—An Overview’ (1997) 28 IIC 1.

INFRINGEMENT

861

own right, he is usually able to call on the proprietor to take proceedings on his behalf.§ Proceedings to enforce a trade mark may be brought as soon as a mark is registered. It should be noted that the rights of the proprietor are enforceable against third parties with regard to acts done after the date of registration (which is the date of filing).? The rights continue for ten years from registration!” and may be renewed, possibly indefinitely, for further ten-year periods.’ Similar principles apply in relation to Community trade marks, with the exception that the proprietors of Community trade marks are only entitled to ‘reasonable compensation’ for acts that occur between publication of the application and registration.!”

2 INFRINGING

ACTS

The circumstances in which a mark may be infringed are set out in sections 10(1)—(3) and Article 9 of the CTMR. Before looking at the circumstances in which a trade mark may be infringed, it is important to note that to infringe there is no requirement of knowledge, intention, or derivation on the part of the defendant. This is because, as with patents and registered designs, liability for trade mark infringement is strict: the monopoly is an ‘absolute’ one. Moreover, and in contrast with passing off, there is no need for a trade mark owner to demonstrate damage. Indeed, a trade mark owner is able to commence an action for infringement even though the mark has not been used. It is also important to note section 10(1)—(3) clearly provide that in order to infringe, it must be shown that the defendant used the mark ‘in the course of trade’.

We discuss the meaning of this phrase below. In order to determine whether a trade mark has been infringed, it is necessary

to compare the registered mark with the alleged infringing sign. The circumstances in which a mark may be infringed are set out in sections

10(1)—(3). These are

where: (i)

the marks are identical and the goods or services are identical: section 10(1)/ Article 9(1)(a);

(ii) the marks are identical and the goods or services are similar and there is a likelihood of confusion, which includes the likelihood of association, with the registered mark: section 10(2)(a)/Article 9(1)(b); 8 TMA s. 30; CTMR Art. 22. ° TMA s. 9(3). No criminal liability can be incurred for acts done before the date of publication of the registration.

10 TMA s. 42. 11 TMA s. 43 deals with renewal. Six months after expiry of the mark, if there has been failure to renew it, the mark is removed from the register. Nevertheless TMR r. 30 permits restoration of the mark on application within 6 months of removal. 12 CTMR Art. 9(3).

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TRADE

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OFF

(iii) the marks are similar, and the goods or services are either identical or similar, and there is a likelihood of confusion, which includes the likelihood of association, between the marks: section 10(2)(b)/Article 9(1)(b); (iv) the marks are either identical or similar, and the goods or services are not

similar, and where the registered trade mark has a reputation in the UK, and use of the defendant’s mark would take unfair advantage of, or be detrimental

to, the distinctive character or the repute of the registered trade mark: section 10(3)/Article 9(1)(c). The grounds for infringement in section 10(1)-(3) mirror the relative grounds for refusal in section 5(1)—(3). One of the consequences of this is that a mark will fall foul

of the relative grounds for refusal in exactly the same circumstances where use of the later mark would amount to an infringement under section 10(1)—(3). Another con-

sequence of the fact that the relative grounds for refusal mirror the provisions dealing with infringement is that the concepts used when deciding whether a mark has been infringed are the same as are used when deciding whether a mark falls within one of the relative grounds for refusal. As we have already looked at the concepts that arise in deciding whether a mark will be refused on relative grounds in Chapter 38, it is not necessary to look at them again here. The key difference between an action for infringement and the relative grounds for refusal is that to establish infringement, it is necessary to show that the mark was ‘used in the course of trade’.

3 USED

IN THE

COURSE

OF TRADE

In order to infringe, the mark must be used in the course of trade. This is a prerequisite for all of the grounds of infringement in section 10(1)—(3)/Article 9. In order to sustain an action for infringement of a British trade mark, the infringing act must

take place in the UK.'° For the most part, this is relatively straightforward. One difficulty that should be noted concerns the situation where an advertisement shown outside of the UK spills into Britain. This problem is likely to be particularly difficult in relation to Internet advertising, as a result of which foreign sellers can be accessed from the UK. Although such uses might appear per se to constitute a use in the UK, Jacob J has indicated that he considers a per se rule to be inappropriate. In each case, ‘there must be an enquiry as to what the purpose and effect of the advertisement in question is.’'* Consequently, an advertisement by an Irish shop in a magazine with circulation in the UK as well as the Republic of Ireland, was held not to infringe the | claimant’s UK trade mark, either because it was not in ‘use’ in the UK or because it

was not in use in the course of trade in the UK. Similarly, the shop’s Irish website did 13 TMA s. 9(1). And the Isle of Man: TMA s. 108(2).

14 Euromarket Designs Incorporated v. Peters & Anor [2001] FSR 288.

INFRINGEMENT

863

not infringe the claimant’s mark, merely because the site could be visited by Internet users from the UK. However, had the Irish shop targeted UK customers, provided prices in sterling, offered international sales and distribution, Jacob J might have held that there was use in the course of trade in the UK. A second difficulty relates to the situation where packaging bearing another’s mark is made in the UK, though the goods are intended to be used in trade overseas. It seems that a person will infringe where, in the UK, they apply a registered mark to goods, or to packaging for goods which are packaged in the UK,’ because in those circumstances the mark is used ‘in relation’ to the goods. However, a mark is not used ‘in relation to goods’ where it is merely applied to packaging materials, and the goods are to be packaged outside the UK.'® In that case there is no use in relation to the claimant’s goods in the UK. The fact that the use must take place ‘in the course of trade’ serves to restrict the scope of protection given to trade mark owners. In so doing, it helps to minimize the impact that trade marks have upon non-commercial uses that are made of the sign. In thinking about whether a mark has been used in the course of trade, a number of questions arise. These are: (i)

what kind of uses are covered?

(ii) what is meant by ‘in the course of trade’? (iii) does use of a sign require use as a trade mark?

3.1

KINDS

OF USE

The starting point for considering what is meant by ‘use in the course of trade’ is section

10(4)/Article 9(2), which provides a non-exhaustive list of the situations

where a person uses a sign.'’ These are where someone: (a) affixes the sign to the goods or to the packaging thereof; (b) offers or exposes goods for sale, puts them on the market or stocks them for these purposes under the sign, or offers or supplies services under the sign; (c) imports or exports goods under the sign; or (d) uses the sign on business papers or in advertising. 3.1.1 Where the sign is affixed to goods Section 10(4)(a)/Article 9(2)(a) provides that a sign is used where it is affixed to the

goods or the packaging thereof. This is probably the most common form of trade mark infringement. This would occur, for example, where a counterfeiter places 15 George Ballantine v. Ballantyne Stewart [1959] RPC 273, 279 (no need for confusion to occur in UK as

long as wrongful act occurs in jurisdiction). 16 TMA s. 10(5), as interpreted in Beautimatic International v. Mitchell International Pharmaceuticals and

Alexir Packaging [1999] ETMR 912, 919-20. 17 TM Dir. Art. 5(3); CTMR Art. 9(2).

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OFF

scented liquid in bottles to which they have attached the cHANEL label. In order to affix a sign to goods, it seems that the defendant must engage in some positive act, such as stamping, engraving, or gluing a label onto the goods. To ‘affix a sign’, the mark must be used directly rather than indirectly on the goods; it is not enough if a mark incidentally appears on the defendant’s goods. This can be seen in Trebor v. Football Association,'* an infringement action involving the Football Association’s ‘three-lion’ logo. The action arose when a sweet manufacturer, Trebor, included photographs of footballers in packets of sweets it sold. The Football Association argued that as some of the footballers were wearing the English team strip, which had the three-lion logo attached to it, this amounted to an infringement of its mark. In dismissing the action, Rattee J explained that Trebor was ‘not even arguably using the logo, as such, in any real sense

of the word

“uses”, and

[was]

certainly not ... using it as a sign in respect of its cards.’ Rattee J added that it was ‘unreal’ to suggest that Trebor was affixing the English football logo to its cards, and therefore to goods, within the meaning of section

10(4)(a).!2 Whether

this

reasoning will be extended to situations where a mark is deliberately used in the background, such as where a model in a pornographic magazine wears a T-shirt with the mam logo on it, is yet to be determined. As this would not be an incidental or accidental Article 9(2)(a).

use, it would

most

probably fall within

section

10(4)/

Affixing a trade mark owner’s mark to packaging but not to goods is not an infringement under section 10(4)(a), but falls under section 10(5). This states that a

person who applies the mark to ‘material intended to be used for labelling or packaging goods, as business paper or for advertising goods or services’ is liable for any infringing use of the material. Unlike an action for primary infringement where knowledge is not a relevant factor, secondary infringement under section 10(5) only arises where the person who applied the mark ‘knew or had reason to believe that the application of the mark was not duly authorized by the proprietor or a licensee’.?°

3.1.2 Use ‘under the sign’ Section 10(4)(b)/Article 9(2)(b) provides that a person uses a sign where they offer or

expose goods for sale, put them on the market or stock them for these purposes

‘under the sign’, or offer or supply services ‘under the sign’. Section 10(4)(c)/Article

9(2)(c) adds that a sign is also ‘used’ when someone imports or exports goods under the sign. The key concept in section 10(4)(b) and (c) is that the goods are dealt with

under the sign. This suggests that although a sign may not be physically attached to the 18 [1997] FSR 211. '9 In Conde Nast Publications v. Luxottica (UK) (1997), Master Moncaster rejected a broad interpretation

of Rattee J’s decision, confining it to cases where there was no act of ‘affixing’ the sign to the goods. 20 The knowledge requirement is in similar terms to that employed in the context of copyright. See Beautimatic International v. Mitchell International Pharmaceuticals and Alexir Packaging [1999] ETMR 912 and, more generally. See pp. 187-8.

INFRINGEMENT

865

goods in question, a sign may nonetheless still be ‘used’ where it is placed in proximity to, or is connected with, the goods. This would be the case, for example, where it is

sold from a place which is called by the sign.?! One question that arises here is whether section 10(4)(b)/Article 9(2)(b) would

apply in situations where a consumer specifically asks for a product by a particular trade name, but is supplied with a competing product. This would be the case, for example, where in response to a request for a particular brand of pharmaceutical, such as the painkiller NUROFEN, customers were provided with the generic product IBUPROFEN. While this would undermine the value of the mark, it is unlikely that this would be treated as a situation where a mark was sold ‘under a sign’ for the purposes of section 10(4)(b)/Article 9(2)(b).

Although the situations where goods are used under a sign are potentially very wide, the scope of section 10(4)(b)/Article 9(2)(b) is limited by the fact that the

defendant must play a direct and positive role in ensuring that a connection is drawn between the sign and the goods in question. It is not enough that the connection is incidental or accidental. This can be seen, for example, in Trebor v. Football Associ-

ation,” where the decision that the sweet manufacturer had not put ‘the cards on the market under the sign comprising the England logo within section 10(4)(b)’ was influenced by the fact that the inclusion of the sign on the card was not a direct consequence of the manufacturer’s actions. That is, the sign was there because the

player was wearing the shirt when the photograph was taken, rather than being a direct result of the defendant’s actions. In these circumstances it is more accurate to say that the goods were sold with, rather than under, the sign. On this basis, it seems that if a photograph of a cricketer with the trade mark of the team sponsor on their shirt appeared on the cover of a book, this would not amount to a ‘use’ of the mark under section 10(4)(b)/Article 9(2)(b).

3.1.3 Use on business papers or in advertising Section 10(4)(d)/Article 9(2)(d) provides that a person uses a sign where they ‘use the sign on business papers or in advertising’. It seems that ‘use on business papers’ covers

things such as use on letterheads, envelopes, and invoices.** Whether such uses are ‘in relation to goods’ will depend on whether they refer to the goods (as opposed, for example, merely to the packaging). As section 103(2) provides that references to use of a trade mark includes use otherwise than by means of a graphic representation, this means that oral offers and oral advertisements also fall within the notion of use. It

21 In Autodrome Trade Mark [1969] RPC 564, 573, Plowman J interpreted the defendant’s use of the words

“CHELMSFORD AUTODROME as indicating the defendant’s business, and thus not use ‘as a trade mark’. This action would now be treated as offering ‘under a sign’, and assuming there is no longer a requirement of trade mark use, could only be justified by way of a defence under TMA s. 11. 22 [1997] FSR 211. 23 Broad v. Graham (No. 2) [1969] RPC 295, 298; Cheetah Trade Mark [1993] FSR 263; Beautimatic International v. Mitchell International Pharmaceuticals and Alexir Packaging [1999] ETMR 912, 925 (invoices).

ENT id O27

866

TRADE

MARKS

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seems that section 10(4)(d) would also encompass the use of ‘meta-tags’ to attract

people to a particular website.” One of the notable features of section 10(4)(d)/Article 9(2)(b) is that unlike the other examples listed in section 10(4)/Article 9(2), the section makes no mention of

the goods. This means, for example, that where someone uses a sign on an advertising billboard they will infringe, even though the goods are not pictured. In these circumstances, it seems that it is only necessary for the advert to ‘relate to’ goods of a relevant kind. This would probably be the case where a trade mark for cigarettes is used in an anti-smoking campaign.”* Similarly, use of a mark in comparative advertising will prima facie infringe the rights of the trade mark owner (though there is a special defence in the 1994 Act which we look at later). It should be noted that a statement in

the Council and Commission minutes relating to the Community Trade Mark Regulation suggested that comparative advertising involving a Community trade mark will not constitute an infringing act in relation to that mark.”’ If this is followed, it seems that the law on this point will be different in relation to Community marks than in relation to that which applies to national marks.”*

3.2

IN THE

COURSE

OF TRADE

In order to infringe the sign must be used ‘in the course of trade’.2? As ‘trade’ is defined to include “any business or profession’,*° it would presumably not cover social or domestic uses. It remains to be seen whether use by public bodies, such as those responsible for health education, will amount to a trade use.?! One question that arises in this context is whether the inclusion of a trade mark ina dictionary or an encyclopedia amounts to a use in ‘the course of trade’. While this may appear to be a contrived or inconsequential question, trade mark owners are often very keen to control such uses. This is because when a mark appears in a dictionary or an encyclopedia, it increases the chance of the mark being used to refer to a product, rather than as a brand of the product. In so doing, it increases the chance of a mark being removed from the Register because it has become generic. While the inclusion of a trade mark in dictionaries and encyclopedias was not treated as being a use in the course of trade under the 1938 Act, the position under the 1994 Act is

23 Roadtech v. Mandata (2000) CIPAJ 346. 26 Gallaher (Dublin) v. Health Education Bureau [1982] FSR 464.

27 Statement 7, Council and Commission minutes to the Council of Ministers Meeting Relating to the CTMR. OHIM OJ(1996) 615. 28 Annand and Norman (1998), 178-9.

22 TM Dir. Art. 5(1); CTMR Art. 9(1). 30 TMA s. 103(1). 31 Gallaher (Dublin) v. Health Education Bureau [1982] FSR 464 (argument that use in an anti-smoking

educational campaign was not ‘in the course of trade’ rejected because the words ‘in the course of trade’ were not then present in the definition of the exclusive rights of a trade mark proprietor). 32M. Ravok (Weatherwear) v. National Press (1955) 72 RPC 110 (mistaken reference in directory of brands

to person who was not the manufacturer did not infringe).

INFRINGEMENT

867

unclear. The Community Trade Mark Regulation has recognized trade mark proprietors’ interests by providing them with the specific right to have such works

indicate that the mark is a registered mark.» 3.3 USE AS A MARK? In order for a mark to be infringed under the 1938 Act, it was necessary to show that the mark had been used as a mark.** That is, the mark had to be used in the course of

trade to indicate a connection with the owner of the mark. Consequently, other uses such as descriptive and decorative uses were held not to infringe.** This can be seen, for example, in Mothercare v. Penguin Books.** In this case the plaintiffs, who were the registered proprietors of the mark MOTHERCARE for books, objected to the publication of the defendant’s book called Mother Care/Other Care, which was a sociological

study of the problems facing working mothers. The Court of Appeal held that there was no serious issue to be tried on the question of infringement. Dillon LJ said: it stands to reason that a Trade Marks Act would only be concerned to restrict the use of a mark as a trademark or in a trademark sense, and should be construed accordingly. If descriptive words are legitimately registered ... there is still no reason why other people should not be free to use the words in a descriptive sense and not in any trade mark sense’.*”

It is unclear whether it is necessary under the 1994 Act to show use as a trade mark for there to be an infringement. On the one hand, support for this view comes from section 9 of the 1994 Act which states that ‘the proprietor of a registered trade mark has exclusive rights in the trade mark which are infringed by use of the trade mark in the United Kingdom without his consent.** This is supported by the decision of Bravado Merchandising v. Mainstream Publishing? where as a result of counsel’s concession, the court operated on the assumption that to infringe the sign had to be used as a trade mark. Since there was clear use by the defendant as a trade mark, the assumption was of no real consequence.

While there is some support for the view that it is necessary to show use as a trade mark to establish infringement under the 1994 Act, the opposite conclusion was reached in British Sugar v. Robertson.* Jacob J noted that while section 9 might indicate that there is a requirement oftrade mark use, as section 10 refers to infringement by any person who uses “a sign’, Jacob J said that this suggested that there is no 33 CTMR Art. 10. 34 TMA 1938, s. 4(1)(a). 35 Mars v. Cadbury [1987] RPC 387 (descriptive use of‘treat size’ did not infringe registered mark TREAT for confectionary.)

Unidoor v. Marks & Spencer [1988] RPC 275 (use by the defendant of slogan on their

T-shirts did not infringe trade mark because the defendant was not using the slogan as a trade mark).

36 [1988] RPC 113. 37 [1988] RPC 113, 119. 38 T. Martino, Trademark Dilution (1996), 93 (doctrine retains its vitality, though basing his argument on TMA s.9).

39 [1996] FSR 205. 40 British Sugar v. James Robertson [1996] RPC 281, 291-3.

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OFF

need to show use as a trade mark. On the basis that the apparent conflict between the two sections could be resolved by reference to the Directive,*! Jacob J concluded that

section 9 was simply a ‘chatty introduction’ to section 10. Moreover, he said that section 9 was not intended to add substantively to section 10 by introducing a requirement of use as a mark.” As such, it was not necessary under the 1994 Act to show use as a trade mark for there to be an infringement. Jacob J’s views have since

been approved by the Inner House of the Court of Session in Discovery Communications v. Discovery FM.** However, the question has now been referred to the ECJ, both by the Court of Appeal in Philips v. Remington and by Laddie J in Arsenal v. Reed.** If the ECJ concludes that there is infringement even though a person is using a mark other than as an indicator of source greater emphasis will inevitably come to be placed on the various defences to trade mark infringement (notably, section 11(2)).

4 SECONDARY

INFRINGEMENT

In addition to the various forms of primary infringement set out in sections 10(1)-— (3), trade mark owners are also given protection against forms of secondary or indirect infringement. Section 10(5) provides that a person who applies the mark to ‘material intended to be used for labelling or packaging goods, as business paper or for advertising goods or services’ is liable for any infringing use of the material. Unlike an action for primary infringement where knowledge is not a relevant factor, secondary infringement under section 10(5) only arises where the person who applied the mark ‘knew or had reason to believe that the application of the mark was not duly authorized by the proprietor or a licensee.’ A defendant may also indirectly infringe the rights in a trade mark where they act as a joint tortfeasor. This notion is reviewed in Chapter 46. 41 While TMA s. 10 reflected the terms of TM Dir. Art. 5, the words in TMA s. 9 were not to be found in the Directive. 42 British Telecommunications v. One in a Million [1998] 4 All ER 476, 499 per Aldous LJ (‘I am not satisfied

that s. 10(3) does require the use to be trade mark use . . ., but I am prepared to assume that it does’).

43 [2000] ETMR 516, 521.

“4 (6 Apr. 2001; 1 May 2001). The case concerned use of the claimant’s registered trade marks on football merchandise a use which Laddie J accepted was use as a ‘badge of allegiance’ not as an indication of origin. 45 The knowledge requirement is in similar terms to that employed in the context of copyright. See Ch. 64.

4] TRADE

MARK

DEFENCES

1 INTRODUCTION In this chapter we explore the various defences that are available to a person who has been charged with trade mark infringement. While the defences to trade mark infringement have always been important, the expansion in the scope of protection in trade marks provided in the 1994 Act means that defendants are likely to try and rely on the defences provided much more frequently. It should be noted that a common tactic for a defendant who is accused of infringement is to assert that the claimant’s registered right was invalidly registered or that it ought to be revoked.! These issues have been considered in Chapters 36-8.

2 COMPARATIVE

ADVERTISING

Comparative advertising is the term used to describe advertisements where the goods or services of one trader are compared with the goods or services of another trader.” To show the advertiser’s wares in a favourable light, comparative advertisements usually emphasize differences in things such as price, value, durability, or quality. In so doing, advertisers often refer to the competitor’s products or services by their trade mark. Under the 1938 Trade Marks Act, use of a trade mark in comparative advertising was treated as an infringement of the owner’s rights (subject to a number of minor exceptions). This was based on a belief that a person engaged in comparative advertising was free-riding on the other trader’s goodwill. Over time, a debate developed as to whether comparative advertising should be allowed. One of the arguments made in favour of comparative advertising was that it would increase consumer knowledge and ! Note also CTMR

Art. 95(3) providing a limited defence short of a counterclaim

for revocation or

invalidity. 2 See A. Ohly and M. Spence, The Law of Comparative Advertising (2000); P. Spink and R. Petty, ‘“Comparative Advertising in the European Union’ (1988) 47 International and Comparative Law Quarterly 855; B.

Steckler and F. Bachmann, ‘Comparative Advertising in Germany with Regard to European Community Law’ [1997] EIPR 578.

3 TMA 1938, s. 4.

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MARKS

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OFF

promote fair competition. Eventually, the arguments in favour of allowing comparative advertising won out. As a result, section 10(6) was introduced into the 1994 Act.

Section 10(6) provides that nothing in the provisions dealing with infringement shall be construed as preventing the use of a registered trade mark for the purpose of identifying goods or services as those of the proprietor or a licensee. This is subject to the proviso that [A]ny such use otherwise than in accordance with honest practices in industrial or commercial matters shall be treated as infringing the registered trade mark, if the use without due cause takes unfair advantage of, or is detrimental to, the distinctive character or repute

of the trade mark. Section 10(6) differs from the other defences in two respects. The first is that the

onus initially falls on the claimant to prove that the defence does not apply.’ Section 10(6) also differs from the defences in sections 11 and 12 in that it has no parallel in the Directive.’ Indeed, section

10(6) has been described

as a ‘home-grown’

provision which was introduced to permit comparative advertising.® While it is potentially much broader,’ we will limit our examination to the impact that it has on comparative advertising. In order for a person engaged in comparative advertising to be able to rely on the section 10(6) defence, they must able to show that:®

(i)

the trade mark was used for the purpose of identifying goods or services as those of the proprietor or a licensee;

(ii) the use was in accordance with ‘honest practices in industrial and commercial matters’; and, (ili) the use ‘without due cause, takes unfair advantage of, or is detrimental to, the

distinctive character or repute of the mark’. We examine each in turn.

2.1

TO IDENTIFY

PROPRIETOR

GOODS

OR

SERVICES

AS THOSE

OF THE

OR A LICENSEE

The requirement that the defendant must use the mark for the purposes of identifying the goods or services of the proprietor or a licensee seems to require that the 4 Barclays Bank v. RBS Advanta [1996] RPC 307, 315, 318. Presumably, not however, that the use was with “due cause’: Premier Brands UK v. Typhoon Europe [2000] FSR 767, 792. > It is said to have been permitted as a result of Art. 5(5). Though note CTMR Art. 9(2) and minutes

attaching to it. © Barclays Bank v. RBS Advanta [1996] RPC 307, 315 (primary object is to allow comparative advertising); Vodafone Group v. Orange Personal Communication Services [1997] FSR 34, 39.

? Permitting perhaps dealings in parallel imports from outside the EEA and advertising and other commercialization of parallel imports from within the EEA. See e.g. W. R. Cornish, “Trade Marks: Portcullis for the EEA’ [1998] EIPR 172. Note also Glaxo Group v. Dowelhurst (No. 2) [2000] FSR 529, 588 (could be strong

arguments that TMA s. 10(6) justifies repackaging by parallel importer from within EEA).

8 In Barclays Bank v. RBS Advanta [1996] RPC 307, 313 Laddie J referred to TMA s. 10(6) as a ‘mess’.

TRADE

MARK

DEFENCES

871

defendant uses the mark as a mark. Given that under the 1994 Act, a mark may be infringed where it is not used as a mark (an issue we discussed earlier),? it would seem that these uses would fall outside the scope of section 10(6).

2.2

HONEST

PRACTICES

The section 10(6) defence only applies where the trade mark is used in accordance with ‘honest practices in industrial and commercial matters’. This proviso to section 10(6) was drawn from Article 10 bis of the Paris Convention, which deals with unfair

competition, and Article 6 of the Directive, which deals with defences. The requirement that the mark be used in accordance with ‘honest practices in industrial and commercial matters’ is also a proviso to the defences in section 11. While the decisions on this point are not entirely consistent, it seems that the question of whether a mark has been used in accordance with honest practices in industrial and commercial matters is decided from the perspective of the reasonable consumer.'? This means that the examination is neither dependent on the subjective intention of the advertiser, nor decided according to industry standards or on the basis of external criteria such as the Consumer Credit Act.'! Rather, the test is whether a reasonable reader would be likely to say that the advertisement is not honest. The cases so far leave undecided whether the reasonable reader is to make that assessment in the light of the full facts,” or only in the light of the facts available to the advertiser

at the time of the statement.'° In deciding whether a mark has been used in accordance with honest practices in industrial and commercial matters, it is assumed that consumers will ignore claims that are considered to be exaggerated, hyperbole, or ‘hot-air’.'* The degree of hyperbole that is acceptable varies according to the product in question. While there may be exceptions, consumers would normally not subject advertisements to minute textual examination.’ In circumstances where material was intended or was likely to be read together, the material should be considered as a whole.'° As Laddie J said in Barclays Bank v. RBS Advanta, if the law were otherwise, a person could avoid liability by

9 See pp. 867-8.

10 Vodafone Group v. Orange Personal Communications Services [1997] FSR 34; Macmillan v. RCN Publish-

ing [1998] FSR 9, 13.

Barclays Bank v. RBS Advanta [1996] RPC 307, 316. !2 Tbid., 315; Vodafone Group v. Orange Personal Communications Services [1997] FSR 34. 13 Cable & Wireless v. British Telecommunications [1998] FSR 383, 391 (Jacob J); R. Meade, “Comparative

Advertising in the UK: The New Law in Its Infancy’ (1997-8) Yearbook of Media and Entertainment Law 247, 253.

'4 Barclays Bank v. RBS Advanta [1996] RPC 307, 316. 15 British Telecommunications v. ATéT Communications

(UK) (unreported, Dec. 1996) (AT&T published

adverts asserting that it was ‘up to 40% cheaper’ but in fact was only that much cheaper on a small number of international calls. Judge Michael Crystal QC dismissed the complaint. The literature was predominantly puff and the specific statement was true—even though it was embedded in a cloud of puff). 16 Barclays Bank v. RBS Advanta [1996] RPC 307, 318 (brochure and leaflet).

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TRADE

MARKS

AND

PASSING

OFF

dividing their advertisement into two parts: one with the misleading comparison, the other with the reference to the trade mark. While the question of whether a mark has been used honestly always depends on the facts of the case, it has been suggested that if an advertisement was ‘significantly misleading’, it would not be regarded as having been used in accordance with honest practices.'’ In one case, it was said that the failure of the defendant to mention

ancillary benefits such as vehicle recovery and overseas emergency assistance did not mean that an advertisement for credit services was significantly misleading.'® However, in another case, the use of graphs in advertising purporting to depict independent tests of the suction of vacuum cleaners when in fact only the claimant’s vacuum cleaner had been tested and then using kaolin powder, the court held that the advertisement was thoroughly misleading and thus not in accordance with honest practices.’

2.3

UNFAIR

ADVANTAGE

OR

DETRIMENT

The third factor that needs to be shown for section 10(6) to apply is that ‘without due cause’, the use ‘takes unfair advantage of, or is detrimental to, the distinctive character

or repute of the mark.’ In Barclays Bank v. RBS Advanta, Laddie J took the view that in most cases the second half of the section 10(6) proviso added nothing of significance to the first half. As we have already discussed this phrase in the context of the doctrine of dilution set out in sections 5(3) and 10(3),”° it is not necessary to look at it again. 2.4

BRITISH

CODE

OF ADVERTISING

Trade mark law forms part of a patchwork of provisions which regulate comparative advertising.*' One of the most important of these is the British Code of Advertising (BCA), which was drafted by the Committee on Advertising and is supervised by the Advertising Standards Authority (ASA).”” The British Code of Advertising establishes what is primarily a self-regulatory system, and was drawn up by representatives from relevant trade and professional bodies. The Code applies to advertisements in newspapers and other printed publications, cinema and video commercials, and promotions.” It does not apply, however, to broadcast commercials (which are the '7 Barclays Bank v. RBS Advanta [1996] RPC 307, 315. 18 Tbid., 307. See also British Airways v. Ryanair (5 Dec. 2000). 19 Emaco and Aktiebolaget Electrolux v. Dyson Appliances [1999] ETMR 903. 20 Barclays Bank v. RBS Advanta [1996] RPC 307, 314-15. Laddie J rejected as helpful the example of dishonest unwarranted flattery as being a case where the use would be dishonest but not take unfair advantage or be detrimental to the mark. Laddie J said such a use would be honest. This view was approved by Jacob J in Vodafone Group v. Orange Personal Communications Services [1997] FSR 34, 39-40. 21 See D. Fitzgerald, ‘Self Regulation of Comparative Advertising in the UK’ [1997] Ent LR 250; A. Ohly and M. Spence, The Law of Comparative Advertising (2000), 6-7, 97-101. 22 This can be accessed at the ASA website: http://www. asa. org.uk. 23 BCA, para. 1.1.

TRADE

MARK

DEFENCES

873

responsibility of the Independent Television Commission or the Radio Authority), to advertisements in foreign media, to health-related claims in advertisements, and to promotions addressed only to the medical and allied professions.” On the premiss that comparative advertising ought to be permitted in the interests of vigorous competition and public information,” the British Code of Advertising permits comparative advertising so long as the comparisons are ‘clear and fair’. The elements of any comparison should not be selected in a way that gives the advertisers an artificial advantage.*° Comparative advertising is also subject to the general provisions of the Code that requires that all advertisements: (i)

be legal,”” decent, honest, and truthful;”8

(ii) respect the principles of fair competition generally accepted in business;”? (ii) do not mislead by inaccuracy, ambiguity, exaggeration, omission, or

otherwise;*° (iv) do not unfairly attack or discredit other businesses or their products;?! and, (v)

do not make unfair use of the goodwill attached to the trade mark, name,

brand, or the advertising campaign of any other business. Conformity with these requirements is assessed according to the advertisement’s probable impact, taken as a whole and in context. The impact that an advertisement has will depend on the audience, the medium, the nature of the product, and any additional material distributed at the time to consumers.” Before releasing an advertisement, advertisers must have documentary evidence to prove all claims, whether direct or implied, that are capable of being objectively substantiated.*> The adequacy of this evidence will be judged on the basis of whether it supports both the detailed claims and the overall impression created by the advertisement. The ASA investigates complaints against advertisements and promotions in non-

broadcast media.** The ASA’s rulings may request that a company withdraw or amend its advertisements or promotions.*? The judgement of the ASA Council on interpretation of the Code is final, though there is some provision for appeal. A 24° BGA, para: 11,2: 25 Tbid., para. 19.

26 Tbid., para. 19.2. 27 Tbid., para. 68.22. The Code requires advertisers and promoters to ensure that all their advertisements and promotions are legal, but the ASA is not a law-enforcement body. Any matter that principally concerns a legal dispute will normally need to be resolved through law-enforcement agencies or the courts. 28 Tbid., para. 2.1.

29 Tbid., para. 2.3. 30 Tbid., para. 7.1. 31 pase Thid., para. 20.1. 32 Tbid., para. 1.4b. 33 Tbid., para. 3.1.

34 Tbid., para. 68.31. These are dealt with by the ITC and Radio Authority, Note in particular the ITC Code of Advertising Standards and Practice, 1997, esp. paras. 26-7. Complaints are normally not pursued if the

point at issue is the subject of simultaneous legal action: BCA, para. 68.29. 35 Tbid., para. 68.13.

874

TRADE

MARKS

AND

PASSING

OFF

number of sanctions exist to counteract advertisements and promotions that conflict with the Code. The media may deny access to space, the publication of a ruling in the ASA’s Monthly Report may generate adverse publicity, trading sanctions may be imposed or recognition revoked by the advertiser’s, promoter’s, or agency’s professional association, and financial incentives provided by trade, professional or media organizations may be withdrawn.*° The self-regulatory system is reinforced by the 1988 Control of Misleading Advertisements Regulations.*” Under these Regulations, if a misleading advertisement or promotion continues to appear after the Council has ruled against it, the ASA can refer the matter to the Director-General of Fair Trading who can seek an undertaking from anyone responsible for commissioning, preparing, or disseminating it, that it will be discontinued. If this is not given or is not honoured, the Office of Fair Trading can seek an injunction from the courts to prevent its further appearance.

2.5

THE

EC DIRECTIVE

ON

COMPARATIVE

ADVERTISING

In 1997, the European Parliament and Council passed a Directive relating to comparative advertising.** In principle, the Directive permits comparative advertising,” but does so only if the advertisement satisfies the eight conditions specified in Article 3a. These are that: (a) it is not misleading according to Articles 2(2), 3, and 7(1) (these oblige

member states to provide a minimum of protection against ‘misleading’ advertising though leave that concept undefined);*° (b) it compares goods or services meeting the same needs or intended for the same purpose; (c) it objectively compares one or more material, relevant, verifiable, and representative features of those goods and services, which may include price; (d) it does not create confusion in the market place between the advertiser and a competitor or between the advertiser’s trade marks, trade names, other

distinguishing marks, goods, or services and those of a competitor; (e) it does not discredit or denigrate the trade marks, trade names, other dis-

tinguishing marks, goods, services, activities, or circumstances of a competitor; 36 BCA, para. 68.35. 37 Control of Misleading Advertising Regulations 1988 (SI 1988/915). Now amended by the Control of Misleading Advertisements (Comparative Advertising) Regulations 2000 (SI 2000/914.)

38 The Directive amends Directive 94/450/EEC. Prior to that the laws of member states varied dramatically: comparative advertising was basically permitted in Ireland, Austria, and Switzerland but was illegal in Italy, Germany, and Benelux. These differences were perceived as obstacles to the free movement of goods. For background, see A. Ohly and M. Spence, The Law of Comparative Advertising (2000). 39 Article 2a defines ‘comparative advertising’ means ‘any advertising which explicitly or by implication identifies a competitor or goods or services offered by a competitor.’ 40 See Ohly and Spence, The Law of Comparative Advertising, 60-1.

TRADE MARK DEFENCES

875

(f) for products with designation of origin, it relates in each case to products with

the same designation; (g) it does not take unfair advantage of the reputation of a trade mark, trade name, or other distinguishing marks of a competitor or of the designation of origin of competing products; and, (h) it does not present goods or services as imitations or replicas of goods or services bearing a protected trade mark or trade name. The Directive had to be implemented by 23 April 2000, and this was done by the Control of Misleading Advertisements

(Amendment)

Regulations 2000 (SI 2000/

914). This amends the Control of Misleading Advertisements Regulations (SI 1998/915), so as to allow complaints to be made to the Director-General of Fair Trading in cases of comparative advertisement which do not satisfy the criteria in regulation 4A (reflecting the conditions in Article 3A of the Directive). However, the Regulation explicitly states that is does not confer or derogate from any independent right of action in civil proceedings. Section 10(6) of the 1994 Act is not modified.”

3 USE OF A REGISTERED

MARK

The next defence to a claim of trade mark infringement is set out in section 11(1).

This provides that a trade mark is not infringed by the use of another registered trade mark in relation to goods or services for which the latter mark is registered. In effect, section 11(1) provides that registration gives a defence to an action for infringement. This is in contrast to the situation in copyright law where a person can simultaneously exploit their own work and infringe someone else’s. The immunity conferred by registration acts as an incentive for traders to apply for trade mark registration. Where a defendant relies on the section 11(1) defence, the claimant will usually respond by challenging the validity of the registered mark under section 47(6). The ability of the claimant to nullify the section 11(1) defence by challenging the validity of the defendant’s registration may be restricted if the claimant has acquiesced in the use of the later trade mark. This is because where the owner of an earlier trade mark has knowingly acquiesced in the use of the mark for a continuous period of five years, section 48 of the 1994 Act provides that they lose the ability to apply for a declaration that the registration is invalid, or to oppose the use of the mark.*? Unless the defendant’s registration was in bad faith, where a claimant has acquiesced in the use of the later mark they lose the ability to rely upon the section 11(1) defence. 41 P. Carey, ‘Comparative Advertising: European Harmonization’ [2000] Ent LR 21. 42 Recitals 13-15 of Directive 97/55/EC indicate that advertising which complies with the Directive will not infringe the rights of atrade mark owner under TM Dir. Art. 5. See BA v. Ryanair (5 Dec. 2000). 43 TM Dir. Art. 9.

876

TRADE

MARKS

AND PASSING

OFF

While there is no equivalent to section 11(1) in the Community Trade Mark Regulation, it does contain a provision dealing with acquiescence.** This disentitles the proprietor from ‘opposing the use of the later mark in respect of the goods or services for which the later trade mark has been used.’ As such, the effect as regards marks that have long been in use is the same as in the UK.

4 USE OF NAME

OR ADDRESS

In contrast with the law of passing off,* trade mark law provides a defence to a claim to infringement where a person uses their own name. Section 11(2)(a) provides that a

registered trade mark is not infringed by ‘the use by a person of his own name or address’.*° As with all of the defences in section 11, this is subject to the proviso that the use is ‘in accordance with honest practices in industrial or commercial matters’.*” Equivalent provisions under the 1938 Trade Marks Act not only applied to personal

names per se, but also seemed to encompass the use of business and company names.** The position under the 1994 Act in this regard has been held to be the same.” According to Jacob J, just as a person’s name is pretty well fixed by birth and by usage, a company which has used its name and built up goodwill is equally stuck with that name, and therefore equally entitled to such a defence. Nevertheless, the issue cannot be regarded as totally resolved, given the comments during the passage of the Community Trade Mark Regulation, to the effect that the equivalent provision was confined to the use of personal names.*’ Even more doubt exists over whether the section 11(2)(a) defence would apply to the use of a nickname.>! In order for the section 11(2)(b) defence to apply, the use must be in accordance

with honest practices in industrial and commercial matters. As we saw in the context 44 CTMR Art. 53. See Annand and Norman (1998), 185-9. 4S Joseph Rodgers v. W. N. Rodgers (1924) 41 RPC 277; Baume v. Moore [1958] Ch 907 (passing off but no trade mark infringement); Parker Knoll v. Knoll International [1962] RPC 265 (passing off but no trade mark infringement); Biba Group v. Biba Boutique [1980] RPC 413 (whatever the general position there is no defence to passing off if defendant uses first name or nickname); NAD Electronics Inc. v. NAD Computer Systems [1997] FSR 380, 392.

4© Goldberg, ‘The Right to Use One’s Own Name in Business’ (1984) 32 Names (Journal of the American Name Society) 156 (explaining transition in US cases from sacred right to own name, to recognition of public interest in avoiding confusion, so that current law tends to take a compromise pon of requiring a defendant to use its full name or a disclaimer to minimize potential confusion). 47 The wording of the proviso derives from Paris. Art. 10 bis. 48 Provident Financial plc v. Halifax Building Society [1994] FSR 81. 49 Euromarket Designs Incorporated v. Peters & Anor [2001] FSR 288, 299. On the other hand, in NAD

Electronics v. NAD Computer Systems [1997] FSR 380 Ferris J said that it was ‘far from clear’ that use of a corporate name fell within the defence. The matter has been referred to the ECJ: Scandecor Developments v. Scandecor Marketing (HL, 4 Apr. 2001).

°° OJ OHIM 5/96 at 609, 615. >! In NAD Electronics v. NAD Computer Systems [1997] FSR 380, Ferris J doubted that Hossain Afkami Aghda’s could rely on the defence to use the NAD sign on the basis that he was commonly known as Nader Aghda or Nad.

TRADE MARK DEFENCES

877

of section 10(6) this is an objective requirement. It is likely that use would not be regarded as honest if the defendant copied the mark, or before commencing use the user was aware of the existing trade mark registration.” It must be doubtful whether the case law decided on the meaning of ‘bona fide’ under the 1938 Act can be used to assist in the interpretation of the proviso in the 1994 Act.™

5 DESCRIPTIVE

USES

The next defence to an action for trade mark infringement is set out in section 11(2)(b). This provides that a registered trade mark is not infringed where the mark is used to indicate the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services, or other characteristics of goods or services.** This is subject to the proviso that the use is in accordance with honest practices in industrial or commercial matters. If a descriptive term becomes registrable because it has acquired a secondary meaning, the section 11(2)(b) defence ensures that the rights conferred on the proprietor do not

restrict other traders from using the same word or sign to describe goods or services. That is, it limits the extent to which a descriptive word can be taken from the public domain. The section 11(2)(b) defence applies in situations where traders use the trade mark to describe their own goods.” It also applies where a person uses the mark to describe the claimant’s goods.” The defence will not apply, however, where the defendant uses the mark as a trade mark in relation to their own goods. In The European v. The Economist,” Millett LJ said he thought that while paragraphs 11(2)(a) and (c) are

directed to the use of the matters referred to as indications of the trade origin of the goods or services, paragraph (b) is different. Section 11(2)(b) would make no sense if

the ‘other characteristics of the goods and services’ included their trade origin. Millet LJ said that the reason for this was that the purpose of section 11(2)(b) is ‘to permit

the fair use of the plaintiff's registered mark to indicate the characteristics of the defendant’s goods or services, for example, in an advertisement, but not ... to

52 Euromarket Designs Incorporated v. Peters & Anor [2001] FSR 288, 300-1 (para 41-2). 53 Baume v. Moore [1958] RPC 226, 235 (Romer LJ); Parker Knoll v. Knoll International [1962] RPC 265,

275 (Lord Denning, dissenting); Provident Financial ple v. Halifax Building Society [1994] FSR 81, 93 (doubt-

ing subjective test); Mercury Communications v. Mercury Interactive (UK) [1995] FSR 850 (affirming subjective test); NAD Electronics v, NAD Computer Systems [1997] FSR 380, 398; G. Mills and P. Taylor, “Bona Fide

Use of Own Name Defence and the Validity of Trade Mark Regulations Relating to Computer Software in the UR [1995] EIPR 503. 54 The equivalent ‘fair use’ defence in the USA, Lanham Act (1946) s. 33(b)(4), is available only in actions

involving descriptive terms and only when the term is used in its descriptive sense. 5° British Sugar v. James Robertson & Sons [1996] RPC 281. °° For example, in comparative advertising: British Sugar v. James Robertson & Sons [1996] RPC 281, 298. °7 [1998] FSR 283.

878

TRADE MARKS AND PASSING OFF

perform the dual function of indicating both the characteristics and the trade origin of the defendant’s goods.’ A descriptive use will only provide a defence if it is in accordance with ‘honest practices in industrial and commercial matters’. In the first instance decision of The European v. The Economist, Rattee J said that that the question of whether the use is in accordance with honest practices in industrial and commercial matters must be decided by an objective test, and not by reference to the subjective intention of the infringer.°? As such, it did not matter that the producer of the EUROPEAN VOICE did not intend to confuse consumers about the relationship between the EUROPEAN VOICE and THE EUROPEAN. Rattee J also said that he thought it could not be in accordance with honest commercial practices for a publisher to use as the title and therefore the trade mark of his newspaper something so similar to the registered trade mark of another newspaper that it was likely to confuse the public.

6 USE TO INDICATE

THE

PRODUCT

INTENDED

PURPOSE

OF A

OR SERVICE

Section 11(2)(c)/Article 12(c) of the CTMR provides that a registered trade mark is

not infringed where the defendant finds it necessary to use the trade mark to indicate the intended purpose of a product or service (in particular, as accessories or spare parts). This is subject to the proviso that the use must be in accordance with honest practices in industrial or commercial matters. In effect, this defence recognizes that while a trader may not be formally linked to the trade mark owner, they may find it necessary to refer to the trade mark as a part of the normal course of their trade. This would occur, for example, where a trader sells spare parts for a particular type of product. In these circumstances, the trader will wish to inform consumers that the parts fit particular products. The most efficient way this can be done is by referring to the trade mark for that product. Another situation where it will be necessary to use a trade mark in the course of trade is where a trader repairs a particular brand of goods (such as SONY televisions). If trade mark owners were able to control such uses, it would unfairly restrict trade. As the ECJ said, the defence in Article 6(1)(c) of the Directive seeks to reconcile the ‘fundamental interests of 8 The European v. The Economist Newspaper [1998] FSR 283, 291-2. See also British Sugar v. James Robertson & Sons [1996] RPC 281, 299; Discovery Communications Inc. v. Discovery FM [2000] ETMR 516, 521

(rejecting argument that Discovery FM was used to indicate geographic origin, because it could be equated with Dundee and because use by defendant was clearly used as a trade mark). But cf. Beautimatic International v. Mitchell International Pharmaceuticals and Alexir Packaging [1999] ETMR 912, 930 (there may be

exceptions in the case of semi-descriptive marks).

59 [1996] FSR 431, 446. 60 bid.

TRADE MARK DEFENCES

879

trade mark protection with those of the free movement of goods and freedom to provide services’.°!

The nature of this defence was considered by the ECJ in BMW y. Deenik. The defendant in this action ran a garage that specialized in repairing and maintaining BMW cars. Notably, he was not a part of the official smw dealer network. Bmw claimed that when the defendant described himself as specialized in the repair and maintenance of BMws, he made unlawful use of the Bmw mark. The ECJ disagreed, explaining that in these circumstances the defendant could rely on the defence in Article 6(1)(c) of the Directive. This was because the defendant could not communi-

cate the fact that he repaired and maintained smw cars without using the Bmw mark.®* In relation to the question of whether the use was necessary to indicate the intended purpose, the ECJ said that ‘if an independent trader carries out the maintenance and repair of BMw cars or is in fact a specialist in the field, that fact cannot in practice be communicated to his customers without using the Bmw mark.’®4 The EC] added, however, that the use of another person’s trade mark for the purpose of informing the public of the repair and maintenance of goods covered by the mark is subject to a number of conditions.® In particular, the Court said that a garage should be free to use the Bmw mark to bring its services to the attention of the public, unless the use of the mark was contrary to honest practices. The ECJ said that a use would be contrary to honest practices where it gave rise to the impression that there is a commercial connection between the trader and the trade mark owner. That is, the trader must not use the mark in a way that suggests that the trader’s business is affiliated with the trade mark owner’s business. The ECJ said that this was a question of fact to be decided by national courts.®’ The ECJ added that if there is no

risk that the public will be led to believe that there is a commercial connection between the trader and the trade mark proprietor, the mere fact that the trader derived an advantage from using the mark (for example because the advertisements lend an aura of quality to their business) would not of itself mean that the use was dishonest. In Aktiebolaget Volvo v. Heritage (Leicester), the High Court granted summary judgment against a former Volvo dealer, who, when the dealership had come to an end in 1995 referred to himself as an “Independent Volvo Specialist’. Applying the proviso, Rattee J said that the test was whether a reasonable motor-car service provider would think what the defendant had done was honest. Given the surrounding circumstances, 61 Bayerische Motorenwerke AG and BMW Nederland BV y. Ronanl Karel Deenik, Case C-63/97 [1999] 1 CMLR

1099, 1127 (para. 64).

62 Ibid., 1099. 63 64 65 66 67 68 69

Tbid., 1125-6 (para. 54). Tbid., 1113-14 (Advocate General para. 54), 1126 (para. 60). Tbid., 1127 (para. 63). Tbid., 1125, 1127 (paras. 52 and 64). Tbid., 1126 (para. 55). Tbid., 1125 (para. 53). [2000] FSR 253.

880

TRADE

MARKS

AND PASSING OFF

including the fact that the defendant had sent out a series of letters which implied a continued trade connection with Volvo, Rattee concluded that the defendant had no

arguable case.

7 LOCAL

USES

Section 11(3) provides that a UK registered trade mark is not infringed by the use ina particular locality of an earlier right which only applies in that locality.” An earlier right applies in a locality ‘if, or to the extent that, its use in that locality is protected by virtue of any rule of law (in particular, the law of passing off).’ The defence only arises if the use of the earlier right began before both the use and the registration of the claimant’s mark. It should be noted that it is not necessary to show that the defendant could have brought an action for passing off. Since the courts seldom provide injunctive relief confined to a particular locality, it seems that if defendants can bring themselves within this section then the defence may apply throughout the UK. The relationship between local uses and Community trade marks is complex. While the Regulation does not have an equivalent to the earlier rights defence contained in national law, Article 106 allows the owner of any earlier right to rely on national law against the Community trade mark owner.’! Thus, the owner of a national mark who

has not opposed the grant of a Community mark” may utilize its national rights in national fora to prevent use of that Community mark (including, presumably an action for infringement against it). This is subject, however, to the principle of acquiescence: that is, five years of continuous use by the owner of the Community trade mark in the member state where the earlier right operates.”?

8 EXHAUSTION Traditionally, trade marks have been territorial in nature, so that a proprietor may own distinct rights in different territories. Typically, those rights have included the right to prevent the importation of goods bearing the mark into the territory where the rights apply.’”* This led to the situation where the owner of a trade mark was able 70 TMA s. 11(3). This reflects TM Dir. Art. 6(2). 71 As defined in CTMR Art. 8. However, while this excludes mere local rights, CTMR Art. 107 provides similar protection for earlier rights which only apply to a particular locality, which presumably encompasses earlier rights of mere local significance: the law of the member state concerned may be utilized to prevent use of the Community mark in the territory in question. 72 As we saw at p. 836, according to CTMR Art. 8(4) use of rights of no more than mere local significance cannot prevent registration on relative grounds,

73 CTMR Art. 53(2).

74 TMA s. 10(4)(c); CTMR Art. 9(2)(c); TM Dir. Art. 5(3)(c).

TRADE

MARK

DEFENCES

881

to use the rights in territory A to prevent the importation of goods from another territory B. This was the case even where the goods had been put on the market in territory B with the consent of the owner. In practice, there are a number of reasons

why the importation of goods from one country to another may be desirable. The most obvious is where the price of the goods is cheaper in one territory than another, or where demand in the second territory (A) is not being met. At first glance, it seems that if importation was permitted, it would be to the advantage of all concerned. The public in territory A would benefit from cheaper products, while the trade mark owner's interests would be satisfied by sale in country B. However, first impressions give way to more complex arguments. This is because trade mark owners may have good reasons for wishing to divide markets up and to prevent parallel importation.” Given that it may be difficult to differentiate between legitimate and counterfeit goods at the border, parallel importation may also weaken the trade mark owner’s capacity to prevent the importation of counterfeit goods.

8.1

DEVELOPMENT

OF THE

BASIC

RULES

Prior to the adoption of the Directive, the European Court of Justice developed a series of sophisticated rules which detailed the situations where the owner of a national trade mark for country B could prevent goods put on the market elsewhere in the Community from being distributed in country B.’ Since Article 7 of the Directive and section 12 of the 1994 Act embody the notion of exhaustion developed under the case law, it is worth noting the basic features of that case law. The jurisprudence that developed prior to the passage of the Directive recognized the conflicting demands of Articles 30 and 36 of the Treaty of Rome. Under Article 30 of the Treaty (now Article 28 EC), ‘quantitative restrictions on imports or measures having equivalent effect’ are prohibited. However, under Article 36 of the Treaty (now Article 30 EC), prohibitions or restrictions on imports between member states that are justified on grounds of the protection of industrial and commercial property are permissible. This is on the proviso that they do not constitute a means of arbitrary discrimination or a disguised restriction on trade between member states. As we observed in Chapter 1, in drawing a compromise between the demands of

the internal market and national industrial property rights,”” the European Court of Justice recognized the principle of exhaustion of rights, where the goods were placed 7° In the case of pharmaceuticals, the price differentials are largely the result of the fact that regulatory mechanisms for price setting differ on a national basis. If parallel importing were always possible, effectively the trade mark owner would pretty much have to live with the lowest price set by any of the national authorities, On the legality of controlling markets by restricting supply, see Bayer AG v. Commission T-41/96 [2001] All ER (EC) 1 (CFI).

76 See Ch. 1 especially at pp. 10-13. 77 Bristol-Myers Squibb v. Paranova A/S and C. H. Boehringer Sohn, Boehringer Ingelheim KG and Boehringer Ingelheim A/S v. Paranova A/S, and Bayer Aktiengesellschaft and Bayer Danmark A/S v. Paranova A/S,

C-427/93 and C-429/93 [1996] ECR I-3457, I-3528 (para. 31) (hereafter Bristol-Myers Squibb v. Paranova).

882

TRADE

MARKS

AND PASSING OFF

on the market under a trade mark with the consent of the trade mark proprietor.’”* On the other hand, in order to ensure that trade marks continue to function as indicators of origin and as guarantors of quality to the consumer,” the European Court of Justice also said that the rights were not exhausted where the trade mark owner had a legitimate reason for opposing further circulation with the goods.*° The principle of exhaustion represents a compromise between a respect for national rights and an attempt to ensure that those rights are not used to restrict trade across borders. To reach this compromise, the jurisprudence relies on the notion of the “specific subject matter’ of a trade mark. In the Community’s view, the essential purpose of a trade mark is to guarantee that the owner has the exclusive right to use that mark for the product for the first time. The trade mark owner can therefore prevent competitors from taking unfair advantage of the status and reputation of the trade mark by selling products illegally bearing the mark. However, once the goods are placed on the market with the proprietor’s consent, the trade mark has done its job. As such, the ‘specific subject matter’ of the trade mark is exhausted. Exhaustion

means that trade mark rights cannot be used to prevent further trade in the goods. This is subject to the proviso that the owner of the mark may be able to control further use of the mark where that use implicates some other aspect of the specific subject matter protected by the trade mark right. This jurisprudence on exhaustion of the rights was carried over into Article 7(1) of the Directive*! and section 12(1) of the 1994 Act.*? This provides that a ‘registered trade mark is not infringed by use of the trade mark in relation to goods which have been put on the market in the European Economic Area under that trade mark by the proprietor, or with his consent.’*’ As with the pre-Directive jurisprudence, the principle of exhaustion found in Article 7(1) and section 12(1) is subject to the general rider that in certain circumstances the rights of the owner will not be exhausted. As section 12(2) says, section 12(1) does not apply where there are legitimate reasons for 78 The principle of exhaustion applies where the same person owns the mark in the country of import and export. It also applies where the parties are economically linked, for example as subsidiaries of the same group: Centrafarm BV and Adriaan De Peijper v. Sterling Drug, Case 15/74 [1974] ECR 1147. However, economic linkage does not cover the situation where an assignment of the trade mark rights has occurred: IHT Internationale Heiztechnik v. Ideal Standard, Case C-9/93 [1994] ECR 1-2789, I-1850—1 (paras. 43-5). The

doctrine of common origin recognized in Hag I, Van Zuylen Freres v. Hag AG, Case 192/73 [1974] ECR 731

can now be regarded as otiose: Case C-10/89 CNL-Sucal v. Hag (Hag II) [1990] ECR I-3711, 1-3759 (para. 19). 79 See e.g. Case 102/77, Hoffmann-La Roche v. Centrafarm [1978] ECR 1139 (para. 7); Case 1/81, Pfizer v. Eurim-Pharm [1981] ECR 2913, 2925-6 (para. 7); Hag II [1990] ECR I-3711, I-3758 (para. 14); and JHT Internationale Heiztechnik, Case C-9/93 [1994] ECR I-2789, I-2847 (para. 33). 80 See Hoffmann-La Roche v. Centrafarm, Case 102/77 [1978] ECR 1139; Centrafarm v. American Home

Products Corporation, Case 3/78 [1978] ECR 1823. 81 Bristol-Myers Squibb v. Paranova A/S, C-427/93 [1996] ECR 1-3457, 3529 (rejecting argument that exhaustion under TM Dir. Art. 7 only permitted the resale of goods, not repackaging and thus represented a change from the existing ECJ jurisprudence). 82 CIMR Art. 13. To the extent that TM Dir. Art. 7 is narrowly drafted, Arts. 28 and 30 EC operated as previously: see Pharmacia & Upjohn SA v. Paranova, C-379/97 [2000] 1 CMLR 51, 81 (para. 28). 83 Although TM Dir. Art. 7(1) refers to marketing in the Community, the principle of the exhaustion of rights was extended for certain purposes to the EEA. See Ch. 1.

TRADE MARK DEFENCES

883

the proprietor to oppose further dealings of the goods bearing the mark. Article 7(2) imposes similar restrictions on the principle of exhaustion established by Article 7. The main difference is that while section 12(2) allows a trade mark owner to oppose ‘further dealings’ with goods bearing their mark where there are legitimate reasons to do so, Article 7 refers to further ‘commercialization of goods’. It seems that the difference in language does not affect the scope of the provisions. Both terms encompass the importation, resale, and advertising of goods bearing the trade mark. 8.2

LEGITIMATE

GOODS

BEARING

REASONS THE

TO PREVENT

FURTHER

DEALINGS

IN

MARK

Trade mark owners are only able to utilize their rights to prevent further dealings of goods bearing their mark which have been placed on the market, when there are ‘legitimate reasons’ to do so. The mere fact that the further dealing is to another trader’s advantage is not a legitimate reason for the trade mark owner to prevent the use from taking place. There are a number of situations where a trade mark owner may have a legitimate reason to oppose further dealings in goods bearing the mark. These include situations where the goods are altered or repacked, or where the mark is altered, or where the goods or services are advertised. We will consider each in turn. 8.2.1 Altering the goods

One situation where a trade mark owner has a legitimate reason to oppose further dealings of a mark is where the condition of the goods has been changed or impaired after they have been put on the market. For example, a trader which manufactures and sells video-game consoles under a particular registered mark in France, may wish to prevent another trader from exporting the console from France to the UK, opening the packaging, adding adaptors to enable the console to work in the UK, and selling the repackaged goods. The trade mark owner may have a legitimate reason to object to the resale of such goods, for example, if the adaptor is of a different standard to that which the trader would supply in the authorized UK packages—at least where the repackaged goods do not clearly indicate the origin of the adaptors.* If the owner was unable to control such acts, the role that the mark plays in enabling the trade mark proprietor to control the quality of products placed on the market under the mark would be undermined. 8.2.2 Repackaging

Another situation where a trade mark owner may have a legitimate reason to control further dealings is where the goods are repackaged. In Bristol-Myers v. Paranova®® Bristol-Myers marketed pharmaceutical products in various member states. BristolMyers was the owner of certain trade marks for those pharmaceuticals in Denmark. 84 Sony Computer Entertainments v. Tesco Stores [2000] ETMR 104. 8° [1996] ECR I-3457. Consequently Art. 7 applied to repackaging, not simply resale.

884

TRADE MARKS AND PASSING OFF

Paranova purchased products sold by Bristol-Myers in member states, such as Greece and the UK, where the prices were relatively low and then imported them into Denmark. The pharmaceuticals had originally been marketed as tablets in blister packs, flasks, phials, and ampoules. For the purposes of sale in Denmark, Paranova repackaged all the pharmaceuticals in new external packaging. In so doing, Paranova gave the pharmaceuticals a uniform appearance, namely, white with coloured stripes corresponding to the colours of the manufacturers’ original packaging. The new packaging displayed the respective trade marks of the manufacturer (viz. Bristol-Myers). It also included statements that the products had been manufactured by Bristol-Myers and were imported and repackaged by Paranova. Bristol-Myers claimed that the importation infringed various trade marks that they had registered in Denmark. The matter was referred to the ECJ for consideration.

The ECJ began by noting that Article 7(1) provides that the owner of a trade mark cannot rely on their rights in the mark to prevent the importation or marketing of a product which has been put on the market in another member state by him or with his consent. The Court went on to point out that derogations from the fundamental principle of free movement of goods are only permitted in order to safeguard the rights which constitute the specific subject matter of that property. With respect to repacking of goods bearing the trade mark, the ECJ said that ‘account must be taken of the essential function of the trade mark, which is to guarantee to the consumer or end user the identity of the trade-marked product’s origin by enabling him to distinguish it without any risk of confusion from products of different origin.’ That guarantee of origin means that consumers or end-users can be certain that the original condition of a trade-marked product offered to them has not been interfered with or affected by a third party.*° The specific subject matter of a trade mark includes the right to oppose any use of the trade mark that was liable to impair the role it played in guaranteeing the origin of the goods. In particular, the ECJ said that the owner should be able to ensure that the product has not been interfered with in such as way as to affect the original condition of the product. As a result, the ECJ said that the trade mark owner could prevent the parallel importation of repackaged goods. The upshot of this was that a trade mark proprietor may rely on his or her rights to prevent the parallel importation of a product put on the market in another member state, where the importer has repackaged the product in new packaging to which the trade mark has been reaffixed.*’ The ECJ acknowledged that this may create problems in so far as it enables owners

to exercise their rights in a way that constitutes a disguised restriction upon the free movement of goods under Article 30 EC (formerly Article 36 of the Treaty). To ensure that this did not occur, the ECJ said that the owner could not prevent the parallel 86 [1996] ECR I-3457, I-3532-3 (para. 47). 87 In Glaxo Group v. Dowelhurst (No. 2) [2000] FSR 529, 564 Laddie J reinterpreted the EC) cases as restricting the trade mark proprietor’s power to prevent importation of repackaged goods to circumstances where the use inflicts substantial damage on the specific subject matter of the mark. That is, Laddie J would require the trade mark owner to prove confusion or damage to the reputation of the trade mark.

TRADE MARK DEFENCES

885

importation of repackaged goods where the use of the trade mark right by the owner contributes to the artificial partitioning of the markets between member states. In so doing, the ECJ limited the scope of the trade mark owner’s rights. To ensure that this derogation from the owner’s rights did not adversely affect the subject matter of the trade mark, the ECJ said that parallel importation of repackaged goods is only permissible where the parallel importer satisfies certain conditions. These are that: (1) the repackaging does not adversely affect the original condition of the product; (2) the parallel importer complies with certain obligations as to labelling and provision of samples; and (3) the quality of the repackaging does not adversely impact on the reputation of the mark.** After looking at the question of what is meant by ‘artificial partitioning of the market’, we will look at each of the three conditions imposed on the parallel importer. (1) Artificial partitioning of the markets between member states. Repackaging by a parallel importer is only justified where and in so far as it is necessary to avoid artificial partitioning of the market.*? The test for whether there has been an ‘artificial partitioning’ of the markets is decided by objective standards. This means that the importer does not need to show that the trade mark owner deliberately intended to partition the markets between member states. The ECJ said that partitioning is artificial if it cannot be justified by the need to safeguard the essential function of the trade mark. In other words, the power of the trade mark owner should only be limited in so far as the repackaging undertaken by the importer is necessary to market the product in the member state of import. Although the term ‘necessary’ has not been further defined by the ECJ, in Glaxo v. Dowelhurst (No. 2), Laddie J has said that the

requirement of necessity is met ‘when it is shown that the use is reasonably required to overcome actual or potential hindrance to further commercialization of the products.’ One situation where repackaging would be justified is where the goods are marketed in a different packaging in one member state from that used in another member state. In this situation, the goods may not be able to be sold in the second member

state unless they are repackaged. In these circumstances reliance on a trade mark to prevent repackaging would contribute to the partitioning of markets between member states (even if that were not the deliberate intention of the rights-owner).?! For 88 [1996] ECR I-3457, I-3533—4 (para. 4). 89 [1996] ECR I-3457, I-3535 (para. 56); Frits Loendersloot, trading as F. Loendersloot Internationale Expeditie v. George Ballantine & Son, Case C-349/95 [1997] ECR 1-6227, 6255 (para. 29). But cf. Glaxo Group v.

Dowelhurst (No.2) [2000] FSR 529, 564, 571, 576-7 where Laddie J argues that the issue of necessity only arises if the use damages the specific subject matter of the trade mark.

% [2000] FSR 529, 570.

°1 Bristol-Myers [1996] ECR I-3457, I-3536 (para. 57).

886

TRADE

MARKS

AND PASSING OFF

example, if a whisky was marketed as ‘pure whisky’ in one country, but regulations in another member state meant that the whisky could not be described as ‘pure’, it would be necessary to remove the word ‘pure’ from the packaging before the product could be imported into the latter state.” Equally, a trade mark owner cannot oppose the repackaging of a product where the size of the original packet cannot be marketed in the member state of importation.” This would occur, for example, where the size of the packaging was dictated by national regulations. It is unclear whether consumer familiarity with one size or type of packaging would justify the need for repackaging. In Bristol-Myers the ECJ has made it clear that a ‘need’ to repackage may exist even where a number of different types of packaging are used in the state of importation. This is so even if this includes the form of packaging in which the goods in question have been marketed.*4 The reason for this is that ‘partitioning of the markets would exist if the importer were able to sell the product in only part of his market.’ This suggests that repackaging may be justified in response to consumer practices, in the same way as it is justified so as to meet national regulations on packaging. Repackaging is not justified if effective marketing in the state of importation could be achieved with a less radical alteration of the product. For example, a trade mark owner can legitimately oppose the repackaging of the product where the importer is able to achieve the desired results merely by affixing new labels to the original packaging.”” Thus, if labelling rules in the member state of destination require additional information to be given to that which is on the original label, it may not be necessary to remove or replace the original labels. This is because the mere application of a sticker with the additional information to the product may suffice.°® Repackaging does not appear to be justified simply because it would make parallel importing easier or more convenient. For example, repackaging is not justified so as to prevent the manufacturer from tracing the goods.”

(1) Whether the original condition of the product is adversely affected. As we have noted, Article 7(2)/section 12(2) allow trade mark owners to prevent the sale of

repackaged goods ‘where the condition of the goods is changed or impaired’. This 92 Frits Loendersloot v. George Ballantine & Son, Case C-349/95 [1997] ECR I-6227, I-6260 (para. 45).

°3. 94 > 6 97

an

Bristol-Myers [1996] ECR I-3457, I-3534—5 (para 53). Thid. (para. 54). Tbid. (para. 54). Tbid., I-3532 (para. 46). Tbid. (para. 45).

98oo Thid., 1-3535 (para. 55). But cf. Glaxo Group v. Dowelhurst (No. 2) [2000] FSR 529, 570 where Laddie J

has held that repackaging is justified because consumers are suspicious of stickered pharmaceuticals, so that effective marketing requires total repackaging. The same issue has been referred to the ECJ in Merck, Sharp & Dohme v. Paranova Pharmazeutika Handels, C-443/99 [2000] ETMR 403.

°? ‘Frits Loendersloot v. George Ballantine & Son, C-349/95 [1997] ECR 1-6227, I-6258-9 (para. 42). Cf. Zino Davidoffv.AG Imports [1999] 3 All ER711, 731-2 (in a case where the trade mark owner was deemed to have consented to importation of goods into the EEA from outside, Laddie J held that the trade mark owner could not object to the removal of product code reference numbers since this did not affect the ‘physical or mental condition’ of the goods).

TRADE MARK DEFENCES

887

impacts on repackaging cases through the requirement that the repackaging must not affect the condition of the goods. If the repackaging is carried out in such a way that it does not affect the original condition of the product inside the packaging, the ability of the trade mark to function as an indication of origin is safeguarded. If the goods are altered, however, then the essential function of the trade mark would be compromised if the trade mark owner was not permitted to prohibit further circulation of the altered goods.!°° Consequently, a trade mark owner may oppose any repackaging of their goods which involves either a risk that the product inside the package may be tampered with, or that the original condition of their goods is adversely affected.!°! This is sometimes referred to as the doctrine of ‘adverse effects’. In order to constitute a legitimate reason for a trade mark owner to oppose further commercialization of goods that have been repackaged, the risks of adverse effects must be real. The hypothetical risk of isolated error will not do. An example is this provided by Bristol-Myers Squibb v. Paranova where it was argued that the repackaging of blister packs might affect the condition of the drugs. It was suggested that by combining blister packs with different use-by dates into single sets, this might lead to the sale of products which might have been stored for too long. The Court of Justice did not consider this to be a real risk.

To determine whether the repackaging adversely affects the original condition of the product, both the nature of the product and the method of repackaging must be taken into account. Parallel importation is permissible where the repackaging only affects the external layer leaving the inner packaging intact, or where the repackaging is carried out under the supervision of a public authority in order to ensure that the product remains intact. Similarly, the addition of accurate information by the repackager will not constitute a legitimate reason to oppose the further circulation of the goods.!° The ECJ has recognized that the original condition of the product inside the packaging might be indirectly affected where the repackaged product omits important information, or gives inaccurate information about the nature, composition, effect, use, or storage of the product.!° (ii) The parallel importer must comply with certain obligations. The decision that trade mark owners may not rely on their rights to oppose the marketing of products

repackaged by an importer where it leads to artificial partitioning of the market is essential to ensure the free movement of goods. To protect the owner against misuse, the ECJ said that the parallel importation of repackaged goods ought only to be recognized in so far as the importer complies with certain requirements.!™ 100 Frits [1997] ECR 1-6227, I-6255 (para. 28). 101 Bristol-Myers [1996] ECR 1-3457, I-3536 (para. 59). 102 Tbid., I-3537 (para. 66); Phytheron International SA, v. Jean Bourdon SA, C-352/95 [1997] ECR I-1729, I-1748 (para. 23).

103 Bristol-Myers [1996] ECR 1-3457, I-3538 (para. 65). 104 Thid., I-3533 (para. 49).

888

TRADE

MARKS

AND

PASSING

OFF

Since it is in the trade mark owner’s interest that consumers or end-users should not be led to believe that the owner is responsible for the repackaging, the ECJ said that the packaging should indicate both who manufactured the product,!%° and who repackaged the product. That indication must be clearly shown on the repackaged product,'° and be printed in such a way as to be understood by a person with normal eyesight, exercising a normal degree of attentiveness.!”” It is not necessary that a statement be made that the repackaging was carried out without the authorization of the trade mark owner.'° In the Playstation case,'” the statement ‘This product has been opened to fit an adaptor to enable it to be used in the UK three-pin power sockets and to include an optional RFU adaptor repacked for Tesco Stores UK’ was considered as probably insufficient to discharge the onus on the importer/seller of dispelling any impression that the trade mark owner is responsible for it. The ECJ also said that the trade mark owner must be given advance notice that the

repackaged product is being put on sale.'!° The owner may also require that they be supplied with a specimen of the repackaged product before it goes on sale. This enables the owner to check that the repackaging does not affect the original condition of the product or damage the reputation of the trade mark. This also affords trade

mark

owners

with

a better

opportunity

to protect

themselves

against

counterfeiting.!!! In Frits Loendersloot v. George Ballantine, which concerned the relabelling of alcoholic drinks, the ECJ suggested that while in the case of pharmaceuticals it was necessary for a parallel importer to comply with the requirements set out in BristolMyers, it might not be necessary to do so in the case of other goods.'!? The Court agreed that the various requirements were intended to reflect the legitimate interests of the trade mark owner with regard to pharmaceutical products. In the case of the parallel importation of alcohol, the interests of the trade mark owner, particularly to combat counterfeiting, only required that the relabeller/importer provide them with prior notice that the relabelled products are to be put on sale. The requirement of prior notice raises a number of issues that have yet to be happily resolved." First, there is the question of what is meant by notice. Second, there is the question of what happens when notice is not given.

As regards the first, is the requirement one of express notice from importer/seller to 105 Pfizer v. Eurim-Pharm, Case 1/81 [1981] ECR 2913, 2926-7 (para. 11); Bristol-Myers [1996] ECR I-

3457, I-3540 (para. 74).

106 Hoffmann-La Roche v. Centrafarm, Case 102/77 [1978] ECR 1139, 1165 (para. 12); Pfizer v. EurimPharm, Case 1/81 [1981] ECR 2913, 2926-7 (para. 11); Bristol-Myers [1996] ECR 1-3457, I-3539 (para. 71).

107 Bristol-Myers [1996] ECR I-3457, I-3539 (para. 71). 108 Tbid. (para. 72).

109 Sony Computer Entertainments v. Tesco Stores [2000] ETMR 104, 109.

10 Hoffmann-La Roche, Case 102/77 [1978] ECR 1139, 1165 (para. 12). "11 Bristol-Myers [1996] ECR 1-3457, I-3540-1 (para. 77). 112 Frits Loendersloot v. George Ballantine & Son, C-349/95 [1997] ECR I-6227, I-6261 (para. 48). 13 In Glaxo Group v. Dowelhurst (No. 2) [2000] FSR 529, 582 Laddie J suggests that the ECJ reverse its position of requiring notice which runs counter to the supremacy of the rule of free movement of goods.

TRADE MARK DEFENCES

889

trade mark owner, or does it include other forms of notice? In the case of pharmaceutical marketing, all activities require the approval of the Medical Controls Agency. Before the MCA issues product licences, it informs the UK product licence holder. In Glaxo v. Dowelhurst (No. 2),!\4 Laddie J took the view that this was sufficient, what

counts being the fact that the trade mark owner receives notice. He also added that one or two days’ notice was sufficient. The more difficult question is what is the sanction for not giving notice: is notice a ‘condition precedent’ to the legitimacy of the marketing, so, if no notice is received, can the parallel importation and sale of the repackaged product necessarily be enjoined? Laddie J, reluctantly, has concluded that this must be the effect.!15

(iv) Quality of packaging. Another factor that may influence whether a parallel importer

falls outside

of Article

7(2)/section12(2)

relates

to the standard

of

repackaging. Although not specifically in issue in Bristol-Myers,!® the EC} recognized ‘the possibility that the reputation of the trade mark and thus of its owner may nevertheless suffer from an inappropriate presentation of the repackaged product’.!!” This is particularly the case where the repackaging is defective, untidy, or poor quality. As such, the EC] acknowledged that poor presentation might constitute a legitimate reason for the trade mark owner to object to the further circulation of the goods. The ECJ saw this as an element of the ‘specific subject-matter’ of the trade mark right.!!® However, the Court said that when assessing whether the presentation of the repackaged product is liable to damage the reputation of the trade mark, it is necessary to take account of the nature of the product and its market.!!° In the case of pharmaceutical products that are marketed directly to the public, packaging could be crucial in maintaining or inspiring public confidence in the quality and integrity of the product. In these cases, defective, poor-quality, or untidy packaging could damage the trade mark’s reputation.'”? However, where a pharmaceutical is sold to hospitals, the presentation of the product will be of little importance.!2! In the intermediate situation, where the product is sold on prescription through pharmacies, presentation may be important to consumers even though some degree of confidence in the quality of the product would flow from the fact that the products were only sold on prescription.!”2 8.2.3 Altering the mark

Another situation where the trade mark owner may have a legitimate reason to restrict further dealings of goods bearing their trade mark arises where the parallel 114 15 116 117 118

[2000] FSR 529, 583-4, 586. Tbid., [2000] FSR 529, 586. Bristol-Myers [1996] ECR I-3457, I-3540 (para. 75); Frits [1997] ECR 1-6227, I-6255 (para. 29). Bristol-Myers [1996] ECR 1-3457, I-3540 (para. 75). Thid.

119 Tbid.

120 Thid. (para 76). 121 Thid. (para. 77). 122 Tid.

890

TRADE

MARKS

AND

PASSING

OFF

importer alters the mark. This issue was discussed by the EC] in Pharmacia & Upjohn v. Paranova. This action arose from the fact Upjohn marketed an antibiotic called clindamycin throughout the Community. Upjohn used the trade mark DALACIN in Denmark, Germany, and Spain, and the trade mark DALACINE in France. Paranova bought clindamycin capsules in France, which had been put on the market there by Upjohn under the paracrine trade mark. Paranova bought the clindamycin with the intention of reselling the antibiotic in Denmark. In importing the drug into Denmark, Paranova sold it under the different name of DALacin, the mark that Upjohn used in Denmark. As part of a trade mark infringement action brought by Upjohn against Paranova, the question arose as to whether Paranova could reaffix the mark in this manner. The issue was referred to the Court of Justice.!2° The EC) said that there is no ‘objective difference between reaffixing a trade mark

after repackaging and replacing the original trade mark by another which is capable of justifying the artificial partitioning being applied differently in each of these cases.”!”4 As such, the question of whether a parallel importer could reaffix trade marks was to be decided by the same principles that were set out in the Bristol-Myers decision. The ECJ noted that the trade mark rights in the importing state may allow the proprietor of the trade mark to prevent the mark being replaced. They also noted that the rights of the trade mark owner cannot be used, however, where they give rise to an artificial partitioning of the market between member states. The ECJ said that the question of whether there had been an artificial partitioning of the market was to be decided in the way as set out in Bristol-Myers. As such, the ECJ said that to justify reaffixing a trade mark as Paranova had done, the parallel importer needs to be able to show that the circumstances prevailing at the time of marketing were such that it was objectively necessary for them to replace the original trade mark to ensure that the product in question could be placed on the market by the parallel importer. In so doing the ECJ made it clear that the suggestion that had been made in American Home Products that to justify reaffixing the mark, the parallel importer had to prove that the owner had a subjective intention to divide up the market was not correct.!25 While the question of whether the relevant circumstances existed to justify rebranding was to be decided by national courts, the EC) said that the ‘condition of necessity’ would be satisfied if, for example, consumer protection legislation prohibited use of the mark, or use of the mark was not allowed because it was misleading (here the language differences between member states becomes important).!7° The ECJ added

that the requisite “conditions of necessity’ did not exist, however, if the replacement of the trade mark was ‘explicable solely by the parallel importer’s attempt to secure a commercial advantage’.! 123 124 125 some

[2000] CMLR 51. [2000] CMLR 51, 82 (para. 37). Centrafarm v. American Home Products, Case 3/78 [1978] ECR 1823, 1841-2 (para. 21-3) (suggesting subjective action by the trade mark owner to partition is required).

126 [2000] CMLR 51, 83 (para. 43).

127 Tbid. (para. 44).

TRADE

MARK

DEFENCES

891

8.2.4 Advertising the goods

Another situation where the trade mark owner may have a legitimate reason to restrict further dealings in relation to goods bearing their trade mark is where the goods are advertised. The situations where the owner may have legitimate reasons to restrict such advertisements was discussed by the ECJ in Christian Dior v. Evora.!*8 Evora operated a chain of chemist shops in the Netherlands. While not officially appointed as an official distributor of Christian Dior products, the Evora shops sold Dior perfumes (such as DUNE and FAHRENHEIT) obtained by means of parallel imports. When Evora advertised that it was selling Dior products, Dior claimed that Evora had thereby infringed Dior’s trade marks associated with the perfumes. The EC) said that the proprietor is able to object to such advertising if there are ‘legitimate reasons’ for doing so. The ECJ held that the damage done to the reputation of a trade mark through subsequent advertising may in principle be a legitimate reason within Article 7(2) to allow the proprietor to oppose further commercialization of goods which have been put on the market in the Community by him or with his consent.'”” After referring to the case law concerning the repackaging of trade-marked goods, the ECJ said that: [A] balance must be struck between the legitimate interest of the trade mark owner in being protected against resellers using his trade mark for advertising in a manner which could damage the reputation of the trade mark and the reseller’s legitimate interest in being able to resell the goods in question by using advertising methods which are customary in his sector

of trade.!°°

In the case of prestigious luxury goods, resellers must endeavour to prevent their advertising from affecting the value of the trade mark by detracting from the allure and prestigious image of the goods in question, and from their aura of luxury.!?! However, if the reseller is merely employing techniques that are customarily used for

goods of the kind but not necessarily of the same quality in issue, then an objection to such advertising is only legitimate if it “seriously damages the reputation of the trade mark’.!** The Court suggested that this would occur if in advertising goods bearing the mark, the trade mark was placed in a context which seriously detracted from the

image which the trade mark owner had succeeded in creating around his or her trade

mark.!*?

128 129 130 131 USP '33

Parfums Christian Dior SA v. Evora BV, C-337/95 [1997] ECR I-6013. Dior SA y. Evora BV [1997] ECR 1-6013, 1-6048 (para. 43). Thid., I-6049 (para. 44). Tbid. (para. 45). tayo Tbid., 1-6050 (para. 47). In BMW v. Deenik, Case C-63/97 [1999] 1 CMLR 1099, 1127 (para. 64) the

EC) added that if there is no risk that the public will be led to believe that there is a commercial connection between the trader and the trade mark proprietor, the mere fact that the trader derived an advantage from

using the mark (for example because the advertisements lend an aura of quality to their business) would not of itself mean that the use was dishonest.

892

8.3

TRADE

PARALLEL

COPYRIGHT

MARKS

IMPORTATION

AND

PASSING

OF TRADE

OFE

MARK

GOODS

AND

IN LABELS

While a parallel importer may be entitled to relabel goods for resale, the question may arise as to whether the proprietor can prevent importation by relying on any copyright they have in the label. Since the parallel importer would presumably reproduce and issue copies of such labels, there is a prima facie infringement of copyright.'4 Nevertheless, a different approach has been taken in relation to labels. This can be seen in Christian Dior v. Evora'** where Christian Dior sought to rely on its copyright in the picture marks to prevent Evora from reproducing their marks on advertising leaflets. The ECJ held that in these circumstances ‘the protection conferred by copyright as regards the reproduction of protected works in a reseller’s advertising may not ... be broader than that which is conferred on a trade mark owner in the same circumstances.’!°° The ECJ added that the holder of copyright may not oppose the use of a trade mark by a reseller who habitually markets articles of the same kind but not necessarily of the same quality as the protected goods unless it is established that the use of those goods seriously damages their reputation. '°”

8.4

INTERNATIONAL

EXHAUSTION

The scope of Article 7 of the Trade Marks Directive and section 12 of the 1994 Act is confined to products placed on the market in the EEA. It does not matter that the product bearing the mark has been manufactured in a non-member country if it has been lawfully put on the market in the member state from which it has been imported by the owner of the mark or with their consent.'** Article 7 gives no explicit guidance as to what happens if the product is imported from outside the EEA and has not yet been placed on the market in the EEA with the consent of the trade mark owner. It is to this issue that we now turn. 8.4.1 Background

Prior to the passage of the Directive, the question of international exhaustion was a matter for individual member states.'*° The Commission’s original proposal would have imposed international exhaustion. That is, trade mark owners would not have been permitted to oppose the resale of products which had been put on the market with their consent anywhere in the world.!4° The Commission subsequently changed 154 Moreover, the normal jurisprudence of the ECJ would protect those rights as forming the “specific subject matter’ of copyright. See Ch 1.

135. Dior SA v. Evora BV [1997] ECR 1-6013. 136 Tbid., I-6053 (para. 58). 137 Thid. (para 59). 138 Phytheron International SA v. Jean Bourdon SA, Case C-352/95 [1997] ECR I-1729, I-1748 (para. 21).

139 EMI Records v. CBS United Kingdom, Case 51/75 [1976] ECR 811, 845 (case law under Arts. 28 to 30 EC (formerly Arts. 30-6 of the Treaty) could not be transposed to imports from third countries). 140 [1980] OJ C 351/80 Art. 6; for the Explanatory Memorandum, see COM(80) 635 final.

TRADE

MARK

DEFENCES

893

its view, and its amended proposal explicitly limited the exhaustion principle to goods that had been put on the market ‘in the Community’.!4! When the Directive was passed, it was construed in two conflicting ways.!4? The first was that the question of whether international exhaustion ought to be adopted was a matter for individual member states. Alternatively, it was argued that it was implicit in the Directive that member states should not provide for international exhaustion. That is, member states were obliged to recognize the use of a trade mark to prevent the importation of goods bearing that mark from outside the EEA. It appears from section 10(6) of the 1994 Act that the UK adopted the former view. According to one interpretation, section 10(6) provides for international exhaustion unless the importation of the goods contravened ‘honest practices in industrial and commercial matters’.'*° That might occur where the goods were of a different quality, or where importation was in breach of a licence given by the proprietor.!4 It would not occur, however, where the UK proprietor was a subsidiary of an international firm that marketed goods with an international image and imposed no such restriction.!* 8.4.2 The decisions

The question fell to be decided first by the EFTA court in Mag Instrument v. California Trading Company Norway.'*° The EFTA countries which are party to the EEA Agreement are bound by the Trade Marks Directive, and subject to the supervision of the EFTA court. In the case at hand, torches had been manufactured in the USA by the claimant, Mag, and sold under the name macuire. C imported the torches into Norway, and Mag brought an action for infringement of the MAGLITE mark. C claimed the benefit of international exhaustion provisions that existed under Norwegian law. Mag asserted that Article 7 of the Directive precluded the adoption of a principle of international exhaustion, and that Norway was obliged to apply Article 7. The Norwegian court sought an advisory opinion from the EFTA court. The EFTA court concluded that it was for each of the EFTA states to decide whether to introduce '41 COM (84) 470 final of 31 July 1984; [1985] OJ C 351, 4. Apparently the proposal to so limit the provision was first mooted by the Economic and Social Committee. In Silhouette International Schied vy. Hartlauer Handelsgesellschaft, Case C-355/96 [1998] 2 CMLR 953, 966 (para. 47) the Advocate General stated that: “No doubt considerations of commercial policy and concern about the possible lack of reciprocity were among the reasons why the provision for international exhaustion which featured in the Commission’s original proposal was not maintained.’ 142° See cites in N. Shea, ‘Does the First Trade Marks Directive Allow International Exhaustion of Rights?’[1995] EIPR 463, n. 6. Advocates of international exhaustion include E.-K. Beier, ‘Industrial Property and the Free-Movement of Goods in the Internal European Market’ (1990) 21 IJC 131; J. Rasmussen, ‘The Principle of Exhaustion of Trade Mark Rights Pursuant to Directive 89/104 (and Regulation 40/94)’ [1995] EIPR 174.

143 W. R. Cornish, “Trade Marks: Portcullis for the EEA’ [1998] EIPR 172. 144 Colgate Palmolive v. Markwell [1989] RPC 49,

145 Revion v.'Cripps & Lee [1980] FSR 85. But cf. Northern & Shell ple v. Conde Nast and National Magazines Distributors [1995] RPC 117, 124 (per Jacob J, the reasoning in Colgate and Revlon ‘will not assist’).

146 Case E-2/97 [1998] 1 CMLR 331.

894

TRADE

MARKS

AND

PASSING

OFF

or maintain the principle of international exhaustion with regard to goods originating

outside the EEA.14” This issue was again addressed in Silhouette International v. Hartlauer,'*8 where the ECJ was called upon to decide whether the principle of international exhaustion applied under the Directive. Silhouette manufactured high-quality fashion spectacles which it distributed worldwide under the trade mark s1LHouETTE. The claimant was the registered proprietor for the mark in Austria and many other countries. Silhouette sold an out-of-date range of frames to a firm in Bulgaria. The defendant, Hartlauer, acquired the out-of-date frames from the Bulgarian firm and then imported them into Austria for resale.'#? Silhouette sought an order prohibiting Hartlauer from marketing the spectacles in Austria under its trade mark. They did this on the basis that the frames had not been put on the market in the EEA by it or with its consent. As such, they had not exhausted their trade mark rights. Silhouette argued that the Directive provides that such rights can be exhausted only by reason of marketing within the EEA. The Supreme Court of Austria sought a ruling from the ECJ as to whether Community law requires member states to provide for exhaustion only when the goods have been marketed in the EEA, or whether member states may (or perhaps must) provide for exhaustion when the goods have been marketed in a third country. Reaching the opposite conclusion to the EFTA court, the ECJ rejected the argument that the Directive left the member states free to provide for exhaustion in their national law. In the light of the first and ninth recitals, the ECJ said that Articles 5 to 7 of the Directive must be construed as ‘embodying a complete harmonization of the rules relating to the rights conferred by a trade mark’.!”° A single rule was also necessary to safeguard the functioning of the internal market. Given the terms of Article 7, the only plausible harmonized rule was that member states are obliged to confer on trade mark owners the ability to prevent importation of trade-marked goods from outside the EEA (even where the same trade mark owner has consented to that marketing). 8.4.3 Responses and unresolved issues

The decision of the Court of Justice received a mixed response. It was variously described as “a welcome relief for trade mark owners’!5! and as bad news for consumers. The full implications of the case remain unclear. In particular, two issues remain to be resolved. First, the EC] will have to consider arguments about exactly what it means to say the trade mark owner has ‘consented’ to importation into the EEA. In a remarkable 147 Case E-2/97 [1998] 1 CMLR 331, 339 (para. 28). 148 Case C-355/96 [1998] 2 CMLR 953. For commentary: A. Carboni, ‘Cases about Spectacles and Torches: Now, Can We See the Light?’ [1998] EIPR 471.

'49 See T. Hays and P. Hansen, ‘Silhouette is not the Proper Case Upon which to Decide the Parallel Importation Question’ [1998] EIPR 277 (detailing factual background and arguing the case was one of re-

importation).

150 [1998] 2 CMLR 953, 977 (para. 25). 151 C. Steele, ‘Fortress Europe for Trade Mark Owners’ (1998) (Aug.) Trademark World 14, 16.

TRADE

MARK

DEFENCES

895

decision, Zino Davidoff,'”? Laddie J asserted that even though, in principle, the trade mark owner has the right to stop importation into the EEA of goods not previously marketed in the EEA by or with his consent, this right cannot be used where ‘he has

agreed, expressly or otherwise to such entry, or he has, directly or otherwise, placed the goods in the hands of a third party under conditions which give the third party a right to distribute and onward sell them without restriction.’ Whether there is such implied consent will, in turn, depend on the law of contract of supply or of the place where the sale took place. In this case, Laddie J said there was a rebuttable presumption that, in the absence of full and explicit restrictions being imposed on the purchasers at the time of purchase, the trade mark owner is treated as impliedly consenting to further distribution of those goods (including their importation into the EEA). As a consequence, there was an arguable case that the defendant was not

infringing Davidoff’s UK trade mark. If the legal principles enunciated in Davidoff are good law, it represents a substantial limitation on the ability of trade mark owners to prevent importation of legitimate goods from outside the EEA. This is because (unless the goods have not been altered), a British trade mark owner who has sold goods outside the EEA (under a contractual arrangement governed by English law) will only be able to take advantage of his right to object to importation into the EEA where he has drafted the distribution agreement in a manner which can bind all purchasers down the chain of distribution. The agreement in Davidoff itself illustrates how difficult a task this is: in it the distributor undertook ‘not to sell any Products outside the Territory and shall oblige his sub-distributors, sub-agents and/or retailers to refrain from such sales.’ The Davidoff case is controversial, and not surprisingly Laddie J referred a number of questions to the ECJ.!°? Pending the outcome of that referral, one further twist has occurred:

the Scottish

Court

of Session

distinguished

Laddie

J’s conclusions

in

another case concerning the importation of Davidoff’s cooL water aftershave from Singapore.'** On this occasion, Marks & Spencer’s Toiletries sought to resist an application for an interdict (injunction) on the basis of implied consent. Rejecting the defence, Lord Kingarth held that interpretation of the distribution contract was a matter for German law, and since the defendant had not given any evidence that this was the same as English law, they had failed to establish their defence. Moreover, he observed that Laddie J had merely been considering whether the defendant had an arguable case in order to justify the refusal of summary judgment. Second, the ECJ will have to deal with arguments that such agreements which prohibit marketing in the EEA are contrary to Article 81 EC (formerly Article 85 of the Treaty). In Javico v. Yves St Laurent,’ Yves St Laurent sought to terminate a distribution contract with Javico under which Javico undertook to sell products only in Russia and the Ukraine, because it had been discovered that some of the products 152 153 ‘54 155.

Zino Davidoff v. A. & G. Imports [1999] 3 All ER711. Tbid., 733. AG’s Opinion, 5 Apr. 2001. Zino Davidoff SA v. M. & S. Toiletries [2000] ETMR 622. Javico International and Javico AG v. Yves St Laurent Parfums SA, Case C-306/96 [1998] ECR I-1983.

896

TRADE

MARKS

AND PASSING OFF

had found their way to the UK. The Cour d’Appel of Versailles sought the advice of the EC) as to whether such a contract might be prohibited by Article 81. The EC] held that the agreement had as its object the restriction of competition, so the key question was whether it was capable of affecting trade between member states. If the agreement specifically prohibited imports into the EEA, it would have as its object the restriction of competition in the EEA and would be likely to be void. However, here the contract specified there were to be no sales outside the territory (whether to the EEA or not). Consequently, the Court said the question was what was the ‘effect’ of the agreement. This involved assessing the economic context, particularly the relative position and importance of the parties on the market in question. If the effects were insignificant, the contract would be outside the prohibition and hence valid. If the Community market is oligopolistic, or the price differentials are significant, it is necessary to examine the likely impact of the disputed contract. If the market outside the Community is relatively small compared to that within the Community, the impact is likely to be insignificant. However, assessing such matters is the task of national courts. 8.4.4 Reform?

Following the Silhouette decision, the European Commission raised the question of reform of the rules relating to international exhaustion. It commissioned a study of the economic effects of changing to international exhaustion, which, in turn, indicated that the issues were complex (there might be effects not just on pricing, but also on matters such as product quality or after-sales services), but that the price-benefits to consumers of changing the regime would probably be limited (in some sectors up to 2 per cent).'°° The Commission then consulted widely with member states and interested parties, mooting various possible options, such as having international exhaustion only for certain products (for example, excluding pharmaceuticals and sound recordings).'*’ However, in May 2000, Commissioner Bolkestein informed the ministers at a meeting of the Internal Market Council that the Commission did not propose any action in this field.

9 OTHER

DEFENCES:

TRANSITIONAL

AND

GENERAL

The proprietor of an existing trade mark registered under the 1938 Trade Marks Act is given the benefit of the extended rights contained in sections 9 to 12 of the 1994 Act. Transitional provisions in Schedule 3, paragraph 4(2) state that it is not an infringement of such a mark ‘to continue after commencement any use which did not 156 National Economic Research Associates/S] Berwin, The Economic Consequences of the Choice of Regime of Exhaustion in the Area of Trade Marks (Final Report for DG XV of the European Commission) (Feb. 1999).

'°7 Select Committee on Trade and Industry, 8th Report, Trade Marks, Fakes and Consumers (8 July 1999).

TRADE MARK DEFENCES

897

amount to infringement of the existing registered mark under the old law.’ In so far as the rights contained in sections 9 and 10 are broader, or the defences contained in sections 11 and 12 are narrower, care must be taken as regards continued use of old

marks. For example, a person who continues to use a mark for dissimilar goods, who would now be liable under section 10(3), is able to continue such use after 31 October

1994. Similarly a defendant who bona fide uses a company name may be able to rely

on the old law of bona fide use of one’s own name, even if the defence under the 1994 Act is confined to personal names.

42 EXPLOITATION AND USE TRADE MARKS

OF

1 INTRODUCTION Given that the law of registered trade marks developed from the law of passing off, it is not surprising that it has long carried with it limitations derived from the law of passing off. One such limitation is that passing off does not protect property in the mark. Instead, it protects traders against misrepresentations affecting a distinct proprietary interest, namely, ‘goodwill’. While this limitation has gradually been removed from the law of registered trade marks, (trade marks are now treated as forms of property in their own right),’ the law relating to the exploitation of trade marks has yet to embrace wholeheartedly the idea that a trade mark is an asset over which its proprietor should have full control.” Although it is now common practice for trade marks to be included on the balance sheet of companies,° the law still imposes a number of restrictions on the use that can be made of marks. We begin this chapter by looking at the ownership of trade marks, focusing in particular on the problems that arise in relation to co-ownership. After going on to look at the ways in which trade marks can be exploited, we will focus on the limitations placed on the uses that can be made of a trade mark. Before examining these matters in more detail, it is worth observing that while the exploitation of British trade marks is governed by the 1994 Trade Marks Act, the Community Trade Mark Regulation only sets out a partial code for dealing with Community marks. In the absence of harmonized Community laws on transfers, assignments, security interests, testamentary dispositions, and insolvency, the drafters of the Regulation decided that the most appropriate approach would be for transactions in relation to Community trade marks to be governed by the laws of the most | TMA s. 22 (personal property); CTMR Art. 16 (an object of property). For a history of the same trend in

the USA, see L. Johnston, ‘Drifting Towards Trademark Rights in Gross’ (1985) 85 TM Rep. 19.

? The White Paper, Reform of Trade Marks Law, Cm. 1203, para. 4.34—39 seemed to indicate acceptance of the view that it is in the proprietor’s best interests that the mark is fully and properly exploited, and thus that legal regulation or restriction of such actions should be kept to a minimum. K. Lupton, “Trade Marks as Property’ (1991) 2 Australian Intellectual Property Journal 29. 3 B. Sherman and M. Power, ‘Law, Accounting and the Emergent Positivity of Intangible Property (1994) 3 Social and Legal Studies 477. P. Cussons, “Trade Marks on the Balance Sheet’ in D. Campbell, H. Harmeling, E. Keyzer (eds.), Trademarks: Legal and Business Aspects (1994), 235.

EXPLOITATION

AND

USE OF TRADE

MARKS

899

closely connected member state. As a result, transactions of Community marks will normally be dealt with by the laws of the country in which the proprietor has his or her seat or domicile on the relevant date.‘

2 OWNERSHIP 2.1

PROPRIETORSHIP

The owner of a trade mark is the person who registers it. In contrast with patent law, which recognizes the concept of the ‘inventor’ and ‘person entitled’ as entities which have an existence prior to (and thus independently of) the application for a patent, the 1994 Act does not recognize that a trade mark may have a proprietor before an application is made. In short, the Act treats the first person to register as the proprietor; and the only proprietor is the registered proprietor. Where there is competition as to who should be entitled to a trade mark, those disputes are decided by reference to the relative grounds of invalidity, and by the requirement that all applications be made in good faith. 2.2

CO-OWNERSHIP

One potential problem which arises in the exploitation of a trade mark is when the mark is owned by two or more parties. In these circumstances, the question arises

as to whether one co-owner can utilize the trade mark without the consent of other co-owners. Where there is no contract between two or more co-owners of a trade mark, the 1994 Trade Marks Act declares that each of the co-owners is ‘entitled to an equal undivided share in the registered trade mark’.° This means that each owner is permitted “by himself or his agents, to do for his own benefit and without the consent of or the need to account to the other or others, any act which would otherwise amount to an infringement of the registered trade mark.” The power and immunity given to each co-proprietor is limited because the joint owner cannot, without the consent of the other co-owner(s), license others to use the trade mark.”

Two points are worth noting about the co-ownership of trade marks. The first is that the position with regard to co-ownership of Community marks is unclear. Article 16 refers to ‘joint’ proprietorship, which has been taken by some to be a reference to the fact that they hold as joint tenants rather than as tenants in common.® However, since the aim of Article 16 is to determine the national laws under which dealings in a 4 CTMR Art. 16(1). See also Art. 20(2) (levy of execution). Cf. Art. 21(1) (applicable rules on bankruptcy are to be those of the state in which proceedings are first brought).

> TMA s. 23. 6 TMA s. 23(3). 7 TMA s. 23(4).

8 Annand and Norman (1998), 237.

900

TRADE

MARKS

AND

PASSING

OFE

mark fall to be assessed, the better view is that if the first-named joint proprietor is from the United Kingdom, the UK provisions on joint ownership apply. That is, the joint proprietors are deemed to be tenants in common. The second point is that co-ownership of trade marks presents the possibility of two distinct traders using the same mark simultaneously in relation to the same categories of goods. Although this is unlikely in the normal course of events, such a situation is quite plausible where, for example, when a partnership breaks down, a disgruntled co-owner might use the same mark on goods of a lower quality. With formerly related but now unrelated businesses selling goods under the same sign, the rules on co-ownership are likely to create confusion in the marketplace.? Given that this is exactly the sort of confusion which trade marks law is designed to prevent, it might be questioned why the 1994 Trade Marks Act preferred this form of coownership. Perhaps it was foreseen that because such fragmented use of the same sign might render the mark liable to revocation, the co-owners were likely to reach a solution that minimized consumer confusion and thus protect the mark.}°

3 MODES

OF EXPLOITATION

Trade marks and trade mark applications can be exploited in a number of different ways.'' Perhaps the most common technique is for owners to exploit the mark themselves. Trade marks may also be assigned, licensed, mortgaged, or devolve by operation of law (notably through death or bankruptcy).!? We will look at each in turn.

3.1

SELF-EXPLOITATION

One of the most common ways trade marks are used is for the owner to exploit the mark themselves. Often this will involve the owner making the goods, applying the mark, and selling the goods. While a trade mark owner may do all of these acts themselves, they often use third parties. For example, a trade mark owner will use goods manufactured by someone else, a ‘contract manufacturer’, to which they apply their marks. In these circumstances, the mark is not used to indicate that the goods were manufactured by the trade mark owner. Instead, the mark indicates that the goods were selected and approved by the trade mark owner.!3 By and large, such 2 nT: McCarthy, ‘Joint Ownership of aTrademark’ (1983) 73 TM Rep. 1. 10 For other criticisms of the provision on tenancy in common, see Annand and Norman (1994), 189-90. 11 For a discussion of the many issues that may arise in the exploitation of trade marks, see N. Wilkof, Trade Mark Licensing (1995). 12 TMA s. 24(1); CTMR Art. 21 (bankruptcy).

'3 Indeed, Millett J has noted that a trade mark owner ‘may have the components made by one company, assembled by another, the trade mark affixed by a third and the goods marketed by a fourth.’ Accurist Watches v. King [1992] FSR 80, 88.

EXPLOITATION

AND

USE

OF TRADE

MARKS

901

relationships are not problematic. However, if they break down, for example, through bankruptcy or failure to meet contractual stipulations, difficulties may arise in determining whether parties other than the trade mark owner can sell the goods that have been marked with the trade mark proprietor’s consent.! Trade mark proprietors use a number of strategies when placing their goods on the market. In many instances, they will be happy for the goods to reach the market by any means. In other cases, however, to maintain the allure of the product they may wish to restrict distribution to particular persons. This is the case with perfumes, which many manufacturers have deemed unsuitable for sale in certain kinds of outlets such as supermarkets.!° Once the goods are on the market in the EEA, the rights of the trade mark owner are exhausted. Usually, therefore distributors of the trade-marked goods do not need permission to sell goods bearing the mark. A trade mark owner may, however, wish to control certain uses of the mark by such a distributor. As we noted in Chapter 41, there will be limitations on the ways in which the distributor may use the mark in advertising, and as regards any alteration of the goods.

3.2

ASSIGNMENT

An assignment is a transfer of ownership of the trade mark (or application). As a result of an assignment, the assignee stands in the shoes of the assignor and is entitled to deal with the trade mark as he or she pleases. In contrast with a licence where the licensor retains an interest in the trade mark, once a trade mark owner has assigned the trade mark they no longer have any interest in, or responsibility to maintain, the trade mark.’° Assignments of trade marks can occur without any corresponding transfer of business or goodwill.'” This is a critical difference between passing off and registered trade marks. An owner of an unregistered mark can only assign the benefit of the mark by assigning the goodwill of the business with which it has been used. This common-law distrust of the trading in marks reflects the understanding that marks are protected because they operate in the consumers’ eyes as indications of source. Following this logic, if assignments were allowed it would create confusion as to source of the goods or services. With registered trade marks being treated more and more as assets, this rationale for restricting assignments carries less weight. An assignment can be made in part or in a limited manner. A national trade mark may be assigned in relation to part of the goods and services for which the mark is registered, limited in the manner of its use,'* or geographically (subject to compliance 14 As in Accurist Watches v. King [1992] FSR 80 (sale by manufacturer in exercise of retention of title clause); N. Wilkof, Trade Mark Licensing (1995), ch. 8.

15 Tbid., ch. 7. 16 TMA s. 24;‘CTMR Art. 24. 17 TMA s. 24(1); CTMR Art. 17. The change was first brought about in the UK by TMA 1938, s. 22.

18 TMA s. 24(2).

902

TRADE

MARKS

AND

PASSING

OFEF

with the Treaty of Rome). In contrast, a Community trade mark must be dealt with ‘in its entirety, and for the whole area of the Community’.° In order for an assignment to be valid, it must be in writing and signed by the assignor. In the case of a Community mark, the assignment must be signed by all the parties to the transaction.”! In situations where the trade mark or application is owned by more than one party, each co-owner can only assign his or her share and then only if the others consent to such an assignment.” It follows that a full assignment of a mark would require the cooperation and signatures of all co-owners. While the assignment does not need to be registered to be effective, there are a number of advantages that follow from registration: these are reviewed below. With respect to the assignment of Community marks, the OHIM is obliged not to register any transfer which is likely to mislead the public as to the nature, quality, or geographical origin of the goods or services in respect of which it is registered. In contrast, the UK Registry has relinquished even a minimal supervisory role.”*

3.3

VOLUNTARY

LICENCES

Another common mode of exploitation is for a trade mark owner to grant a licence which enables others to carry out specified activities in relation to the mark. The licensing of trade marks, which facilitates merchandising, franchising, and distribution agreements more generally, is at the heart of a multi-billion pound industry,”4 that ‘pervades the way . . . goods and services are distributed, marketed and sold, both domestically and internationally.” At a basic level, a licence is merely a permission to do an act that would otherwise be prohibited without the consent of the trade mark owner. A licence enables the licensee to use the trade mark for specified goods or services without infringing. So long as the use falls within the terms of the licence, the licensee is immune from an action by the trade mark owner.”® The terms of a volun-

tary licence are, for the most part, up to the parties to determine and thus will depend on the needs, capacities, and wishes of the parties.”” However, under trade mark law a licence amounts to much more than a mere 19 TMA s. 24(2)(b). 20 CTMR Art. 16(1). 21 TMA s. 24(3) (must be signed by assignor); CTMR Art. 17(3) (must be signed by parties to the

contract).

2 TMA s. 23(4). 23 For refusal of transfer to be justified such deception must be clear from the transfer documents. Moreover, the OHIM should accept the transfer in so far as the transferee agrees to limit registration of the Community mark to goods or services in respect of which it is registered: CTMR Art. 17(4). In addition, under Art. 17(2) of the Regulation a presumption exists that a transfer of the whole of an undertaking includes the transfer of the Community trade mark. 24 G. Battersby and C. Grimes, ‘Merchandising Revisted’ (1986) 76 TM Rep. 271, 275. 25 N. Wilkof, Trade Mark Licensing (1995), 1.

26 Sport International v. Inter Footwear [1984] 2 All ER 321. *7 If provision is made for such action, the law recognizes that a licensee may grant sublicences. TMA

n

28(4).

EXPLOITATION

AND

USE OF TRADE

MARKS

903

permission to use a mark. In the absence of an agreement to the contrary, a trade

mark licence binds a successor in title to the grantor’s interest.”* In addition, the 1994 Act enables a licensee of a trade mark to enforce their rights against third parties.” Given the almost proprietary nature of a trade mark licence,” it is not surprising that the law requires the licence to be in writing for it to be ‘effective’.*! A licence need not be registered to be valid as against the licensor, but there are several advantages from registration, which are discussed below.” Licences may take many forms: from a one-off permission through to an exclusive licence.** Licences (even of Community trade marks) may be limited geographically,*4 temporally, in relation to particular goods or services, or as to manner of use.*° Of the different forms of licence, perhaps the most significant (in terms of law, at least), is the ‘exclusive licence’. An exclusive licence is an agreement according to which the registered proprietor of a trade mark not only confers permission on the licensee to use the trade mark, but also promises that they will not grant any other licences and that they will not exploit the mark themselves.*° The legal consequence of this is that an exclusive licence confers a right in respect of the trade mark to the exclusion of all others including the licensor. In some ways it is the intangible property’s equivalent to a ‘lease’.*” An exclusive licence confers powers on the licensee that are equivalent to those of an assignee.*® Undoubtedly the most significant aspect of this is that unlike a mere licensee,” an exclusive licensee can sue infringers without having to persuade the proprietor to take action on their behalf.*° An exclusive licensee is given the same rights as an assignee and therefore has the right to bring proceedings in respect of any infringement that occurs after the date of the licence agreement. Indeed, an action can be brought by both the trade mark proprietor and an exclusive licensee.*! The statute provides guidance where concurrent rights exist.’ Although the law distinguishes between bare, contractual, and exclusive licences, commercial dealings are less precise in the way the term ‘licence’ is used. Indeed it has 28 TMA s. 28(3); CIMR Art. 23(1). But note Art. 23(2). 29 TMA s. 30; CIMR Art. 22(3). 30 See N. Wilkof, Trade Mark Licensing (1995), ch. 12. For discussion of the distinction between licences

and proprietary interests in the context of relief from forfeiture see esp. paras. 12.33—7, 232-5, 31 TMA s. 28(2). Presumably the law will continue to recognize implied licences and oral consents, as well as to apply the traditional principles relating to estoppel. 32 Where there are joint proprietors, all of them must consent to any licence: TMA s. 23(4)(a). 33 TMA 28(1)(b); TM Directive Art. 8(1); CTMR Art. 22(1).

34 TMA s. 28(1)(b); CTMR Art. 22(1). 35° TMA s. 28(1). 36 TMA

s. 29(1). See Scandecor International v. Scandecor Marketing (4 Apr. 2001) (para. 14).

37 For an analogy between a franchise agreement and a lease of ‘goodwill’ see Kall-Kwik Printing (UK) v. Frank Clarence Rush [1996] FSR 114.

38 TMA s. 31(1). 39 For the position of amere licensee, see TMA s. 28(2)-(5).

40 TMA s. 31(1). 41 TMA s. 31(2). 42 TMA s. 31(4)-(8).

904

TRADE

MARKS

AND

PASSING

OFE

been said that ‘both business executives and lawyers use the word “licence” indiscriminately and conclude agreements they call “licences” when no licence is really necessary.”? From a commercial point of view, it is possible to characterize licences and similar arrangements in a more functional manner as product trade mark licences, franchise agreements, and distributorship agreements."* Under a ‘product trade mark licence’, the licensee will manufacture the product and be permitted to apply the mark to it. This often occurs with character merchandising, and also with the manufacture of many products (such as soft drinks, where the trade mark owner supplies the syrup but the licensee makes up, bottles, and sells the drink). Product trade mark licences are also often linked to licences of patents and technology. It has been said that franchising accounts for a third of the UK’s retail turnover.*® Under a franchise agreement, the franchisor provides the framework within which the

franchisee operates. While the nature of the agreement varies from case to case, the franchisor effectively provides the shell within which the business operates. The franchisor may provide things such as the corporate image (including the mark), the advertising, training, premises, know-how, support service.*© Familiar examples of franchises include pronupTia’s wedding attire, KALL-KWIK photocopying shops, and PIERRE VICTOIRE restaurants.” A ‘distribution agreement’ is merely a means by which a producer regulates how their goods reach the market.** Although distribution agreements are not usually trade mark licences, such agreements may include clauses requiring the distributor to sell the goods under the producer’s trade mark in a manner specified by the producer. Alternatively, they may require a licensee to use particular distributor’s marks.*? In order to protect the reputation of the brand, a supplier may restrict distribution to certain specialist shops: a recent example has been the refusal of perfume manufacturers to supply supermarkets.

3.4

MORTGAGES

Like other forms of property, trade marks may be used as security for a debt.*° This 43 R. Joliet, ‘Trademark Licensing Agreements under the EEC Law of Competition’

(1983-4) 5 North

Western Journal of International Law and Business 755, 765.

44 Tbid., 765-6. 45 M. Abell, ‘Clouds on the Horizon for Franchisor’s in the EU’ (1998) (Aug.) Trademark World 34.

46 Kall-Kwik Printing (UK) v. Frank Clarence Rush [1996] FSR 114. 47 Franchises have been subdivided into three categories: ‘service franchise agreements* which concern the supply of services (e.g. KALL-KWIK); ‘production’ or ‘industrial franchise agreements’ which concern the manufacturing of goods; and ‘distribution franchise agreements’, which involve the sale of goods (e.g. PRONUPTIA).

48 In some circumstances, distribution franchises can share many facets of distribution agreements. R. Joliet, “Trademark Licensing Agreements under the EEC Law of Competition’ (1983-4) 5 North Western

Journal of International Law and Business 755, 764—5. 49 Consten & Grundig v. EC Commission, Case [1966] CMLR 418. 50 TMA s. 24(4); CTMR Art. 19(1). See further: Morcom et al. para. 11.1; C. Smith, “Trade Marks as

Collateral in the United Kingdom’ in D. Campbell, H. Harmeling, and E. Keyzer (eds.), Trademarks: Legal and Business Aspects (1994) 247.

EXPLOITATION

AND

USE

OF TRADE

MARKS

905

can be a useful technique which enables the proprietors of trade marks to raise funds. One form of such security is the legal mortgage, which involves an assignment of the trade mark by the trade mark owner (mortgagor-borrower) to the mortgagee-lender. This is subject to a condition that the trade mark will be reassigned to the mortgagor when the debt is repaid (or as the law says ‘on redemption’). It is important that the assignment reserves for the mortgagor a right to continue using the trade mark. This is probably best achieved by reservation of an exclusive licence.®! An alternative form of security is to subject the trade mark to a ‘charge’,*? in which case there is no assignment. Instead, the chargee gains certain rights over the trade mark. In the case of both forms of security, to be valid the transaction must be in writing and signed by the parties.°’ Where there are joint proprietors, all of them must consent to the grant of a security interest.°* While such an interest need not be registered to be valid, there are advantages from registration which are reviewed below.

3.5

TESTAMENTARY

DISPOSITIONS

Because a trade mark is personal property, it is capable of passing on the death of the proprietor either by will or according to the rules applicable in cases of intestacy. In the case of the death of one co-owner, because they hold the trade mark as tenants in common (rather than as joint tenants), the share of the deceased co-owner passes along with the rest of its estate rather than accruing to the other co-owners. In devolving the trade mark, the personal representative must sign a written assent. It appears that a Community trade mark will pass in accordance with the laws of the country in which the proprietor was domiciled at his or her death.*©

3.6

REGISTRATION

OF INTERESTS

AND

TRANSACTIONS

We observed earlier that trade mark registration performs a number of different functions.” It helps to overcome difficulties in proving the existence of goodwill, allocates priorities between competing traders wishing to secure rights over a particu-

lar trade mark, and acts as a repository of information which alerts third parties who might independently wish to use the same or a similar mark about the proprietor’s rights. While in the past another, perhaps the chief, concern of registration (particularly of trade mark licences) was to restrict trafficking in marks (and thus to protect consumers from deception), under the 1994 Act the supervisory role of the Registrar

has been reduced to virtually nothing. As a result, registration is now primarily 5! Tbid., 250-2 (advising that the legal mortgage technique be avoided).

52 93: 4 °°

TMA TMA TMA TMA

s, s. s. s.

24(5). 24(3)-(5). 23(4). 23(1).

°6 CTMR Art. (a).

57 See above at p. 658.

906

TRADE

MARKS

AND

PASSING

OFF

concerned with providing public information and securing priorities between competing rights-holders, or as the White Paper put it, with ‘legal transparency’. Although legal transparency might be an admirable goal, because there is no statutory obligation to register marks or transactions therewith, and indeed transactions are valid in the absence of registration, the register cannot be said to operate as a ‘mirror’ of legal rights over commercial signs in the way the Land Registration system purports to be a reflection of proprietary rights over real property. Nevertheless, the usefulness of the Register is ensured because of the existence of incentives for parties to transactions in marks to enter them on the Register. This is because as unregistered transactions are vulnerable to later dealings, it is highly advisable to register them immediately.” Registrable transactions are listed in section 25(2) as assignments, the making of assents, the granting of securities, and the grant of licences. Notice of trusts may not be registered.*! While similar transactions may be registered on the UK Register and at the OHIM, the consequences of failing to register a transaction differ between the two regimes. As such, they will be considered separately. Registration of transactions with regards to UK marks at the UK office has three distinct effects. First, registration ensures that the interest of the registrant survives further inconsistent transactions in relation to the mark. More specifically, section 25(3) states that an unregistered transaction is ‘ineffective’ as against a person acquiring a conflicting interest in or under the mark in ignorance of it.** Secondly, as regards licences, registration enables the licensee to acquire the full scope of available rights and remedies. Thirdly, financial remedies (damages and accounts of profits) are withheld from assignees and licensees who do not register promptly, that is within six months of the transaction, as regards any acts of infringement that occur prior to registration.™ According to the Community Trade Mark Regulation, similar consequences flow from non-registration of transactions affecting Community marks. Article 23 states that transfers, grants of security, and licences of Community marks shall only have effect vis-a-vis third parties after entry in the Register, unless that third party knew of the relevant transaction at the date on which they acquired their interest. The effect of levies of execution and bankruptcy on third parties are matters for the law of the relevant member states. A special incentive to register is placed on transferees of Community marks. °8 White Paper, Reform of Trade Marks Law, Cm. 1203 (1990), para. 4.38. 59 See N. Wilkof, Trade Mark Licensing (1995), chs. 3 and 4.

6° The Community Trade Mark Regulation provides that on request of one of the parties the following shall be entered on the register and published: a transfer, security, levy of execution, licence (or transfer thereof): CTMR Arts. 17(5), 19(2), 20(3), 21(2), 22(5). 61 TMA s, 26.

62 The effect of this can be illustrated as follows: A assigns the trade mark to B on 1 July 1998, and A then licenses the trade mark to C on 1 Aug. 1998; B had not registered the assignment, and C had no knowledge of it on 1 Aug. B is bound by C’s licence. See Wilkof, Trade Mark Licensing, 60.

63 TMA s. 25(3)(b). 64 TMA s. 25(4). This corresponds to PA s. 68, discussed above at pp. 517-18.

EXPLOITATION

AND

USE

OF TRADE

MARKS

907

According to Article 17(6), as long as the transfer has not been entered in the OHIM,

the successor may not invoke the rights arising from registration of the Community trade mark. It is important to note that the OHIM must not register any transfer that is likely to mislead or deceive the public as to the nature, quality, or geographical origin of the goods or services in respect of which it is registered. For refusal of a transfer to be justified, the deception must be clear from the transfer documents. Moreover, the OHIM should accept the transfer in so far as the transferee agrees to limit the registration of the Community mark to goods or services in respect of which it is registered.

3.7

COMPULSORY

LICENCES

In contrast with other areas of intellectual property law such as designs, copyright, and patents, there are no compulsory licences in relation to trade marks.

4 LIMITS

ON EXPLOITATION

The terms and conditions under which a trade mark is exploited are usually determined contractually by the parties: the 1994 Trade Marks Act merely provides a shell within which parties are able to manoeuvre. Where parties have agreed upon the way a trade mark is to be exploited, the law has been loath to substitute its view of what should have been agreed. Having said this, as with all forms of intellectual property law, the power conferred by trade mark law on a proprietor is limited in a number of ways. The restrictions imposed by British trade mark law are changing. Whereas the law previously imposed a number of impediments on the licensing of marks, after the liberalization effected by the 1994 Act, the major restriction on licensing arises through the operation of the revocation provisions contained in section 46. This is because if the terms or extent of the licensing (or assignment) are such that the mark becomes deceptive, the registration may be revoked. As a result, in exploiting a trade mark, the proprietor should take care to ensure the mark does not become deceptive or generic. In order to avoid the mark becoming deceptive, trade mark owners would be wise to include quality control provisions in any licences they grant, and to operate some sort of monitoring policy to ensure that those standards are complied with. Another important limitation placed on the use that can be made of a trade mark is provided by UK and European competition law. In the next section we outline the general nature of these regulations, before considering the ways in which these regimes treat a selection of commonly used trade mark licence terms.

65 CTMR Art. 17(4).

66 See at pp. 857-9.

908

4.1

TRADE

EC COMPETITION

MARKS

AND

PASSING

OFF

LAW

The key provision of European competition law affecting trade mark licences and exploitation agreements is Article 81 EC (formerly Article 85 of the EC Treaty). This renders void all agreements that affect trade between member states and which have the object or effect of preventing, restricting, or distorting competition within the Common Market. The issue of whether an element in an agreement ‘restricts trade’ is usually looked at by the Commission in terms of whether it restricts the activities of the parties to the agreement (or third parties) to an ‘appreciable extent’.” For minor agreements, the Commission has issued a Notice on Agreements of Minor Importance, which treats vertical agreements between firms whose combined

market share is less than 10 per cent as falling outside of Article 81(1). This does not apply, however, where those agreements contain provisions relating to resale price-fixing or territorial protection.® Even if an agreement falls within the Article 81 EC (formerly Article 81 EC) prohibition, it may nonetheless be granted an individual exemption by the Commission, or fall within one of the block exemptions issued by the Commission. The two block exemptions that are relevant relate to: (i)

Technology transfer agreements (Block Exemption 240/96);

(ii) Vertical agreements (Block Exemption 2790/1999).

We have considered the Technology Transfer Regulation in some detail in Chapter 22. Here it should be noted that the Technology Transfer Regulation only applies where trade marks are ancillary to the main purpose of the agreement, namely, the licensing of patents or know-how.” If trade marks are a central component, the agreement cannot fall within the Block Exemption.”! However, much more important for trade mark licences is the Commission Regulation 2790/99 on 67 This is often called ‘freedom of action theory’ and has been widely criticized as casting the prohibition too broadly. The Court, e.g. in Javico v. Yves Saint Laurent Case C-306/96 [1998] ECR I-1983 (paras. 23-6), has tended to look at the effect in the market, and has treated a number of agreements as falling outside Art. 81(1) because they are objectively necessary for particular kinds of transactions. For discussion, see N. Green, ‘Article 85 of the EC Treaty in Perspective: Stretching Jurisdiction, Narrowing the Concept of a Restriction and Plugging a Few Gaps’ [1988] ECLR 190; H. P. Lugard, ‘Vertical Restraints under EC Law: A Horizontal Approach’ [1996] 17 ECLR 166. The Commission seems to be signalling a change towards a less formalistic approach: see R. Whish, ‘Regulation 2790/99: The Commission’s “New Style” Block Exemption for Vertical

Agreements’ (2000) 37 CMLR 887, 889-90.

:

68 [1997] OJ C 372/13, [1998] 4 CMLR 192. Below the threshold, the Commission considers that the competition authorities of member states should provide primary supervision. 6° Regulation 240/96 of 31 Jan. 1996 on the Application of Art. 85(3) of the Treaty to certain categories of Technology transfer agreements. See above at pp. 520-3. 70 TT Reg. Art. 1(1); Recital 6 (‘when such additional licensing contributes to the achievement of the

objects of the licensed technology and contains only ancillary provisions’). ’! Moosehead/Whitbread [1990] OJ L 100/36 (where the agreement was held to fall outside the Know How Block Exemption because the trade mark licence was central to the agreement). See R. Subiotto, ‘Moosehead/ Whitbread: Industrial Franchises and No-Challenge Clauses Relating to Licensed Trade Marks under EEC Competition Law’ [1990] 11 ECLR 226.

EXPLOITATION

AND

USE

OF TRADE

MARKS

909

the application of Article 81(3) of the Treaty to Categories of Vertical Agreements and Concerted Practices.’” The idea behind this block exemption is that vertical restraints often have positive consequences by increasing interbrand competition and are only anti-competitive in limited circumstances such as where the supplier has a high level of market power. Consequently, the Regulation provides for the exemption of many agreements where the market share of the supplier is under 30 per cent.” Nevertheless, even some agreements between small undertakings will not be exempt where they include provisions on the ‘hard core’ list (for example, fixing-price and strict territorial restraints): these are prohibited in all

agreements.” The Regulation applies to vertical agreements which are defined as agreements or concerted practices entered into between two or more undertakings each of which operates, for the purposes of the agreement, at a different level of the production or distribution chain, and relating to the condition under which the parties may purchase, sell, or resell certain goods or services.’? However, while it is explained that this covers agreements containing provisions which relate to the assignment to the buyer or use by the buyer of intellectual property rights, those provisions must be directly related to the use, sale, or resale of goods or services by the buyer or its customers. However, the Block Exemption does not apply if those provisions relating to intellectual property constitute the primary object of such agreement.”® It should be noted, then, from the outset that the Block Exemption does not cover many trade mark transactions: it does not cover assignments, nor such things as merchandising arrangements.’’ However, for the most part it will be potentially applicable to franchising and distribution agreements, where trade mark issues often arise, but the provisions are directly related to the use, sale, or resale of goods or

services.’”®

.

If the agreement constitutes a vertical restraint, does not contain a forbidden (‘hard core’) term, and does not fall outside the market share limitation, then the agreement is exempt. This is so irrespective of the other terms of the agreement:

the exemption works on the basis that anything not forbidden is permitted. If, on the other hand, the Block Exemption does not apply, a restrictive agreement may be 72 This was adopted on 22 Dec. 1999 and entered into force on 1 June 2000, replacing the previous Block Exemptions on Distribution (Regulation 1983/83 [1983] OJ L 173/1), and Franchising (Regulation 4087/88i [1988] OJ L 359/46) which had lapsed in May 2000. Note also the Commission’s Guidelines on Vertical Restraints

2000/C

291/1

(OJ 13 Oct.

2000),

For a review,

see

R. Whish,

‘Regulation

2790/99:

The

Commission’s “New Style” Block Exemption for Vertical Agreements’ (2000) 37 CMLR 887. 73 VR Reg. Art. 3. In the case of an ‘exclusive supply obligation’ the relevant share is that of the purchaser. Under VR Reg. Art. 8 the Commission may withdraw the benefit of the block exemption where 50% of the market is covered by similar agreements. 74 VR Reg. Art. 4. Where an agreement includes a term under Art. 5, these can be severed. 73 VR Reg. Art. 2(1).

76 VR Reg. Art. 2(3). 77 Guidelines on Vertical Restraints, para. 32. But, at para. 43, the Commission intimates such agreements would be treated in a similar way. 78 Guidelines on Vertical Restraints, paras. 42—4 (on franchising).

910

TRADE

MARKS

AND

PASSING

OFF

notified to the European Commission.” Where this occurs, the Commission may ‘clear the agreement as not being contrary to Article 81(1), ‘exempf the agreement as satisfying Article 81(3), provide a comfort letter, make a provisional finding that the agreement is illegal,*° or hold the agreement to be prohibited.

4.2

UK

COMPETITION

LAW

British competition law is made up of a complex mixture of common law principles restricting the terms that may legitimately be imposed in contracts, such as the doctrine of restraint of trade, and statutory interventions, of which the most important is

the Competition Act 1998. This Act establishes a system that parallels European competition law, by enacting a provision equivalent to Article 81 EC (formerly Article 85 of the Treaty).*! However, most vertical agreements are exempted from this by the Competition Act (Land and Vertical Restraints Exclusion) Order 2000.*? In addition, an agreement will be deemed to be exempt from the national prohibition if it is exempt from the Community prohibition.®

4.3

COMMONLY

USED

TRADE

MARK

LICENCE

TERMS

In this section, we look at terms which are commonly used in trade mark licence

agreements and the approach that competition law takes towards them. 4.3.1 Exclusivity

A trade mark licence commonly includes terms guaranteeing the licensee the exclusive right to sell the goods or provide the services under the mark in a particular territory, such as the United Kingdom. It may also include associated undertakings by the licensor not to put the goods on the market under the same mark in that territory, or compete with the licensee by providing the same services. In turn, the licensee may

undertake not to sell goods bearing the mark in territories of other licensees.°* The inclusion of a guarantee of exclusivity may be important to a licensee who has to make a considerable investment in the establishment of production facilities (in the 79 Following Council Regulation (EC) no. 1216/99 amending Regulation no. 17: first Regulation implementing Arts. 81 and 82 of the Treaty [1999] OJ L 148/5, all vertical agreements and bilateral agreements involving only restrictions on the exercise of intellectual property rights are exempted from the requirement that they be notified prior to individual exemption, so that the Commission can back-date an individual exemption. The Commission is reviewing the need for notification: White Paper on Modernization [1999] OJ C 132/1; [1999] 5 CMLR 208.

80 Regulation 17, Art. 15(6) (such a provisional finding removes the immunity from fines which notification of the agreement gives the parties). 81 Competition Act 1998, s. 2. 82 ST 2000/310. See P. Freeman and R. Whish (eds.), Butterworths Competition Law Div. 1, paras. 637-64.

83 Competition Act 1998, s. 10 (parallel exemptions).

84 R. Joliet, ‘Trademark Licensing Agreements under the EEC Law of Competition’ (1983-4) 5 North Western Journal of International Law and Business 755, 789-90 distinguishes between territorial licences, exclusive territorial licences, and territorial sales restrictions.

EXPLOITATION

AND

USE OF TRADE

MARKS

911

case of trade mark product licences) or retail outlets (in the case of distribution or service franchisees). In these cases the licensee may wish to ensure that they have a reasonable degree of control over the relevant market. In the absence of exclusivity, the licensee would not only be exposed to competition that exists in the market in the goods or services, but also to competition from others dealing in goods or services bearing the brand name, and (not surprisingly) may prefer not to risk such investment. Consequently, exclusivity agreements may encourage the production and dissemination of goods and services with the mark into the market—and thus foster competition. Simultaneously, exclusive licences cause little detriment to third parties because the trade mark owner had such exclusivity as a result of the ownership of the trade mark. On the other hand, exclusive licensing—by dividing up territories—may have serious detrimental effects on the achievement of the internal market. The Block Exemption on Vertical Restraints recognizes a compromise position. Article 4(b) states that the exemption will not be available where the object of the agreement is ‘the restriction of the territory into which, or of the customers to whom, the buyer may sell the contract goods and services.’ However, it is permissible to impose a restriction on active sales into ‘the exclusive territory or to an exclusive consumer group reserved to the supplier or allocated by the supplier to another buyer where such a restriction does not limit sales by the customers of the buyer.’ The key distinction is thus between ‘passive’ and ‘active’ sales, that is, between sales that are a response to customer action, and sales that involve the trader actively approaching the customer.*° The basic idea underpinning the various exemptions is that an agreement is only exempt if the prohibition is limited to active selling outside the territory. 4.3.2 Manufacturing standards To ensure that certain standards are maintained, a trade mark proprietor who is either involved in franchising or licensing others to manufacture and sell goods to which a mark is applied, will often wish to impose conditions on the manufacture or operation of the licensee’s business.*° Since one of the functions of a mark is to guarantee quality, such clauses are readily justified and, in general, are not treated as restrictions on trade. However, because such clauses might require the licensee to purchase ingredients, components, or other material from certain limited sources, such obliga-

tions may look like anti-competitive tie-ins. Nevertheless, the competition authorities have treated such clauses with less severity than they have in respect to patent agreements that include tie-ins. If such clauses are caught by Article 81, the Block Exemption on Vertical Restraints appears to permit them as long as they are not too long in duration or too extensive in scope. Article 5(a) excludes from the Biock Exemption ‘any direct or indirect noncompete obligation, the duration of which is indefinite or exceeds five years.’ Article 1

85 Guidelines.on Vertical Restraints, para. 50 (advertising and Internet selling is treated as passive). 86 Joliet, ‘Trademark Licensing Agreements under the EEC Law of Competition’, 5 North Western Journal

of International Law and Business 755, 779-85.

912

TRADE

MARKS

AND

PASSING

OFF

defines ‘non-compete’ obligations as including ‘any obligation on the buyer to purchase from the supplier or from an undertaking designated by the supplier more than 80 per cent of the buyer’s total purchases of the contract goods or services and their substitutes on the relevant market.’ Consequently, in many cases such clauses will be permissible. 4.3.3, Non-competition

A trade mark owner may be keen to prevent licensees from selling other goods. In Campari the Commission approved such a clause on the ground that it would ensure that licensees focused on selling the licensed product. The Commission said that although such clauses in patent licences might be objectionable on the basis that they constituted barriers to technical and economic progress, such a prohibition in trade marks licences ‘makes for improved distribution of the relevant product in the same way as do exclusive distribution agreements.’ Trade mark owners might also wish to protect their interests by prohibiting licensees from competing in the same goods after termination of the licence. This is particularly desirable where the licence of the trade mark has been part of a deal involving trade secrets. It may be equally desirable to protect the trade mark owner’s goodwill. Under the Block Exemption, it seems such restrictions are permitted in limited circumstances.

First, the restriction must

not exceed one year, it must be

confined to sales of competing goods or services from the point of sale at which the buyer operated during the contract period, and the restriction must be indispensable to protect ‘know-how’ transferred from the supplier to the buyer.*” In the case of more severe restrictions, individual exemptions will be required. In domestic law such matters are also governed by the doctrine of restraint of trade which requires restraints to be reasonable having regard to the legitimate interests of the parties and the public interest. In Kall-Kwik Printing (UK) v. Rush,® a franchise agreement for a photocopying shop contained a restraint not to engage directly or indirectly in any business competitive with the business of the franchisor. It also said that the restraint operated within a ten-mile radius of the premises of any franchisee of the franchisor for two years after termination. During the term of the franchise, the franchisee set up a competing shop a short distance from the franchised premises. The court held that the clause was too widely drawn geographically. This was because since the franchisor had 191 franchisees, the effect of the clause would have been tantamount to a nationwide prohibition. However, the judge construed the clause as being confined to businesses competitive with that of the business and this allowed him to uphold it. Judge Cooke said he considered the two-year period to be reasonable.®

87 VR Reg. Art. 5(b). This obligation is without prejudice to the possibility of imposing a restriction which is unlimited in time on the use and disclosure of know-how which has not entered the public domain.

88 [1996] FSR 114.

89 Kall-Kwik (UK) v. Bell [1994] FSR 674 (18 months not unreasonable restraint); Prontaprint v. London Litho [1987] FSR 315 (3 years).

EXPLOITATION

AND

USE

OF TRADE

MARKS

913

4.3.4 No-challenge clauses Trade mark licence agreements often include undertakings prohibiting the licensee from challenging the validity of the registration. These are known as ‘no-challenge clauses’. These are not dealt with in the Block Exemption, so are presumed permis-

sible. In Moosehead/Whitbread,” a no-challenge clause was upheld in the context of a trade mark licence between the Canadian beer manufacturer and its UK licensee. A distinction was drawn in the case between obligations not to contest the validity of the registration and no-challenge clauses concerned with the ownership of the mark. Clauses challenging ownership did not contravene Article 85 of the EC Treaty (now Article 81 EC), because, according to the Commission, they did not restrict competition. However, a clause preventing the challenge to the validity of the mark might be a restriction within Article 81. In the case itself, the Commission held that as the obligation related to both, it did not constitute an appreciable restriction on competi-

tion. In the main this was because the MOOSEHEAD mark was new to the market. We will return to the question of no-challenge clauses in the context of trade mark delimitation agreements which are discussed below. 4.3.5

Price restrictions

A trade mark owner may wish to restrict the price at which the licensee sells the trademarked product. Such restrictions are treated as anti-competitive under Article 81(1) EC, and exemptions are not possible under Article 81(3) unless the agreement allows consumers a fair share of resulting benefit. Unsurprisingly, such terms fall in the ‘hard core’ prohibited terms, which if present prevent an agreement from benefiting from the block exemption on vertical restraints.?! Nevertheless, it is possible for an agreement to contain price recommendations. Similarly, under the 1998 Competition Act agreements which ‘directly or indirectly fix purchase or selling prices’ are specifically referred to as examples of prohibited agreements under section 2(2)(a).

4.4

TRADE

MARK

DELIMITATION

AGREEMENTS

In the previous section we examined the application of competition regulations to

various common clauses in vertical arrangements relating to trade marks, that is to agreements which operate down the chain from manufacturer to consumer, such as those between trade mark owner and franchisee or distributor. We now need briefly to consider horizontal arrangements, that is arrangements at the same level of distribution between

competing

manufacturers/trade

mark

owners.

These are generally

treated as much more likely to be anti-competitive. Our interest in them extends as far as ‘consent agreements’ or “trade mark delimitation agreements’. Trade mark

90 Commission

Decision of 23 Mar. 1990; [1990] OJ L 100/36; [1991] 4 CMLR

391. See R. Subiotto,

‘Moosehead/Whitbread: Industrial Franchises and No-Challenge Clauses Relating to Licensed Trade Marks under EEC Competition Law’ [1990] 11 ECLR 226. 91 VR Reg. Art. 4(a).

914

TRADE

MARKS

AND

PASSING

OFF

delimitation agreements are contracts between owners of similar marks which are intended to settle conflicts

(or potential conflicts) between

them.** While these

arrangements may not be licences at all, because they contain many terms similar to those found in licence agreements which are regulated by competition law, we will consider them in this section.” There seem to be a number of typical ways of resolving such conflicts: (i)

By agreeing that one party will use the mark only in one field, and the other in a distinct field, so as to avoid the possibility of overlap.

(ii) By agreeing that only one party use the mark, so that the other must adopt a new mark. (iii) By agreeing that one party will use the mark in a particular geographical area, and the other in a different geographical domain. (iv) By agreeing that each will only use the mark with specified get-up, so that consumer confusion is minimized. The contents of trade mark delimitation agreements will vary, but in each case will need to be scrutinized under both European and domestic law. As regards European competition law, the key provision is Article 81 EC. The Commission and the Court of Justice have indicated that such settlement agreements may be acceptable because by resolving protracted litigation between the parties, they eliminate restraints on competition and the Internal Market that conflicting rights under national laws may cause.”* The Commission has indicated, however, that in forging the compromise the enterprises should try and reach the least restrictive solution possible.” If the agreement restricts competition or produces market-sharing it will contravene Article 81(1). Whether the agreement restricts competition has been said largely to depend on the use to which the mark was previously being put. In BAT CigarettenFrabirk GmbH v. EEC,” for example, an agreement restraining a Dutch competitor of BAT from using its ToLTECs mark in Germany was an unlawful restraint, because BAT’s porceT mark was dormant (or unused). Where, however, the party who sub-

mits to the restraint has not used the mark (or was not utilizing it to a significant extent), the Commission has taken the view that assignment of that mark to the other party will not amount to a restriction on the assignor’s ability to compete.” Indeed, the Commission seems to take the view that an unused mark has no value and a person can simply choose a different mark for their goods or services. %2 See generally Wilkof, Trade Mark Licensing, ch. 9; M. Fawlk, ‘Trademark Delimitation Agreements under Article 85 of the Treaty of Rome’ (1992) 82 TM Rep. 223. °3 R. Joliet, “Trademark Licensing Agreements under the EEC Law of Competition’, 5 North Western Journal of International Law and Business 755, 765.

°4 BAT Cigaretten-Frabirk v. EEC [1985] FSR 533, 541 (para. 33). °° Commission Decision 78/193/EEC of 23 Dec. 1977 relating to a proceeding under Article 85 of the EC Treaty of the EEC Treaty (Penneys) [1978] FSR 385, 395. 96 [1985] FSR 533. 97 Commission Decision 78/193/EEC of 23 Dec. 1977 relating to a proceeding under Article 85 of the EC Treaty of the EEC Treaty (Penneys) OJL 60/19 [1978] 2 CMLR 100; [1978] FSR 385, 396.

EXPLOITATION

AND

USE

OF TRADE

MARKS

915

However, in most cases of conflict both parties will have been using their marks to some extent. As indicated, the Commission then favours the least restrictive solution. If conflict can be avoided by the parties merely agreeing to utilize different ‘get-up’, that is likely to receive the Commission’s approval.* Alternatively, it may be that the conflict can be settled by assigning one mark to one party and a different mark to another. Although the effect will be to force the party to re-establish goodwill under other marks and this may have a restrictive effect bringing it within Article 81, such an arrangement might be acceptable if there is a transitional phasing out and/or the party is allowed to continue using the name as a trade name. It seems that the Commission looks least favourably on agreements that give different parties use of the mark in different parts of the Common Market.” It also has indicated that it disapproves of widely drawn or lengthy ‘no-challenge’ clauses.! As regards UK law, trade mark delimitation agreements have heretofore been treated as enforceable commercial contracts. The only ground for objection that seems to have been raised in the case law is restraint of trade. In Apple Corp. Ltd. v. Apple Computer Inc.'°! When considering various difficult procedural questions concerning litigation over a consent agreement, the Court of Appeal held that restraints contained in such agreements were legitimate only where they were necessary to protect the legitimate interests of the parties. The ownership of registered marks would not of itself justify such an agreement: rather the restraint would be justified only where it was necessary to protect the goodwill of the restrainer. As a consequence, such a restraint would be justified only where the mark had been used. The Court of Appeal observed that the approach under Article 85 of the EC Treaty (now Article 81 EC) and under the common law were largely similar.!” %8 Commission Decision 78/193/EEC of 23 Dec. 1977 relating to a proceeding under Article 85 of the EC Treaty of the EEC Treaty (Penneys) [1978] FSR 385. 99 Sirdar/Phildar [1975] 1 CMLR D 93; Community v. Syntex/Synthelabo [1990] FSR 529. 100 BAT Cigaretten-Frabirk GmbH v. EEC [1985] FSR 533. In other cases more flexibility has been shown:

Commission Decision 78/193/EEC of 23 Dec. 1977 relating to a proceeding under Article 85 of the EC Treaty of the EEC Treaty (Penneys) OJ L 60/19 [1978] 2 CMLR 100; [1978] FSR 385, 396-7 (acceptable if under 5 years).

101 [1991] 3 CMLR 49. 102 Such an agreement may include a no-challenge clause: Apple Corp. v. Apple Computer Inc. [1992] FSR 431.

a ry ce Begs bene!

bs ae Ae sae

Orn

be

$5 oe

TS

Soar? Interfirm Comparison v. Law Society ofNSW [1977] RPC 137.

920

CONFIDENTIAL

INFORMATION

competition law does in other legal systems.° There is also a possibility that breach of confidence may give rise to a separate right of privacy.’ The origins of the breach of confidence action are obscure. Recent work has highlighted two possible genealogies. The first traces the action to a series of eighteenthcentury decisions dealing with common law copyright in unpublished works,* where rights over undisclosed information were first recognized.’ A second history, espoused by Megarry J in Coco v. Clark," traces the action back to the sixteenth century, when in speaking about the general jurisdiction of the court of Chancery (or conscience) Sir Thomas More said ‘three things are to be helped in conscience; Fraud, Accident and things of confidence.’ Although it is not possible to trace a line of cases back that far, a number of modern commentators have adopted the corresponding view that the action of breach of confidence is an application of a broader notion of good faith.!! While the origins of the action may be obscure, it is clear that by the mid-nineteenth century the courts had developed a series of principles that were relied upon to protect what we now call confidential information. For example, in Prince Albert v. Strange, Lord Cottenham LC ordered that publication of a catalogue describing Prince Albert's etchings be restrained, noting that ‘this case by no means depends solely upon the question of property, for a breach of trust, confidence, or contract would itself entitle the plaintiff to an injunction.’

1.1

INTERNATIONAL

INFLUENCES

Until recently the action for breach of confidence has largely fallen outside the remit of international treaties. This situation changed, however, as a result of the fact that the 1994 TRIPs Agreement requires members to afford protection to those who lawfully control ‘undisclosed information’.!° More specifically, Article 39 of TRIPs states that in the course of providing protection against unfair competition (as required by © See J. Reichman, ‘Legal Hybrids between Patent and Copyright Paradigms’ (1994) 94 Columbia Law Review 2432. 7 Douglas v. Hello! [2001] EMLR 199 (CA) supports those who would develop a right of privacy out of breach of confidence. To the extent that this develops the law, the CA saw the Human Rights Act as supporting this development. See Sedley LJ, at 234, 239, 240 paras. 110, 125-6, 129: ‘The law no longer needs to construct an artificial relationship of confidentiality between intruder and victim: it can recognize privacy itself as a legal principle drawn from the fundamental value of personal autonomy.’ Keene LJ at 252, para. 166: ‘There may be merit in recognizing that the original concept of breach of confidence has in this particular category of cases now developed into something different from the commercial and employment relationships with which confidentiality is mainly concerned.’ 8 G. Hammond, ‘The Origins of the Equitable Duty of Confidence’ (1979) 8 Anglo-American Law Review 71; S. Ricketson, ‘Confidential Information—A New Proprietary Interest?” (1977-8) 11 Melbourne University Law Review 223, 233-5.

? But this was limited to unpublished ideas which were in recorded form, either in manuscript or other-

wise: Abernethy v. Hutchinson (1824) 1 H & Tw 28; 47 ER 1313.

10 11 12 13

[1969] Seager (1849) See R.

RPC 41; Fraser v, Evans [1969] 1 QB 349. v. Copydex (No. 1) [1967] 2 All ER 415. 2 DeG & Sm 652; 64 ER 293 (Knight Bruce LJ); (1949) 1 Mac & G 25; 41 ER 1171. Krasser, ‘The Protection of Trade Secrets in the TRIPs Agreement’ in Beier and Schricker 216-25.

INTRODUCTION

TO CONFIDENTIALITY

921

Article 10 bis of the Paris Convention), members shall provide natural and legal

persons with 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. Article 39 requires information to be protected if it is secret, has commercial value because it is secret, and has been subject to reasonable steps to keep it secret. Although British law probably complies with Article 39, where there is doubt (such as in relation to the obligations of third parties) Article 39 may influence the way the case law is interpreted.

1.2

DOCTRINAL

BASIS

OF THE

ACTION

One issue that has preoccupied commentators over the last few decades is the doctrinal basis of the action.'* In particular, commentators

have discussed whether

breach of confidence has its roots in contract, tort, property, or equity.'!5 While at times these debates may appear to be sterile, the decision as to the appropriate doctrinal basis of the action may have important consequences when it comes to matters

such as conflicts of laws and limitation periods.'® It has also been said that the failure to identify a single doctrinal or conceptual basis for the action is the reason why so many aspects of the action are unclear. In particular, the conceptual uncertainty is said

to be the reason why there is confusion about the liability of third-party recipients, strangers, bona fide purchasers of information, and the remedies which are available to a confider.'” Instead of attempting to locate an assumed but ever-elusive doctrinal basis for breach of confidence, a preferable option is to treat breach of confidence as a separate cause of action in its own right.'* This approach, which has found support in Canadian courts,'? would mean that the action was not dependent upon a particular jurisdictional basis. The advantage of seeing breach of confidence as a sui generis action is that the courts would not be hidebound by particular conventions or models. As such, they could tailor rules to the circumstances as and when they present themselves. It may also be more fruitful to consider whether the existing law could be reorganized so as to make it more comprehensible, predictable, or just. One possibility would be to divide breach of confidence into several related actions. In so doing the courts '4 As one commentator has put it, ‘[t]he action for breach of confidence is something of an orphan. Various theories have been advanced about the correct jurisprudential foundation but no consensus is yet apparent.’ J. McDougall, “The Relationship of Confidence’, in D. Waters (ed.), Equity, Fiduciaries and Trusts (1993) 1572

15 Gurry, 23-62. 16 See pp. 1001, 1029-30. 17 G. Jones, ‘Restitution of Benefits Obtained in Breach of Another’s Confidence’ (1970) 86 Law Quarterly Review 463, 463;A.Weinrib, ‘Information as Property’ (1988) 28 University of Toronto Law Journal 117, 136.

18 Gurry, 25-8, 58-61. !9 LAC Minerals v. International Corona Presource [1990] FSR 441, 495 (Sopinka J, Supreme Court of Canada); Cadbury Schweppes v. FBI Foods [2000] FSR 491, 504—6 (Supreme Court of Canada).

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CONFIDENTIAL

INFORMATION

could better attune the rules to the interests involved and thereby provide greater clarity and certainty. Such an approach would recognize that different rules apply to different types of information; notably personal,?? commercial,”! or government information. This could take place along similar lines to the changes that took place in the United States last century.”

2 ELEMENTS

OF THE

ACTION

However confused the details of the law relating to breach of confidence may be, its

basic framework is now well established. According to the seminal case of Coco v. Clark, in order to establish a claim for breach of confidence, the claimant must show that:

(1) the information is capable of being protected; (2) the defendant owes the claimant an obligation to keep the information confidential; and (3) the defendant used the information in a way that breached that duty.”?

Once these three factors have been proved, a defendant may raise a defence, the most significant being that the disclosure was justified in the public interest. In the next three chapters we will explore the elements of breach of confidence in more detail. Thus, in Chapter 43 we look at the type of information that is capable of being protected by the action. In Chapter 44, we look at the situations where a duty of confidence arises between the parties. In Chapter 45 after looking at whether the duty of confidence has been breached, we examine the defences to breach. We finish by looking at the remedies available. 20 R. Wacks, Personal Information (Oxford: Clarendon, 1989) 131-2 explains how failure to differentiate in the way proposed leads to strained development of the rules relating to breach of confidence. 21 J. Stedman, ‘Trade Secrets’ (1962) 23 Ohio State Law Journal 4, 26 (bemoaning the lack of aconsidered

and articulate trade secret policy that can serve as a sure guide in deciding whether protection in any given situation should be granted or denied). 22 This followed from Warren and Brandeis’s famous article on privacy: S. Warren and L. Brandeis, ‘The Right to Privacy’ (1890) 4 Harvard Law Review 193.

*° Coco v. Clark [1969] RPC 41. It is important to note that there is a degree of fluidity in its application.

For example, faced with similar facts, one court might justify its conclusion on the ground that the defendant is not under a duty, while another court would accept that the defendant was under a duty of confidentiality, but either limit the duty so as not to cover the defendant’s conduct or provide a defence.

43 IS THE INFORMATION CAPABLE OF BEING PROTECTED? 1 INTRODUCTION The first factor that must be shown to establish breach of confidence is that the information is capable of being protected. Before being in a position to determine whether the information is capable of being protected by breach of confidence, it is first necessary for the information in issue to be identified. As O'Connor J said, ‘it was

essential that the claimant should make it absolutely clear and certain what it was that he alleged to be confidential [and] which he sought to protect.’! The reason why the information should be identified at the outset is because it would be impossible to determine whether the information is of the type that will be protected without first knowing what the information is. This is not an inquiry into the quality of the information per se, so much as a preliminary examination as to whether the informa-

tion has been identified in such a way that the action can proceed. As such, it is akin to the question of what is a work in copyright law. If a claimant does not identify the information in sufficient detail, their action may be struck out on the basis that it is speculative and an abuse of process.’ Failure to identify the information may also lead the court to refuse to grant an injunction. For example, in Suhner v. Transradio the claimants gave the defendant 246 drawings saying that about 100 of the documents contained confidential drawings and that part of the information in the other 146 documents was confidential. The court refused to grant an injunction, primarily because ‘it was very difficult to know precisely what information it is which the plaintiffs say is confidential’? Laddie J reiterated this

position in the Ocular Sciences* decision where he said that the claimant should give full and proper particulars of all confidential information that he intended to rely upon. The reason for this was that unless the confidential information was properly 1 PA Thomas v. Mould [1968] QB 913, 922. See also Ocular Sciences v. Aspect Vision [1997] RPC 289,

359-69; CMI-Centers for Medical Innovation v. Phytopharm [1999] FSR 235, 243. 2 John Zinc v. Lloyds Bank [1975] RPC 385. 3 Suhner v. Transradio [1967] RPC 329, 334. 4 Ocular Sciences v. Aspect Vision Care [1997] RPC 289, 359.

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CONFIDENTIAL

INFORMATION

identified, the injunction might be of uncertain scope and might be difficult to enforce. The absence of proper ‘particulars of claim’ could also compromise a defendant’s ability to defend him or herself. On this the basis, Laddie J said that if the claimant failed to give proper particulars, it was open to the court to infer that the purpose of the litigation was harassment rather than the protection of the claimant’s rights. On this basis the action could be struck out as an abuse of process.5 With the exception of trivial or immoral information, no restrictions are placed on the subject matter that is protected by breach of confidence. As a result, the action has been used in relation to a variety of subject matter: the idea for a new type of ‘carpet grip’;° a concept for a new television programme;’ the genetic structure of a nectarine tree;* medical lectures;? customer lists; marital secrets;!° the cultural and religious secrets of an Aboriginal Community;'! and a report by the Department of Education on employment conditions.'? Information is protected irrespective of the format in which it appears. Thus, the action applies equally to information when embodied in writing,!’ drawings," photographs,'° goods or products, or where it has been disclosed orally.’® It is also clear that the information does not need to be fixed or in a permanent form. As such, the information may be written, oral, encrypted, embodied in physical objects (whether it be the genetic code of a tree or the design of a product), or take shape as a formulae, a plan, or a sketch.

While there are very few restrictions placed on the subject matter that is capable of being protected and the format that the information needs to take, there are four limitations placed on the type of information that may be protected under the action. These are where the information is trivial, immoral, vague, or in the public domain.

We will deal with each in turn.

2 TRIVIAL

INFORMATION

The first limit placed on the type of information that is protected by breach of confidence is that the courts may not protect information that is trivial. In Coco

v. Clark Megarry J said he doubted ‘whether equity would intervene unless the > Ocular Sciences v. Aspect Vision Care [1997] RPC 289, 359. © Seager v. Copydex [1967] 2 All ER 415. 7 Fraser v. Thames [1983] 2 All ER 101. 8 Franklin v. Giddins [1978] Qd. R. 72. 9 Abernethy v. Hutchison (1824) 1 H & Tw 28; 47 ER 1313.

10 1 12. '3 '4 !5 16

Argyll v. Argyll [1967] Ch 302. Foster v. Mountford [1978] FSR 582. Director General of Education v. Public Services Association of New South Wales (1985) 4 IPR 552. Interfirm Comparison (Aust.) Pty. v. Law Society of New South Wales [1975] 2 NSWLR 104. Saltman Engineering v. Campbell Engineering (1948) 65 RPC 203. Hellewell v. Chief Constable of Derbyshire [1995] 1 WLR 804. Fraser v. Thames [1983] 2 All ER 101.

PROTECTABLE

INFORMATION

925

circumstances are of sufficient gravity; equity ought not to be invoked to protect trivial tittle-tattle, however confidential’.!”? In the context of trade secrets, the courts have

occasionally suggested that to be protectable an idea must be economically valuable or ‘commercially attractive’. The trivia exception has had little impact upon the information protected by breach of confidence. This is because the courts have been reluctant to label information as trivial. The potential scope of the exception is further restricted by the fact that it has been suggested that it would never apply to government information. The reason for this is that it is impossible for the court to determine whether such information is important or not.!®

3 IMMORAL

INFORMATION

It also seems that the courts will not enforce obligations of confidentiality relating to matters that are grossly immoral.'” However, it has been said that in the absence of a generally accepted code of morality that the courts should be extremely careful about castigating certain types of behaviour on the basis that it is immoral.’? As such, as with the trivia exclusion, it seems that the exclusion of immoral information will have little impact upon the information protected by the action.

4 INFORMATION

THAT

IS VAGUE

In many cases, the information protected by breach of confidence is detailed and specific. Information of this nature presents few problems. Thus, detailed plans of a prototype engine shown by an inventor to a manufacturer or a detailed formula for a new pharmaceutical may be protected. However, breach of confidence also applies to more general ideas and concepts such as a proposal for a new television series. The

problem here is that if a claimant was able to impose confidentiality over very general ideas, this may enable them to impose unjustifiable burdens on anyone who received the information in confidence. To protect against this, the courts have said that the law will not protect information that is vague or general. More specifically, the courts have said that an aspiration or a desirable goal the flavour of which can be captured in the phrase “Wouldn’t it be great if...” would not be protected by the action.*! Instead, such information is in the public domain, free to be used by all. It should be noted 17 [1969] RPC 41, 48.

18 Attorney General vy. Guardian Newspapers [1990] AC 109, 269 (Lord Griffiths). Cf. Lord Goff (recognizing exclusion but limiting it to trivia of the most humdrum kind).

19 Following case law originating in the context of copyright: see, pp. 105-7. 20 Stephens v. Avery [1988] 2 All ER 477, 480-1. 21 De Maudsley v. Palumbo [1996] FSR 447, 456.

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CONFIDENTIAL

INFORMATION

that the courts have been careful to stress that vagueness and simplicity are not the same thing.” The exclusion of vague information can be seen in De Maudsley v. Palumbo.”? The claimant in this case argued that the defendants, who ran the dance club called the

Ministry of Sound, had appropriated his ideas for a new type of dance club that the claimant had told the defendant about at a dinner party. The claimant’s idea for the new dance club consisted of five features. These were that the club would legally be open all night; be very large and fitted out in hi-tech industrial warehouse style; incorporate separate areas for drinking, dancing, and socializing; have an enclosed dance area where the sound quality would be high; and employ top-quality disc jockeys. Knox J held that all five features of the claimant’s ideas were ‘individually too vague’ and thus not protectable. With the exception of the idea that the club would be legally open all night, he also said that the ideas were not novel. A similar approach was adopted in Secton v. Delawood.” In this case the claimant company, who was involved in developing methods of separating oil and water, brought an action against the defendants, who were former employees, from working in the same field. The court refused to grant relief, holding that a bare goal, purpose, or possibility, a mere speculative idea, was not capable of being protected as a trade secret. While general ideas may not be protected by breach of confidence, this does not mean that all ideas or concepts are therefore excluded. Indeed, one of the notable features of the action is that unlike other areas of intellectual property, notably copyright, breach of confidence provides protection over more abstract aspects of the creative process. As with similar inquiries in other areas of intellectual property law, the difficult question is determining where and how the boundary is to be drawn between detailed information (which is clearly protectable) and very general ideas (which are not).

In thinking about how the dividing line is to be drawn, the courts have said that to be protected a concept or idea must be ‘sufficiently developed to be capable of being realized’.”” That is, it is necessary to go beyond simply identifying a desirable goal and to show a ‘considerable degree of particularity in a definitive product’.”° This can be seen, for example, in Fraser v. Thames TV, which concerned an idea for a TV series about the formation of a female rock group and the subsequent experiences of the members. Hirst J said ‘that to be capable of protection the idea must be sufficiently developed, so that it would be seen to be a concept that has at least some attractiveness 22 De Maudsley v. Palumbo [1996] FSR 447, 456; Cranleigh Precision Engineering v. Bryant [1965] 1 WLR 1293, 1309, 1310.

23 De Maudsley v. Palumbo [1996] FSR 447. 24 Secton Pty. v. Delawood Pty. (1991) 21 IPR 136, 155 (Supreme Court of Victoria). See also Intelsec

Systems v. Grechi-Cini [1999] 4 All ER 11, 31, (suggestion that flame detection could be developed as well as smoke detection was too vague to be capable of protection as a trade secret). Cf. the simple idea developed into the finished business plan in Wheatley v. Bell [1984] FSR 16. 2° These requirements trace their origin to the comments of Harris J in the Supreme Court of Victoria in Talbot v. General Television Corp. [1981] RPC 1.

26 De Maudsley v. Palumbo [1996] FSR 447.

PROTECTABLE

INFORMATION

927

for a television programme and which is capable of being realised in actuality.’ Similarly, in Talbot v. General Television, which was also concerned with whether a concept for a new television series could be protected, it was held that the new concept for a TV programme was protected because it was ‘capable of being realized in actuality’.2” The requirement that the idea must be capable of being realized ‘as an actuality’ has been taken to mean that it was capable of being transformed into ‘a finished product in the relevant medium’.** Perhaps the best way to get a sense of the level of detail needed for an idea to be protected is to look at the way the issue has been construed in the cases. We have already seen above how in Palumbo the claimant’s ideas for a new dance club were held to be too vague to be protected. In contrast, in Talbot the court held that the proposal for a new television programme was sufficiently developed to be the subject of confidence. In this case, the claimant approached the defendant with an idea for a TV series about real-life millionaires. While the claimant subsequently sent the defendant a more detailed outline, this did not add very much of substance to the initial idea.”’ As such, it seems that the general proposal for a new type of programme involving real-life millionaires would have been protected in its own right. In effect this is what transpired in Fraser v. Thames TV where it was held that the claimant’s concept for an idea for a TV series about the formation of a female rock group was specific enough to be protected. The level of detail required for an idea or concept to be protectable varies depending on the case in hand. Speaking about the level of detail needed for a proposal for a television programme to be protected, Hirst J said ‘I do not think that’ the requirement of actuality ‘necessitates in every case a full synopsis. In some cases the nature of the idea may require extensive development of this kind in order to meet the criteria. But in others the criteria may be met by short unelaborated statement of an idea.’*” One factor that will influence the level of specificity required is the way information is normally treated in the industry in question. Thus, in Fraser v. Thames TV Hirst J said that the fact that it was normal practice in the theatre, television, and film industries to treat general proposals for new programmes as if they were protected was an important factor in him reaching the conclusion that the information was in fact protected.*! In some cases, the courts have suggested that the test for whether an idea or concept is sufficiently developed to be protectable is to consider whether the idea or concept is ‘attractive’.*? However, as Knox J pointed out in Palumbo, this requirement “doesn’t advance

things much because if the element is missing it is hardly likely to be appropriated’.** 27 Talbot v. General Television Corp. Pty. [1981] RPC 1, 9.

28 De Maudsley v. Palumbo [1996] FSR 447. Knox J distinguished between a ‘mental product’, that could be protected, and a mere ‘aspiration’, which could not.

29 Fraser v. Thames TV [1983] 2 All ER 101, 121. 30 Tid.

31 Tbid., 121-2. 32 Talbot v. General Television Corp. Pty. [1981] RPC 1, 9. 33 De Maudsley v. Palumbo [1996] FSR 447, Knox J. This requirement seems similar to the one that information is not ‘trivial’.

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INFORMATION

The flip side of this is that if a defendant uses the information this would be proof of its attractiveness. As such, the relative attractiveness of the information adds little to the inquiry.

5 INFORMATION

IN THE

PUBLIC

DOMAIN

One of the most important restrictions placed on the information that is protected by breach of confidence is that the action does not apply to material that is in the public domain. As Laddie J said “[p]rima facie, information that is in the public domain is

not capable of being treated as confidential’.*4 The upshot of this is that however confidential the circumstances of communication, ‘there can be no breach of confidence in revealing to others something which is already common knowledge’.*° In more positive terms, this means that to be protected the information must be relatively secret. It is important to note that the notion of public domain has a different meaning in relation to breach of confidence than it does in other areas of intellectual property law. Before looking at what is meant by the public domain in this context, it should be observed that the status of the information is a question of fact, not intention. Consequently, information is still capable of being protected even though the confider intended the information to be published, but failed to do so.*° Conversely, if material is in the public domain, it does not matter that the confider intended, but failed, to

keep the information secret.*”

5,1.. RELATIVE. SECRECY In patent law a single disclosure to one person is sufficient to place the information in the public domain and thus to destroy the novelty of an invention. In contrast, breach of confidence is built around a notion of ‘relative secrecy’. In essence this means that it is possible for a number of people to know about the ‘secret’ and the information still not be in the public domain. The upshot of this is that the fact that information has been disclosed to a number of people does not necessarily mean that the information is incapable of being treated as confidential. For example, in Prince Albert v. Strange*® the court held that while Prince Albert had disclosed details of his engravings to 34 CMI-Centers for Medical Innovation v. Phytopharm [1999] FSR 235, 255. See also Attorney General v. Guardian Newspapers [1990] AC 109, 282.

> Coco v. Clark [1969] RPC 41, 47. 36 A mere intention to publish in due course should not deprive information of its confidential status, despite the Court of Appeal’s decision in Times v. Mirror Group [1993] EMLR 443. For criticism, see J.

Rubinstein, “The Downing Street Years: A Mole’s Charter’ [1993] Ent LR 189. 37 It is clear that if the confider publishes the information, the obligation comes to an end: Mustad v. Allcock and Dosen (1928) [1963] 3 All ER 416 n. 38 (1849) 2 DeG & Sm 652; 64 ER 293 (Knight Bruce LJ); (1949) 1 Mac & G25; 41 ER1171 (Cottenham LC).

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INFORMATION

929

friends and relatives, this did not destroy the confidentiality that existed in the information. The crucial question is how widespread must the information be for it to lose its status as a secret and for it to fall into the public domain? The degree of publication required before secrecy is lost depends on a range of different factors. These include the type of information in question; the section of the public who have an interest in knowing about the information;*? the domain in which the information was published; the degree of publication within that domain; the form in which the information is published; and the vigour with which the information is likely to be pursued within that domain.“° It is important to note that a partial disclosure only deprives that part of the information disclosed of its confidentiality.’ A personal secret might be of interest to many more people than a trade secret, which is only likely to be of interest to competitors. Thus, a court may treat personal information as being relatively secret even though a lot of people know about it.” In Franchi v. Franchi* the court was called upon to consider whether information was still confidential after it had been published in a patent specification in Belgium, but before it had been published in the UK. It was held that the fact that the information was in the public domain in another country might be relevant when considering whether the information was confidential in the UK. The court also held that because patent agents were in the habit of inspecting foreign specifications, the information was in the public domain. As Internet use grows, it will be increasingly difficult for a claimant to establish that information known in one place is confidential elsewhere. Another factor that may useful in indicating whether information remains confidential is the extent to which further publication would harm the claimant. In some cases, the requirement of harm and the finding that the information is confidential have operated as alternative grounds. This can be seen, for example, in the Spycatcher decision. Peter Wright, who was under an obligation of confidentiality as a member of the Security Services, wrote a book called Spycatcher. The book was published in Australia, Ireland, and the USA. The Sunday Times began to serialize the book in England and the Guardian/Observer sought to repeat the story. The Attorney General sought an injunction to prevent publication. Lord Keith said that the continued

39 In Ryan v. Capital Leasing (High Court ofIreland, 2 Apr. 1993) it was said that the public domain means that ‘the information is well known to that section of the public which has an interest in knowing the information.’ See P. Lavery, ‘Secrecy, Springboards and the Public Domain’ [1998] EIPR 93.

40 Dean, 123-9. 41 House of Spring Gardens v. Point Blank [1983] FSR 213, 255. 42 Gy. Day [1982] 1 NSWLR 24 (ephemeral revelation on TV did not deprive information of confidential status).

43 [1967] RPC 149. 44 ‘The truth of the matter is that in the contemporary world of electronics and jumbo jets news anywhere is news everywhere’: Attorney General v. Guardian Newspapers [1987] 1 WLR 1248, 1269 per BrowneWilkinson V-C. Cf. Attorney General v. Turnaround Distributors [1989] FSR 169 (publication of book in Ireland did not render it unarguable that the book was confidential in the UK) —a pre-Spycatcher case.

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CONFIDENTIAL

INFORMATION

serialization of the book would not be a breach of confidence. This was because it

would not have caused any further damage to the Government.*®

5.2

THE

SPRINGBOARD

DOCTRINE

Another situation where the breach of confidence action may provide protection over information that is in the public domain is in relation to the so-called springboard doctrine. In essence the doctrine aims to ensure that a person who breaches a duty of confidence is not able to benefit from the breach. As Lord Denning said in Seager v. Copydex,** a person who obtained the information from a private source should not be in a better position than someone who went to the public source. The effect of the doctrine is to prevent a person who obtained the information from a private source from getting a headstart without paying for it. As Roxburgh J said in Terrapin v. Builders’ Supply Co., a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication, and a springboard it remains even when all the features have been published or can be ascertained by actual inspection by any member of the public.*”

The claimants in this case manufactured prefabricated portable buildings. As part of a joint venture the claimants gave the defendants detailed technical information about the prefabricated buildings. When the relationship broke down and the defendants continued to manufacture the buildings, the claimants sued for breach of confidence. The defendants claimed that the information was no longer capable of being protected by breach of confidence. This was because the claimants had sold buildings to members of the public (which could be dismantled to reveal the details) and also published a brochure that disclosed the technical details of the buildings. In short, they argued that as the information was now in the public domain, it was no longer capable of being protected. Roxburgh J held that to obtain information equivalent to that initially given to the defendant, the defendant would have had to dismantle a portable building and construct tests. The initial information gave the confidant a head start over a member of the public. Under the springboard doctrine, the defendants were to be placed under a special disability to ensure that they did not get a head start over competitors.

The springboard doctrine attempts to prevent a person from using any special information they may have obtained in confidence from gaining an advantage over 45 Attorney General v. Guardian Newspapers [1990] AC 109, 260. Lord Keith said that in relation to government secrets, it was necessary to show that there was a public interest in restraining disclosure and that given that no harm would occur, this was absent. 46 Seager v. Copydex (No. 1) [1967] 2 All ER 415, 417. See also Schering Chemicals v. Falkman [1982] QB 1, 15-16 (per Denning MR, dissenting). 47 [1967] RPC 375, 391. See also Saltman v, Campbell Engineering [1948] 65 RPC 203 (The defendant

could have taken the leather punch to pieces and constructed drawings, but had not done so, and thus was liable).

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INFORMATION

931

others who would have had to obtain the information by other means (such as reverse engineering the publicly available embodiment of the information).** The doctrine serves two policies. It promotes the integrity of confidential relations by minimizing any benefits that can be gained by a confidant utilizing information obtained in confidence. It also promotes fair relations between potential competitors.” The springboard doctrine has a number of important limitations. The first is that the restrictions imposed by the springboard doctrine on private information do not last forever. In Potters Ballotini v. Weston Baker Lord Denning explained that ‘{a]lthough a man must not use such information as a springboard to get a start over others, nevertheless the springboard does not last forever. If he does use it, a time may come when so much has happened that he can no longer be restrained.’ Accordingly, the appropriate remedy was to restrict the confidant from using the information for a limited time. The appropriate period is calculated by reference to the time that it would take to discover the information from legitimate public sources.?! The second limit on the action is that because of the difficulties in calculating the duration of the confidant’s head start and the problems of enforcing it by way of injunction, the courts have indicated that they prefer to give monetary rather than injunctive relief.>” So far, we have explained that the springboard doctrine is concerned with the situation where a person acquired information in confidence that could later be located from public sources. However, the reasoning has also been extended to situations where the confidential information was itself collated from public sources (rather than where private information has been disclosed to the public in a different form).°’ In Roger Bullivant v. Ellis,* during the course of employment, the defendant had taken a copy of the list of customers from his employer. While each of the names could have been acquired from public domain sources such as professional and trade directories, Falconer J granted an injunction to prevent the defendant from taking

unfair advantage of the information. The Court of Appeal allowing the appeal and discharging the injunction said that such an injunction should not normally extend beyond the period for which the unfair advantage is expected to continue.°°

48 The law could reach the same result if it recognized that a recipe or formula may still be ‘relatively secret’ even though products made to the recipe are on the market and are such that they can be analysed to ascertain the secret recipe. However, recent case law suggests that such information is no longer confidential: Mars v. Teknowledge [2000] FSR 138. But cf. Murray v. Yorkshire Fund Managers [1998]

1 WLR 951, 960, per

Nourse LJ: ‘In my view the springboard principle can have no application where, as here, the information has ceased to be confidential.’ 49 Aquaculture v. New Zealand Mussel Co. (1985) 5 IPR 353, 383 (‘a principle, founded on the concept of

fairness’). Dean, 143 describes the springboard doctrine ‘as close to a de facto doctrine of unfair competition as Anglo-American courts have come.’ 50 [1977] RPC 202. 51 If reverse engineering is not a possibility, the springboard metaphor is inappropriate: Electro Cad Australia v. Mejati RCS SDN BHD [1999] FSR 291, 307.

52 Coco v. A. N. Clark (Engineers) [1969] RPC 41, 47. 53 But cf. Schering Chemicals v. Falkman [1982] 1 QB 1.

54 [1987] FSR 172.

°° [1987] FSR 172, 184.

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5.3

CONFIDENTIAL

ENCRYPTED

INFORMATION

INFORMATION

Another situation where questions about the status of information arise is where information is encrypted. What is the effect of disclosing information in an encrypted form? If a person places encrypted information in the public domain, does this mean that the information is secret and potentially protectable? Or does it mean that the information is published and thus not protectable? The question of whether the encrypted information that is in the public domain is capable of being protected was considered in Mars v. Teknowledge.*® The claimants in the case designed and manufactured coin-receiving and -changing mechanisms (which are used in vending machines). The mechanisms included ‘discriminators’

that function to determine the authenticity and denomination of a coin fed into the machine. One of the problems with the discriminators was that whenever there was a change in the coinage, they had to be reprogrammed. The claimants developed a new discriminator (called the ‘Cashflow’) which had the ability to be reprogrammed for new coin data. Cashflow consisted of ‘a data layout, a serial communications protocol and an encryption system to make it difficult for third parties to find out by reverse engineering how to recalibrate (reprogram) the Cashflow discriminator.’ Importantly, none of this information was published directly by the claimants. The defendant had broken the encryption system and reverse engineered the Cashflow discriminator, The claimants brought an action arguing, inter alia, that the defendant’s activities by way of reverse engineering amounted to a breach of confidence. Jacob J held that the encrypted information in the Cashflow machine did not have

the necessary quality of confidence. After noting that the machine was freely available on the market,’’ Jacob J said that ‘[a]nyone with the necessary skill to de-crypt had access to the information. The fact that only a few have those skills is . . . neither here nor there. Anyone can acquire the skills and, anyway, a buyer is free to go to a man who has them.’*® On this basis, Jacob J concluded that as the information had been

published, it was not capable of being protected. The courts have adopted a similar approach in situations where the information is embodied in an object in the public domain that can only be accessed through reverse engineering.” The cases have suggested that where information is embodied (or hidden) in a machine or a product which is in the public domain, the information is also in the public domain and thus not capable of being protected. The upshot of this is that information will be treated as having been published anid thus in the °6 [2000] FSR 138. °’ For consideration of the situation where the product has been hired rather than sold, so the product is not ‘freely available’, see K. S. Paul (Printing Machinery) v, Southern Instruments (Communications) [1964] RPC 118 (in accordance with a hiring agreement, the claimant supplied a telephone-answering machine to the defendant, but with a specific obligation not to interfere with it. In breach of that the defendant allowed another to remove it and examine it. The court granted an interim injunction). 8 Mars v. Teknowledge [2000] FSR 138, 149. 59 Saltman Engineering v. Campbell Engineering (1948) 65 RPC 203.

PROTECTABLE

INFORMATION

933

public domain, even though it can only be accessed through a process of decryption or reverse engineering. These decisions, if followed, will restrict the use that can be made of the breach of

confidence action to regulate information on the Internet. Given that genetic information in biological matter is ‘in the public domain’, these decisions may also have important ramifications for the use of the action in respect of biotechnological inventions. It would not be very difficult, however, for a court to use the notion of ‘relative secrecy’, to reach a different conclusion. 5.4

PUBLIC

INFORMATION

THAT

BECOMES

PRIVATE

In patent law, the standard for deciding whether information is in the public domain is absolute. This means that once information is in the public domain it can never become secret. In contrast, with the breach of confidence action the test for whether information is in the public domain is more flexible. As a result, the status of informa-

tion may change over time. This means that it is possible for information that is in the public domain to become secret. This may occur because the public forgets the information, or because the individuals that make up the relevant public change. For example, in Schering Chemicals v. Falkman’' details that a drug called prrmopos, which Schering manufactured for use as a pregnancy test, had damaged unborn children had been widely publicized between 1975 and 1978. In order to improve its

image which had been damaged by the adverse publicity, Schering engaged a public relations firm, Falkman, to train its staff in the handling of television interviews in relation to the drug. One of Falkman’s employees approached Thames TV with a view to making a documentary about Schering and primopos. Even though the information upon which the programme was based could have been derived from public sources, the Court of Appeal granted Schering an injunction on the grounds of a breach of confidence. Shaw LJ stated that ‘to revive the recollection of matters which

may be detrimental or prejudicial ... is not to be condoned because the facts are already known and linger in the memories of others.’ 5.5

DISCLOSURE

BY THE

CONFIDANT

For some time, it was thought that where information had entered the public domain as a result of a breach of confidence that this did not affect the status of the information. While the information may have been public knowledge, the fact that the information entered the public domain wrongfully meant that it was not public property.©° 60 Cf. Ackroyds y. Islington Plastics [1962] RPC 97, 104 (if what is in the public domain needs reverse engineering, that information ought to be treated as relatively secret). 61 [1982] 1 QB1. 62 [1982] 1 QB1, 28. 63 Cranleigh Precision Engineering v. Bryant [1964] 3 All ER 289 and Speed Seal Products v. Paddington [1986] FSR 309 appeared to support the proposition that a confider could not be released from an obligation

of confidentiality by his own acts.

934

CONFIDENTIAL

INFORMATION

This meant that the information remained confidential in spite of the fact that it was widely available. Others argued that once information was in the public domain, it was not capable of being protected by the action. This was the case even where disclosure arose through a breach of confidence. Most of the confusion as to whether information disclosed through a breach of confidence is still be capable of being protected by the action was resolved in Spycatcher. In this decision, the House of Lords held that once information was in public domain the courts could not restrain further publication. Even though information that enters the public domain via a breach of confidence is not capable of being protected by the action, this does not mean that the confidant is thereby absolved of liability. In these circumstances, the confidant has clearly committed a wrong and will be subject to the regular remedies for breach of confidence. Some cases have referred to the provision of remedies against the confidant in these circumstances as ‘the springboard doctrine’.®© The idea being that a person who obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential communication. We prefer to reserve the springboard metaphor for a different category of cases (which were discussed above). We will look at the remedies against an errant confidant when we look at remedies for breach of confidence later.

5.6

COMPILATIONS

OF PUBLIC

DOMAIN

INFORMATION

While information that is in the public domain will not be protected by the breach of confidence action, a distinction is drawn between public domain information (which is not protected) and information that builds upon public domain information (which may be protected). It is clear that where someone collects, arranges, or elabor-

ates on elements that are already in the public domain that the resulting information is capable of being protected.®’ As Lord Greene MR said in Saltman Engineering,® ‘it is perfectly possible to have a confidential document . . . which is the result of work done by the maker on materials which may be available for the use of anybody’. He added that ‘what makes it confidential is the fact that the maker of the document has used his brain and thus produced a result which can only be produced by somebody who goes through the same process.’ In a similar vein, Megarry J said in Coco v. Clark that “something constructed solely from materials in the public domain may possess 64 Attorney General v. Guardian Newspapers [1990] AC 109. For commentary, see G. Jones, ‘Breach of Confidence—after Spycatcher’ (1990) 42 Current Legal Problems 48; Dean, 161-2. 65 Lord Goff held that once information was widely available there could be no obligation respecting it. This was because the subject matter of the obligation had vanished. 66 Ocular Sciences v. Aspect Vision Care [1997] RPC 289, 399.

67 TRIPs Art. 39(2) requires protection to be granted only where information 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.’

68 (1948) 65 RPC 203, 215.

PROTECTABLE

INFORMATION

935

the necessary quality of confidentiality... But whether it is described as originality or novelty or ingenuity or otherwise, I think there must be some produce of the human brain which suffices to confer a confidential nature upon the information’.” It is clear that not all acts of compilation will produce results that are capable of being protected. Indeed, as Knox J has said, ‘a combination of features which were

not individually novel does not automatically become novel by being added together’.”” The status of compilations of public domain information was considered in Ocular Sciences v. Aspect Vision.’' In this case, the claimant asserted that a booklet that contained a compendium of the detailed dimensions of the range of the claimant’s contact lenses was confidential. This was the case even though each of the lenses had been put on the market. The claimant argued that to obtain even a small amount of the information contained in the booklet a lens manufacturer would need to analyse thousands of lenses, a process that would take considerable time and effort. Laddie J said that he had great doubts as to whether ‘a mere mechanical collection of

data which is in the public domain’ could be confidential.” He added that Saltman and Coco do not establish that the compilation of public domain information is always enough to confer confidentiality. While valuable and novel ideas could be produced by the judicious selection and combination of a number of items which are separately in the public domain and that such ideas would be capable of being the subject of an obligation of confidence, they would only be such if they were the ‘product of the skill of the human brain’. In contrast, Laddie J said that a ‘mere non-

selective list of publicly available information should not be treated as confidential even if putting it together involves some time and effort. No relevant skill is employed.’”’ As is the case with the copyright protection for facts, the difficult question is knowing the type and level of labour that needs to be exerted on public domain material for the resulting information to be capable of being protected.”4 While this topic has attracted very little attention, it seems that the threshold for protection is low.” This can be seen in Talbot,’® where the court was called upon to decide whether a proposal for a television programme about real-life millionaires was capable of being protected by the action. While similar television programmes had already been made, the court held that the claimant’s programme had a ‘commercial twist’ or a ‘particular slant’ that distinguished it from pre-existing programmes. The unique feature of the proposal was that as part of the programme 69 [1969] RPC 41, 47. 70 De Maudsley v. Palumbo [1996] FSR 447, 459.

71 [1997] RPC 289. 72 [1997] RPC 289, 374.

73 [1997] RPC 289, 375. 74 See pp. 91-4. Note also that the springboard notion may limit reliefinsuch cases. 7° In International Scientific Communications v. Pattison [1979] FSR 429, 434 per Goulding J (‘the lists with which I am concerned embodied enough labour of composition, experience of the trade, and practical utility to fall into the class of confidential trade information’).

76 Talbot v. General Television Corp. [1981] RPC 1, 9. See also Fraser v. Thames TV [1983] 2 All ER 101.

936

CONFIDENTIAL

INFORMATION

successful [sic] millionaires, such as Alan Bond and Neil Diamond, were to give the

recipe for their success.

5.7

PRIVATE

INFORMATION

ABOUT

PUBLIC

INFORMATION?

The account so far has left at least one issue unexplained. This relates to the level of protection to be afforded to private information about public information. In Cranleigh Precision Engineering v. Bryant’ the defendant had been managing director of the claimant firm, which manufactured swimming-pools made according to a patent owned by the company. In the course of his employment, the defendant learned of a prior grant of a patent for similar swimming-pools. Instead of informing the claimant, the defendant set up a rival business and purchased the patent. The claimant sought an injunction to restrain the defendant from making use of information received in his capacity of managing director, in particular ‘the knowledge of the possible effect to and on the [claimant] of the existence and publication of the specification’. Roskill J granted an injunction preventing the defendant from making use of the patent.” In so doing, Roskill J rejected the defendant’s argument that because the information related to the patent that was in the public domain, the information in question was also in the public domain. Although Cranleigh was initially interpreted as supporting the proposition that confiders could not be released from an obligation of confidentiality by their own acts,”” subsequent case law has rejected that approach. How then are we to explain the result in Cranleigh? If we ignore the easy option of arguing that it was wrongly decided, two alternative ways of explaining the decision present themselves. According to the first view, the defendant was under a fiduciary duty that meant that instead of

taking advantage of the opportunity for himself, he should have exploited the patent for his employer. Cranleigh can also be explained as a case concerning confidential private information about public information. While information about the patent was in the public domain, the impact (and thus the value) of the patent depended on private information that the defendant had acquired through his employment with the claimants. As such, what was protected here was not the information disclosed in the patent per se, so much as the information about the consequences and importance of the patent to the defendant, which depended on information that was not in the public domain.°*°

77 [1964] 3 All ER 289.

78 More specifically, ‘from overtly making use of their acquisition of [the patent] or any licence granted in respect thereof in support of or in connection with sales ... etc. of above-ground swimming-pools in competition with the plaintiff's above-ground swimming-pools’: [1964] 3 All ER 289, 303. 7) See Speed Seal Products v. Paddington [1986] FSR 309 (claim to injunctive relief might be justified where facts alleged that confidant had himself published the confidential designs for couplings). 80 [1965] 1 WLR 1293, 1312-14.

PROTECTABLE

6 NOVEL

AND

INFORMATION

ORIGINAL

937

INFORMATION?

One of the key differences between breach of confidence and the statutory forms of intellectual property relates to the qualitative restrictions placed upon the intangible property that is protected. For example, novelty and non-obviousness play a key role in limiting the inventions that are patentable. Similar restrictions exist in all the other areas we have covered in this book. With the exception of the information that is vague and in the public domain, there are few restrictions imposed on the information that is protected. In a number of recent cases, however, the courts have begun to use language that suggests that they are working towards the imposition of some type of qualitative restriction upon the type of information protected by the action. For example, in Coulthard v. Disco Mix,*' the High Court held that information relating to the techniques the defendant used for creating mega-mixes was not confidential. The technique involved the defendant listing the recordings, identifying the beat and key of each song, and then mixing the songs together in an order that enabled them to be blended smoothly. Judge Sher QC doubted that information about the techniques used by the claimant in creating mega-mixes would be protected. The reason for this was that the techniques were ‘pretty obvious once one is setting out to create a beatmix.’** In other contexts, the courts have also spoken of the need for information to be original and novel. For example, in De Maudsley v. Palumbo* Knox J said that with the exception of the idea that the club would be legally open all night, the ideas were not novel.** The courts have also used the novelty and originality as a way of gauging whether information that builds upon public domain material is capable of being protected.

It is difficult to know what to make of these statements. In part this is because the language of the decisions is unclear. Another problem is that most of the comments were obiter with little, if anything, turning on them. For the most part, it seems that such criteria seem to be most appropriate in relation to trade secrets and commercial information. The requirements seem superfluous in relation to personal information:

there seems to be little that could be gained from asking whether information about a person’s sexual preferences is ‘obvious’ or ‘novel’. In thinking about the potential relevance of novelty and related criteria to the information that is capable of being protected by breach of confidence, it is helpful to ask, what purpose could they serve? That is, what is to be gained from looking at breach of confidence in these ways? Unlike the situation with patents, the obligation of confidentiality only applies to those who are in a confidential relationship with the claimant. As such, the consequence of protecting information that is not novel is

81 [1999] 2 All ER 457. 82 [1999] 2 All ER 457, 474. (The claimant had not argued that the idea of amega-mix was confidential.)

83 De Maudsley v. Palumbo [1996] FSR 447. 84 Tbid., 456 (the idea ‘must contain some significant element of originality’).

938

CONFIDENTIAL

INFORMATION

much more limited than with patents. Having said that, problems could still arise if protection was given over information that was not novel. For example, in the absence of any restrictions as to the need for novelty (or obviousness), what would happen if a person approached a publisher and said, in confidence, ‘I have an idea to write a textbook on intellectual property law’? In the absence of a novelty requirement, there is a possibility that the publisher could be prevented from commissioning other authors from working in the area.*° This consequence seems particularly undesirable where there are only very few people who have the potential to exploit a particular idea (here, legal publishers). Whether the novelty (etc.) requirement is intended to meet such concerns, and, if it is, the degree to which the law succeeds in protecting the public from such restraints, is far from clear. 85 Though the publisher would not be prevented from going ahead with an identical proposal independently put forward by another author.

chek OBLIGATION OF CONFIDENCE 1 INTRODUCTION The second element that must be proved in a breach of confidence action is that the defendant was under a legal (as opposed merely to a moral) obligation of confidentiality.’ While the rights recognized by copyright, patents, designs, and trade marks apply against anyone who deals with the intangible property within the relevant jurisdiction, the breach of confidence action only applies to those who receive information in confidence. In describing the situations where an obligation of confidentiality will arise, it is common practice to focus on the nature of the relationship between the parties. In following this model, we look at look at the duties that arise where the parties are in a direct relationship, where there is an indirect relationship, and where

there is no relationship between the parties. We then look at the duties that arise when the parties are in an employment relationship and the special duties owed by statutory bodies who gather information.

2 DIRECT

RELATIONSHIP

The first and most straightforward situation where a duty of confidence may arise is where the parties are in a direct relationship with each other. In these circumstances a duty of confidence may arise contractually, as a result of the type of relationship that exists between the parties, or because of the way the information is communicated. We will deal with each in turn. 2.1

CONTRACTUAL

PROVISIONS

AS TO CONFIDENTIALITY

A person may be under a contractual obligation not to use or disclose information. The contractual conditions of confidentiality may be express or implied.’ Express 1 See Attorney General v. Jonathan Cape [1976] QB 752; Malone v. Metropolitan Police Commissioner [1979] Ch 344.

2 An express confidentiality agreement may however be void. In the case of software, for example, a clickwrap restriction prohibiting decompilation may be void. See pp. 286-7.

940

CONFIDENTIAL

INFORMATION

obligations typically arise in employment contracts (which we look at later) and in the licensing of know-how. The relationship between banker and customer is an example of a situation where an obligation of confidentiality will normally be implied into the

contract.’ 2.2

INTRINSIC

NATURE

OF THE

RELATIONSHIP

In some cases, an obligation of confidentiality arises as a result of the type of the relationship that exists between parties. More specifically, an obligation of confidentiality might exist as part of a fiduciary relationship that exists between the parties. A “fiduciary relationship’ is an equitable relationship in which one party has a duty to act for the benefit of another,* and arises, for example, between doctor and patient; priest and penitent; solicitor and client; husband and wife;> and trustee and beneficiary.° It is unclear whether the duty also applies to other types of personal relationships.’ That said, the manner in which the law of confidence and the law of fiduciaries interrelate is unclear.’ Some courts and commentators have suggested that all confidential obligations are examples of fiduciary obligations.’ However, such conflation seems inappropriate given that a number of persons normally subject to obligations of confidentiality (such as employees)'° are not normally treated as fiduciaries.'! It would seem preferable, at least for the sake of clarity, to keep the notions of ‘fiduciaries’ and ‘confidences’ distinct. In any case, the pressure to merge the two categories may well diminish if the courts accept that the remedy of a constructive trust is available for a breach of confidence, rather than only for a breach of fiduciary duty.'?

3 Tournier v. National. & Provincial Bank [1924] 1 KB 461.

4 > © 7

See Bristol and West Building Society v. Mothew [1998] Ch 1, 18. Argyll v. Argyll [1967] Ch 302. Boardman v. Phipps [1967] 2 AC 46. See M. & N. Mackenzie v. News Group Newspapers (18 Jan. 1988) (a homosexual relationship did not give rise to a duty of confidence). But cf. Stephens v. Avery [1988] 2 All ER 477; Barrymore v. News Group Newspapers [1997] FSR 600, 602 (disclosures in all personal relationships fall within ‘limited purpose’ test, and hence are confidential).

8 For a thorough review see D. Klinck, ‘Things of Confidence: Loyalty, Secrecy and Fiduciary Obligations’ (1990) 54 Saskatchewan Law Review 73 (a confidant is a type of fiduciary). Cf. G. Hammond, ‘Is Breach of Confidence Properly Analysed in Fiduciary Terms?’ (1979) 25 McGill Law Journal 244, See also Gurry, 158-62; Dean, 21 (the debate is ‘largely sterile’). 9 Schering v. Falkman [1982] 1 QB 1, 27; Attorney General v. Blake [1998] 1 All ER 833, 843 (not discussed by the House of Lords); Ocular Sciences v. Aspect Vision [1997] RPC 289, 413. 10 Balston v. Headline Filters [1990] FSR 385. But cf. Attorney General v. Blake [1998] 1 All ER 833, 842 (employees are fiduciaries).

"! Indata Equipment Supplies v. ACL [1998] FSR 248, 256, 262, 264 (breach of confidence despite lack of fiduciary relationship); following Sopinka J in Lac Minerals v. International Corona Resources [1990] FSR 441.

12 See pp. 974-5 below.

OBLIGATION

2.3

FROM

THE

MANNER

OF CONFIDENCE

941

OF COMMUNICATION

In some cases, an obligation of confidence may arise from the way the information is communicated between the parties.'* In these circumstances, the test for whether there is a duty of confidence is to ask, would a reasonable recipient have realized that the information was given to them in confidence? As Megarry J said in Coco v. Clark: It seems to me that if the circumstances are such that any reasonable man standing in the shoes of the recipient of the information would have realized that upon reasonable grounds the information was being given to him in confidence, then this should suffice to impose upon him the equitable obligation of confidence.

The question of whether a reasonable person would consider the information to have been communicated to them in confidence always depends on the facts of the case. Perhaps the most straightforward situation is where a party makes an express statement that the information is confidential. In these circumstances a defendant would find it very difficult to show that a reasonable confidant would not think that they were under an obligation of confidence.!° An obligation of confidence may also be inferred from the circumstances in question. When considering whether a reasonable person would infer that the information was confidential from the circumstances, the courts will take account of commonly

held views, usages, and practices of the industry or trade in question. The way the parties understand their moral obligations may also be relevant.'© While the question of whether the reasonable person would infer that the information is confidential always depends on the facts in hand, it may be helpful to outline some examples. (i) Normal Conversation. Where a person blurts out information in public, no obliga-

tion of confidentiality would arise.'? Equally, where information is disclosed in an informal, social-setting, normally no obligation would arise.'® (ii) Disclosures for a Limited Purpose. In most

instances, where a person reveals

information to someone for a limited purpose this will give rise to an obligation that the information only be used for that purpose.!’ This is because where information is supplied for a specific purpose, the reasonable confidant would readily infer that the information should not be used for another purpose. This is sometimes referred to as '3 e.g. in Seager v. Copydex [1967] 2 All ER 415. 14 Coco v. A. N. Clark (Engineers) [1969] RPC 41, 48. '5 Stephens v. Avery [1988] 2 All ER 477 (where the plaintiff expressly declared that the information was to ‘go no further’). But if the stipulation is unreasonable an obligation might not arise: Dunsford and Elliott v. Johnson [1978] FSR 143, 148; Yates Circuit Foil Co. v. Electrofoils [1976] FSR 345, 380.

16 Fraser v. Thames TV [1983] 2 All ER 101, 121-2; De Maudsley v. Palumbo [1996] FSR 447, 457. Cf. Carflow Products (UK) v. Linwood Securities (Birmingham) 11996] FSR 424,

'17 Coco v. A. N. Clark (Engineers) [1969] RPC 41, 48. 18 De Maudsley v. Palumbo [1996] FSR 447, 458. 19 Ackroyds London v. Islington Plastics [1962] RPC 97 (supply of plastic moulding tool for use in manufacture of ‘swizzle sticks’ (used to stir cocktails) not to be used for other purposes); Barrymore v. News Group Newspapers [1997] FSR 600, 602 (disclosure of information in a personal relationship was ‘for the relationship and not for a wider purpose’).

942

CONFIDENTIAL

INFORMATION

the ‘limited purpose’ test. There may be circumstances, however, where this is not the case. In particular, where the information could be protected by copyright, patent, or design protection a reasonable recipient might not assume that the information was

given to them under an obligation of confidence.”° (iii) Encrypted Material. Until recently little attention has been given to the question of whether a person who receives encrypted information is thereby placed under a duty of confidence. The question here is whether a reasonable confidant who received encrypted information would take the fact that the information had been encrypted to mean that there was a duty of confidence in relation to the information. For example, would a person who visited an electronic bulletin board that contained

encrypted information (that was only readily available via password), be thereby placed under a duty of confidence in relation to that information? In order to answer these questions positively, it would be necessary to treat the fact that the information was encrypted as equivalent to a sign saying ‘confidential—you may not de-encrypt’. Similar questions also arise where information is embodied in a machine or a product and can only be obtained through reverse engineering. One of the few decisions to consider issues of this nature was Mars v. Teknowledge.! As we saw earlier,” this was a breach of confidence action brought in relation to encrypted information embodied in the coin-receiving and -changing mechanisms used in vending machines. The question arose as to whether a person buying a machine that contained the encrypted information was under an implied duty of confidentiality in relation to the information. In effect the question was whether a reasonable recipient would consider the fact that the information had been encrypted to mean that they were under an obligation of confidentiality in relation to the information. Applying the reasonable person test, Jacob J said that the information embodied in the machine was not obviously confidential. More specifically Jacob J said: I cannot see why the mere fact of encryption makes that which is encrypted confidential or why anyone who de-crypts something in code, should necessarily be taken to be receiving information in confidence. He will appreciate that the source of the information did not

want him to have access, but that is all.”* It is possible, however, that the circumstances of communication might be such that the reasonable confidant might assume that the information was given to them in confidence. The question of whether the fact of encryption gives rise to an implied duty of confidence is similar to the situation where someone uses other forms of technology (such as a fence) to protect the information. If this analogy is accepted, Jacob J’s reasoning here is at odds with Franklin v. Giddens. As we will see, in this

20 Carflow Products v. Linwood Securities [1996] FSR 424.

22 See above at pp. 932-3.

21 [2000] FSR 138.

23 [2000] FSR 138, 150.

OBLIGATION

OF CONFIDENCE

943

decision a duty of confidence was implied from the conduct of the defendant when he stole a branch that contained confidential genetic information from a nectarine tree in the claimant’s orchard. A subjective standard? While in most cases the courts have favoured the objective standard of the reasonableperson test, in some cases the courts have taken into account the subjective expectations of the parties. For example, in Schering Chemicals v. Falkman Shaw LJ said that an obligation of confidence would be imposed in circumstances where the information ‘is regarded by the giver and recognised by the recipient as confidential’.* In Carflow Products v. Linwood Securities’ the question arose as to whether the demonstration of a car-lock device took place in circumstances

of confidence. Jacob J

acknowledged that there were two possible approaches to determining whether an obligation arose. The court could either examine what the parties thought they were doing, or focus on what a reasonable person would have thought the parties were doing. According to Jacob J, the key difference between the two approaches is that the former takes into account the subjective unspoken views of the parties. He observed that while such subjective views would not be relevant in relation to decisions concerning the making of a contract, however because “equity looks at the conscience of the individual’, subjective views were relevant in relation to the equitable obligation of confidence. Jacob J acknowledged that on the facts of Carflow it did not matter whether the

problem was approached using a subjective or objective test. In other cases, however, the different tests (or some permutation thereof) may lead to different results. As

such, it would be helpful to have some clarification as to which of the two approaches should be applied.

3 THIRD-PARTY

RECIPIENTS

One of the most difficult issues that arises in this area of law concerns if and when parties outside an initial confider—confidant relationship will be bound by a duty of confidence.”° More specifically, if a person owing an obligation of confidence discloses confidential information to a third party, what factors determine when that third

24 Cf. De Maudsley v. Palumbo [1996] FSR 447, 458. 25 [1996] FSR 424. See J. Phillips, ‘Opportunity Knox’ (1997) 1 IPQ 134 (pointing out that De Maudsley v. Palumbo [1996] FSR 447, in preferring an objective test, is more consistent with existing authorities than Carflow Products v. Linwood [1996] FSR 424).

26 J. Stuckey, ‘The Liability of Innocent Third Parties Implicated in Another’s Breach of Confidence’ (1981) 4 University of New South Wales Law journal 73; S. Ricketson, “Confidential Information: A New Proprietary Interest?’ (1977-8) 11 Melbourne University Law Review 223, 244-5.

944

CONFIDENTIAL

INFORMATION

party will be treated as being subject to an obligation not to use or disclose the information?”” In deciding whether a third-party recipient is under a duty of confidence, the courts have said that a third party who lacks good faith is bound by an equitable obligation of confidence. In so doing the courts have rejected the suggestion that third-party liability should be decided by analogy to traditional trust rules concerning the liability of those involved in a breach of trust.?® The question of whether a thirdparty recipient is bound by a duty depends on the circumstances of the case.2? While this should be borne in mind, we will outline some of the more important factual situations that may arise. (i) An indirect recipient of the information who is aware of its confidential status

will normally be bound by a duty of confidence. In Spycatcher, Lord Keith said ‘[i]t is a general rule of law that a third party who comes into possession of confidential information which he knows to be such, may come under a duty not to pass it on to anyone else.’*° There has, thankfully, been none of the precise discussion as to levels of

knowledge that give rise to a duty, though it seems a duty should be imposed on any person who was grossly negligent in failing to know that a breach of confidence was involved.*! However, it has been said that a recipient would not be bound if he or she was careless, naive, or stupid or merely knew of an assertion that a breach of confidence had occurred.” (ii) Ifa person receives information innocently, but subsequently discovers that the information is confidential, they will be bound by a duty of confidence. For example, in English & American v. Herbert Smith,* the papers of the counsel acting for the claimants in an action pending in the Commercial Court were mistakenly sent to the solicitors for the other side, Herbert Smith. The solicitors, who were the first defendants in this case, realized the mistake but were instructed by their clients to inspect the papers. The claimant sought an interim injunction preventing the solicitors from using information derived from privileged documents.

27 Ifa third party has actively sought the information, it may be that he or she will have committed the tort of inducing breach of contract: see British Industrial Plastics v. Ferguson [1940] 1 All ER 479. 28 Valeo Vision Société Anonyme v. Flexible Lamps [1995] RPC 205; Wheatley v. Bell [1984] FSR 16. Cf. AG v. Guardian Newspapers [1987] 1 WLR 1248, 1264 per Browne-Wilkinson V-C (equitable property’); Morison v. Moat (1851) Hare 241; 68 ER 492). 29 W. Cornish, ‘Protection of Confidential Information in English Law’ (1975) 6 IIC 43,53. 30 Attorney General v. Guardian Newspapers [1990] AC 109, 260 (Lord Keith), 268 (Lord Griffiths).

31 See fn. to Art. 39 TRIPs. Note also Attorney General v. Guardian Newspapers [1990] AC 109, 281-2 (knowledge includes circumstances where the confidant has deliberately closed his eyes to the obvious) > Thomas v. Pearce [2000] FSR 718 (awareness or willingness to turn a blind eye). 32 Tbid., 721; Fraser v. Thames TV [1983] 2 All ER 10; see also Union Carbide v. Naturin [1987] FSR

538, 549. 33 Stephenson Jordan & Harrison v. MacDonald & Evans (1951) 68 RPC 190; (1952) 69 RPC 10; Hoechst v. Chemiculture [1993] FSR 270; Cadbury Schweppes v. FBI Foods [2000] FSR 491, 504 (Supreme Court of Canada). Cf. Fractionated Cane Technology v. Ruiz-Avila [1988] 7 Qd R610.

34 [1988] FSR 232.

OBLIGATION

OF CONFIDENCE

945

Browne-Wilkinson V-C granted the injunction on the ground that it did not matter whether the defendants were innocent when they received the documents, given that later use of the information was unconscionable. (iii) It seems that the courts might grant an injunction, but not damages against a bona fide purchaser.*° In Valeo Vision Société Anonyme v. Flexible Lamps*® Valeo, who designed and manufactured lights for cars, disclosed details of the design to M. M revealed details of the lights to the defendant who produced similar lights. Valeo sued the defendant for breach of confidence. Aldous J held that the information was

confidential and that despite being a bona fide purchaser the defendant was subject to a duty of confidentiality. In so doing Aldous J drew a distinction between a duty that will give rise to injunctive relief and one that would result in an award of damages. Aldous J indicated that while when deciding whether to grant injunctive relief the bona fide purchaser rule was too narrow, in order to get damages the conscience of the defendant had to be affected. On the facts, the plaintiff failed to

establish that the defendant knew that the information they used ‘was the confidential property of the plaintiff nor did it know that it should not be used without the plaintiffs consent.’*” (iv) Little attention has been given to the question of whether a third-party recipient of information is under an obligation when the information is communicated to them by a person who is not bound by an obligation of confidence. In so far as the duty may arise as a consequence of the knowledge of the defendant, it is foreseeable that an innocent party might communicate information to a third party who would be aware of the significance of the information. In some cases, the courts have been

willing to assume that a third party is bound without investigating the position of the communicator. For example, in Prince Albert v. Strange,*® it was held that a third party

who proposed to publish the catalogue of Prince Albert’s etchings was under an obligation of confidence. This was the case even though no evidence was available as to how he came by the material.*? However, this and related cases can be explained on the basis that the courts assumed that the information had been communicated by a wrongdoer.

35 Wheatley v. Bell [1984] FSR 16.

28° (1995) RPC 205, 37 [1995] RPC 205, 226. 38 (1849) 2 DeG & Sm 652; 64 ER 293 (Knight Bruce LJ); (1849) 1 Mac & G 25; 41 ER 1171 (Cottenham

LC). See also Times v. Mirror Group Newspapers [1993] EMLR 443. 39 Similarly, in Times v. Mirror Group Newspapers [1993] EMLR 443, the court assumed that the Daily Mirror came under an obligation of confidence with regard to the manuscript of Margaret Thatcher’s Diaries, even though the source of the copy was undisclosed.

946

CONFIDENTIAL INFORMATION

4 WHERE

THERE

IS NO

RELATIONSHIP

THE

PARTIES:

BETWEEN

STRANGERS

A person may come by confidential information without having it imparted to them by the confidant, or by a person owing an obligation of confidence.*° For example, a burglar might uncover confidential files, or a member of the public might find a confidential document

in the street. In some

cases, it is possible for a duty of

confidence to arise even though there is no relationship between the parties. The case law on the issue dealing with the question as to whether (and, if so, when) a stranger comes under an obligation of confidentiality is unclear. A decision of authoritative status would be of great benefit in this area. At a very general level, the courts have adopted two different approaches when deciding whether a stranger in receipt of confidential information falls under a duty of confidence. The first focuses on the conduct of the stranger in acquiring the information. Here the courts have looked at whether the stranger has acted illegally. The second line of cases focus on the question of whether the stranger knew that the information was confidential. 4.1

THE

WAY

THE

INFORMATION

WAS

OBTAINED

In some cases, the courts have focused on the conduct of the person who acquired the information. More specifically, the courts have looked at whether the stranger has acted illegally: if the stranger acted illegally he or she comes under an obligation, if the stranger acted legally he or she does not. This can be seen by contrasting two cases of telephone tapping: Malone v. Commissioner of Metropolitan Police! and Francome v.

Mirror Group Newspapers Ltd.” In the first case, the police tapped a telephone line and as a result prosecuted the claimant for handling stolen goods. The claimant sued the police for breach of confidence.*? The court held that the police did not come under an obligation of confidentiality. Megarry V-C said it ‘seems to me that a person who utters confidential information must accept the risk of any unknown overhearing that is inherent in the circumstances of communication.’ Deliberate tapping was one such risk and, as such, no obligation of confidentiality arose.*4 In contrast, in Francome v. Mirror Group Newspapers Ltd.* it was a private investigator (rather than the police) who was investigating breaches of Jockey Club rules who illegally tapped a phone conversation of a jockey. The jockey concerned sought an interim injunction to 40 G. Wei, ‘Surreptitious Takings of Confidential Information’ (1992) 12 Legal Studies 302; M. Richardson,

‘Breach of Confidence, Surreptitiously or Accidentally Obtained Information and Privacy: Theory Versus Law’ (1994) 19 Melbourne University Law Review 673.

41 [1979] 1 Ch 344. 42 [1984] 1 WLR 892. 43 Other claims were based on privacy, property, and human rights. The case prompted an application to the European Court of Human Rights— Malone yv. United Kingdom (1984) 7 EHRR 14—and the government responded to criticism therein with the Interception of Communications Act 1985.

44 [1979] 1 Ch 345, 376. 45 [1984] 1 WLR 892.

OBLIGATION

OF CONFIDENCE

947

prevent disclosure of the information. The Court of Appeal distinguished Malone and held that in these circumstances there was a serious question to be tried. Fox LJ noted

that Malone was concerned with a case of authorized tapping rather than, as with the case in hand, with illegal tapping by private persons. He also observed that ‘[i]t must be questionable whether the user of a telephone can be regarded as accepting the risk of that in the same way as, for example, he accepts the risk that his conversation may

be overheard in consequence of the accidents and imperfections of the telephone system itself.’4° The different conclusions in Francome and Malone seem to depend on a distinction between a person who obtains information lawfully—who does not come under an obligation—and a person who obtains information unlawfully, who is subject to a duty of confidence. It seems that this position needs to be refined in the light of recent decisions concerned with the question of what is meant by a person acting ‘legally’ where the information was acquired under statutory powers. While we look at this in more detail later in the chapter, it should be noted here that the courts have held that

the information may only be used for the purposes for which the powers are conferred.*’ These cases suggest that the police in Malone were under an obligation of confidentiality not to use the information for purposes other than those for which their powers existed. Use of the information in prosecuting the claimant for handling stolen goods was clearly furthering those purposes and as such was permissible. Consequently, where a stranger sets out to acquire information they come under a limited obligation when the acquisition is based on legal authority, and under a broader obligation when it is illegal.

4.2

KNOWLEDGE

OF THE

STRANGER

In a second line of cases, instead of focusing on whether the stranger acted illegally, the courts have looked at whether the stranger had knowledge that the information was confidential. In Attorney General v. Guardian (No. 2), Lord Goff said: I start with the broad general principle (which I do not intend in any way to be definitive) that a duty of confidence arises when confidential information comes to the knowledge of a person (the confidant) in circumstances where he has notice, or is held to have agreed, that

the information is confidential, with the effect that it would be just in all the circumstances that he should be precluded from disclosing the information to others ... I have expressed the circumstances in which the duty arises in broad terms, . . . to include certain situations, beloved of law teachers—where an obviously confidential document is wafted by an electric fan out of a window into a crowded street, or where an obviously confidential document, such as a private diary, is dropped in a public place, and is then picked up by a passer-by.*®

According to Lord Goff the key factor is not whether the stranger is acting illegally. 46 [1984] 1. WLR 892, 900. 47 Marcel v. Commissioner PM [1992] 2 WLR 50; Hoechst v. Chemiculture [1993] FSR 270.

48 [1990] AC 109, 281-2.

948

CONFIDENTIAL

INFORMATION

Rather, it is whether the stranger knows that the information is private or confidential. As such, the question is whether ‘anything reasonably leads the observer to realize that what he or she observes is confidential.’? This question arose in Shelley Films v. Rex Features” where the claimant, who was producer of the film Frankenstein, sought to restrain the defendant, a photographic agency, from publishing copies of a photograph of Robert De Niro, which had been taken without authority by a stranger during filming. The defendant argued that neither they nor the photographer were under a duty of confidence. Judge Mann QC held that there was a ‘serious question to be tried’. He noted that the photographer was not an invitee on the filmset and that it could be assumed that he saw the signs at the entrance to the film studios and on the filmset that said “Absolutely No Photography— All Films will be confiscated’ and ‘No Admittance— Access to Authorized Persons only’. Judge Mann QC said that it was impossible not to conclude that this might have fixed the photographer with knowledge that the plaintiff regarded the information as confidential. One of the interesting things about this decision, especially when compared with Francome, is that instead of emphasizing the illegality of the means by which the photograph was taken, the Judge focused on the fact that the photographer had knowledge that the claimant considered the images to be confidential. A similar tendency to focus on whether the stranger had knowledge about the confidential nature of the information, rather than on the means by which the information was acquired, can be seen in Hellewell v. Chief Constable of Derbyshire.>! In this case the claimant brought an action against the police for breach of confidence in revealing mugshots to the public. The case involved a simple application of the authorities, dealing with the duty owed by a statutory body who obtains information.” Under this approach, the police were under a limited duty of confidentiality not to use the mugshots other than for police purposes. However, Laws J acknow-

ledged the statement of Lord Goff in Spycatcher concerning ‘finders of information’ and added: If someone with a telephoto lens picture of another engaged in some would, in my judgement, as surely stolen a letter or diary in which the

were to private amount act was

take from a distance and with no authority a act, his subsequent disclosure of the photograph to a breach of confidence as if he had found or recounted and proceeded to publish it.°?

This dictum was, like Lord Goffs in Spycatcher, unnecessary to decide the case in hand. Nevertheless, both seem to reveal a growing use of the doctrine of confidentiality to mitigate against the absence of a law of privacy. While useful in some respects, this may cause problems, not least because Laws J’s statements are cast very generally. 49 M. Richardson, ‘Breach of Confidence, Surreptitiously or Accidentally Obtained Information and Privacy: Theory Versus Law’ (1994) 19 Melbourne University Law Review 673, 699. 50 Shelley Films v. Rex Features [1994] EMLR 134. 51 [1995] 1 WLR 804. >? Marcel v. Commissioner of Police of the Metropolis [1992] 2 WLR 50; Hoechst v. Chemiculture [1993] FSR

270.

93 [1995] 1 WLR 804, 807.

OBLIGATION

OF CONFIDENCE

949

Not only is it left unclear what amounts to a private act, but an approach of this sort might result in the imposition of liability on a commercial operator who dismantled a competitor’s product in the knowledge that their competitor regarded the product as embodying details of a secret process.*° It is in this area that retaining a single doctrine of breach of confidence poses the most problems. Either the obligation arises in limited circumstances so that privacy interests are neglected, or the obligation is cast so broadly that (desirable) competitive activity might be inhibited. It should be reiterated that knowledge that another person regards information as confidential will not always give rise to an obligation of confidence. This is because the information in question must also have the ‘necessary quality of confidence’. In Creation Records v. News Group Newspapers® Lloyd J acknowledged that merely because a well-known person tries to stop people taking photographs of them it does not follow that any picture taken in evasion or defiance of those attempts is in

breach of confidence.*” On the facts in Creation Records, the High Court granted the deviser of the artwork for the cover of an Oasis album an interim injunction restraining the Sun newspaper from publishing photographs surreptitiously taken at the claimant’s photo-shoot. This was on the ground that the Sun’s photographs were obtained in circumstances of confidentiality. In Lloyd J’s view, the situation was quite distinct from the case of photographs of a public figure in a public place. Although the photographer was lawfully at the hotel and had not been told that he should not take photographs (indeed, the taking of photographs was tolerated before the shoot began), the claimant’s evidence showed that during the shoot a tighter security regime had been imposed to prevent photographs being taken.** While Lloyd J accepted that those who were allowed to observe the scene could have described the picture in writing or made a sketch of it from memory, this did not mean that they were free to take photographs. According to the Judge to be able to record it as a photographic image is different in kind, not merely in degree, from being able to relate it verbally or even by way of a sketch. That is above all because it was in photographic form that it was intended to be preserved for the group. It is the photographic record of the scene, the result of the shoot in fact, that was to be confidential.°”

54 Presumably an act that occurs in a public place cannot be a private act: see Woodward v. Hutchins [1977] 1 WLR 760, 764. 55 However, Mars v. Teknowledge [2000] FSR 138 seems to avoid these difficulties by treating any informa-

tion obtained in this way as lacking the necessary quality of confidence. 56 [1997] EMLR 444. 57 [1997] EMLR 444, 455. One explanation for this is that such a photograph would not involve any confidential information: in contrast, in Hellewell, for example, it is not the mugshot that is confidential so much as the information conveyed by the mugshot that the plaintiff was known to the police. Likewise in the example given by Laws J in that case, the information would be that the person had participated in the particular private act. No such information is conveyed by the publication of a public act of apublic figure.

°8 [1997] EMLR 444, 455. °° Thid.

950

CONFIDENTIAL

INFORMATION

In contrast with the taking of a photograph of a public figure in a public place, the obligation appears to have arisen because the effort involved in arranging the objects with a view to taking the photographs for the album cover meant that the specific image (as opposed to its general nature) was original and hence confidential. It also arose because the photographer knew the particular purpose for which the shoot was being held.

5 EMPLOYEES As we mentioned earlier, the breach of confidence tions are imposed on an relationship, we will deal 5.1

DURING

THE

special considerations apply in relation to the application of action between employer and employee. As different obligaemployee during employment than after the employment with each separately.

COURSE

OF EMPLOYMENT

5.1.1 Express duties during employment

In many cases, the contract of employment will include express provisions dealing with the nature and scope of the duty of confidence owed by the employee to the employer. During the period of employment, the courts will enforce the express terms of the contract. Any express terms imposing a duty of confidentiality upon the employee (it is rare for an employer to be under equivalent duty) are subject to the general rules of contract. 5.1.2 Implied duties during employment While a contract may not contain express clauses imposing a duty of confidentiality

upon an employee, this does not mean that employees will not be bound by a duty of confidence. This is because in some cases the courts may imply a duty of confidence into the employment relationship. The courts have said that employees are under an implied duty of fidelity to their employers.*! The duty of fidelity will prevent employees from disclosing information and from competing with their employers. According to the Court of Appeal, The employer is entitled to the single-minded loyalty of his employee. That employee must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or

the benefit of a third party without the informed consent of his employer.”

The courts have sometimes imposed more onerous obligations on more senior 60 But note the Public Interest Disclosure Act 1998, s. 1, introducing Employment Rights Act 1996 s. 43] (agreement void in so far as it purports to preclude a worker from making a protected disclosure). 61 Robb v. Green [1895] 2 QB 315, 320; Thomas Marshall v. Guinle [1979] 1 Ch 227.

62 Attorney General v. Blake [1998] 1 All ER 833 (not considered by HL on appeal). See esp. Hivac v. Park Royal Scientific Instruments [1946] Ch 169.

OBLIGATION

employees,

primarily because

OF CONFIDENCE

of the fiduciary duty that they owe

951

to their

employer.®? 5.2

POST-EMPLOYMENT

Once the employment relationship is terminated different considerations apply. On the one hand, employers have an interest in controlling the use that an employee is able to make of information he or she acquired during the course of their employment. At the same time, this has been balanced against the fact that it would be unfair to enable employers to prohibit an employee from working in the same area again. This would effectively be the result if employers were able to control more generic skills that an employee may have gained during the course of their employment. 5.2.1 Express obligations post termination: restraint of trade In order to protect themselves, employers will normally include in their contract of employment a clause, usually referred to as a restrictive covenant, to the effect that the employee will not work in the same industry for a specified period after termination.™ While recognizing the importance of such clauses, the law also recognizes that employees should be free to make use of the personal skills, knowledge, experiences, and abilities gained in the course of their employment.” The courts have attempted to navigate these conflicting goals through the doctrine of restraint of trade.®° In essence this provides that a restrictive covenant will be struck down if the obligations imposed go beyond what is reasonably necessary to protect the employer’s interests. More specifically, a restraint of trade clause will only be enforceable if it is appropriately limited as to time,°” geographical applicability,* and the scope of activities.” The operation of the doctrine can be seen from Mont v. Mills.’”° In this case, the

defendant had been employed in the paper tissue industry for twenty years. He left the 63 Balston v. Headline Filters [1990] FSR 385. 64 Since an obligation specifically not to disclose trade secrets will rarely provide satisfactory protection: Littlewoods Organisation v. Harris [1978] 1 All ER 1026. 65 Herbert Morris v. Saxelby [1916] AC 688; Attwood v. Lamont [1920] 3 KB 571.

66 See above, pp. 275-8. The doctrine is alleged to date back to Dier’s Case (1414) 2 Hen. V 5, pl. 26, but its modern form derives from Mitchel v. Reynolds (1711) 1 P. Wms. 181 which has been described as the ‘carta’ of the law. See N. H. Moller, Voluntary Covenants in Restraint of Trade (1925) 5.

67 But in Attorney General v. Blake [2000] 3 WLR 625, 647 Lord Hobhouse said a lifelong obligation on a member of the Intelligence Service not to divulge any official information gained as a result of his employment was justified and thus not an unlawful restraint of trade. 68 Commercial Plastics v. Vincent [1964] 3 All ER 546 (in absence of geographical limitation the restraints will be read as worldwide, in which case they will usually be void); Lansing Linde v. Kerr [1991] 1 All ER 418, 426 (facts would justify restraint in western Europe only). 69 Fellowes v. Fisher [1976] QB 122, 129 (restrictive covenant purporting to restrain conveyancing clerk on one-year contract from working in ‘legal profession’ in districts of Walthamstow and Chingford for 5 years was too broad in scope, in geographical coverage and in duration). Cf. Poly Lina v. Finch [1995] FSR 751 (clause prohibiting defendant from engaging in any trade or business which was in competition with the plaintiff for one year held to be valid).

70 [1993] FSR 577.

952

CONFIDENTIAL

INFORMATION

claimant company and signed a severance agreement, under which he received a large sum of money. The agreement also said that the defendant was required not to join another company in the tissue industry for one year. The defendant failed to honour this promise and became joint managing director of a competitor, whereupon the claimant sought an injunction. The Court of Appeal held that the severance agreement was unenforceable on the basis that it was an unjustifiable restraint of trade. This was because the undertaking was not limited as regards geographical area or the nature of activities to which it applied. The court declined to construe the clause in favour of the employee: for to do so provided employers with no incentive to impose restraints in appropriately limited terms.’! Simon Brown LJ noted that the fact that the company had paid the ex-employee during the period of restraint did not prevent the agreement from being unenforceable. The law’s concern was not merely that all persons have a living. If that were the only policy, the law would permit an employer to buy restraint. Rather, he argued, that ‘[p]ublic policy clearly has regard to the public interest in competition and in the proper use of an employee’s skills.’” ‘Garden Leave’ The level of duty owed by employees to their employers differs markedly depending on whether they are employed or not.” If a company wishes to restrain an employee from entering into similar employment, the most effective mechanism is for them to retain them as an employee.” This is often done by placing employees on ‘garden leave’. This occurs where an employee remains as a paid employee for a specified period of time, during which they are not required to attend work or carry out normal duties. In contrast with post-termination provisions, ‘garden leave’ clauses are not normally subject to the doctrine of restraint of trade: they are enforceable. Even So, questions remain as to what remedy is appropriate to enforce the contract.”> In GFI Group v. Egglestone,”° where an employee was required to give twenty weeks’ notice, the court granted an injunction to prevent the employee from working for a competitor for three months after he had given notice of resignation. Here, the court was influenced by the high pay the employee received and the fact that the agreement had been negotiated between the parties (rather than imposed by the employer). Although the courts recognize the employee’s interest in exercising his skills, a ‘garden leave’ clause will be enforced if failure to do so would harm the employer. The courts have suggested that an employer can utilize both a ‘garden leave’ provision and restrictive covenant, though the existence of the ‘garden leave’ clause may be taken into account when determining the reasonableness of the restrictive covenant.” 71 [1993] FSR 577, 585. Lansing Linde v. Kerr [1991] 1 All ER 418, 429.

72 [1993] FSR 577, 587.

73 In some cases prompting an innocent employer to refuse to accept a repudiatory breach of contract by the employee: Thomas Marshall v. Guinle [1979] 1 Ch 227 (Megarry V-C). 74 Balston v. Headline Filters [1990] FSR 385, 416. > Credit Suisse Asset Management v. Armstrong [1996] ICR 882, 892-4.

76 [1994] FSR 535.

77 Credit Suisse Asset Management v. Armstrong [1996] ICR 882 (but that does not mean that there is

automatic set off of garden leave period when considering reasonableness of a post-term covenant).

OBLIGATION

OF CONFIDENCE

953

5.2.2 Implied obligations post termination In the absence of an express duty of confidence in the contract of employment, the courts may imply certain limited obligations on the use that an ex-employee can make of information acquired during the course of their employment. In a normal business context,’* the obligations imposed are primarily limited to the use that can be made of trade secrets. The classic authority on the position of ex-employees is Faccenda Chicken v. Fowler.” In this case the claimant, who sold fresh chickens from refrigerated vans,

attempted to prevent a former employee from participating in a competing venture. The claimant argued that in so doing the ex-employee was utilizing confidential information concerning the customers, prices, products sold, and so forth. As the exemployee’s contract contained no restrictive covenant, the Court of Appeal was called upon to decide the scope of implied post-termination obligations. The Court of

Appeal held that an ex-employee’s obligations were confined to ‘trade secrets’, which includes things such as chemical formulae,*° secret manufacturing process,*! designs and special methods of construction,” and ‘other information of a sufficiently high degree of confidentiality to amount to a trade secret’.®? In Faccenda, the Court of Appeal said that in deciding whether information amounts to a trade secret, the court should consider four factors. The first is the

nature of the employment. Under this heading the court would consider things such as how near the employee is to the ‘inner counsel’ of the employer. This is because information only made available to trusted employees is more likely to constitute a trade secret than information disclosed to shop-floor workers. The second factor to consider is the nature of the information. To be capable of protection the information must be defined with some degree of precision. Protection will not be available for general business methods and practices.** It has been said that just because the information is technical does not mean that it relates to trade secrets. If an employee is an expert or specialist, their general skill and knowledge might extend into the field of formulae, blends, and chemical processes.® The third factor to consider is whether the

employer impressed on the employee the confidentiality of the information. If information was specifically designated as a trade secret by the employer, it is more likely to be treated as such by the courts. However, the courts have noted that ‘it would be unrealistic to expect a small and informal organization to adopt the same business 78 Cf. Attorney General v. Blake [1998] 1 All ER 833 (in secret service context duty of confidence survives as long as the information remains confidential).

79 Faccenda Chicken v. Fowler [1987] 1 Ch 117. 80 Amber Size & Chemical Co. v. Menzel [1913] 2 Ch 239.

81 Herbert Morris v. Saxelby [1916] AC 688, 701. 82 Reid and Sigrist v. Moss and Mechanism (1932) 49 RPC 461. 83° Printers & Finishers v. Holloway [1965] RPC 239, 253; Faccenda Chicken v. Fowler [1987] 1 Ch 117, 136. 84 Lancashire Fire v. S. & A. Lyons [1996] FSR 629, 668; Aveley/Cybervox v. Boman and Sign Electronic Signal [1975] FSR 139; Searle & Co. v. Celltech [1982| FSR 92.

85 Ocular Sciences v. Aspect Vision Care [1997] RPC 289, 385 Laddie J (court should guard against imposing more stringent restraints on more technical employees).

954

CONFIDENTIAL INFORMATION

disciplines as a larger and more bureaucratic concern.’** In the case of small businesses, the courts may treat information as a trade secret even though the employer did not identify it as such. The fourth and final consideration taken into account when assessing whether information is a trade secret is whether the information can be easily isolated from other information (such as the employee’s own stock of knowledge, skill, and expertise) which the employee is free to use or disclose.®” One issue which remains undecided is whether the obligations implied into an employment contract for the post-termination period changes when an ex-employee intends to disclose rather than use the information. Because the policy considerations that restrict implied, post-termination obligations to trade secrets aim to promote the mobility of labour and socially productive use of skills it seems that the courts will be less generous to an ex-employee who sells information or exposes it gratuitously.*®

6 STATUTORY

OBLIGATIONS

AND

PUBLIC

BODIES

Obligations of confidentiality can be imposed by statute.*® Where a statute permits a public body to acquire information, the statutory body is under a duty of confidentiality only to use the information to satisfy the statutory purpose. In Marcel v. Commissioner of Police of the Metropolis,” as part of a criminal investigation concerning a property development in the Docklands, the police obtained information from the claimant under powers conferred by the 1984 Police and Criminal Evidence Act. The police disclosed the information to a third party, who was bringing a civil action related to the property developments against Marcel (the claimant in this case). The claimant objected to the police’s revelation of the information. The Court of Appeal held that public officers who exercise such powers for public purposes come under a duty of confidentiality which prevents them from using the information for other purposes without the consent of the confider. The powers to seize and retain are conferred for the better performance of public functions by public bodies and cannot be used to take information available to private individuals for their private purposes. The purpose for which the information can be used is a matter of statutory interpretation. As Sir Christopher Slade explained in Marcel, the only purposes for which the information could be used were those contemplated by the relevant legislation. However, on the facts these were defined broadly as including purposes ‘reasonably 86 Lancashire Fire v. S. & A. Lyons [1996] FSR 629, 668. 87 Printers and Finishers v. Holloway [1965] RPC 239.

88 Faccenda Chicken v. Fowler [1986] 3 WLR 288, 301; United Indigo Chemical Co. Ltd. v. Robinson (1932) 49 RPC 178, 187.

89 These may be expressly stated in the statute, as for example in the Trade Descriptions Act 1968, s. 29; Consumer Credit Act 1974, s. 174; Building Societies Act 1986, s. 53; Competition Act 1998, s. 55 (each making disclosure of information gained using specified powers a criminal offence). 90 [1992] 2 WLR 50; Hellewell v. Chief Constable ofDerbyshire [1995] 1 WLR 804; Bunn v. BBC [1998] 3 All ERD O2 ROD0:

OBLIGATION

OF CONFIDENCE

955

incidental’ to the investigation and prosecution of crime: matters that he was happy to label as ‘police purposes’. Another example of the obligation of confidence that may be imposed on a statutory body is provided by Hoechst v. Chemiculture.?' Here, Morritt J took a broad view of the purpose of the powers conferred by the 1985 Food and Environmental Protection Act. Using these powers, the Health and Safety Executive obtained information from the defendant. The Executive subsequently disclosed the information to the claimant who, in turn, used the information in support of an Anton Piller application as regards trade mark infringement against the defendants.”* Morritt J recognized that the Health and Safety Executive was under an obligation of confidentiality. However, he took the view that the claimant’s action for trade mark infringement fulfilled similar purposes to the Act. This was because the claimant had been licensed to sell the herbicide by the Health and Safety Executive and the containers it used had been approved. The defendant, who had not been licensed to use the herbicide, was using the claimant’s mark ‘Cheetah’ on different containers from those of the claimant. 91 [1993] FSR 270. Note also, R v. Licensing Authority, ex parte Smith Kline & French Laboratories Ltd. [1989] FSR 440, 446.

92 See below at pp. 989-90 for further explanation as to Anton Piller/seizure orders.

45 BREACH, DEFENCES, REMEDIES

AND

1 INTRODUCTION In this chapter, we complete our examination of the breach of confidence action. After looking at the third factor that a claimant must show to sustain an action, namely, that the obligation of confidence has been breached, we look at the defences that a defendant may rely upon to escape liability. Finally, we look at the remedies available where a duty of confidence has been breached.

2 HAS THE OBLIGATION OF CONFIDENCE BREACHED?

BEEN

The third and final factor that must be shown to establish breach of confidence is that

the obligation of confidence has been breached.

2.1

THE

SCOPE

OF THE

OBLIGATION

In order to determine whether the duty of confidence has been breached it is first necessary to determine the scope of the obligation. At its most general, the duty of confidence prohibits the use and disclosure of the confidential information. While the scope of the obligation may restrict use and disclosure, it does not apply to the acquisition of information.’ This may mean that British law fails to comply with Article 39 of TRIPs which speaks of the disclosure, acquisition, or use of information. While the scope of the action potentially extends to any use or disclosure of the information, the scope of the obligations that are actually imposed upon an individual always depends on the facts of the case. In some circumstances, the obligation may provide that the confidential information should not be used or disclosed in any 1 See also R v. Layton (The Times, 3 Mar.

1993) (industrial espionage not a crime). See V. Tunkel,

‘Industrial espionage: What can the law do?’ [1993] Denning Law Journal 99; Law Commission Consultation

Paper No. 150, Pt. VII.

BREACH,

DEFENCES,

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957

circumstances. In other situations, the confidant may only use the information for limited purposes, or for a limited period of time. Despite its importance, the question of how the scope of the obligation is determined has received very little attention. Perhaps the most straightforward situation is where the obligation arises as a result of an express term in a contract or an express obligation in equity.’ In these situations, the scope of the obligation depends on the way the relevant provisions are interpreted. The task of determining the scope of the obligation becomes more difficult where the obligation is implied into a contract or imposed by equity. Presumably, in these cases the scope of the obligation would depend on the views of the reasonable person in the circumstances.

One area that warrants special attention is where the scope of the obligation arises via the so-called ‘limited purpose test’? As we saw earlier, where information is imparted for a limited purpose, this may give rise to an obligation of confidence. Where information is supplied for a specific purpose, one can readily infer that the information should not be used for another purpose. In these circumstances, if the information is used for any purpose other than the limited one for which the information was imparted there may be a breach. In many cases, it will be clear from the circumstances that the confidant actually knew that the information being disclosed to them was only to be used for a restricted purpose. In other cases, the scope of the obligation is determined by the objective standard of what the confidant ought to have known. This can be seen from the Australian decision of Smith Kline & French v. Department of Community Health.’ In this case the pharmaceutical company SK&F applied to the Australian Department of Community Services and Health for permission to market certain drugs. As part of the application process, SK&F supplied the Department with information concerning the drug. The Department of Community Services later proposed to use that information to decide whether it should authorize a different company to sell a related drug. SK&F argued that in so doing the Department had breached the duty of confidence they owed to them. The reason for this was that SK&F had only disclosed the information to the Department for one specific purpose: namely, to enable their drug to be approved. The court refused the claimant’s application for an injunction. The Federal Court said that the scope of the obligation was not to be determined by the subjective views of the confider (here SK&EF). Instead, it was to decided by the objective standard of what the confidant knew or ought reasonably to have known in the circumstances. As such, the question to be considered was whether the relevant officers of the Department ought to have known that the data furnished by SK&F was disclosed for a limited purpose (thus excluding the practice of the Department of using the data to evaluate other applications). 2 See Gurry, 116. 3 See aboveat pp. 941-2. 4 [1990] FSR 617, 647; 20 IPR 643. For the equivalent UK decision, see R v. Licensing Authority, ex parte Smith Kline & French Laboratories [1989] FSR 440, 446 (obligation of confidence interpreted as of limited

scope).

958

CONFIDENTIAL INFORMATION

In so doing it was suggested that a number of factors should be taken into account when determining the scope of the obligation. These include whether the information was supplied gratuitously or for a consideration; whether there were any past practices that gave rise to an understanding that the use was limited; how sensitive the informa-

tion was; whether the confider had any interest in the purpose for which the information was to be used; and whether the confider expressly warned the confidant against a particular disclosure or use of the information. On the facts, the Federal Court held that the scope of the obligation did not restrict the Department’s use of the information to the SK&F application. Two factors influenced the court in deciding that the equitable obligation had not been breached. The first was that previous practices (SK&F themselves had submitted latter applications where the Department relied upon information supplied earlier by SK&F) meant that ‘it went without saying that the Department would look back at data that had already been submitted.” The second factor was that the court stressed that in determining the scope of the obligation, it was necessary to ‘have regard to the effect of the legal framework within which the parties were dealing.’ The court added that it would ‘be slow to attribute to a regulatory authority knowledge that a party dealing with it expected it to act in a manner which would inhibit it in the exercise of its legal powers and obligations.” The question of the way in which the scope of the obligation should be determined was also considered by the Court of Appeal in Source Informatics. In this case Source collected information about doctors’ prescribing habits and patterns, which it then sold to pharmaceutical companies so that they could market their products more effectively. In return for a fee, pharmacists collated the relevant information from the prescription forms that had been completed by doctors and forwarded it to Source. Importantly, the information sent to Source did not include the name of the patient. The Department of Health issued a policy document that said that this process amounted to a breach of patient confidentiality. Source brought an action for judicial review challenging the Department’s policy. In particular, they argued ‘that disclosure by doctors or pharmacists to a third party of anonymous information (that is information from which the identity of the patients may not be determined), does not constitute a breach of confidentiality.’ At first instance, the Department’s policy was upheld. However, the Court of Appeal overturned the decision.’ Simon Brown LJ began by noting that while the reasonable person test was useful in determining whether there is a duty of confidence, it did not give guidance as to the scope of the obligation of confidentiality. In considering how the scope of the obligation was to be determined Simon Brown LJ said that ‘the touchstone by which to judge the scope of [the confidant’s] duty and whether or not it has been fulfilled or breached is his own conscience, no more and no less.’ On the facts this meant it was > [1990] FSR 617, 646. 6 [1990] FSR 617, 647. 7 Rv. Department of Health, ex parte Source Informatics [2000] 1 All ER 786 (CA).

BREACH,

DEFENCES,

AND

REMEDIES

959

necessary to ask ‘would a reasonable pharmacist’s conscience be troubled by the proposed use to be made of patients’ prescriptions? Would he think that by entering Source’s scheme he was breaking his customers’ confidence, making unconscientious use of the information they provide?’® If the language used here is stripped bare, the test proposed is the same objective standard as put forward in Smith Kline & French. Given this, it would be reasonable to assume that Simon Brown LJ would have then

gone on to consider what the reasonable pharmacist knew or ought reasonably to have known in the circumstances.’ Instead of adopting such an approach, Simon Brown LJ turned to focus on the type of information in question. In particular he said that in relation to personal information, ‘the concern of the law is to protect the confider’s personal privacy.’ Simon Brown LJ went on to say that the ‘patient [has] no property in the information and no right to control its use provided only and always that his privacy is not put at risk.’!° Using the language of rights, the court held that the scope of the obligation was limited to uses that would affect the confider’s personal privacy. On the facts, the Court of Appeal held that as the information had been used anonymously, the patient’s privacy was safeguarded. The reasonable pharmacist’s conscience ought not to have been troubled. As such, there was no breach of confidence. Despite the gesture towards the use of an objective standard of the reasonable pharmacist, the Court of Appeal seemed to rely more on the a priori language of rights (the patient’s right of privacy) than on what a reasonable pharmacist would have concluded from the circumstances."! One area where problems may arise is where a number of people jointly generate information and one party later wants to develop it, but the others do not. For the most part this question is decided in terms of the nature of the relationship between the parties. This can be seen in Murray v. Yorkshire Fund Managers.'* In this case, a group of businessmen (including the claimant) developed a plan to take over an ailing

business. While the financial backers were happy with the remainder of the team, they refused to work with the claimant. The claimant brought an action for breach of confidence arguing that confidential information was disclosed to the defendant for the limited purpose of deciding whether the financier should invest in the venture disclosed in the business plan.'’ Rejecting this approach, Nourse LJ observed that there had never been a binding agreement that all the members would continue to participate in the project, so that any of them could have withdrawn. He therefore concluded that the confidential information came into being for the purpose of 8 Tbid., 796 (CA). 9 SK & F v.Department of Community Services and Health (1991) 99 ALR 679, 691. Followed in R v. Department of Health, ex parte Source Informatics [2000] 1 All ER 786, 793 (CA). 10 Tbid., 797 (CA). 11 The Court of Appeal may have reached the same

conclusion

if they looked at the conclusions

a

reasonable pharmacist would have reached from the circumstances.

12 [1998] 1 WLR 951. 13 In Murray v. Yorkshire Fund Managers [1998] 1 WLR 951, 960 Schiemann LJ observed that ‘[I]nsofar as [the plaintiff] submitted that the recipient of confidential information is not ever entitled to use it for his own

benefit, that submission is clearly too wide.’

960

CONFIDENTIAL

INFORMATION

facilitating the project and was best viewed as ‘an adjunct of a relationship’. It followed that when the claimant was excluded from the relationship, he lost the ability to control how the information was used. The Court of Appeal decision should not be taken to be endorsing a view that one of several ‘owners’ of confidential information may use or exploit that information without the approval of the other ‘“co-owners’.!4 Such a rule would raise complicated questions about who generated and contributed what information, and when such information came to be ‘co-owned’. Moreover, if the rule was applied for example to marital secrets, it would be a licence to ‘kiss and tell’. Rather, the Court of Appeal

appears to have been attempting to produce a solution based on the expectations of the parties. This is also a sensible approach, in that if a different conclusion had been reached, it would have led to the unacceptable position where one member of a team could prohibit the remaining members from using the information. If an individual member of a team has problems with the way jointly developed information is to be used, they should deal with it contractually at the outset of the arrangement. 2.2

HAS

THE

OBLIGATION

BEEN

BREACHED?

Once the scope of the obligation has been ascertained, it is then possible to consider whether the obligation has been breached. This is primarily a factual question. Before looking at this in more detail, it is important to note three things. 2.2.1

Derivation

The first is that in order for a breach of confidence to occur, the information used by

the defendant must have been derived from the confider’s information and not from some other source. If the information has been independently generated, there is no breach. In CMI-Centers v. Phytopharm, Laddie J noted that there are three ways of proving that a defendant has used the confidential information.'5

(1) The first is to show direct evidence of derivation. This would stem, for example, from an employee of the defendant who had seen the information being copied and then used. (2) The second way of proving derivation is indirect. For example, if the protected information contained a ‘significant fingerprint’,!© and the defendant’s use bears the same fingerprint, the court will infer that the defendant derived its product (etc.) from the claimant. For example, the defendant’s product may have dimensions, a design, composition, or behaviour which is only to be found in the claimant’s and which is consistent with the use of the information '4 Cf. Heyl-Dia v. Edmunds (1899) 81 LT 579 (drawing analogy between co-ownership of trade secrets and co-ownership of patent). ' CMI-Centers forMedical Innovation v. Phytopharm [1999] FSR 235, 257-8. 16 Ibid. Berkeley Administration v. McClelland [1990] FSR 505, 528 the judge was not satisfied that associate of ex-employees’ figures were so similar to the claimant’s that they must have been derived.

BREACH,

DEFENCES,

AND

REMEDIES

961

and inconsistent with use of non-contaminated sources. Laddie J also said that

it may be possible to show that the defendant has gone to all the same suppliers and customers as the claimant and that it would be ‘highly unlikely that the same group would have been approached had the defendant been working from uncontaminated sources.”!” (3) Thirdly, a claimant may be able to ‘persuade the court that the defendant could not have got to the position they have with the speed he has had he simply started from legitimate sources and worked everything out for himself.’® 2.2.2 The defendant’s state of mind

The second general point to note is that the defendant’s state of mind is not relevant when determining breach. There is no need for a claimant to show that the breach was conscious or deliberate. Thus, it does not matter if the defendant acted in good faith, did not know that the information was confidential, or used the information accidentally!’ or subconsciously.”° 2.2.3 Breach and damage? The third point to note is that it remains unclear whether for a disclosure to be actionable, a claimant must show that he or she was harmed by the disclosure. That is, the question has arisen as to whether damage is an essential part of the action. The way this question is answered depends on the type of information in question. It also depends on how ‘damage’ and ‘harm’ are defined.”! In the case of government secrets the Crown must demonstrate a public interest in restraining disclosure.” In Attorney General v. Guardian (No. 2),” Lord Keith refused the government’s claim to an injunction on the ground that it was necessary for the government to prove damage from the continued publication of Spycatcher, and it could prove none. While there has been little discussion of this issue in other areas, it seems that is only necessary to show harm in relation to government secrets. In the case of personal secrets, however, it seems that there is no need to prove damage. For example, in Spycatcher Lord Keith took the view that there is no need to prove detriment, so that a person ought to be able to prevent a breach of a personal confidence which would show him up in a good light, for example one which revealed that the confider had given large sums to charity.** In another case, where a hospital employee disclosed 17 CMI-Centers for Medical Innovation v. Phytopharm [1999] FSR 235, 258; Talbot v. General Television Corp. [1981] RPC 1, 17. 18 CMI-Centers forMedical Innovation v. Phytopharm [1999] FSR 235, 257-8.

19 A confidant cannot escape liability by arguing that the disclosure was accidental: Weld-Blundell v. Stephens |1919] 1 KB 520. 20 Seager v. Copydex [1967] 2 All ER 415; Talbot v. General Television Corp. [1981] RPC 1, 17. 21 Attorney General v. Guardian Newspapers [1990] AC 109, 281-2 (Lord Goff). 22 Lord Advocate v. The Scotsman Publications Ltd. [1989] FSR 580.

23 Attorney General v. Guardian Newspapers [1990] AC 109, 260 (Lord Keith).

24 Tbid., 256; Coco v. A. N. Clark [1969] RPC 41.

962

CONFIDENTIAL

INFORMATION

personal information relating to a colleague,”° Rose J held that neither detriment nor

potential detriment in the use of the information was necessary. In these circumstances, detriment occurred because the records were leaked. It was also recently said in relation to commercial information that detriment was ‘not an essential constituent of a claim for a breach of confidence’. The Court of Appeal added that if detriment is a requirement the diversion of business opportunities could amount to a detriment to the person imparting the confidential information.”° Has the confidential information been misused? For the most part, the question of whether confidential information has been misused is relatively straightforward. Thus, if someone who is given an unpublished manuscript in confidence is told not to use or disclose it and they publish the manuscript, they will be in breach. Having said that, there are a number of areas that are unclear

which warrant attention. Where the information used or disclosed is different Where the information used or disclosed by the defendant is identical (or very similar) to the confidential information, few problems arise in determining breach. If the action were limited to identical uses, it would enable a defendant to avoid liability by

changing the information slightly. To ensure that this does not occur, the law has long recognized that the information used or disclosed by the defendant need not be identical to the confidential information. It is clear, for example, that the information

can appear in another format and still breach.. Thus, a change of language or a product built to a plan may be actionable. As is the case with all forms of intellectual property, the difficult question is determining how different the information can be and there still be a breach. Here the courts need to consider both the interests of the confider as well as the interests of the person making the disclosure. It seems clear that the way this question is answered will change depending on the nature of the information in question. Thus where the information is personal in nature, it seems that the level of ‘similarity’ required need not be great. Here, what matters is the substance of the message. In the case of technical trade secrets, however, in order to avoid hampering competition, the courts may be less willing to construe the scope of protection as broadly.

Partial uses One situation where questions about the similarity of the information arise is where the defendant only uses part of the confidential information. In this situation, the information ultimately used is different from the information that was originally disclosed by the claimant. The case law has not considered this issue in much detail. It seems, however, that the answer will vary with the circumstances of the case. If the

claimant’s confidential information is the product of a lot of work, a defendant might

25 X Health Authority v. Y [1988] RPC 379, 391-2. 26 Federal Bank of the Middle East v. Hadkinson [2000] 2 All ER 395, 413-14,

BREACH,

DEFENCES,

AND

REMEDIES

963

infringe if they use a part of the information.’” However, if the confidential information was the product of very little effort, it is likely that there will only be a breach of confidence if all (or most) of the information was used. An approach of this nature was supported by the Court of Appeal in Source Informatics when Simon Brown LJ agreed with the comment that ‘a confidant will be liable for breach of his duty if he misuses only part of the confidential information which has been disclosed to him, provided that the misuse relates to a material part of the information.’ The question of whether partial use of information could constitute a breach was

considered in De Maudsley v. Palumbo.” As we saw earlier,*® this was a breach of confidence action brought in relation to an idea for a nightclub (which was rejected because the information was too vague). The court suggested that to breach the defendant would have needed to have used substantially the same idea. The defendant had only adopted two of the five features of the claimant’s idea for a nightclub (namely that the club was to be open all night and have separate dancing areas). Knox J held that (in these circumstances) partial use would not be sufficient to constitute an unauthorized use for the purposes of breach of confidence. The judge also took into account that the defendant had added a number of important features, such as the idea that the club would not sell alcohol and that admission be limited to those over 21.

Where the defendant alters the confidential information Another situation where questions about the nature of the breach arise is where the defendant adds to or alters the confidential information. In these cases, the informa-

tion ultimately used or disclosed is different from the information that was originally disclosed by the claimant. In Ocular Sciences, Laddie J took the view that it was a

question of fact whether the use of a derived product should be treated as a use of the information employed in its creation.*' He said, It is not every derived product, process or business which should be treated as a camouflaged embodiment of the confidential information and not all ongoing exploitation of such products, processes or business should be treated as continued use of the information. It must be a matter of degree whether the extent and importance of the use of the confidential information is such that continued exploitation of the derived matter should be viewed as continued use of the information.”

It seems that similar reasoning would apply in other situations where the information used by the defendant is different from the information that was originally disclosed by the claimant. Following similar logic, the courts have held that information about 27 Amber Size v. Menzel [1913] 2 Ch 239, 248 (‘material part of the plaintiff's secret method’). 28 Gurry, 258, quoted with approval in R v. Dept. of Health, ex parte Source Informatics [2000] 1 All ER 786, 796 (CA).

29 [1996] FSR 447. 30 See above at pp. 926, 927. 31 [1997] RPC 289,

32 [1997] RPC 289, 404.

964

CONFIDENTIAL INFORMATION

etchings was replicated when it appeared in a catalogue containing descriptions of those etchings.» In another case, it was held that information about the processes for making sausage casings was used by the importation of sausage casings which had been bought from a manufacturer who had wrongfully used that information.*4 However, it has been held that the use of a confidential computer program did not justify broader relief relating to the defendant’s business that had benefited from previous use of the program. The problem here was that there was no evidence that the program made any significant contribution to the business.*° Non-action One question that has yet to be considered is whether non-action amounts to a use. Would it be a breach of confidence if on the strength of confidential information a person decided not to act in a particular way? For example, if someone was told confidential information that showed that the value of a building that they were planning to buy was about to decrease, would they be liable for breach if on the basis of the information they decided not to buy the building? While this issue has not been addressed directly, Lord Hoffmann noted in relation to the 1984 Data Protection Act that a ‘person who refrains from entering a field with a notice saying “Beware of the Bull” is using the information obtained from the notice.’°° Whether similar reasoning would be used in relation to breach of confidence is unclear. If the courts were willing to treat failure to act as an actionable use, it would be necessary for a claimant to demonstrate that the defendant had previously set upon a particular course of conduct from which they subsequently withdrew. In the example above, a claimant would need to show that the defendant had set out to purchase the building and that the reason why they subsequently decided not to purchase it was because of the confidential information and not some other reason.

3 DEFENCES Once it is established that a defendant has breached their obligation of confidentiality, the only way they can escape liability is if they can show that they fall within one of the defences which are available to them. These include consent or authorization to use the information, disclosure in the public interest, as well as a number of other equitable and statutory immunities. We examine these in turn. :

33. Prince Albert v. Strange (1849) 2 DeG & Sm 652; 64 ER 293 (Knight Bruce LJ); (1849) 1 Mac & G25; 41 ER 1171 (Cottenham LC).

34 Union Carbide Corp. v. Naturin Ltd. [1987] FSR 538, 547. 35 Ocular Sciences v. Aspect Vision [1997] RPC 289, 403.

36 Rv. Brown (Gregory) [1996] AC 543.

BREACH,

3.1

CONSENT

DEFENCES,

AND

REMEDIES

965

OR AUTHORIZATION

If a defendant is able to show that the claimant consented to or authorized the use of the information, they will be exempt from breach. Consent to the use or disclosure of information can arise through an express licence, or from a release from liability. An express licence might be contractual in nature, as with a technology-licensing agreement,” or gratuitous.** Consent or authorization might also be implied from the circumstances. The courts have suggested that special considerations apply in relation to consent given in relation to medical information.

3.2

PUBLIC

INTEREST

DEFENCE

The most important defence available to a defendant is the public interest defence. This provides defendants with the opportunity to escape liability for breach if they can establish that the disclosure is justified in the public interest. The origin of the

defence lies in the dicta of Wood V-C in the 1856 decision of Gartside v. Outram.” In that case the claimant, who carried on business as woolbrokers, brought an action to restrain the defendant, an ex-employee, from communicating information about their business dealings. The defendant asserted that the claimant had been defrauding its customers using falsified business records. Wood V-C held that if the defendant made out the case pleaded by him, he would have ‘a very good case for resisting this injunction’.*° He said that: there is no confidence as to the disclosure of iniquity. You cannot make me the confidant of a crime or a fraud, and be entitled to close up my lips upon any secret which you have the audacity to disclose to me relating to any fraudulent intention on your part: such a confidence cannot exist.*!

Although Wood V-C’s comments suggest that the public interest is not so much a defence as a reason why the court will not recognize an obligation of confidence in the first place, case law since the 1960s has treated public interest as a defence in its own right. For example, in Initial Services v. Putterill’? the defendant had been employed as a sales manager by the claimant company, a firm of launderers. The defendant resigned and revealed documents to the Daily Mail exposing the claimant’s pricefixing. After the Daily Mail published articles about the price-fixing, the claimant 37 One question which has proved to be problematic is that of determining the position of the parties when the agreement comes to an end: Torrington Manufacturing Co. v. Smith [1966] RPC 285 (once agreement terminated there was no right to continue to use the confidential information); Regina Glass Fibre v. Schuller [1972] RPC 229 (continued right to use information even after licence agreement terminated). 38 C v, C [1946] 1 All ER 562 (doctor did not breach confidence when patient asked him to reveal

information about her venereal disease to third party). 39 (1856) 26 LJ Ch 113; 5 WR 35; 3 Jur (NS) 39, 28 LT (OS) 120. The judgment was delivered ex tempore

and the reports vary.

40 26 LJ (NS)Ch 113, 116. 41 26 LJ (NS) Ch 113, 114. 42 [1968] 1 QB 396.

966

CONFIDENTIAL

INFORMATION

brought an action for breach of confidence. In response, the ex-employee argued that the disclosure was in the public interest because it revealed that the claimants were parties to a price-fixing agreement contrary to the 1956 Restrictive Trade Practices Act. The claimant’s action failed. Salmon and Winn LJJ applied the iniquity rule, but widened it to include improper trade practices. This was on the ground that ‘what was iniquity in 1856 differed from what was iniquity in 1967.’*? Lord Denning suggested a different test altogether. This was that the defence was not limited to crime or fraud. Instead, it covered any misconduct of such a nature that it is in the public interest to disclose.“ Lord Denning reasserted this view in Fraser v. Evans,*® when he said that

iniquity is merely an example of a ‘just cause or excuse’ for breaking a breach of confidence. More recently, the courts have incorporated the generalized public interest defence into a balancing process. For example, in Spycatcher, Lord Goff explained that [A]lthough the basis of the law’s protection of confidence is a public interest that confidences should be preserved and protected by law, nevertheless that public interest may be outweighed by some other countervailing public interest which favours disclosure.*®

The tendency of British courts to treat matters of public interest as a general defence was criticized by Gummow J in the Federal Court of Australia on the basis

that it was ‘picturesque but somewhat imprecise’.“” He argued that Gartside v. Outram did not establish a defence. Instead, GummowJ said that it was better explained either

as a case where the contractual obligation implied by the court did not extend to the information concerned, or where the court withheld equitable relief on the grounds of ‘unclean hands’. In Smith Kline & French v. Department of Community Health, GummovwJ continued to criticize the English public interest defence on the basis that it had been constructed out of inadequate historical and doctrinal materials. Moreover, it was ‘not so much a rule of law as an invitation to judicial idiosyncrasy’. In

contrast, Gummow J asserted that equitable principles are best developed by reference to what conscionable behaviour demands of the defendant. Whatever validity Gummow J’s criticisms may have, it is clear that where a defendant discloses information in the public interest that British law provides them with a possible defence to escape liability. Having said that, the Court of Appeal recently cited Gummow J’s comments about the defence being a call to ‘judicial idiosyncrasy’ as a reason for confining the public interest defence within strict limits.*° 3.2.1 What is the public interest?

While it is impossible to delimit the types of circumstances in which a particular 43 [1968] 1 QB 396, 410. 44 [1968] 1 QB 396, 405.

4 [1969] 1 QB 349. 46 *” 48 ?

Attorney General v. Guardian Newspapers [1990] AC 109, 282. See also Lord Griffiths at 269. Corrs Pavey Whiting & Byrne v. Collector of Customs (Vic) (1987) 14 FCR 434, 451-8 (FCA). [1990] FSR 617, 663. Rv, Department of Health, ex parte Source Informatics [2000] 1 All ER 786, 800 (CA).

BREACH,

DEFENCES,

AND

REMEDIES

967

disclosure will be in the public interest, a number of different factors are taken into

account when deciding whether the disclosure is in the public interest. (1) The nature of the information. The most important factor to be considered will be

the nature of the information. If a disclosure relates to misdeeds of a serious nature and importance to the country, then it is likely to be justified as being ‘in the public interest’.°! Disclosure relating to a criminal offence, a failure to comply with a legal obligation, a miscarriage of justice, behaviour likely to endanger health or safety, or damage the environment are obvious examples of cases where disclosure might be justified. Although the public interest defence is defined broadly, it does not permit the unauthorized disclosure of information that is merely ‘interesting to the public’. In this context, the law draws a distinction between matters which affect the moral, political, medical, or material welfare of the public (or a section thereof), and the public’s entertainment, curiosity, or amusement.

Having said this, in an exceptional case, the Court of Appeal held that disclosure of the private activities of a group of pop stars (including Tom Jones and Engelbert Humperdink) by their former press agent was justifiable where they had falsely represented to the public that they were clean-living.*? According to Lord Denning if the image which a public figure fostered was ‘not a true image, it is in the public interest that it should be corrected.’ This was because in these cases ‘it is a question of

balancing the public interest in maintaining the confidence against the public interest in knowing the truth.’ (ii) The consequences of non-disclosure. A disclosure may be justified as being in the public interest, even though it does not reveal wrongful behaviour or misconduct,” for example where the disclosure will protect public health or safety.°° In Lion Laboratories the court held that it was legitimate for the press to disclose confidential internal papers that suggested that an alcohol-measuring machine was faulty. (The machine was used to test whether drivers were guilty of driving under the influence of alcohol.) The disclosure was justified because if the information remained concealed, the life and liberty of an unascertainable number of persons might be affected. Revelation in the press was justified because disclosure to the police might not have been adequate.” 50 These factors are reflected in the provisions of the Public Interest Disclosure Act 1998, which protects employees from action by employers as regards ‘protected disclosures’. 51 Beloff v. Pressdram [1973] 1 All ER 24, 260. This is not to say that iniquity always justifies disclosure: Bunn v. BBC [1998] FSR 70.

>? Lion Laboratories v. Evans [1985] QB 526, 537. 53 Woodward v. Hutchins [1977] 1 WLR 760, 763.

4 Tbid., 764. 55 Malone v. Metropolitan Police Commissioner [1979] Ch 344, 362, per Megarry V-C. (‘There may be cases where there is no misconduct or misdeed but yet there is a just cause or excuse for breaking confidence.’) 56 Hubbard v. Vosper [1972] 2 QB 84.

57 See also W v. Egdell [1990] 2 WLR 47; Schering Chemicals v. Falkman [1982] 1 QB 1 (Shaw LJ would allow disclosure where the subject matter ‘is something which is inimical to the public interest or threatens public safety’).

968

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INFORMATION

(iii) The type of obligation. Another factor that is likely to play a significant role in determining whether a disclosure is permissible is the type of obligation involved. It seems likely that the courts will treat some obligations as more absolute than others. For example, a disclosure by a priest or doctor could rarely be justified in the public interest.”* In a rare case, the Court of Appeal held that a psychiatrist was justified in breaching the obligation of confidence he owed to a patient who had been interned under the Mental Health Act, by alerting the Home Office to the patient’s interests in firearms and explosives. This was vital information, directly relevant to public safety.°°

(iv) The beliefs of the confidant. Because the public interest defence covers any situation where there is ‘just cause or excuse’ for breaking a confidence, the court is not confined to considering whether the information is in fact real misconduct. Instead, the court can also take into account whether the confidant believed on reasonable grounds that revelation was required in the public interest. That is, according to the broader ‘just cause’ characterization of the defence, a disclosure may be justified where the confidant reasonably believed they were disclosing an iniquity, even if it turns out that they were wrong.°! For example, in Malone v. Metropolitan Police Commissioner” it was held that if the police owed a duty of confidentiality, nevertheless there was a reasonable suspicion of iniquity such as to justify the disclosure.

(v) The party to whom the information was disclosed. Another factor that will influence whether a disclosure is justified is the body to whom the information is disclosed.® It may be legitimate to disclose information to one body, but not another. For example, while a disclosure is likely to be justified if it is made to a responsible body, it is less likely to be justified if it is disclosed to the general public via a newspaper. As the Court of Appeal emphasized in Lion Laboratories, newspapers must

take special care not to confuse the public interest with their own interest in increasing circulation. Thus, if the confidence relates to a crime, for a disclosure to be justified, it should normally be made to the police. In Francome v. Mirror Group Newspapers, an interim injunction was granted preventing disclosure in a newspaper of conversations which were alleged to reveal that Johnny Francome had breached Jockey Club regulations and possibly committed criminal offences. The main basis of the decision appears to have been that disclosure to the Jockey Club would have

°8 X Health Authority v. Y [1988] RPC 379, 395 (confidentiality was vital to secure public as well as private health, so that the interest in non-disclosure outweighed the interest in disclosure).

°° W v. Egdell [1990] 2 WLR 47.

60 Fraser v. Evans [1969] 1 All ER 8. 61 Y. Cripps, Disclosure in the Public Interest (1994), 25-6. 62 [1979] Ch 344, 377. See also Woolgar v. Chief Constable of Sussex Police [2000] 1 WLR 25, 36. 63 Employment Rights Act 1986 allows for disclosures to employers, prescribed bodies, and ‘in other

cases’. In the latter case, the person to whom the information is revealed is a significant factor in assessing whether a disclosure is ‘qualifying’: s. 43G(3)(a), 43H(2).

64 Initial Services v. Putterill [1968] 1 QB 39, 405-6.

BREACH,

DEFENCES,

AND

REMEDIES

969

sufficed: there was no need for full newspaper disclosure.® While the courts have been wary about using the public interest defence to justify publication in a newspaper, in some cases publication to the press might be justified.” (vi) Other factors. A number of other factors may influence the court in determining whether disclosure is in the public interest. For example, in Francome, the court took

account of the manner in which the information was acquired. Another relevant factor is whether the person claiming the defence received remuneration for the disclosure.** While receipt of remuneration does not preclude the operation of the defence,” it may indicate that a defendant confused their own interests with that of the public.” Finally, it seems that the extent to which the information is already publicly available may impact on the operation of the public interest defence. If the information is not very confidential, disclosure may be justified even if there is only a low level of public interest. Public and private interests. Typically, the public interest defence is characterized as the balancing of one public interest against another. The idea that it might involve a balancing of public interest against a private interest was rejected in W v. Egdell where the relevant private interest was that of the confider.’’ It has yet to be seen, however, whether the courts might accept a defence of disclosure in the private interests of the person who made the disclosure. For example, if a doctor who knew that one of their patients had a contagious disease disclosed that information to a person in a sexual

relationship with the patient, the court might be tempted to develop a defence of justified disclosure in the private interest.” A related question is whether disclosure can be justified by reference to the confider’s own interests. For example, is a doctor justified in revealing information about treatment of a child to the child’s parents? While in Gillick the majority of the House of Lords held that doctors did not have a duty to inform parents about the advice they 6° [1984] 1 WLR 892, 899 (Lord Donaldson MR). 66 e.g. Lion Laboratories v. Evans [1985] QB 526, 553. See also Cork v. McVicar (The Times, 31 Oct. 1984) (disclosure to the press might be in the public interest where the information disclosed concerned police corruption and therefore disclosure to police might not suffice). 67 [1984] 1 WLR 892 (rejecting the defence in a case where the information had been acquired criminally, in breach of the 1949 Wireless Telegraphy Act). In contrast, if all the defendant has done is break a promise that will not weigh materially against a public interest defence: Cork v. McVicar (The Times, 31 Oct. 1984), Scott J. See also Employment Rights Act 1986, s. 43B(3) (not a qualifying disclosure if person commits an

offence by making it). 68 [nitial Services v. Putterill [1968] 1 QB 396, 406 (Lord Denning MR observing that ‘It is a great evil when people purvey scandalous informaticn for reward’), 69 Hubbard v. Vosper [1972] 2 QB 84; Church of Scientology v. Kaufman [1973] RPC 627, 635. Cf. Employment Rights Act 1986, s. 43G(c), 43H(1)(c) (not a qualifying disclosure if person makes disclosure for personal gain). 70 Schering Chemicals v. Falkman [1982] QB 1, 39. 71 [1990] 2 WLR 471, 485.

72 D, Caswell, ‘Disclosure by a Physician of AIDS-related Patient Information: An Ethical and Legal Dilemma’ (1989) 68 Can Bar Rev. 225.

970

CONFIDENTIAL

INFORMATION

had given to their children (here in relation to contraception), the Lords did not express any view on whether if the doctor did so, they would be in breach.”? Lord Templeman, dissenting, was clear that ‘confidentiality owed to an infant is not breached by disclosure to a parent responsible to that infant if the doctor considers that such disclosure is necessary in the interests of the infant.’”4 3.3

MISCELLANEOUS

IMMUNITIES

A defendant may also be immune from a breach of confidence action where they have revealed information pursuant to a statutory obligation or a court order.” Another way in which a defendant might be able to escape liability is via the equitable principle that for a claimant to bring an action in equity they must have ‘clean hands’.”° For the claimant’s conduct to be relevant, ‘it must have an immediate

and necessary relation to the equity sued for.” In Lennon v. News Group,’® John Lennon sought to restrain his former wife, Cynthia, from publishing details of their married life in a newspaper article called ‘I saw the man I loved turn into a snake’. The Court of Appeal affirmed the decision of Bristow J not to grant the injunction. The court was influenced by the fact that newspaper articles written by the Lennons’ chauffeur and by John Lennon had already been published which had discussed ‘their most intimate affairs’. While the reasoning employed did not rely on clean hands,” this can be seen as a case where the court refused to assist a claimant in preventing a defendant from doing things that the claimant had already done.

4 REMEDIES In this final section we where there has been a remedies more generally considerations that arise

look at the more important remedies that may be granted finding of breach. While we examine intellectual property elsewhere,* in this section we wish to highlight the peculiar in relation to breach of confidence.

73 Gillick v. West Norfolk & Wisbech HA [1985] 3 All ER 402, 410-13.

74 [1985] 3 All ER 402, 434. 75 Examples include the Criminal Justice Act 1988, s. 98 (where a person discloses to a constable a belief

that property is the proceeds of a crime, that disclosure is not to be treated as a breach of any restriction upon disclosure of information imposed by contract). 76 See Hubbard v. Vosper [1972] 2 QB 84, 101 (Megaw LJ) (refusing injunctive relief because of the deplorable means that the claimant used to protect its confidential information); Church of Scientology v. Kaufman [1973] RPC 635. 77 Besant v. Wood (1879) 12 Ch D 605. Moreover, a claimant will not be disentitled to an equitable remedy

if the acts are not of the same kind or degree: Duchess ofArgyll v. Duke of Argyll [1967] Ch 302 (granting relief in spite of claimant’s wrongdoing because the defendant’s behaviour was altogether a different order of perfidy). 78 [1978] FSR 573. 7 According to Lord Denning, this put their relationship in the public domain and neither could restrain the other.

80 See Ch. 47.

BREACH,

4.1

INTERIM

DEFENCES,

AND

REMEDIES

971

RELIEF

The primary remedy that a claimant is likely to pursue in a breach of confidence action is an interim injunction to restrain use or disclosure of the information. In other areas of intellectual property law, the test for whether an injunction should be granted is that outlined in American Cyanamid. In essence, this provides that once a claimant has established that there is a serious question to be tried, then the court will

exercise its discretion to grant or withold interim relief on the basis of the ‘balance of convenience’. (We review its application in greater detail in Chapter 47.) While this test is widely used in other areas of intellectual property, as we will see in some circumstances the courts have decided not to apply this test in breach of confidence actions. 4.1.1 Interim relief restraining publication Where the defendant proposes to publish the information, the claim for injunctive relief is normally directed at preserving the confidential nature of the information. If the American Cyanamid test were applied it would almost always lead to the grant of injunctive relief.*! This is because the balance of convenience almost always favours restraint in order to ensure that the information concerned retains its confidential quality until trial. However, such automatic grant of interim relief raises serious questions about freedom of expression. To avoid this, the courts have been wary about using the American Cyanamid test in these circumstances, preferring to pay greater attention to the merits of the parties’ claims.* Section 12(3) of the 1998 Human Rights Act now confirms that where the relief

impinges upon freedom of expression a claimant must show that there is more than a serious question to be tried. Section 12(3) provides that where a court is considering whether to grant relief which might affect the exercise of the right to freedom of expression, no relief should be granted which will restrain publication prior to trial ‘unless the court is satisfied that the applicant is likely to establish that publication should not be allowed.’ Courts are also instructed to take account of the extent to which the material has or is about to become available to the public; and whether it is, or would be, in the public interest for the material to be published.

4.1.2 Interim relief restraining use Where injunctive relief is being sought to prevent use of confidential information, different considerations operate. Interim relief restraining use prevents wrongdoers 81 AG v. Newspaper Publishing [1988] Ch 333, 358 per Sir John Donaldson MR; Robertson and Nicol, Media Law (1992), 192. 82 Hubbard v. Vosper [1972] 2 QB 84, 96, 98; Cambridge Nutrition v. BBC [1990] 3 All ER 523; Times v.

Mirror Group [1993] EMLR 443. 83 Human Rights Act 1998, s. 12(4). The tribunal is also instructed to take into account ‘any relevant privacy code’. See J. Griffiths, ‘The Human Rights Act 1998, s. 12—Press Freedom over Privacy?’ [1999] Ent LR 36. The injunctions granted in the Spycatcher litigation were reviewed by the European Court of Human Rights in The Observer and The Guardian v. United Kingdom (1991) 14 EHRR 153.

972

CONFIDENTIAL

INFORMATION

from benefiting from their wrongful acts or from continuing to inflict damage on the claimant. The grant of an injunction restricting use often also operates to restrain manufacture, sale, and competition. The stakes, therefore, can be very high. Where the

effect of injunctive relief is likely to be that no trial will ever take place, the courts have taken it upon themselves to consider the strength of the parties’ cases before deciding whether to grant interim relief. In restraint of trade cases, the courts have also been reluctant to apply the American Cyanamid test on the basis that it might interfere with a person’s right to trade.*4 The rejection of the American Cyanamid test is sometimes said to be justified on the ground that in the absence of a speedy trial matters are resolved by interim relief. For example in Lansing v. Kerr,®° where trial would not take place before a twelve-month restraint clause had expired, the Court of Appeal declined to apply the American Cyanamid test. Instead, the court looked at the parties’ chance of success. Since the express restraint, though temporary, was worldwide, the judge considered it would be unlikely that it would be enforceable. The Court of Appeal held that such a consideration was appropriate. In contrast, where a speedy trial was pending and the restraint in question was two years, the Court of Appeal has used the American Cyanamid test to grant an interim injunction preventing a former employee from taking up a post at a competitor firm.*° 4.1.3. Permanent injunctions (and delivery up)

If a claimant succeeds at trial in establishing a breach of confidence, they are prima facie entitled to injunctive relief.’” Nevertheless, claimants are not entitled as of right

to an injunction. As the courts retain discretion as to whether to grant the injunction, if there are special or exceptional factors the court may refuse to grant an injunction. This would be the case, for example, if the effect of a permanent injunction would be oppressive, or out of all proportion to the value of the information used.** It is important that any injunction granted be formulated in specific terms.® As an adjunct to an

injunction,

a court

may

award

delivery up for destruc-

tion of material containing confidential information.” This remedy is dealt with in Chapter 47.

84 Fellowes v. Fisher [1976] QB 122, 133 (per Lord Denning, arguing that Cyanamid does not apply to restraint of trade cases), 138, 142 (per Browne LJ and Sir John Pennycuick, taking Cyanamid approach but looking at the strength of the parties’ cases when assessing the balance of convenience).

85 [1991] 1 All ER 418.

86 Lawrence David v. Ashton [1991] 1 All ER 385. 87 Ocular Sciences v. Aspect Vision [1997] RPC 289, 410.

88 Tbid., 410-11. 89 Potters Ballotini v. Weston Baker [1977] RPC 202. °0 Peter Pan v. Corsets Silhouette [1963] RPC 45 (order for delivery up for destruction of bras which the defendant had manufactured with the use of confidential information); but cf. Ocular Sciences v. Aspect Vision

[1997] RPC 289, 410 (delivery up refused in relation to all documents needed for the running of its business

and defendants’ plant, equipment, or products).

BREACH, DEFENCES, AND REMEDIES

4.2

973

DAMAGES

Specific problems have arisen in relation to financial remedies for breach of confidence as a result of the confusion as to the juridical nature of the obligation. Where the obligation of confidentiality is contractual, the promisee will usually be entitled to damages for breach of contract under normal contractual principles. However, doubts have been raised as to whether damages are available for breach of an equitable duty of confidentiality.”' This was because only common law courts, rather than equity, awarded damages. Instead, it is said that if the claimant desires a financial remedy in a Court of Equity it should be in the form of an account of profits. Despite these doubts, the courts have awarded damages even though the obligation was equitable.” In some cases, the basis for doing so has been attributed to a ‘beneficent construction of Lord Cairn’s Act’ which enables a court to grant damages ‘in lieu of an injunction.” It has been said that the measure of damages for breach of confidence should be tortious, reflecting loss to the claimant.” In Seager v. Copydex (No. 2)°° the Court of Appeal held that damages were to be assessed by reference to the market value of the information. This has been subsequently said to be one, but not the only way of assessing damages.”° Other techniques for the assessment of damages are by way of fair remuneration for a licence, loss of profit the claimant would have gained,” or depreciation in value of the right to have the information kept confidential.”

91 Nichrotherm Electrical Co. v. Percy & G. A. Harvey & Co. (London) [1957] RPC 207, 213-14.

92 Seager v. Copydex [1967] RPC 349. 93 Chancery Amendment Act 1858 (21 & 22 Vict. c. 27); Attorney General v. Guardian Newspapers [1990] AC 109, 286 (Lord Goff); Malone v. Metropolitan Police Commissioner [1979] Ch 344, 360 (only remedy is

account where no injunction would issue). But see Cadbury Schweppes v. FBI Foods [2000] FSR 491, 516 (Supreme Court of Canada) (damages were not dependent on Lord Cairn’s Act and accepting that the action was “sui generis’). 94 Indata Equipment Supplies v. ACL [1998] FSR 248, 261, 264. Cf. J. Beatson, ‘Damages for breach of confidence’ (1991) 107 Law Quarterly Review 209, 211 (remedy should be restitutionary: either profit attributable to breach or saving made by defendant); R. Plibersek, “Assessment of Damages for Breach of Confidence in England and Australia’ [1991] EJPR 283 (arguing that damages for breach of the equitable obligation of confidence should be assessed on a ‘restitutionary’ basis of giving a claimant sufficient to restore him to the same position he would have been in if the breach of duty had not occurred); P. Birks, “The Remedies for Abuse of Confidential information’ [1990] Lloyds Maritime and Commercial Law Quarterly 460 (compensatory and restitutionary damages should be available, but the choice should not merely be a matter of discretion: rather the restitutionary remedy should only be available where there is a strong need to buttress

the practice of good faith in bargaining).

9% [1969] 2 All ER 718. 96 Talbot v. General Television Corp. [1981] RPC 1, 22; Aquaculture v. New Zealand Mussel (1985) 5 IPR 353 (NZ High Court); [1990] 3 NZLR (NZ CA). 97 Dawson & Mason Ltd. v. Potter [1986] 1 All ER 418; Cadbury Schweppes v. FBI Foods [2000] FSR 491, 513-14, 517 (Supreme Court of Canada) (damages for lost opportunity).

98 In Talbot v: General Television [1981] RPC 1, 31-3, damages were assessed as the loss of the chance to make the television series which at best could have made the plaintiff a Aus. $160,000 profit: the court awarded him Aus. $15,000.

974

CONFIDENTIAL INFORMATION

Occasionally it has been suggested that the courts might award exemplary damages

for breach.” 4.3

ACCOUNT

OF PROFITS

In general, a claimant relying on an equitable duty of confidence is entitled to an account of profits for the wrongful use or disclosure of confidential information. This restitutionary remedy also appears to be available in cases where the obligation of confidence is contractual.’ In either case, similar problems of computation arise as with other intellectual property claims.!”

4.4

CONSTRUCTIVE

TRUSTS

One feature that distinguishes the law of breach of confidence from other areas of intellectual property law is that constructive trust is a possible remedy. If a confider succeeds in a claim for breach of confidence, the court might order that property derived from the breach is held by the confidant on trust for the confider. The effect of this may be to enable a claimant to obtain priority over general creditors, to recover profits-from-profits made by the defendant, to obtain compound interest, and to bring an action outside the normal (contractual) limitation periods.!”

The first signs that the remedy of the constructive trust may be available against an errant confidant appeared in the Spycatcher case where various of the Law Lords suggested that Peter Wright held copyright on constructive trust for the Crown.) Although emanating from the House of Lords, these views were obiter, were expressed

without the benefit of any argument from Wright, and might easily have been interpreted as being confined to the narrow situation where the confidant was also a fiduciary. However, in LAC Minerals'™ the majority in the Supreme Court of Canada held that it was appropriate to impose a constructive trust over land which the defendant had bought after he had been told in confidence that it might be goldbearing. More recently, in Ocular Sciences v. Aspect Vision, Laddie J accepted that a constructive trust might be available where there was a pre-existing fiduciary relationship and that there would usually be such a relationship where there existed a confidential obligation.’ This reasoning, which has much in common with that of »? Aquaculture v. New Zealand Mussel [1990] 3 NZLR 299, 301. See also Legislating the Criminal Code: Misuse of Trade Secrets, No. 150 paras. 3.34 (no authority supporting award of exemplary damages for breach of confidence). And see generally pp. 1026-7 below. 100 Peter Pan Manufacturing Corporation v. Corsets Silhouette [1963] 3 All ER 402; AG v. Blake [2000] 3 WLR 625, 641 (Lord Nicholls).

101 See pp. 1028-9 below. 102 Though this latter advantage seems doubtful in the light of Coulthard v. DMC [1999] 2 All ER 457, 477-80.

103 [1990] AC 109, 139 (Scott J), 211 (Dillon LJ), 286 (Lord Goff).

104 [1990] FSR 441, 445, 452; 497 Sopinka J (dissenting recognized that the remedy would be available in

very special circumstances).

105 [1997] RPC 289, 413-14.

BREACH,

DEFENCES,

AND

REMEDIES

975

Wilson J in LAC Minerals,'°° paves the way for the availability of constructive trusts in almost all cases of breach of confidence. It should not be mistaken, however, to be suggesting that the remedy should be granted in all cases. Other cases have cast doubt over whether the constructive trust is a remedy that is available in an action for breach of confidence. For example, in Attorney General v. Blake’ Scott V-C said that existing case law would have precluded a finding of constructive trust in the case before him, where there was a breach of confidence but

no pre-existing fiduciary relationship. On appeal, Lord Woolf MR appears to have agreed that a constructive trust was an inappropriate remedy for breach of a contractual duty of confidentiality.’°* Although the House of Lords did not consider this issue explicitly, it seems clear from their approach that they did not consider a

constructive trust to be an appropriate remedy for breach of contract.'® Whether the constructive trust is only available for breach of a pre-existing fiduciary duty or for all breaches of confidence, it is clear that it will rarely be the appropriate form of relief.'!° In determining whether a proprietary remedy is appropriate, the court must look at the circumstances of the case and the effects of imposing a constructive trust. A constructive trust should only be awarded if there is reason to grant to the claimant the additional rights that flow from recognition of a right of property. In LAC Minerals, La Forest J imposed a constructive trust on the grounds that but for the actions of the defendant in misusing confidential information and thereby acquiring the Williams property, that property would have been acquired by the claimant. The defendant intercepted the claimant’s efforts to obtain a specific and unique property that it would otherwise have acquired. The defendant was enriched by the acquisition of an asset that would have, but for the actions of that party, been acquired by the claimant. In contrast, in Ocular Sciences''! Laddie J refused the claim for the imposition of a constructive trust over a part of the defendant’s business and assets. This was because there was no question of the diversion of assets from the claimant, and because the contamination that was ‘small and technically inconsequential’, only affected a fraction of the business. In relation to the latter point Laddie J noted that there would likely be difficulties in imposing a constructive trust over part of the business. In United Pan-Europe Communications NV v. Deutsche Bank AG'” the Court of Appeal, held that a constructive trust might be available as a remedy for breach of confidence even if the breach was only ‘relevant’ to the acquisition made. 106 107 108 109 110

[1990] FSR 441, 444. [1996] 3 WLR 741. [1998] 1 All ER 833, 842. [2000] 3 WLR 625. [TAC Minerals v. International Corona Presource [1990] FSR 441, 474, 497. Cf. P. Birks, “The Remedies

for Abuse of Confidential Information’ [1990] Lloyds Maritime and Commercial Law Quarterly 460 (criticiz-

ing use of constructive trust for breach of confidence). 111

[1997] RPC 289, 411-16.

112

[2000] 2 BCLC 461 (CA).

976

4.5

CONFIDENTIAL INFORMATION CRIMINAL

LAW

Taking confidential information is not, in English law, theft.!!3 Section 1 of the 1968

Theft Act defines theft as the ‘dishonest appropriation of property belonging to another with the intention of permanently depriving the other of it.’ While section 4 says that property includes ‘other intangible property’, it has been held in a number of cases that for these purposes information is not intangible property. In Oxford v. Moss,'™* an undergraduate at Liverpool University obtained the proofs of an examination paper before the exam. After reading the exam, the student returned the paper, but ‘retained’ the information. Smith J held that this did not amount to theft. This

was because information was not property and because there was no intention to deprive the university of the information. While it might be possible in certain situations to treat specific breaches of confidence as carrying criminal liability on other grounds, these all carry limitations.!! A number of calls have been made for the criminalization of the act of misappropriating trade secrets,''® and the Law Commission have responded by issuing a consultation paper (No. 150).!!” The paper provisionally concluded that the case for criminal offences of trade secret misuse is a strong one, basing that view primarily on the close analogy between trade secrets and property ‘in the strict sense’, and on the economic importance of protecting business investment.!!® The paper reviewed the

practical problems of legislating: in particular, difficulties associated with reaching a satisfactory definition of the concept of ‘trade secrets’. The Law Commission said it wanted to ensure that all misuses of trade secrets which were criminalized would be breaches of confidence at civil law, but made it clear that it did not wish to criminalize all acts which would incur civil liability under the present law. Views were sought, in particular, about the definition of trade secret, whether errant employees should be subject to criminal liability, and the appropriate scope of a public interest defence.!!° The final Report is awaited. 113 See A. Coleman, The Legal Protection of Trade Secrets (1992), ch. 7.

114 (1979) 68 Cr App R 183.

‘19 If two people steal a trade secret, this may constitute conspiracy to defraud: R v. Lloyd [1985] QB 29; [1985] 3 WLR 30. Other criminal charges may be available under the Prevention of Corruption Act 1906 and s. 1 of the Computer Misuse Act 1990, which creates the offence of gaining unauthorized access to data held on a computer.

N6 e.g. A. Coleman, The Legal Protection of Trade Secrets (1992), 93 (criminal law needed to stigmatize

conduct, and afford adequate deterrent). 117 For a review, see J. Hull, ‘Stealing Secrets: A Review of the Law Commission’s Consultation Paper on the Misuse of Trade Secrets’ (1998) 4 IPQ 422. 118 Law Commission, Legislating the Criminal Code: Misuse of Trade Secrets Consultation Paper no. 150 (1997), para. 3.1.

"19 For the Law Commission’s provisional proposal, outlining specific purposes for disclosure which are in the public interest, but without prejudice to the generality of the defence, see ibid., para. 6.54.

PART

VI

LITIGATION REMEDIES

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46 LITIGATION

1 INTRODUCTION While many improvements have taken place since Charles Dickens lampooned the archaic patent system of the mid-nineteenth century, nonetheless intellectual property litigation remains an expensive and time-consuming process.’ In part this can be explained by the technical nature of intellectual property (especially in patent cases); by the role that experts play; and by the fact that infringement actions are frequently countered by claims for the invalidity of the intellectual property right. This chapter provides an overview of some of the more important aspects of intellectual property litigation.

2 WHO

CAN BRING PROCEEDINGS?

Most intellectual property proceedings are concerned with the infringement of rights. In some

cases, however, would-be

defendants

might want reassurance

that their

proposed activities will not infringe. In these circumstances, a person may be able to apply to the court for a declaration that their activities are non-infringing.

2.1

ACTION

FOR

INFRINGEMENT

Usually it is the rights-holder as defined in the relevant legislation who is able to bring an action for infringement. In certain situations, however, other parties are able to

litigate to protect their interests. For example, in some cases equitable owners are able to bring an action where their intellectual property rights have been breached or infringed. To do so, they must join the legal owner before final judgment can 1 See J. Phillips, Charles Dickens and the Poor Man’s Tale of a Patent (1984); M. Lubbock, ‘Access to Justice:

The Woolf Report’ [1997] EIPR 385 (a patent action which would cost £600,000 in England might cost as little as £40,000 in Germany).

984

LITIGATION AND REMEDIES

be given.” A co-owner can also bring an action for infringement.? While exclusive licensees are usually able to bring an action for infringement: the question of whether a licensee of a sign is able to bring a passing off action depends on the circumstances.° In some cases, the courts have allowed representative actions to be brought, notably by trade associations such as the British Phonographic Industry.° Representative actions are allowed where there is a common interest and a common grievance so that the remedy sought will be of benefit to all those who are represented. In cases of criminal infringement, the police and other relevant public authorities, such as the local Weights and Measures Authority, may be empowered to take action.’ 2.2

DECLARATION

OF NON-INFRINGEMENT

Given the cost and uncertainty of intellectual property litigation, it may be important for someone who plans to invest a lot of money in a particular activity for them to know whether the proposed conduct is non-infringing.® One option is to seek legal advice.’ In some cases, would-be-defendants are able to apply to the court for a declaration that their activities are non-infringing. A declaration of non-infringement can be made either under the court’s general powers or (in relation to potential patent infringements) under the powers provided by the 1977 Patents Act. We will look at the provisions under the Patents Act after examining the general non-statutory declarations. For a court to grant a declaration of non-infringement under their general powers, it must be satisfied that the possibility that the activity is infringing is real and not theoretical. The court must also be satisfied that the applicant has a real interest in seeking the declaration and that there is a proper ‘contradictor’, that is a defendant who has a true interest in opposing the claim.'!° This means that declarations of noninfringement will only be granted where legal rights have been contested or, more 2 Columbia Pictures Industries v. Robinson [1988] FSR 531, 547; Batjac Productions v. Simitar Entertainment [1996] FSR 139, 149-52. 3 PA s. 66(2); TMA s. 23(5) (but must join all other co-owners to proceedings, other than for interim relief); CDPA s. 173(2), Cescinsky v. Routledge [1916] 2 KB 325; CDPA s. 259 (references to designer to be treated as references to all designers). In the case of patents and trade marks, acts done or authorized by

another co-owner may not amount to an infringement: PA s. 36; TMA s. 23(3). 4 PA s. 67. See Bondax Carpets v. Advanced Carpet Tiles [1993] FSR 162, 163; CDPA s. 101, s. 191L; TMA s.

31; Proposal for Council Regulation (EC) on Community Design Art. 34 (2); Council Regulation 40/94 (20 Dec. 1993) on the Community Trade Mark, Title X. Cf. Registered Designs: Oren & Tiny Love v. Red Box Toy

Factory [1999] FSR 785 (exclusive licensee has no right of action against an infringer). 5 Scandecor Developments v. Scandecor Marketing [1998] FSR 500 (CA). 6 CBS Songs v. Amstrad [1988] RPC 567.

7 The Trade Descriptions Act 1968 also creates certain offences, discussed in Ch. 47, which the Trading Standards Departments enforce. 8 See P. Young, Declaratory Orders (1984) chs. 2 and 7; A. Hudson, ‘Declaratory judgements: theoretical cases and the reality of the dispute’ (1977) 3 Dalhousie Law Journal 706. ? In the context of registered rights would-be-defendants are also able to apply to have the right revoked or declared invalid. We have dealt with this in the relevant chapters. 10 Russian Commercial and Industrial Bank v. British Bank of Foreign Trade [1921] 2 AC 438, 448.

LITIGATION

985

specifically where the right-holder has already made a claim against the applicant for the declaration.'’ As a result, declarations of non-infringement will only rarely be

available. '? In addition to the general power the courts have to make declarations of noninfringement, the 1977 Patents Act contains specific statutory provisions that empower the courts to make declarations of non-infringement in relation to potential infringements of patents.'* The provisions recognize the burdensome nature of patent litigation. In order to provide certainty to potential competitors and to facilitate investment, section 71 of the 1977 Patents Act enables applicants to apply to the court or the Comptroller for a declaration that certain acts do not constitute an infringement of the patent. This is the case even though no claim has been made against the applicant.!* Declarations will only be made where it can be shown that the person has applied in writing to the proprietor for a written acknowledgement that they are not infringing and the proprietor has refused or failed to provide an acknowledgement.” When a declaration is issued, patentees are estopped from later claiming that the matters in the declaration constitute an infringement of the patent.

3 WHO

CAN BE SUED?

There are a number of parties who may be sued for infringement or breach of intellectual property rights. In deciding who should be sued, claimants will be guided by a range of factors. These include pragmatic concerns such as the convenience of suing a central party rather than a range of disparate infringers (a manufacturer rather than a retailer, or an Internet Service Supplier rather than a person who posts or receives information). In other cases the relative financial stability of the parties may determine who is sued.

3.1

PRIMARY

INFRINGERS

The most obvious person to sue is the primary infringer, that is the person directly 11 On the relationship between declarations of non-infringement and the appropriate scope of an injunction see Coflexip v. Stolt Comex Seaway [1999] FSR 473, 484. 12 Where the applicant has already begun to take the relevant action (such as manufacture, import, or sale) and an intellectual property right-holder has objected to that action, the court will more readily consider the grant of a declaration. Even then, the remedy is discretionary and so will only be granted in ‘appropriate circumstances to settle appropriate questions’: Biogen v. Medeva [1993] RPC 475, 489.

13 PA 5. 71. The section does not prevent a person applying under the inherent jurisdiction, but it appears that it is not possible to put the validity of the patent in issue when seeking a declaration under the inherent jurisdiction, because of PA s. 74. On the limits see Organon Teknika v. F. Hoffmann-La Roche AG [1996] FSR

383.

.

14 Plastus Kreativ v. Minesota Mining and Manufacturing Co. [1995] RPC 438, 442.

15 On the need for specificity in the applicant’s description of the activities about which they want a declaration see MMD Design & Consultancy [1989] RPC 131, 135; Wollard’s Patent [1989] RPC 141.

986

LITIGATION AND

REMEDIES

responsible for the infringement or breach. We have dealt with the circumstances in which such persons will be liable in each of the infringement chapters.'®

3.2

SECONDARY

AND

INDIRECT

INFRINGERS

Most intellectual property regimes extend the scope of liability from immediate infringers such as manufacturers, importers, or vendors of infringing goods to also include parties who facilitate, authorize, or induce infringement. Often these are referred to as secondary infringers. In most instances for the secondary or indirect infringer to be liable they must have known, or it must have been obvious to a reasonable person, that they were facilitating, authorizing, or inducing the infringement. As with primary infringers, the special provisions relating to secondary infringers have been considered in the earlier chapters on infringement.

3.3

EMPLOYERS

The general tortious rule that the employer will be vicariously liable when an employee commits an infringing act in the course of their employment applies as much to intellectual property rights as to other torts. Where the wrong is equitable the position is not so clear. It is difficult to see, however, why an employer should not be equally liable for a breach of an equitable duty of confidentiality by an employee as they are for a breach of any other obligation.!”

3.4

JOINT

TORTFEASORS

It is also possible to bring an action against a party where they are acting as a joint tortfeasor. A person will be liable as a joint tortfeasor where they are connected with or somehow associated with the infringement. It is important to note that not every connection is sufficient to render an associated person a joint tortfeasor.'®In particular, mere assistance (knowing or otherwise) in the commission of a tort will not

suffice to make an aider or abetter civilly liable as a joint tortfeasor. The situations where a party will be liable as a joint tortfeasor fall into two categories. The first category concerns the situation where one party conspires with the primary party or

induces the commission of the tort. The second category concerns the situation where two or more persons joined in a common design pursuant to which the tort was committed.'? We deal with each in turn. 16 See Chs. 6, 8, 13, 22, 28, 30, 40.

17 AGIP (Africa) v. Jackson [1992] 4 All ER 385, 408. 18 See Credit Lyonnaise v. Export Credit Guarantee Department [1998] 1 Lloyds LR 19, 44 (appealed on a

different issue to the House of Lords [1999] 2 WLR 540); Lancashire Fires v. SA Lyons [1996] FSR 629, 675

(CA) (same principles apply to determine liability for breach of confidence). Cf. Evans v. Spritebrand [1985] FSR 267 (differentiating between strict liability torts and those dependent on mens rea). 19 Unilever v. Gillette (UK) [1989] RPC 583, 608.

LITIGATION

987

3.4.1 Conspiracy or inducement

A person will be liable where they conspire to infringe or where they induce the infringement.” While a person who sells an article knowing that it is going to be used to infringe may assist infringement, they will not be treated as having induced the infringement. For example, in CBS Songs v. Amstrad’! the House of Lords was asked to consider whether, in selling a high-speed tape-to-tape recorder which the manufacturer and vendor knew was likely to be used to infringe copyright in sound recordings, the supplier was a joint tortfeasor. The House of Lords held that because the supplier did not have control over how purchasers used the tape recorders, nor had they asked purchasers to use the tape recorder in a particular way, the supplier was not a joint tortfeasor with purchasers who made illegal recordings. 3.4.2 Common design

Where a group of people share a ‘common design’ (a plan or a purpose), and one of the group commits a tort while carrying out the common design, the other members will be liable as joint tortfeasors.”” Although one member of the group commits the tort, it is treated as if it was committed on behalf of and in concert with the other members of the group. For parties to operate in a common design it is not necessary for the secondary party to have mapped out a plan with the primary offender;” tacit agreement will suffice. Thus, a person who sells an article in kit form with instructions which when constructed infringes the claimant’s copyright will be a joint tortfeasor with the person who puts the kit together.” The common design need not be to

infringe if the agreed action leads to an infringement.” It also does not matter whether or not the parties knew they were infringing.” The fact that a parent company has financial control of a subsidiary is not enough of a connection to constitute a

20 For a director to be liable as a joint tortfeasor, they must have directed that an act be carried out knowing that it would be tortious: Canon Kabushiki Kaisha v. Green Cartridge Co. [1996] FSR 874, 894 (Hong Kong Court of Appeal); White Horse Distillers v. Gregson Associates [1984] RPC 61, 91. Normally, directors are not liable for tortious acts done by servants of acompany unless they are privy to the act, that is, they ordered or procured it: PRS v. Ciryl Theatrical Syndicate [1924] 1 KB 1, 14-15.

21 [1988] RPC 567, 606. 22 Morton-Norwich Products v. Intercen [1978] RPC 501, 512, 515 (where Dutch company supplied English firm with drug which infringed the claimant’s patent, the Dutch company was a joint tortfeasor even though it had committed no act in the UK).

23 A joint marketing agreement by which the supplier of infringing goods also provides demonstration machines, literature, and advertising material and training might be indicative of sufficient cooperation between the parties to constitute a common design: Puschner v. Tom Palmer (Scotland) [1989] RPC 430. 24 Unilever v. Gillette (UK) [1989] RPC 583, 609. See also Lubrizol v. Esso Petroleum (No. 1) [1992] RPC 281.

25 Rotocrop International v. Genbourne [1982] FSR 241, 259. 26 Unilever v. Gillette (UK) [1989] RPC 583, 609; Ravenscroft v. Herbert [1980] RPC 193, 210 (contract

between author and publisher whereby publisher was bound to publish constituted common author was also liable for act of publishing work).

design so

27 e.g. that they believed the goods had been put on the market with the consent of the holder of the

intellectual property right: Morton-Norwich Products v. Intercen [1978] RPC 501, 515.

988

LITIGATION AND REMEDIES

common design. The parent company must be shown to have taken part in the primary act.?8

4 OBTAINING

AND

PRESERVING

EVIDENCE

Often intellectual property-right-holders find out about infringement by chance. For example, an employee or representative may stumble across an infringing article while on holiday, or a dissatisfied customer may complain to the right-holder that the goods made by the infringer are faulty. Intellectual property rights-owners also have other more systematic ways of discovering infringements. In particular, collecting societies and trade associations such as the British Phonograph Industry’s Anti-Piracy Unit, the Federation against Copyright Theft (which polices video piracy), and the Federation against Software Theft (which monitors software infringement) play an important role in identifying and policing infringement. Once a right-holder discovers that their rights are being infringed, a number of options are available. For example, they can sue for infringement or attempt to settle out of court. Whichever route is chosen it is usually prudent and often necessary for them to gather the relevant evidence. The evidence that is needed will vary according to the facts in hand, and may include evidence that an infringement has taken place, the details of the parties involved, and the extent of infringement. In some cases, evidence of infringement is obtained by ambushing or entrapping the defendant. For example, a legal practitioner may pose as a bona fide customer of a person selling infringing products or service. Such actions, which are called ‘trap orders’, often involve a degree of deception by the person collecting the evidence. Despite this, the courts have not objected to evidence obtained in this way, nor have claimants relying on such evidence been treated as lacking ‘clean hands’. Instead, the courts have left the probity of such techniques to be regulated by the appropriate professional bodies. Copyright owners and anyone whom they authorize are given the power to seize and detain infringing copies without first obtaining a court order. To protect the expectations of property owners and the public more generally, the availability of such self-help mechanisms is limited. Another important source of evidence derives from the fact that intellectual 28 Unilever v. Chefaro Proprietaries [1994] FSR 135, 138; Napp Pharmaceutical Group v. Asta Medica [1999] FSR 370; Coin Controls v. Suzo [1997] FSR 660, 666; The Mead Corporation v. Riverwood Multiple Packaging [1997] FSR 484. 29 Marie Claire Album v. Hartstone Hosiery [1993] FSR 692.

30 CDPA s. 100, s. 196. The copies must be exposed or otherwise immediately available for sale or hire; a local police station must be duly notified beforehand of the action to be taken; and the seizure must be in a public place or on public premises from a person who does not have a permanent or regular place of business there. Notice of what has been seized has to be given in prescribed form. No force may be used; though, if police officers are present, they may be able to use the discretionary power of arrest. See Police and Criminal Evidence Act 1984, s. 24—5.

LITIGATION

989

property right-holders are able to obtain a court order requiring a person to reveal information relevant to the action.*! This may include the names and addresses of relevant parties, the dates and quantities of importation, and the source of goods or materials.** Orders for discovery are particularly useful in that they enable right-holders to trace the channels through which infringing goods are

distributed.** To enable intellectual property right-owners to preserve evidence prior to trial, the British courts developed the so-called Anton Piller order.** As a result of recent changes, the Anton Piller order is now called a search order.” In essence a search order permits a claimant (and their solicitor) to inspect the defendant’s premises and to seize or copy any information that is relevant to the alleged infringement. Applications for search orders are made either to a patents judge in the High Court or the Patents County Court, or to a Chancery judge.** As the order aims to ensure that evidence is not destroyed, the application is made without giving notice to the other party. Given the potentially draconian nature of the search order,” they will only be made if the matter is urgent or otherwise desirable in the interests of justice.** Before an order will be granted, the courts require claimants to show that they have an extremely strong prima facie case of infringement and that the potential damage to them is very serious. The claimant must also provide clear evidence that the defendant has incriminating material in their possession and that there is a real possibility that the evidence will be destroyed.*? The search order is subject to procedural safeguards,*° such as the need for a supervising solicitor (unconnected with the applicant)

CPR

ot.

32 Prior to the Civil Procedure Rules, equivalent orders were previously made under the court’s inherent jurisdiction: Norwich Pharmacal v. CCE [1974] AC 133. It seems likely that the case law thereunder will be adopted for CPR r. 31 Orders. For example, the Commissioners of Customs and Excise have been required to reveal the names of importers of a patented drug: Norwich Pharmacal v. CCE [1974] AC 133; and British Telecom the names of mobile phone users alleged to be involved in passing off: The Coca-Cola Co. v. British Telecommunications [1999] FSR 518, 523. It is unlikely that an order will include the names of customers of a

competing business: Jade Engineering (Coventry) v. Antiference Window Systems [1996] FSR 461, 465-7. 33 Tn certain circumstances, an application for such an order can be resisted e.g. journalists may be protected from having to reveal their sources under the Contempt of Court Act 1981, s. 10. 34 Anton Piller v. Manufacturing Processes [1976] Ch 55. See M. Dockray, Anton Piller Orders (1992); S. Gee,

Mareva Injunctions and Anton Piller Relief (1995); M. Hoyle, The Mareva Injunction and Related Orders (1997), ch. 8. For a Marxist interpretation of the development of the order see F. Carrigan, “The Political Economy of Anton Piller Orders’ (1995) 11 Australian Journal of Law & Society 33. 35 CPA 1997 s. 7; CPR r. 25; Rule 25 Practice Direction.

36 CPR Rule 25A Practice Direction, para. 8.5. 37 Universal Thermosensors v. Hibben [1992] FSR 361; Taylor Made Golf Company v. Rata and Rata [1996] FSR 528, 535. In Bank Mellat v. Nikpour [1985] FSR 87, 92 Donaldson LJ described the order as one of two

‘nuclear weapons’ of English law.

38, CPR

25.2(2)(b):

39 The applicant should disclose all material facts. Rule 25A Practice Direction, para. 3.3. See Naf Naf SA v. Dickens [1993] FSR 424. 40 CPR Rule 25A Practice Direction. See M. Hoyle, The Mareva Injunction and Related Orders (1997), 110 (use of such orders has declined since adoption of safeguards in Universal Thermosensors v. Hibben [1992] FSR 361 and the Practice Direction (Mareva Injunctions and Anton Piller Orders) 1994 [1994] RPC 617).

990

LITIGATION

AND

REMEDIES

who is experienced in the operation of search orders.*! The order may only be served on a weekday between 9.30 and 5.30 (unless the court orders otherwise), and super-

vising solicitors must explain the terms of the order to the respondents in everyday language and advise them of their rights. Failure to comply with an order is a contempt of court, resulting in imprisonment or a fine.*? The application for a search order may be combined with an interim injunction against infringement and a freezing order (formerly known as a Mareva injunction) ordering the retention of property pending the outcome of the litigation.*4 In addition, the search order may require that the defendant provide information about the source of the infringing copies or their intended destination.”

5 PRESUMPTIONS Normally in civil actions, the obligation falls upon the claimant to prove their case on the balance of probabilities. However, in a number of situations intellectual property legislation creates presumptions that alter the normal burden of proof. The most important is that it is presumed that registered rights have been validly granted. Thus, the obligation falls on the alleged infringer of a patent, a registered trade mark, or a registered design to prove that the right is invalid (or obtain revocation). Presumptions also operate in the field of unregistered rights, copyright, and the database right. These relate to the identity of the author,** or (in the case of database right) the

maker,” and the date on which a work (etc.) was published.** In copyright law, where

41 CPR Rule 25A Practice Direction, paras. 7.2 and 8.1 (supervising solicitor must not be an employee or

member of the applicant’s firm of solicitors). Other safeguards were imposed as a result of Universal Thermosensors v. Hibben [1992] FSR 36.

42 CPR Rule 25A Practice Direction, para. 7.4. Where the supervising solicitor is a man and the respondent is likely to be an unaccompanied woman, at least one other person named in the order must be a woman and must accompany the supervising solicitor: para. 7.4(5). 43 Taylor Made Golf Company v. Rata and Rata [1996] FSR 52 (fine of £75,000). See the Notice to the Respondent in the sample order annexed to CPR Rule 25A Practice Direction. 44 CPR r. 25(f).

4> There is a statutory exception to the privilege against self-incrimination: Supreme Court Act 1981

So IDR 46 CDPA

ss. 104(2)-(4);

Waterlow Publishers v. Rose [1995] FSR 207, 218. These presumptions do not

operate for the purposes of the publication right: Related Rights Reg. 17(2)(b). As regards films, additional presumptions operate concerning statements as to who was the director or producer of the film, as well as who was the principal director, author of the screenplay, author of dialogue, or composer of music.

47 See Database Reg. r. 22(1).

48 As regards copyright in sound recordings and computer programs, it is presumed that statements naming the copyright owner or giving the date or place of first publication, are true: CDPA s. 105. See Microsoft Corporation v. Electrowide [1997] FSR 580, 594. Where copies of the database as published bear a label or a mark stating that the database was first published in a specified year, the label or mark shall be admissible as evidence of the facts stated and shall be presumed to be correct until the contrary is proved: Database Reg. 22(3).

LITIGATION

991

an author is dead it is presumed that the work was original and that it was first

published where and when the claimant alleges.”

6 UNJUSTIFIED

THREATS

TO SUE

The cost and burden of intellectual property litigation means that the mere threat of litigation has the potential to act as a potent commercial weapon.” To ensure that the threat to sue is not misused, special provisions provide remedies against unjustified threats to litigate.°! These exist in the case of patents, trade marks, registered designs, and the unregistered design right. There are no statutory provisions that protect against unjustified threats to sue in relation to copyright, passing off, or breach of confidence. In these cases, persons unjustifiably threatened with litigation have to resort to other means. 6.1

THREATS

TO

SUE:

PATENTS,

TRADE

MARKS,

DESIGNS

Special statutory provisions exist in the case of patents,” trade marks,” registered designs, and the unregistered design right” to protect parties against unjustified threats to sue. These statutory provisions ‘ensure that threats of infringement proceedings are not made casually or recklessly, because of the potential damage and concern they can cause.’** As a result, if owners threaten to sue, they must ensure that the threat can be justified. In order to qualify for relief against a groundless threat, a claimant must establish that an actionable threat has been made and that as a result they have been aggrieved. If the defendant fails to justify the threat, the court will grant relief. We will deal with these factors in turn. 6.1.1

Actionable threats

In order for a claimant to be entitled to the relief provided, they must show that an actionable threat has been made. It should be noted that in the case of patents,” 49 CDPA s. 104(5). 50 Another technique that is used to avoid unnecessary litigation is the issuing of certificates of contested validity. As well as acting as a victory trophy, the certificate may deter subsequent litigation. RDA s. 25; PA s. 65; TMA s. 73.

51 See L. Gee, ‘The “Threats” Section in the UK Trade Marks Act 1994: Can A Person Still Wound Without Striking?’ [1995] EIPR 138. The earliest statutory action was in Patents, Designs and Trade Marks Act 1883 (46 & 47 Vict. ch. 57) s. 32.

52 PAs. 70. 53 TMAs. 21. 54 RDA s. 26: e.g. Jaybeam v. Abru Aluminium [1975] FSR 334.

55, CDPAS. 253: 56 Prince v. Prince Sports Group [1998] FSR 21, 33. 7 PA s. 70(4) provides that s. 70 does not apply where the threat is to bring infringement proceedings for the ‘making or importing a product for disposal or of using a process’, uo

992

LITIGATION

AND

REMEDIES

registered designs,’® and trade marks® special provisions limit the circumstances in which groundless threats are actionable. In essence these exclude threats made in relation to primary acts of infringement. While the legislative philosophy underlying these exclusions is “difficult to detect’,®" it is clear that they greatly weaken the scope of the threats provisions. Threats can take many different forms. Although actionable threats will usually be explicit, they may also be implicit, and may arise from a single letter or a circular. When considering whether a threat had been made, the document in question is looked at through the eyes of a reasonable and normal recipient.“ In so doing, the court will take into account matters such as the circumstances of the business or the background information available to a reasonable recipient.® The courts will pay particular attention to the initial impression that the communication has on a reasonable addressee. Mere notification of the existence of a patent, trade mark, or other

right will not constitute a threat of proceedings. It has been suggested, however, that notification of a patent (and presumably other statutory intellectual property rights) may constitute an actionable threat if it is ‘given in such a context that a threat is seen to be intended.’® It is necessary to show that a threat has been made against someone in particular: it is not enough for a claimant to show that a general threat has been made.®” 6.1.2 Aggrieved

A person is able to bring an application for relief even though the threats have not been made against them. This means that a right-owner is able to bring an action where a shopkeeper who sells their products is threatened with litigation by a competitor. The availability of the action is limited by the requirement that a claimant must show that they were ‘aggrieved’ by the threats. This excludes frivolous 58 RDA s. 26(2A) and CDPA s. 253(3) state that proceedings may not be brought under the respective

threat provisions ‘in respect of a threat to bring proceedings for an infringement alleged to consist of the making or importing of anything.’ °° TMA s. 21(1) excludes threats involving ‘the application of the mark to goods or their packaging; the importation of goods to which, or to the packaging of which, the mark has been applied; or the supply of

services under the mark.’

60 Cavity Trays v. RMC Panel Products [1996] RPC 361. 61 Brain v. Ingledew Brown Bennison & Garrett (No. 3) [1997] FSR51 15525: 62 Bowden Controls v. Acco Cable Controls [1990] RPC 427, 431; Scandecor Development v. Scandecor

Marketing [1999] FSR 26, 47. 6° When read in conjunction with other letters or circulars, the communication as'a whole may be

construed as giving rise to a threat of litigation: Brain v. Ingledew Brown Bennison & Garrett (No. 3) [1997]

FSR 511, 521-4. Later letters cannot nullify an earlier threat: Prince v. Prince Sports Group Inc. [1998] FSR

DSS.

64 Brian v. Ingledew Brown Controls [1990] RPC 427, 431; 65 Brain v. Ingledew Brown 66 CIPA Guide, 595. Brain

Bennison & Garrett (No. 3) [1997] FSR 511, 521; Bowden Controls v, Acco Cable Lunar Advertising Company v. Burnham & Co. (1928) 45 RPC 258, 260. Bennison & Garrett [1996] FSR 341, 349. v. Ingledew Brown Bennison & Garrett [1996] FSR 341, 349. Jaybeam v. Abru

Aluminium [1975] FSR 334, 340 (describing the letter as an over-ingenious attempt by solicitors to avoid producing an actionable threat); L’Oreal v. Johnson & Johnson [2000] ETMR 691, 703.

67 Speedycranes v. Thompson [1978] RPC 221.

LITIGATION

993

applications or applications by busybodies who have no real interest in the threats. While a person can be aggrieved without having to prove actual damage at trial, they must show that something more than a mere fanciful or minimal commercial interest has been interfered with. The courts are more likely to infer an adverse effect where the threats are made directly against a party. Where threats are made indirectly, claimants will need to demonstrate that they suffered actual or potential loss (that is not minimal).”° This will be easier to prove where the threat was intended to scare off

the claimant’s customers.’! 6.1.3 Groundless threats

Once a claimant has established that a threat has been made and that as a result they were aggrieved, the statutory provisions shift the onus onto the defendant to prove that the threats were justified.” To do this, the defendant will need to show that the

right in question is valid’’ and that the acts in respect of which proceedings were threatened would constitute an infringement of the right. This means, for example, that where a threat was made after a patent application had been made but before the patent had been granted, it will not be possible to justify the threat if the patent is not granted before trial.”4 6.1.4 Relief

If a claimant can show that they have been aggrieved as a result of an actionable threat and the defendant cannot establish that the threat was justified, the claimant is entitled to the relief provided in the relevant statutory provisions.” This includes a declaration that the threats are unjustifiable,’”° an injunction against the continuance of the threats,’” and damages for any losses which were sustained as a result of the threats.”®

68 Brain v. Ingledew Brown Bennison & Garrett [1997] FSR 511, 519 (hurt feelings are not enough).

69 John Summers v. Cold Metal Press Co. (1948) 65 RPC 75; Prince v. Prince Sports Group [1998] FSR 21, 33-4.

70 Brain v. Ingledew Brown Bennison & Garrett [1997] FSR 511, 520; Summers & Sons v. The Cold Metal Process Co. (1948) 65 RPC 75.

71 Dimplex v. De’Longhi [1996] FSR 622. 72 RDA s. 26(2); PA s. 70(2); CDPA s. 253{2); TMA

s. 21(2).

73 TMA s. 21(3). 74 Brain v. Ingledew Brown Bennison & Garrett (No. 2) [1997] FSR 271, 275.

75 RDA s. 26(2); PA s. 70(3); CDPA s. 253(1); TMA s. 21(2). 76 For a discussion of the relationship between this and the inherent jurisdiction to grant declarations that a claimant does not infringe, see L’Oreal v. Johnson & Johnson [2000] ETMR 691. 77 Ynjunctions should usually follow a successful threats action: Prince v. Prince Sports Group [1998] FSR 21, 36)

78 Damage must be shown to have been caused by the threat: Carflow Products v. Linwood Securities [1998]

FSR 691 (decision to withdraw product was a consequence of commencement of proceedings rather than a threat).

994

6.2

LITIGATION AND REMEDIES

THREATS

TO SUE:

COPYRIGHT,

PASSING

OFF, AND

BREACH

OF

CONFIDENCE

There are no statutory provisions that protect against unjustified threats to sue in relation to copyright, passing off, or breach of confidence.” In these circumstances, a person who suffers damage as a result of an unjustified threat will have to seek relief through alternative avenues.*° In some cases, an aggrieved party may be able to bring an action for the tort of abuse of process.*! A more important option is provided by the action for injurious falsehood. To succeed in an action for injurious falsehood, a claimant must prove that the statements were untrue and malicious. They must also show that they suffered special damage as a result of the statements. The notion of malice has proved difficult to define. It seems to require that the threat must be issued with a view to injuring the claimant rather than defending the defendant’s rights. Moreover, it has been said that an honest belief in an unfounded claim is not

malicious.

7 COURTS

AND

TRIBUNALS

One of the methods that have been adopted to deal with the technical nature of intellectual property litigation has been to develop special courts and tribunals. In this section we provide a brief overview of some of the courts and tribunals that operate in the UK.

7.1

THE

VARIOUS

TRIBUNALS

7.1.1 High Court

Disputes to do with all forms of intellectual property can be brought before the Chancery Division of the High Court. Proceedings under the Patents Act are dealt with the by the Patents Court, which is a specialist court within the Chancery Division.** Proceedings before the Patents Court are heard before a specialist judge, sitting without a jury. The parties must be represented either by counsel instructed by ” During the passage of the 1988 CDPA, it was explained in Parliament that no such action was required in relation to copyright because the position as regards ownership of copyright is usually clear. See Lord Young, 501 Hansard (HL), 2 Nov. 1988, col. 338. 80 See Laddie et al., 953. A person may also seek a declaration of non-infringement. Once a letter or

circular has been issued it seems that the legal contest is sufficiently joined to justify a court making such a declaration. See Leco Instruments v. Land Pyrometers [1982] RPC 133, 136. 8! Grainger v. Hill (1838) 4 Bing NC 212. On the limits of the action see Pitman Training v. Nominet [1997]

FSR 797; Essex Electric v. IPC Computer [1991] FSR 690. On the distinction between the tort of abuse of process and malicious prosecution see Speed Seal Products v. Paddington [1986] 1 All ER 91 (Fox LJ). 82 Greers v. Pearman and Corder [1922] 39 RPC 406, 417; Polydor v. Harlequin [1980] FSR 26, 31. 83 Practice Direction, pt. 49E Clause 1.3 defines patent to include supplementary protection certificates

and patent court business to include proceedings under the RDA.

LITIGATION

995

a solicitor, or by a solicitor. The Patents Court has a reputation for the quality of its decisions.™ Despite this, it has been said that litigation before the Patents Court is time-consuming, laborious, drawn out, and as a consequence expensive.®” 7.1.2 Patents County Court The Patents County Court, which was established in 1990,*° aim to provide a quicker,

cheaper, and more accessible way of dealing with patent and design litigation.*” The Patents County Court has jurisdiction to hear and determine any action or matter relating to patents or designs over which the High Court has jurisdiction. It is also able to hear claims or matters ancillary to or arising from such proceedings. This has

been held to include ancillary copyright matters.** While patent agents have the right of appearance before the Patents County Court,® discovery is not available ‘as of right’ and it is unusual for experiments to be conducted to prove a particular point. Procedures in the Patents County Court are otherwise similar to those in the Patents Court: there is cross-examination of witnesses,” and the court is equipped with a full range of remedies (such as interim and final injunctions and search orders).”! The question of whether proceedings should be transferred from the Patents Court to the Patents County Court is left to the Patents County Court.’ When deciding whether to transfer a matter, the County Court takes account of: the financial position of the parties;?? whether it would be more convenient or fair for the hearing to be held in another court; the availability of a judge specializing in the type of claim in question; the relative complexity of the legal issues, the remedies, and the procedures involved; the importance of the outcome to the public; and the facilities available at the court where the claim is being dealt with.” Despite empirical evidence suggesting otherwise,”® doubts have been raised over

84 Chaplin Patents Holding Co. v. Group Lotus (CA) (The Times, 12 Jan. 1994). 85 R. Nott, ‘Patent Litigation in England’ [1994] EIPR 3. 86 CDPA pt. VI; Patents County Court (Designation and Jurisdiction) Order 1990 (SI 1990/1496). The court was established by CDPA

s. 287. Patents County Court (Designation and Jurisdiction) Order

1994 (SI

1994/1609). So far only one court has been designated, namely the Central London County Court. 87 Chaplin Patents Holding Co. v. Group Lotus (CA) (The Times, 12 Jan. 1994) (Sir Thomas Bingham MR); Memminger-Iro v. Trip-Lite [1992] RPC 210, 216 (Aldous J). Cf. P. Ford, ‘Patent Litigation: A Better Deal for Litigants?’ [1990] EIPR 435, 436.

88 PSM y. Specialised Fastener Products [1993] FSR 113, 116-17; McDonald v. Graham

[1994] RPC 407,

434-5, 441. 89 CDPA s. 292 (1). Memminger-Iro v. Trip-Lite [1992] RPC 210, 221.

9 Tbid., 220. 91 CPA s. 7; CPR r. 25; CPR, Practice Direction para. 8.5. See McDonald v. Graham [1994] RPC 407, 435.

92 CDPA s. 289. Memminger-Iro v. Trip-Lite [1992] RPC 210, 224. 93 CDPA s. 289(2). °4 Chaplin Patents Holding v. Group Lotus (CA) (The Times, 12 Jan. 1994).

95 CPR £.:30:3. 96 J. Adams, ‘Choice of Forum in Patent Disputes’ [1995] EIPR 497, 501-2. In McDenald v. Graham [1994] RPC 407, 441 Evans LJ was more supportive.

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REMEDIES

the success of the Patents County Court.*” As Hoffmann J noted, it has resulted ‘not so

much to a saving in costs but to a shifting in the time at which those costs are incurred.”* More specifically, the requirement that the claimant set their case out at the preliminary stage leads to greater costs at an earlier stage, which may be unnecessary if the action is settled quickly.” 7.1.3 County Court

County Courts have jurisdiction to hear cases on copyright,’ unregistered designs, passing off, and performances,’ but not patents, registered designs, or (possibly) trade marks.’ The jurisdiction of the County Court is local: a defendant should be sued in the County Court in the district where they reside. Patent and trade mark agents have no right of audience. While certain forms of relief, such as search orders and delivery up,'° are not available, the County Court can award interim injunctions, damages, and account of profits. 7.1.4 Comptroller of Patents

The Comptroller of Patents and the Patent Office more generally have important powers to determine matters relating to the validity and revocation of patents.!°5 With the authority of the parties, the Comptroller has the ability to hear infringement actions and counterclaims for revocation.'°° The Comptroller also has jurisdiction over certain issues concerning unregistered design rights.!°” The Comptroller provides litigants with a cheaper, quicker, and more specialized and informal forum than is offered by the Patents Court.'°° One advantage of using the Comptroller is that the parties can be represented by patent agents rather than by counsel.!°° However, the jurisdiction has rarely been used. This may be because the Comptroller has no jurisdiction to grant injunctive relief and because failed proceedings do not give rise to any issue estoppel. Moreover, the courts have been extremely reluctant to stay court

97 R. Nott, ‘Patent Litigation in England’ [1994] EIPR 3 (also pointing to the unfortunate record of the court for being reversed on appeal); M. Lubbock, ‘Access to Justice: The Woolf Report’ [1997] EIPR 385, 389.

°8 Composite Gutters v. Pre-Formed Components [1993] FSR 305, 308; Chaplin Patents Holding Co. v. Group 29 100 101

Lotus (CA) (The Times, 12 Jan. 1994). R. Nott, ‘Patent Litigation in England’ [1994] EIPR 3, 4. PSM v. Specialised Fastener Prods [1993] FSR 113, 116; McDonald v. Graham [1994] RPC 407. Arnold, 142. :

102 PA s. 130(1), RDA s. 27(1), TMA s. 75.

103 County Courts Act 1994 s. 15 gives the court power to hear ‘any action’. 104 CPR Rule 25A Practice Direction, para. 8.5.

105 The most important is the power to revoke the patent as invalid: PA s. 72, s. 73. The Comptroller may also grant compulsory licences, settle the terms of licence of right, and award compensation to employees. See Reid, chs. 7 and 8.

106 "PAs: 61(3). 107 CDPA s. 246. 108 Cf. Ferro Corporation v. Escol Products [1990] RPC 651.

#0? PAvs.-102(1);

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proceedings pending determination of the issues by the Comptroller.'!° Hoffmann J said that these factors mean that the Comptroller and the Patent Office can only be made to work as an alternative tribunal in infringement cases by the giving of undertakings by the parties which will enable it to decide finally on those issues which are before it and, even then, resort may still be had to the High Court in order to obtain injunctions."

7.2

WHICH

TRIBUNALS

CAN

BE USED

FOR

WHICH

RIGHTS?

Not all actions can be brought before all of the courts. In the following section we attempt to explain in which tribunals proceedings can be brought for infringement of the different intellectual property rights. 7.2.1 Copyright Copyright (including publication right and database right), moral rights, and performers’ rights cases'!* can be brought before the County Court (if the value is under £15,000),'!° or the High Court (Chancery Division). Where a copyright issue is ancillary to a designs question it may also be considered in the Patents County Court or High Court (Patents Court).!" 7.2.2 Patents

UK patent infringement cases can be brought before the Comptroller (if the parties consent);'!° the Patents County Court (there is no value ceiling), or the High Court

(Patents Court).'!° Such cases cannot be brought before the ordinary County Courts. Since issues of validity may be heard before the Comptroller, or opposition proceedings may be taking place at the European Patent Office,'!” a possibility exists that proceedings will be duplicated. With domestic proceedings, some attempt is made to avoid such duplication by a provision that prohibits issues of validity from being raised before the Comptroller pending the outcome of a decision in the Patents Court. As between UK infringement proceedings and Oppositions at the EPO, the early cases suggested that the UK courts would refuse to stay infringement proceedings.''®

110 Such a stay was ordered in Hawker Siddley Dynamics Engineering v. Real Time Developments [1983] RPC 395. Hawker was subsequently described as ‘exceptional’ (Gen Set v. Mosarc [1985] FSR 302) and as a ‘very unusual case’ (Ferro Corporation v. Escol Products [1990] RPC 651).

111 Ferro Corporation v. Esso Products [1990] RPC 651, 652. 112 Arnold, 142. 113, PSM v, Specialised Fastener Prods [1993] FSR 113, 116; McDonald v. Graham [1994] RPC 407 Pasterfield v. Denham [1999] FSR 168 (copyright, moral rights, and passing off). 114 PSM ¥. Specialised Fastener Prods [1993] FSR 113, 116.

M5 PA s. 61(3). U6 sPA 8..130(1). 117 EPC Art. 99; Memminger-Iro v. Trip-Liie [1992] RPC 210. 118 Amersham

International v. Corning [1987] RPC 53; Pall v. Commercial Hydraulics [1988] FSR 274;

Beloit Technologies Inc. v. Valmet Paper Machinery Inc. [1996] FSR 715.

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However, some recent cases have ordered that UK proceedings be stayed referring to that as the ‘preferred option’.!? 7.2.3 Supplementary protection certificates

Supplementary protection certificate cases can be brought before the High Court (Patents Court).!*°

7.2.4 Plant variety rights

Plant variety cases, including Community plant variety infringement cases, can be brought before the County Court (if the value is under £15,000) or the High Court (Chancery Division). There is also a special procedure whereby the Plant Varieties and Seeds Office can operate as an arbiter.'*! Since issues of validity of a Community plant variety may only be determined by the Community Office, the national court is directed to assume that the right is valid, or if proceedings are pending at the Community Office to stay the national proceedings pending the determination of the validity of the right.!” 7.2.5 Registered designs

UK Registered Design cases can be brought before the Patents County Court (there is no value ceiling) or the High Court (Patents Court).'”3 Such cases cannot be brought before the ordinary County Courts.!** Since issues of validity may be heard by the Comptroller’ and the Patents Court,!° provision must be made for one set of proceedings to be stayed pending the determination in the other tribunal. 7.2.6 Unregistered design right

UK unregistered design right cases can be brought before any of four tribunals. Questions of subsistence, term, and first ownership can also be heard by the Comptroller.” The Comptroller cannot decide infringement questions, which are determined by the County Court (if the value is under £15,000); the Patents County Court (there is no value ceiling) or the High Court.

119 Kimberly-Clark Worldwide v. Procter & Gamble [2000] FSR 235, 250-1; Unilever v. Frisa [2000] FSR 708.

120 CPR Practice Direction, pt. 49E, para. 1.3 defines patents to include supplementary protection certificates. ; 121 PVA s, 43.

122 CPVR Art. 20 (nullity), Art. 21 (cancellation), Art. 105 (national court to treat as valid), Art. 106(2) (stay where proceedings have been initiated).

'23 CPR Practice Direction, pt. 49E para. 1.3 Patent Court business to include proceedings under the RDA.

124 RDA‘s..27.

125 RDA s. 11] (cancellation). 126 RDA s. 20 (rectification).

127 CDPA s. 246. The comptroller can refer the issue to the High Court: CDPA s. 251. For procedure, see the Design Right (Proceedings before the Comptroller) Rules 1989 (SI 1989/1 130). Patent agents have rights of audience: r. 6(1).

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7.2.7 Passing off Passing off cases can be brought before the County Court (if the value is under £15,000) or the High Court (Chancery Division).!** Where a passing off claim is ancillary to a designs question it may also be considered in the Patents County

Court.'”? 7.2.8 Trade marks

Community trade mark infringement cases can only be brought before the High Court (Chancery Division).!*° It is unclear whether an action for infringement of a domestic trade mark can be heard in the County Court as well as the High Court. Issues of validity may be heard before the Comptroller, or in the case of Community Marks by the Office of Harmonization in the Internal Market, as well as in counterclaims in infringement actions.'*! 7.2.9 Breach of confidence

Breach of confidence cases can be brought before the County Court (if the value is under £15,000) or the High Court (Chancery Division).

8 EXPERTS Given the technical and novel nature of the subject matter of intellectual property law, it is not surprising that the courts frequently rely on experts for a range of different matters.!*? Courts can hear expert evidence in relation to matters of which the court is ignorant and needs to be informed. These include questions such the meaning of a word in a patent claim, whether a substantial part of a copyright work has been reproduced, or the likelihood of confusion in a passing off or trade mark action.'*? It should be noted that while courts can hear expert evidence on a range of matters,

ultimately it is for the court to decide the factual issue in hand. The permission of the court is required to call an expert or to put an expert’s report

in evidence.!** As the use of expert evidence increases the cost of intellectual property 128 McCain International v. Country Fair Foods {1981] RPC 69; CHC Software Care v. Hopkins & Wood [1993] FSR 241, 248 (malicious falsehood based on infringement of copyright should be heard in Chancery Division).

129 PSM vy. Specialised Fastener Prods [1993] FSR 113, 117.

130 CTMR Art. 91; TMA s. 52(1)(d); CTMR 1996 (SI 1996/1908) r. 9. Cf. Morcom et al., 304.

131 CTMR Arts. 50-1. 132 On the practice of courts in relation to expert evidence and technical terms see American Cyanamid v. Ethicon [1979]

RPC 215, 252-3.

133 Cf, Guccio Gucci SpA v. Paolo Gucci [1991] FSR 89, 91 where Browne-Wilkinson V-C admitted expert evidence in a passing off case as to whether consumers were likely to be deceived even though this was the very question that the court itself had to determine and therefore one on which evidence is not normally admitted. . 134 The rules on experts are codified in the CPR Rule 35 Practice Direction. These are intended to limit the use of oral expert evidence to that which is ‘reasonably required’. These seem to codify the duties and responsibilities of experts identified in The Ikarian Reefer [1993] FSR 563.

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litigation,'»° matters requiring expert evidence should where possible be dealt with by a single expert. In patent matters directions can be made for the production of joint reports.'°° An expert’s report should be addressed to the court and not to the party from whom the expert has received their instructions. The courts have emphasized that experts should be impartial, that is they should not assume the role of an advocate.!37

9 JURISDICTIONAL

ISSUES AND

CONELICTS

OF LAW

Given the nature of intellectual property it should come as no surprise that many intellectual property actions have a transnational dimension.'** For example, the claimant may be domiciled in country A and the defendant in country B. In these circumstances, it is necessary to decide whether the action should be brought in country A or B. More complex questions arise where the infringement occurs in a number of countries. This would be the case, for example, where the defendant

manufactures infringing goods in country C and an importer sells them in country D. In these cases a claimant may wish to sue both infringers in a single action. Even more complicated scenarios arise, for example, where copyright infringement takes place on the Internet.'*? Where disputes cross national boundaries, a number of questions arise. Here we focus on whether a court has jurisdiction to hear a matter, the type of law that should be applied, and the situations where foreign judgments will be recognized and enforced. A number of considerations arise in answering these questions: the convenience and efficiency of litigation; the impact on national sovereignty; the desirability of allowing litigants to choose the jurisdiction most favourable to their claim (forum-shopping);'° and national interests in attracting legal business.'“! 9.1

JURISDICTION

The question of whether a court has jurisdiction to hear a matter where the infringement or breach of an intellectual property right crosses national boundaries depends on the situation in hand. 135 The need for experts is reduced by specialist Court and by the use of scientific advisers. In order supply a scientific primer prior to trial. Moreover, certain claims are to be made, that the parties set out 136 CPR Part 49E Practice Direction.

courts such as the Patents Court and Patents County to avoid delays, patent judges require that the parties CPR Part 49E Practice Direction specifies that where the relevant matters in detail.

137 Cantor Fitzgerald International v. Tradition [2000] RPC 95.

138 See Fawcett and Torremans; Wadlow (1998); I. Karet, ‘Intellectual Property Litigation: Jurisdiction in

Europe’ (1998) 3 IPQ 317. 139 Fawcett and Torremans, 236-7.

140 Tbid., 198-201. '41 The most controversial example of foreign courts offering extensive relief has been the Dutch ‘kort geding’ procedure in which following a speedy hearing of both parties, the judge determines appropriate relief on the basis of forecasting the outcome in full court procedure. See J. Brinkhof, ‘Summary Proceedings

and Other Provisional Measures in Connection with Patent Infringements’ (1993) 24 IIC 762.

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9.1.1 Under the Brussels Convention

The question of whether a British court has jurisdiction over a matter is largely governed by the 1968 Brussels Convention.'” The basic rule of the Convention is that a person domiciled in a contracting state (that is an EC or EFTA state) should be sued in the courts of that state (actor sequitur forum rei).'\** Consequently, an English copyright owner must normally bring an action against a French infringer in French courts: the domicile of the claimant and the familiarity of the court with the relevant law being largely irrelevant.'** As Jacob J put it, in footballing terms the claimant must play away.'*° There are five qualifications to this basic rule which need to be noted.'*° (1) Where the matter involves a tort (therefore including infringement of intel-

lectual property rights with the possible exception of equitable actions for breach of confidence)'*” a claimant may bring an action in the place where the harmful event occurred:'8 Article 5(3). (2) Where there are a number of defendants, an action may be brought in the country where any one of the defendants is domiciled: Article 6(1).!” (3) An action can be brought in a country other than that of the defendant’s

domicile if both parties agree: Article 17.!° (4) In proceedings concerned with the registration or validity of patents, trade mark, designs, or other similar rights required to be deposited or registered, the courts of that state have exclusive jurisdiction: Article 16(4).’*!

(5) Different rules apply in relation to preliminary measures: Article 24. 142 This came into force in England on 1 Jan. 1987. Jurisdiction can be challenged according to CPR r. 11. 143 Brussels Convention Art. 2. Domicile is determined under national law: Brussels Convention Art. 52. On the problems of knowing where a person is ‘domiciled’ see Wadlow (1998), 283. 144 This has worried some of the UK judiciary. In Coin Control v. Suzo [1997] FSR 660 Laddie J was concerned that English courts might as a result have to decide ‘questions of foreign law as well as factual issues relating to the pronunciation and meaning of similar words spoken in other languages.’ See also Pearce vy. Ove Arup [1977] FSR 641.

145 Mecklermedia v. DC Congress [1997] FSR 627, 633. 146 Which are to be narrowly construed: see Kalfelis v. Scroder, Case 189/87 [1988] ECR 5565. See Wadlow, 67-9. 147 On what is a ‘tort’ see Kalfelis v. Schroeder, Case 189/87 [1988] ECR 5565 (all actions which seek to establish the liability of adefendant and which are not related to contract within the meaning of Art. 5(1)).

The breadth of this statement is hard to reconcile with other parts of Kalfelis that seemed to exclude a claim for unjust enrichment from Art. 5(3). In matters of contract, jurisdiction is given to the courts of the place of performance of the obligation. It has been suggested that breach of confidence is not within Art. 5(3): Kitechnology v. Unicor Plastmaschinen [1995] FSR 765, 778. See Wadlow (1998), 173-4. 148 Brussels Convention Art. 5(3). On the place where the ‘harmful event occurred’, see Bier v. Mines de Potasse d’Alsace, Case 21/76 [1976] ECR 1735; Shevill/Press Alliance SA, Case 68/93 [1995] ECR I-415. See Fawcett and Torremans, 154 ff.; Wadlow (1998), 90-6.

149 See Athanasios Kalfelis v. Bankhaus Schroder, Case 189/87 [1988] ECR 5565; Pearce v. Ove Arup [1997] FSR 641; Coin Controls v. Suzo International [1997] FSR 660; cf. Fort Dodge Animal Health v. Akzo Nobel NV

[1998] FSR 222; Expandable Grafts Partnership v. Boston Scientific BV [1999] FSR 352 (Court of Appeal of the Hague). See Fawcett and Torremans, 172-4 ff.; Wadlow (1998), 81-2.

150 Brussels Convention, Art. 17. See e.g. Kitechnology v. Unicor Plastmaschinen [1995] FSR 765, 774. 151 Brussels Convention, Art. 16(4). See Wadlow (1998) 104 ff.; 112 ff.

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REMEDIES

The first two exceptions are self-explanatory, and nothing more will be said about their substance here. As they provide alternative jurisdictions, they enable claimants to choose the forum. The possibility of alternative jurisdictions creates the problem that simultaneous proceedings may produce inconsistent judgments. Consequently, the Brussels Convention contains provisions which deal with pending actions (lis pendens). These provide that where a court of a contracting state is presented with a claim (e.g. on the basis of domicile) which has already been commenced elsewhere (e.g. on the basis of harm), the later action should be stayed. More specifically, Article 21 states that where a later court is presented with the same cause of action between the same parties that court must decline jurisdiction.!” In addition, a further provision gives the court a discretion to stay proceedings if it is presented with an action which is ‘related’ to one that is already being heard in the courts of another contracting state. This discretion only arises where the actions are ‘related’, that is where they are so closely connected that it is expedient that the actions be tried together to avoid the risk of irreconcilable judgments.!*? Where the parties have selected a forum under Article 17, or the action concerns

the registration or validity of patents, trade mark, designs or other similar rights, required to be deposited or registered (Article 16(4) ), the jurisdiction is exclusive: there is no question of alternative jurisdictions. If a court of a contracting state is presented with a claim which is ‘principally concerned’ with a matter over which the courts of another contracting state have exclusive jurisdiction, it should decline jurisdiction.'** While it should be relatively easy to determine whether the parties have a formal agreement governing the choice of jurisdiction (Article 17), it is more difficult to determine when Article 16(4) applies. Article 16(4) applies to the registration or validity of patents, trade mark, designs, or other similar rights required to be deposited or registered. The phrase ‘other similar rights’ refers to other registrable rights such as plant varieties, supplementary protection certificates, and utility models. As such, it does not apply where the intellectual property right is unregistered, as with copyright, unregistered design right, or passing off.'°° Article 16(4) only applies to proceedings concerning the ‘validity’ of such rights. Although in certain circumstances it is clear that an issue relating to a registered right does not concern validity (e.g. where the dispute is over ownership),'°” 'S2 Brussels Convention, Art. 21. See e.g. Molins v. G. D. SpA [2000] 1 WLR 1741 (deciding where proceedings were first started). An action for infringement of a trade mark is not the ‘same action’ as an action for passing off: Mecklermedia v. DC Congress [1997] FSR 627, 637. While a wholly owned subsidiary might be regarded as the ‘same party’ a mere licensee will not: ibid. '°3 An action brought by a defendant for infringement of a German registered trade mark (‘Internet World’) against the claimant’s licensee was held not to be ‘related’ to an action for passing off by the claimant in relation to its goodwill in the same words in England: ibid., 638. 154 For discussion of the meaning of ‘claim’ and an argument that it is distinguishable from the ‘issues’ in

that it should concern the claimant’s action, not the defendant’s response, see Wadlow (1998), 183—4.

15° Brussels Convention, Art. 19. See e.g. Coin Controls v. Suzo International [1997] FSR 660. 156 Pearce v. Ove Arup [1997] FSR 641. '°7 Ferdinand Duijnstee v. Lodewijk Goderbauer, Case 288/82 [1995] 1 CMLR 220.

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1003

in many situations the matter is less clear. For example, in an action for infringement of a patent or design registration, one of the most common ‘defences’ is that the registration is invalid. The problem here is that while questions of validity and infringement are technically distinct, in British intellectual property law they are inextricably linked.!°* The question of whether an action is ‘concerned with the registration or validity of patents, trade marks designs, or other similar rights’ is a crucial one.!°’ In Fort Dodge v. Akzo Nobel,‘®° the Court of Appeal observed that while the Brussels Convention presupposed that there was a distinction between actions of infringement and those concerning validity, the split cannot always be made. More specifically, Lord Woolf MR said that ‘when there is a bona fide challenge to the validity of a United Kingdom patent, any proceedings for infringement must in English eyes be “concerned with” the validity of the patent.’!®' However, because these conclusions were not acte clair, the court referred the issue to the European Court of Justice.’ Unfortunatley, it

seems that the litigation was settled, so a final resolution of this issue will have to await a further reference to the court.’® There are a number of problems with the Fort Dodge ruling. From a practical viewpoint, it is difficult for a court to predict when validity is going to be a real issue in a patent infringement action or, in the Court of Appeal’s terms, when a challenge is bona fide.'** Consequently, the ruling introduces unjustified uncertainty.’ From a policy point of view, the Fort Dodge ruling means that the same issues of patent validity may have to be simultaneously litigated in a number of countries with consequent costs and inconvenience. Moreover, for those who think it is inappropriate that foreign patent infringement actions are brought before UK courts,'® Fort Dodge is likely to be seen as not going far enough. The fifth possible exception to the golden rule of the Brussels Convention that a defendant should be sued in their state of domicile relates to ‘provisional measures’. More specifically Article 24 states that an application may be made to the courts of a

158 Nowhere is this more apparent than in the so-called ‘Gillette’ defence. See pp. 511-12. 159 On the policy of Art. 16(4) see Ferdinand Duijnstee v. Lodewijk Goderbauer, Case 288/82 [1995] 1 CMLR 220, 227 (Rozes AG), 235 (EC)J).

160 [1998] FSR 222. 161 [1998] FSR 222, 244. Given that the case involved just such issues, the court concluded it fell within the exclusive jurisdiction of the UK courts. 162 [1998] FSR 222, 247. The Court of Appeal also declined to grant the injunction prohibiting further Dutch proceedings, though the Court of Appeal said it anticipated that the Dutch court would take due notice of the conclusions. 163 For possible solutions see Wadlow (1998), 194-210. 164 The Dutch courts have indicated that jurisdiction with respect to infringement does not cease as soon as nullity actions are instituted: Expandable Grafts Partnership v. Boston Scientific [1999] FSR 352, 361 (Court of Appeal of the Hague). See Fawcett and Torremans, 203-4.

165 Wadlow (1998), 180-1. 166 Plastus Kreativ AB v. Minnesota Mining and Manufacturing Co. [1995] RPC 438, 447 (patent infringement cases should be heard by a court situated in the country where the public will have to pay the higher prices if infringement is found to exist).

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LITIGATION

AND

REMEDIES

contracting state for provisional measures (including protective measures that are available under the law of that state), even if under the Convention the courts of

another contracting state have jurisdiction over the substance of the matter. On one interpretation, this means that claimants can choose the forum which they prefer to get an interim injunction, even if that court could not grant final relief. If this is correct, it means that forum shopping is possible at the interim stage. However, in Fort Dodge, the Court of Appeal held that Article 24 did not justify provisional proceedings being heard in the Netherlands for infringement of a UK patent because no final relief could be given in Dutch courts.!%

9.1.2 Where the Brussels Convention is not applicable The Brussels Convention applies where a person is domiciled in a contracting state. This is the case even if the claimant is domiciled outside the EC,'® the right is granted by a state outside the EC, or the infringing acts took place outside of EC/EFTA territories. If the defendant is domiciled in the UK and a claim relates to infringement of American copyright by acts done in the USA, the Convention will apply and the UK court must accept jurisdiction. The Convention will not necessarily apply where the defendant is not domiciled in a contracting state. Thus, if a US citizen A was

resident but not domiciled in the UK, and claimant B argued that the court should take jurisdiction over A for infringement of B’s American copyright by acts in the USA, it seems that the traditional UK rules would apply.' The traditional British rules on jurisdiction were long understood to preclude an action based on infringement of foreign intellectual property rights.!”° However, in light of the Court of Appeal decision of Pearce v. Ove Arup Parnership it seems that English courts might now accept jurisdiction in these situations. In this case, the Court of Appeal said that existing case law provided no assistance ‘on the question whether an action for alleged infringement of a foreign copyright by acts done outside the United Kingdom, in a case where the existence and validity of the right is not in issue, is justiciable in an English court.’!”! However, the court might decline jurisdiction on the ground that a UK hearing is not ‘convenient’ under the principle of ‘forum conveniens ,'”2

167 [1998] FSR 222, 246.

:

168 Societe Group Josi Reinsurance Company SA v. Compagnie d’Assurances Universal: General Insurance Company, Case C-412/98 (13 July 2000) (an insurance case).

169 Similarly, if a British claimant wanted to bring an action against a US company alleging infringement of copyright in the UK, the UK court might consider serving a claim form outside the jurisdiction. In contrast with the situation where jurisdiction exists under the Brussels Convention, leave of the court is required to serve a claim from outside the jurisdiction. The claim must fall within one of the “gateways’ under the CPR r. 6.20. On the circumstances in which the service of proceedings out of the jurisdiction will be permitted see

Beecham Group v. Norton Healthcare [1997] FSR 81; Fawcett and Torremans, 25-6.

170 See Fawcett and Torremans, 279-90. 171 [1999] FSR 525, 557.

'2 Spiliada Maritime Corp. v. Cansulex [1987] AC 460. See Fawcett and Torremans, 267.

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1005

9.1.3 Community rights Special rules exist on the allocation of jurisdiction in relation to ownership of Euro-

pean patents’ and more generally for community rights (such as the Community Trade Mark and Plant Variety). Article 90 of the Community Trade Mark Regulation incorporates the Brussels Convention in modified form.'”4 The basic rule of the Brussels Convention, viz. that a person should sue in the jurisdiction where the defendant is domiciled, is maintained. This is extended to those who are not domiciled but who have an ‘establishment’ in the jurisdiction. The Community Trade Mark Regulation also modifies the application of the Brussels Convention by excluding Article 4, thereby conferring jurisdiction on the Community Trade Mark Courts over defendants domiciled outside of contracting states (rather than applying national rules). Defendants should normally be sued in the place where the claimant is domiciled (if they are domiciled in the Community). Where neither party is domiciled nor established in the Community, the action should be brought in the place where the Community Trade Mark Office is situated (i.e. Alicante). These rules are mandatory and applied in strict sequence. As a result, there is a reduced possibility of there being competing alternative jurisdictions and hence less scope for forum shop-

ping. However, despite the strict scheme, Article 93(5) of the Community Trade Mark Regulation also allocates jurisdiction based on the place of infringement. If a claimant uses this forum, relief is territorially limited. Consequently, this route is less attractive than an action brought in the state of the defendant’s domicile.'”” Moreover, Article 6 of the Brussels Convention is maintained, so that an action can also be brought against a co-defendant in a court other than the court where they are domiciled.

9.2

APPLICABLE

LAW

Once the court accepts it has jurisdiction, the next issue to determine is the law that applies. With the abolition of the so-called ‘double actionability’ rule in determining whether a tort is actionable,'”° the law to apply is usually that of the country where the infringement took place (lex loci delicti).'”’ For example, if a claimant brings an action in an English court against a defendant domiciled in the UK, alleging infringement of 173 Protocol on Jurisdiction and the Recognition of Decisions in respect to the Right to the Grant of a European Patent. Art. 4 allocates jurisdiction to the courts of the contracting state whose law determines the

right. In EPC Art. 60, this is the law ofthe state in which the employee is mainly employed. 174 Protocol on Jurisdiction Art. 13. Following the proposals of the Protocol to the Community Patent Convention on Litigation. The excluded provisions are Arts. 2, 4, 5(1), (3)-(5), and 24. Rather oddly, the CPVR bases its rules on the Lugano Convention. For problems, see Wadlow (1998), 276; Fawcett and

Torremans, 357 ff.

175 Wadlow (1998), 287-8. 176 Private International Law (Miscellaneous Provisions) Act 1995, s. 10. 177 Breach of confidence is probably not a ‘tort’ for these purposes, and defamation (and hence injurious

falsehood) are not subject to the reform: Private International Law (Miscellaneous Provisions) Act 1995, s. 13. See Wadlow (1998), 342 ff.

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REMEDIES

their Dutch copyright by acts done in the Netherlands, the applicable law would be Dutch copyright law.'”8 While the law to apply is normally that of the country where the tort occurred, in certain cases, the law to be applied is determined by special rules. For example, disputes about the ownership of European patents for employee inventions are determined by the law of the state in which the employee is mainly employed.!” Where the right infringed is a Community right, such as a Community trade mark, the relevant law is that of the Regulation concerned. However, where the Regulations do not apply, the relevant law is the law of the forum (except in the case of remedies, when it is the law of the place where the infringement occurred).

9.3

RECOGNITION

OF JUDGMENTS

Where intellectual property matters cross jurisdictional boundaries, questions often arise about the recognition and enforcement of foreign judgments. This is largely governed by the Brussels Convention. The general policy of the Convention is that there should be free movement of judgments. This means that once a court has assumed jurisdiction over a matter, any determinations it makes should be recognized and, if necessary, enforced in other member states. So, for example, if a Dutch court held that a British domiciled co-defendant infringed the Dutch claimant’s copyright, then the order of that court should be enforced by English courts. The procedure for recognition is straightforward. The judgment must first be registered and then notice is served on the person subject to the judgment.!*° The requirement that a court of a contracting state automatically recognizes judgments from other contracting states is qualified in a number of ways.!8! The most important is that where the originating court assumed jurisdiction in breach of Article 16, then recognition must be refused. Thus, if a Dutch court ordered the revocation of a British patent, UK courts would not have to recognize the judgment since it was made in respect of a claim principally concerned with validity. However,

as the scope of Article 16(4) is unclear it will be difficult to predict whether a British court would be able to refuse to recognize the Dutch judgment that a UK patent had been infringed. This is especially the case if the Dutch court formed a conclusion as to the validity of the patent.'*?

178 Pearce v. Ove Arup [1999] FSR 524, 542. 179

EPC Art. 60.

HO) Oper ae 181 Brussels Convention Art. 27(1) and Art. 28. See also Renault v. Maxicar Case C-38/98 ECJ (11 May 2000).

182 Wadlow (1998), 539.

LITIGATION

10

ALTERNATIVE

DISPUTE

1007

RESOLUTION

In many areas of law, the cost and hassle of litigation has encouraged the growth of mechanisms such as arbitration and mediation for resolving disputes outside of the court framework. While alternative dispute resolution is used in many areas of law, it has not been widely used to resolve disputes concerning intellectual property.'* It seems, however, that this may change.'** One reason for this is that the Woolf Reforms offer increased incentives for parties to avoid using the court system.'® The Civil Procedure Rules, for example, promote the use of alternative dispute resolution by providing that proceedings may be stayed pending alternative dispute resolution'*® and by allowing courts to make early neutral evaluations of the merits of the case (thus prompting settlement).'*” Another reason is that alternative dispute resolution is becoming more widely used by international bodies. A notable example is the recent extension of the WIPO

Arbitration and Mediation Centre (established in

1994), to include compulsory arbitration under the Internet Corporation for Assigned Names and Numbers’ (ICANN) Uniform Domain Name Dispute Resolution Policy.'** ICANN’s policy and procedures are incorporated into a subscriber’s Internet registration agreement, so that if a person makes a complaint to ICANN, the

registrant is required to submit to a mandatory administrative proceeding. Proceedings only begin where a complainant asserts that (i) the domain name is identical or confusingly similar to a trade mark or service mark in which the complainant has rights; (ii) the registrant has no rights or legitimate interests in respect of the domain name; and (iii) the domain name has been registered and is being used in bad faith. In the proceedings, the complainant must prove each of these three elements. The cost of the proceedings is borneby the complainant. The remedies available are the cancellation of the domain name or the transfer of the domain name registration to the complainant.'® If the ICANN regime is successful, it will provide an impetus for greater use of compulsory arbitration.” 183 See K. Mackie, ‘ADR in Europe: Lessons from a Classic US Case: IBM v. Fujitsu’ [1992] EIPR 183. M.

Doherty and I. Griffiths, ‘Costs in the Copyright Tribunal: Negotiate or Litigate?’ [1999] EIPR 370. 184 See W. Kingston, “Ihe Case for Compulsory Arbitration: Empirical Evidence’ [200] EIPR 154. 185 See J. Lambert, ‘IP Litigation after Woolf [1999] EIPR 427.

186 CPR r, 26.4. Note also the cooling off period for friendly settlement of opposition proceedings in the OHIM and the UK Registry. 187 Prior to the American Cyanamid v. Ethicon [1975] AC 396 decision, litigants used to treat the grant of interlocutory relief, as equivalent to such an early neutral evaluation. See p. 1010.

188 Approved by ICANN, 24 Oct. 1999. 189 See Scania CV AB v. Leif Westlye [2000] ETMR 767; Christan Dior Couture SA v. Liage International Inc. {2000] ETMR 773; Winterson v. Hogarth [2000] ETMR 783; Worldwide Wrestling Foundation [2000] EIPR N-37.

190 W. Kingston, ‘The Case for Compulsory Arbitration: Empirical Evidence’ [2000] EIPR 154 and [1995] European Journal of Law and Economics 85.

47 CIVIL

AND CRIMINAL REMEDIES

In this chapter we look at the criminal and civil remedies that a claimant may obtain for violation of intellectual property rights. We begin by looking at the civil relief available pre-trial: interim injunctions and prevention of importation. We then go on to look at the civil remedies available at full trial: final injunction, delivery up or destruction, damages, and account of profits. Next we look at the various criminal

remedies that may be available for a claimant. Finally, we look at some of the proposed reforms that may impact on intellectual property remedies.

1 INTERIM

INJUNCTIONS

In many cases, there may be a considerable delay between the time when a rightsholder discovers that their rights are being infringed and the time when the matter is heard at trial. In order to ensure that a rights-holder’s interests are not undermined during this period, provision exists for interim orders, sometimes referred to as ‘interlocutory’ relief." The most important of these is the interim injunction.” This is a court order to stay events pending a final determination. An interim injunction will only be granted if the matter is urgent or is otherwise desirable in the interests of justice.’ Given the urgency, applications for interim injunctions are disposed of quickly. They are usually considered on the basis of sworn written evidence which has not been subjected to cross-examination. Consequently, there is a danger that the tribunal’s interim decision will differ from the result after matters are fully aired at trial. It is therefore important that when a court grants interim relief that it does so in a way which minimizes the irreparable consequences to the parties that may arise from a hasty view of the merits of the case. In these circumstances, the courts are ' R. Sharpe, Injunctions and Specific Performance (1983), 64-87; A. Burrows, Remedies for Torts and Breach of Contract (1994), 423-43; P. Cole, ‘Interlocutory Injunctions in UK Patent Cases’ [1979] EIPR 71; M. Hoyle,

‘Interlocutory Injunctions in Intellectual Property Disputes’ [1988] EIPR 112. 2 CPRr. 25.1(a).

3 CPR r. 25.2(2)(b). 4 Films Rover International v. Cannon Film Cells [1986] 3 All ER 772, 780.

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caught in a tension. On the one hand, there is a desire to examine the issues as fully as possible to ensure that the interim decision is accurate. At the same time, since the evidence is necessarily inadequate, there is a desire to ignore the legal issues and focus instead on minimizing the injustices that will ensue from incorrect preliminary intervention. Applications for interim injunctions in the UK are usually assessed according to the approach set out by the House of Lords in American Cyanamid v. Ethicon.® It is important to note that recent cases have been reluctant to follow these guidelines strictly. It should also be noted that the 1998 Human Rights Act has modified the approach that must be taken in cases which concern freedom of expression. In American Cyanamid the claimant sought interim relief to restrain the defendant from infringing the claimant’s patent for surgical sutures. The defendant company planned to argue at trial either that it had not infringed or that the claimant’s patent

was invalid. When considering whether to grant interim relief, the High Court and the Court of Appeal said that the key question was whether the claimant had established a strong prima facie case.’ Overturning this approach, the House of Lords rejected previous suggestions to the effect that a prima facie case must be established before a court could grant interim relief. Instead, the Lords laid down a reduced threshold requirement. More specifically, the House of Lords said that for a court to be vested with the discretion to grant an interim injunction, it was necessary for a claimant to establish that there was ‘a serious question to be tried .* Once a claimant has established that this threshold had been met, the House of Lords said that when considering whether to grant an interim injunction, the court should then go on to consider a series of other matters. First, the court should compare the possible effects of granting and not granting the injunction on the defendant and the claimant. Lord Diplock explained that this involved deciding whether the claimant’s or defendant's interests were capable of being satisfied solely by financial means. If these considerations do not produce a clear indication of the best course of action, the court should consider the ‘balance of convenience’. In turn, if there is no clear result from considering the balance of convenience, the court should look at the merits of the case. The goal of American Cyanamid was to reduce the number of mini-trials that occurred at the interim stage and thereby speed up the process of granting interim relief. In turn, it was thought that this would avoid duplication and produce a more efficient judicial process. Nevertheless, the approach set out in American Cyanamid has been criticized on a number of grounds.’ First, it has been said that Lord Diplock

5 6 7 that had

See J. Leubsdorf, ‘The Standard for Preliminary Injunctions’ (1978) 91 Harvard Law Review 525. American Cyanamid y. Ethicon [1975] AC 396. In the High Court, Graham J found that the claimant had established a strong prima-facie case and the balance of convenience favoured the grant of interim relief. In the Court of Appeal, where argument lasted for two weeks, Russell LJ held that no prima-facie case of infringement had been proved, and so did

not go on to consider the balance of convenience: [1974] FSR 312.

8 American Cyanamid v. Ethicon [1975] AC 396, 407-9. 9 See P. Prescott, ‘American Cyanamid y. Ethicon’ (1975) 91 Law Quarterly Review 168.

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failed to deal adequately with, or refer to, a number of existing House of Lords authorities which are difficult to reconcile with American Cyanamid."° Secondly, while

the approach set out in American Cyanamid is supposed to be of general application, it is inflexible especially where a claimant’s case is strong.'' Many commentators have noted that it gives rise to the perverse situation whereby the availability of interim injunctive relief to a claimant with an open-and-shut case turns on questions of convenience. Thirdly, it is also said that it is unrealistic to expect judges not to take into account obvious conclusions as to the merits of the case.!2 Fourthly, ignoring the merits and basing the availability of relief on matters such as the adequacy (including the ability to pay) damages sometimes unduly favours established businesses at the expense of newer, financially weaker, competitors.'? Fifthly, the refusal to consider the merits overlooks the value to litigants of the kind of ‘mini-trials’ which took place prior to American Cyanamid. More specifically, it has been argued that because interim relief required the merits of the parties’ cases to be considered, the interim decision was often treated as indicating the final outcome of the case. In effect, interim relief was used as a cheap method of litigation and as a way of avoiding long-drawn-out final trials.'4 For some time it was unclear whether the principles in American Cyanamid applied to all proceedings for interim injunctions for infringement of intellectual property rights.” In particular it was suggested that American Cyanamid did not apply in passing off cases.'° This view was later rejected, and in County Sound v. Ocean Sound the Court of Appeal argued that the principles were well suited to a passing off action.’” In addition, after some doubts,'® the American Cyanamid approach has also been applied to cases of breach of confidence and restraint of trade cases.!2 While the general applicability of American Cyanamid to intellectual property cases has been accepted, a number of exceptions have been introduced to the American Cyanamid approach.”° The most important of these was the recognition of the principle that where the interim decision would be determinative of the action, the MOS

Stratford & Son v. Lindley [1965] AC 269 (a requirement of a ‘sufficient prima facie case’) and

Hoffmann-La Roche ¥. Secretary of State forTrade and Industry [1975] AC 295 (requiring a strong prima facie

case).

'l Rubycliff v. Plastic Engineers [1986] RPC 573, 583 (American Cyanamid recognized to be not ‘a very popular decision, being rather formal and rigid’). A. Gore, ‘Interlocutory Injunctions : A Final Judgment?’ (1975) 38 Modern Law Review 672, 678. See also J. Leubsdorf, ‘The Standard for Preliminary Injunctions’ (1978) 91 Harvard Law Review 525, 540.

12. Alfred Dunhill v. Sunoptic [1979] FSR 337, 372-3. P. Prescott, “American Cyanamid v. Ethicon’ (1975) 91 Law Quarterly Review 168. '4 Ibid. at 169; Leubsdorf, ‘The Standard for Preliminary Injunctions’, at 540. '> K. Gray, ‘Interlocutory Injunctions Since American Cyanamid’ (1981) 40 Cambridge Law Journal 307.

'© Newsweek v. BBC [1978] RPC 441.

'7 County Sound v. Ocean Sound [1991] FSR 367, 372. 18 Fellowes v. Fisher [1976] QB 122; Office Overload v. Gunn [1977] FSR 39, 43 (Lord Denning MR) (cf. Bridge LJ at 44).

19 Lawrence David v. Ashton [1991] 1 All ER 385. 20 A. Burrows, Remedies for Torts and Breach of Contract (1994) 432 ff.; MacMillan Magazines v. RCN

Publishing [1998] FSR 9, 12.

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approach in American Cyanamid is not appropriate. This is because the basic goal of American Cyanamid, namely to minimize the harm when a preliminary decision turns out to have been incorrectly decided, does not arise where the preliminary decision is going to be the only decision. In these cases the court should simply do its best to

resolve the legal issues.”! In general, however, when considering the grant of interim relief the court should operate in two stages. First, the court should decide whether there is a serious question to be tried (or in freedom of expression cases, whether the claimant is likely to succeed). Secondly, if the court decides that this threshold has been reached, it should

then go on to consider whether to exercise its discretion to grant an injunction. That is, it will consider whether it would be fair to grant interim relief.” We now examine these two stages in more detail.

1.1

SERIOUS

QUESTION

TO

BE TRIED

The first task confronting a claimant seeking an interim injunction is that they must satisfy the threshold requirement that there is a serious question to be tried. In other words if the evidence reveals that the claimant does not have any real prospect of succeeding in his or her claim for a permanent injunction at trial, the court will not even consider the balance of convenience.”* According to Lord Diplock, when determining whether there is a serious question to be tried the court should only investigate whether a known cause of action is revealed. In so doing it should take account of points of law that necessarily arise on the facts that are revealed at the interlocutory stage. The courts should not, however, embark upon mini-trials of disputed questions of fact or difficult questions of law. A claimant might fail to demonstrate that there is a serious question to be tried for a number of reasons. In some cases, a claimant may fail to show a realistic cause of action. For example, if a straightforward reading of existing case law suggests that the cause of action does not exist, the application will be refused.” Moreover, if the

claimant’s case is dependent on overseas authorities,” or the extension of an existing action to new circumstances, the court might take the view that this falls below the

21 The general principle was established in NWL v. Woods [1979] 3 All ER 614. It has frequently been applied in intellectual property disputes: Athletes Foot v. Cobra Sports [1980] RPC 343 (where little dispute on facts and law not difficult); Mirage Studios v. Counter-feat Clothing [1991] FSR 145, 154; Barnsley Brewery Company v. RBNB [1997] FSR 462.

22 United Biscuits v. Burton Biscuits [1992] FSR 14, 15. 23 Although Lord Diplock equated this test with a claimant showing that the vexatious’, subsequent courts have preferred to ignore that rephrasing which prudential baggage of the striking out action: see Mothercare v. Robson Books Consorzio del Proscuitto Di Parma v. Marks & Spencer [1991] RPC 351, 372 per 383.

claim is not ‘frivolous or carries with it the juris[1979] FSR 466, 472-4; Nourse LJ; cf. Leggatt LJ,

24 Mail Newspapers v. Insert Media [1987] RPC 521, 529-30; Brigid Foley v. Ellott [1982] RPC 433; Schulke

& Mayr v. Alkapharm [1999] FSR 161, 166.

25 Lyngstrad v. Anabas Products [1977] FSR 62, 68 (Oliver L)).

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threshold.” In contrast, where the existing authorities are merely unclear, the court will usually decline to resolve the dispute and treat the situation as raising a serious question to be tried. More commonly, a court will find that there is no arguable case because the affidavit evidence is so insubstantial that it is clear that the case will fail. In many Cases, particularly in passing off and trade mark cases, the court will be able to make a fairly confident judgement on factual matters such as whether a name or get-up is not distinctive,” and whether there is a misrepresentation”* or a likelihood of confusion? The fact that a reasonable person could bring the action in good faith will not matter if it is so hopeless a case that no interim relief should be available.3° Having said that, a case may be ‘thin’ but arguable.*! Another reason why the court may hold that there is no serious question to be tried is because the defendant has a very strong prospect of a successful defence.** It should be noted that the question is not whether there is an arguable defence: if the defence is only arguable, there is a serious question to be fried>? An important qualification to the threshold for injunctive relief set out in American Cyanamid was introduced by section 12(3) of the 1998 Human Rights Act.** This provides that where a court is considering whether to grant relief which might affect the exercise of the Convention’s right to freedom of expression,*° no relief should be granted that restrains publication prior to trial ‘unless the court is satisfied that the applicant is likely to establish that publication should not be allowed.>5 The court is further instructed to take account of the extent to which the material has or is about 26 Times Newspapers v. MGN [1993] EMLR 443; Brigid Foley v. Ellott [1982] RPC 433; Marcus Publishing v.

Hutton Wild Communications [1990] RPC 576, 584. 27 Scott v. Nice-Pak Products [1988] FSR 125; Marcus Publishing v. Hutton Wild Communications [1990] RPC 576, 583; County Sound v. Ocean Sound [1991] FSR 367, 372.

8 Consorzio del Proscuitto Di Parma v. Marks & Spencer [1991] RPC 351, 372 (describing this-as a question of ‘law depending on evidence already before the court which is of its nature complete and

incontrovertible’). 22° Morning Star Co-operative Society v. Express Newspapers [1979] FSR 113 (no serious question to be tried

that Daily Star would be confused with Morning Star); Furnitureland v. Harris [1989] FSR 536 (no arguable case that FURNITURE CiTy infringed the plaintiff's FURNITURELAND trade mark), 39 Mothercare v. Robson Books [1979] FSR 466, 472-3. 31 Metric Resources Corporation v. Leasemetrix [1979] FSR 571, 580. 32 News Group Newspapers v. Rocket Record [1981] FSR 89, 102.

33 Cf. Warnerv.Channel Four [1994] EMLR 1. 34 This was confirmed in Douglas v. Hello! [2001] EMLR 199 Keene L) at 246-8, paras. 145-53; and Sedley

LJ (at 242-4, paras. 134-6) (CA). This does not appear to be inconsiste nt with TRIPs Art.-50 which requires

that judicial authorities have the authority to order ‘prompt and effective provisional measures’ because Art. 50(3) allows for consideration of the evidence as to whether the applicant’s rights are being infringed. 3° There will no doubt be argument over when an intellectual property right interferes with freedom of expression: see e.g. Associated Newspapers Group v. News Group Newspaper s [1986] RPC 515, 517 (denying that copyright interferes with freedom of speech); Duracell International v. Ever Ready [1989] FSR 71, 85 (denying that comparative advertising raised question of free speech). 36 This makes explicit the courts’ pre-existing tendency to demand that a claimant show more than merely a serious question to be tried in freedom of expression situations. Kennard v, Lewis [1983] FSR 346, 347; Secretary of State for Home Dept. v. Central Broadcasting [1993] EMLR 253, 274 (Hirst LJ); Times Newspapers v. MGN [1993] EMLR 443 (requiring the claim to be “convincing’).

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to become available to the public. The courts also take account of whether it would be

in the public interest for the material to be published.*” 1.2

IS IT FAIR

THAT

THE

INJUNCTION

BE GRANTED?

Where the claimant passes the threshold and establishes that there is a serious question to be tried, the court will then consider whether to exercise its discretion to grant an injunction. That is, it will consider whether it would be fair to grant interim relief. The aim is to reduce the chances of the provisional decision providing an unjust result.** In so doing, the court will focus on three factors: whether damages would be

an adequate remedy, the balance of convenience, and the relative strength of the parties’ cases.*? 1.2.1 Adequacy of damages The first matter to be considered is the adequacy of damages. Here, the court asks if an injunction was refused would damages awarded at full trial be a satisfactory remedy for the claimant? If damages are an adequate remedy for a claimant and the defendant is able to pay them, no relief should be granted.” In considering whether damages would be an adequate remedy, the courts will consider whether the damage suffered by the claimant is reparable at all. That is, they ask whether the claimant’s interest can be compensated by a financial remedy that may be granted at trial. If the damage is to a non-financial interest, such as privacy or personal reputation, it is highly unlikely that the claimant will be able to be compensated for the loss in question. As a result, interim injunctions are less likely to be awarded in patent cases, compared with confidentiality or copyright cases where nonfinancial interests are often present.*! In addition, if the claimant has been in the habit of licensing rights for royalties, it is likely that damages will be seen to be an adequate remedy.” 37 Human Rights Act 1998, s. 12(4). The tribunal is also instructed to take into account ‘any relevant privacy code’. See J. Griffiths and T. Lewis, “The Human Rights Act 1998, s. 12: Press Freedom over Privacy?’ [1999] Entertainment Law Review 36.

38 Barnsley Brewery Company v. RBNB [1997] FSR 462, 472; Netlon y. Bridport-Gundry [1979] FSR 530, 535; Film Rover International v. Cannon Film Sales {1987] 1 WLR 670, 680. 39 In its initial formulation, Lord Diplock’s speech appears to set out a series of matters to be considered

sequentially, rather than a catalogue of factors—a matter criticized by A. Gore, ‘Interlocutory Injunctions: A Final Judgement?’ (1975) 38 MLR 672, 678. However, in a number of cases the latter approach has been preferred: see e.g. Fleming Fabrications v. Albion Cylinders [1989] RPC 47, 56. Polaroid v. Eastman Kodak [1977] FSR 25, 35. Note that the ‘adequacy of damages’ issue is sometimes treated as part of the assessment of the balance of convenience. Indeed, Lord Diplock used the term ‘balance of convenience’ inconsistently in this respect. Nothing, however, appears to turn on the categorization.

40 Roussel-Uclafv.Searle & Co. [1977] FSR 125; Baywatch Productions v. The Home Video Channel [1997] FSR 22: 41 Catnic v. Stressline [1976] FSR 157.

42 Smith & Nephew v. 3M United Kingdom [1983] RPC 92, 102. However, just because the claimant has granted a licence does not mean its losses will be quantifiable. See e.g. Games Workshop v. Transworld Publishers [1993] FSR 705, 714 (passing off).

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The courts also consider whether the defendant is likely to be able to pay such damages.*? In general, the impact of this is that the smaller a defendant’s business, the more likely interim relief will be granted.** In some cases, in order to avoid unduly favouring rich claimants over poorer defendants, the courts have devised orders that

allow a defendant to continue their allegedly infringing operations even where they cannot provide an undertaking. In these orders, the courts protect the claimant’s rights by requiring the defendant to make payments into an account on a royalty-type basis.*° Where damages are not an adequate remedy, the courts will consider whether it is possible to formulate a cross-undertaking that compensates the defendant for any harm caused during the period when their activities were curtailed. If the crossundertaking would be satisfactory, then an injunction should be granted. Usually the question is merely one of the adequacy of damages, not of their ability to pay. The reason for this is that if there is any doubt as to reliability of the cross-undertaking, the court may require the claimant to provide security. If the claimant acted promptly, the chances are that the cross-undertaking will be satisfactory and that the interim relief will be granted. (This is because money spent in preparations for trade are usually quantifiable.)*° Moreover, pending trial the defendant can continue to trade in noninfringing ways (for example, by selling non-infringing items or selling goods under a different trade mark). This, however, will not be the case where timing is crucial to the defendant, for example, where the defendant is satisfying a short-term fashion or seasonal demand,” where a third-party competitor of the defendant is about to launch,** or where the defendant’s whole business is in allegedly infringing goods.” If the defendant is already selling the allegedly infringing goods on the market, the crossundertaking is liable to be inadequate. This is because it will be very difficult to quantify losses incurred from withdrawing from a (usually expanding) market. 1.2.2 Balance of convenience

In deciding whether to grant an interim injunction, the court will consider the balance of convenience.”' The facts that are taken into account will vary depending on ‘8 Dyrlund Smith v. Turbervill Smith [1998] FSR 774; Alfred Dunhill v. Sunoptic SA [1979] FSR 337, 365, 368; Metric Resources Corporation v. Leasemetrix [1979] FSR 571, 581.

44 Quantel v. Shima Seiki Europe [1990] RPC 436 (no interim injunction in patent case where defendant

gave bank guarantee of £2 million to cover damages). 45. Vernon (Pulp Products) v. Universal Pulp Containers [1980] FSR 63; Brupat v. Sandford Marine Products [1983] RPC 61; Mirage Studios v. Counter-feat Clothing [1991] FSR 145, 154. 46 Mothercare v. Robson Books [1979] FSR 466, 475; Metric Resources Corporation v. Leasemetrix [1979] FSR 571,581; Ames Crosta v. Pionex International [1977] FSR 46, 49. Cf. Polaroid v. Eastman Kodak [1977] FSR25, 35.

47 In a case of alleged copying of dress designs, the Court of Appeal took the view that although damages would not be adequate for either party, they should nevertheless ‘fight it out for the money stake’: Aljose Fashions v. Alfred Young & Co. [1978] FSR 364, Cf. Monet of London v. Sybil Richards [1978] FSR 368; Quaker Oats v. Alltrades Distributors [1981] FSR 9, 14; Monadress v. Bourne & Hollingsworth [1981] FSR 118.

48 Silicon Graphics v. Indigo Graphic Systems [1994] FSR 403, 418. 49 Mirage Studios v. Counter-feat Clothing [1991] FSR 145, 153. 50 Quantel v. Shima Seiki Europe [1990] RPC 436. >! It has been said that the phrase is rather inept, and alternative phrases such as the ‘balance of injustice’

or ‘prejudice’ have sometimes been deployed.

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the circumstance of the case. It has sometimes been suggested that the public interest may be taken into account in assessing the balance of convenience. For example, if granting injunctive relief might prevent the public having access to a life-saving drug, then such relief might be refused. The court will also compare the likely impact that their decision will have on both parties. For example, in a case of alleged copying of a dress design, the Court of Appeal held that the risks which the claimant was exposed to were ‘more dreadful’ and their “consequences more lasting and more irreparable’. As such, they granted interim injunction.” In contrast, where there is only a remote risk of damage to the claimant, but the defendant would certainly suffer substantial unquantifiable damage, the balance of convenience will be against the grant of interim injunctive relief.** If the order would prevent the defendant from earning a living, it is more likely that the court will be reluctant to grant interim relief.°° Another factor often considered in the determination of the balance of convenience is whether the claimant brought the action promptly. If the claimant has delayed bringing the action, the court will usually refuse interim relief.°° This is especially the case where over the period where the claimant failed to act, the defendant spent a

considerable amount of money or put themselves at risk.°” However, if the claimant

can explain the delay or show that they acted diligently, the court is unlikely to treat this as a basis for refusing interim relief.°* Another factor often considered in the determination of the balance of convenience is whether the defendant deliberately took a risk. If the defendant deliberately risked infringing, this may tip the balance of convenience in favour of an injunction.” Where the factors are evenly balanced, Lord Diplock suggested that the best course is to preserve the status quo.® Subsequent cases have said that the status quo refers to the period preceding the issue of the ‘statement of case’ claiming a permanent injunction.*' Thus if a defendant is doing something they have not done before, all the injunction does is to postpone their activities; if the injunction would stop them from continuing to do something they were already doing this would cause greater inconvenience. The courts have been careful to prevent the desire to preserve the

status quo from being used tacticaily. In particular, they have been careful to ensure 52 Roussel-Uclafv.Searle [1977] FSR 125, 131-2. 53 Monadress v. Bourne & Hollingsworth [1981] FSR 118, 122. >4 John Walker v. Rothmans International [1978] FSR 357, 363; British Association of Aesthetic Plastic Surgeons v. Cambright {1987} RPC 549; John Wyeth v. Pharmachem [1988] FSR 26, 33.

55 Raindrop Data Systems v. Systemics [1988] FSR 354, 361. °© Silicon Graphics v, Indigo Graphic Systems [1994] FSR 403. 57 Financial Times v. Evening Standard {1991]| FSR 7, 12-13 (delay of 11 days taken into account). 58 Mirage Studios v. Counter-feat Clothing [1991] FSR 145, 153 (3-month delay explained by fact that claimant was attempting to enforce claim through trading standards authorities). °° News Group Newspapers v. Rocket Record [1981] FSR 89, 107; Elanco Products v. Mandops (Agrochemical Specialists) [1979] FSR 46.

60 This has been referred to as a ‘judicial last resort’: Barnsley Brewery Company v. RBNB [1997] FSR 462. 61 Garden Cottage Foods v. Milk Marketing Board [1983] 2 All ER770, 774. But not always: Alfred Dunhill v. Sunoptic [1979] FSR 337, 376 (date may well vary in different cases). 62 Elanco Products v. Mandops (Agrochemical Specialists) [1979] FSR 46.

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that a defendant cannot alter the status quo for example by embarking on a high-risk strategy. 1.2.3 The merits of the case

The third factor that the court will consider in deciding whether an interim injunction should be granted is the relative strength or merits of the parties’ cases. According to the traditional reading of American Cyanamid, the court should only consider the merits of each party’s case in the last resort. Applying the approach strictly, the courts have often refused to indicate which of the parties’ cases they consider to be stronger, for fear that it might prejudice the ultimate outcome.” While American Cyanamid suggests that the strength of the parties’ cases should not be considered until this final stage, nonetheless in a number of cases the courts

have been influenced by the merits of the claimant’s case when considering factors such as the adequacy of damages and the balance of convenience.® This generated a growing feeling of unease that judges were not following American Cyanamid.© In Series 5 Software Laddie J criticized this trend saying that he did ‘not believe it is satisfactory to exercise the court’s discretion to grant an interlocutory injunction by paying lip-service to the guidance given in American Cyanamid while in practice applying different criteria.’ Laddie J took the opportunity in Series 5 Software ‘to look again at American Cyanamid to see what it decided’. Laddie J’s primary concern was to consider the extent to which Lord Diplock’s judgment precluded a court from considering the legal and factual merits of the case. Laddie J argued that Lord Diplock could not have been imposing the sea change attributed to him, given the fact that in a subsequent decision Lord Diplock himself said that to justify the grant of such a remedy the claimant must satisfy the court first that there is a strong prima-facie case.’ Laddie J argued that when Lord Diplock said that the court should not consider the strength of the claimant’s case, he was merely referring to the ‘mandatory initial hurdle’. Indeed, a close analysis of the factors which Lord Diplock thought were relevant revealed that even he would consider the strength of the case. Laddie J therefore argued that the prospects of success was still a relevant factor when considering the balance of convenience. However, he did accept that Lord Diplock had intended that this should be conducted in a way so as to avoid a mini-trial. Laddie J’s reformulation has met with a mixed reception. In Barnsley Brewery 63 Jian Tools for Sales Inc. v. Roderick Manhattan Group Ltd. [1995] FSR 924, 943. 64 Sodastream v. Thorn Cascade [1982] RPC 459, 467. For discussion of the prejudice argument, see J. Leubsdorf, “The Standard for Preliminary Injunctions’ (1978) 91 Harvard Law Review 525, 546-7.

6 Alfred Dunhill v. Sunoptic SA [1979] FSR 337, 374; County Sound v. Ocean Sound [1991] FSR 367, 372. 6° K. Gray, ‘Interlocutory Injunctions Since American Cyanamid’ (1981) 40 Cambridge Law Journal 307, 338-9 refers to differences of appearance rather than substance. 6? Series 5 Software v. Clarke [1996] 1 All ER 853; [1996] FSR 273 (the analysis appears to have been obiter). 68 Hoffmann-La Roche v. Secretary of State for Trade and Industry [1975] AC 295, 360. 6° For example, Lord Diplock stated that if damages would satisfy a claimant no injunction should be granted ‘however strong the plaintiffs claim’—implying that if damages were not adequate the strength of the claim was a relevant consideration.

REMEDIES

1017

Company v. RBNB,” Robert Walker J signalled his approval, by stating that while Series 5 ‘is sometimes regarded as surprising or even heretical’, it provided a valuable reminder of the background to and basic message contained in American Cyanamid. However, other judges have ignored Series 5, preferring to stick to American Cyanamid and the acknowledged exceptions to it.”! Most recently, in Guardian Media Groups v. Associated Newspapers’? the Court of Appeal said that the American Cyanamid principles had a degree of flexibility and do not prevent the court from giving proper weight to any clear view which the court can form at the time of the application for interim relief (and without the need for a mini-trial on copious affidavit evidence) as to the likely outcome at trial. That is particularly so when the grant or withholding of interim relief may influence the ultimate commercial outcome.

The better view appears to be that the strength of each case is a relevant factor for the court to take into account when it exercises its discretion. However, this should

only be considered where there is no credible dispute as to the evidence and it is clear that one party’s case is more likely to succeed.”

2 STOPPING

IMPORTATION

In many situations, the infringing products originate from other jurisdictions. In

these circumstances, the claimant may try to prevent the infringement at its source. Alternatively, they may try to intercept the infringing articles or materials at the point of importation.” There are two legal mechanisms for stopping articles that infringe intellectual property rights at their point of importation into the UK.” The most important of these are the European procedures specified in the Infringing Goods Regulation.”° The other set of procedures, which are now of limited scope, derives from domestic legislation.”” The European Regulations attempt to establish mechanisms which ensure that goods which infringe intellectual property rights (other than travellers’ personal luggage) can be retained by customs authorities when they are introduced into or exported from the Community. The Regulations define goods infringing intellectual 70 [1997] FSR 462, 472 (refusing injunction largely because claimant’s case in passing off though not unarguable was weak). 71 EMAP National Publications v. Security Publications [1997] FSR 891; Dyno-Rod v. Reeve [1999] FSR 149, 151-2, 158-9.

72 (20 Jan. 2000). 73 Intelsec Systems v. Grech-Cini [1999] 4 All ER 11, 26,

74 House of Commons Select Committee on Trade and Industry 8th Report (1998-9), Trade Marks, Consumers and Fakes, para. 102 (reporting 4000 seizures between 1995 and 1997). 75 TRIPs Arts. 51 and 52 requires such measures. 76- Council Regulation no. 3295/95 of 22 Dec. 1994 (as amended by Council Regulation 241/99 of 25 Jan. 1999). The Counterfeit and Pirated Goods (Consequential Provisions) Regulations 1995 (SI 1995/1447). 77 TMA s. 89; Trade Marks (Customs) Regulations 1994 (SI 1994/2625); CDPA s. 111.

1018

LITIGATION

AND

REMEDIES

property rights to cover ‘counterfeit’ goods infringing trade marks, ‘pirated’ goods infringing copyright, and goods which infringe patents and supplementary protection certificates, but not plant varieties.’”* The Regulations do not apply to parallel imports or overruns.” Provisions are made in the Infringing Goods Regulation for a pro-active intellectual property rights-holder who gets wind of the fact that goods are going to be imported, to ask the relevant customs authorities (the Criminal Justice, Fraud and Enforcement

Team of HM Customs and Excise) to hold the goods. The right-holder is required to describe the goods and provide proof that he or she is the rights-owner.®” The customs authorities may ask for security and charge.*! If advance warning has not been given, but the relevant authority discovers goods which it suspects are infringing, the Regulation empowers the authority to prevent their transit temporarily. During this time the authority will attempt to contact the relevant intellectual property right-holder,®” who has three days to lodge a suitable application and provide information that shows that the goods infringe their intellectual property rights.* In the light of such a finding, the relevant customs authority may not release the goods.** The right-owner must then refer the matter to ‘an authority competent to take a substantive decision’, or an authority duly empowered to adopt an interim measure. If the customs office is not informed within ten days either of an interim decision, or a substantive application, the goods are released.*° 78 Infringing Goods Reg. Art. 1(2)(a). This further defines ‘counterfeit goods’, as goods which infringe registered trade marks where the trade mark used without consent is identical to or cannot be distinguished in its essential aspects from the registered mark; and which is used on the same type of goods; and ‘pirated goods’ as goods which are or embody copies made without the consent of the holder of the copyright or neighbouring rights or design right whether registered under national law or not. ” Infringing Goods Reg. Art. 1(4) (goods which have been manufactured with the right-holder’s consent but are placed in circulation without it, or which are manufactured or bear a trade mark ‘under conditions other than those agreed with the holder of the right in question’). 89 Infringing Goods Reg. Art. 3(2). See Commissioners of Customs and Excise v. Top High Development [1998] FSR 464 (no reasonable grounds for seizure by customs authority where declarant had only applied for a trade mark and was not yet registered).

81 Infringing Goods Reg. Art. 3(4); SI 1995/1430 rs. 5~6. The charge is £200 for the first month, £400 for 3 months, £700 for 6 months, and £1200 for a year. 82 Infringing Goods Reg. Art. 4; Goods Infringing Intellectual Property Rights (Consequential Provisions) Regulations 1999 (SI 1999/1618) r. 4.

83 Infringing Goods Reg. Art. 3. 84 Thid., Art. 2. 85 Although it has been held that the customs authority is itself an authority duly empowered to adopt an

interim measure and consequently a decision of customs to seize the goods as liable to forfeiture is sufficient

(Martin Ponting v. H. M. Commissioners of Customs and Excise [1999] FSR 394, 401) such an interpretation is

difficult to square with the wording of Art. 7, as well as the EC]’s decision in Re Adidas, Case C-223/98 [2000]

FSR 227, 232; [1999] 3 CMLR 895 which suggests that the competent authority is not the customs authority itself. Consequently, it seems that in the 10-day period the right-holder must make an application to a court—in England and Wales, the High Court. The customs authorities currently only require such an application where the relevant right is a patent, supplementary protection certificate, or registered or unregistered design right. 86 Where no interim order is made within 10 days (but substantive proceedings have begun), Infringing Goods Reg. Art. 7(2) allows for release of goods suspected of infringing patent, certificates, or design rights on provision of ‘security’. See Worsdall and Clark, para. 7.34.

REMEDIES

1019

If the owner of seized goods wishes to contest the seizure, they must give written notice to the customs authorities. In turn, the Commissioners of Customs and Excise must institute ‘condemnation proceedings’, either in the High Court or a magistrates’

court.*’ If the goods are found to be infringing at the substantive hearing, the competent authorities are empowered to destroy the goods and take any measures which deprive the persons concerned of the economic benefits of the transaction.** Reexporting or removing trade marks affixed to counterfeit goods is not normally regarded as sufficient. A residual domestic procedure continues to coexist with the European Regulation,®® but does not apply to goods already in free circulation within the EEA. According to this procedure, copyright and trade mark owners may notify the Commissioners of Customs and Excise that infringing goods, materials, or articles

are about to be imported and request that they be prohibited.” As regards copyright, the right only applies to printed copies of a literary, dramatic, or musical work or of sound recordings or film. As such, it does not cover things such as computer programs on disc or artistic works. Given that the copyright works covered by the domestic procedures fall within the scope of the EC Regulation (which pre-empts domestic procedures), its impact in this sphere is likely to be restricted to parallel imports and overruns. As regards trade marks, the domestic procedure applies to all infringing goods, materials, or articles and so is broader in scope than the EC procedure. As with the EC procedure, the applicant must give certain information so that the Commissioners can establish that the applicant is the copyright or trade mark owner and that the goods (etc.) are infringing. The Commissioners may require an indemnity and security against any liability and expense which may accrue.”’ Once a notice is in force the importation of the goods is prohibited. If the customs find such goods (other than for the private and domestic use of the person importing them), they will be seized and the owner informed.’* The owner has one month to make a claim that the goods were not liable to seizure. If such notice is given the Commissioners are obliged to bring proceedings for ‘condemnation’ of the goods (either in the Magistrates’ Court or High Court).”* If successful, the goods will usually be destroyed.”*

87 Customs and Excise Management Act 1979, Sched. 3. 88 Infringing Goods Reg. Art. 8: Customs and Excise Management Act 1979, s. 139, Sched. 3.

89 See Morcom et al., ch. 18; Wordsall and Clark, 214-17; Copinger, 1118-20. 90 CDPA

s. 111; Copyright

(Customs)

Regulations

1989 (SI 1989/1178), amended

by Copyright

(EC

Measures Relating to Pirated Goods and Abolition of Restrictions on the Import of Goods) Regulations 1995 (SI. 1995/1445); TMA s. 89, s. 112; Trade Marks (Customs) Regulations 1994 (SI 1994/2625).

71 GDPA\s, 112. 92 Customs and Excise Management Act 1979, Sched. 3, para. 1(2).

93 Tbid., para. 8.

°4 CDPA s. 111(4); TMA s. 89(2).

1020

LITIGATION

3 FINAL

AND

REMEDIES

INJUNCTION

A final or perpetual injunction is usually granted to an intellectual property rightowner who proves at trial that his or her rights have been infringed by the defendant.” A final injunction will order the defendant not to carry on with certain activities. As such, it is directed at future conduct, whereas the financial remedies

operate in relation to past acts. The injunction, being equitable in origin, is a discretionary remedy. This means that while final injunctions are normally awarded, they are not granted automatically. The question of whether an injunction should be granted usually depends on the facts of the case.?° Nevertheless, the courts have indicated a few of the circumstances

where an injunction might be refused.”” These include situations where the infringement is trivial and can be estimated in financial terms and adequately compensated by money and an injunction would be oppressive on the defendant;8 where a claimant is only interested in money;

where

the claimant’s

action is vexatious;

or where

the

infringing act is old and there is no future threat.?? Moreover, in circumstances where licences of right are available to a defendant, injunctive relief will not normally be granted.'* An injunction will not be refused simply because there is a public interest in widespread exploitation or dissemination of a particular product (such as a cure for HIV);'"! or the infringing material comprises only a small portion of the defendant’s products.! The appropriate scope of injunction in intellectual property rights has recently become a contentious issue. It has been common practice to grant an injunction that corresponds to the rights that were infringed. For example an injunction might be granted that restrains the defendant from infringing the patent in suit or restrains the defendant from passing off his goods as those of the claimant.!°? This was done on the basis that ‘claimants cannot be adequately protected by orders which are cabined or confined.’!* However, in Coflexip v. Stolt Comex Seaway, Laddie J cast doubt on this °° Chiron v. Organon

(No. 10) [1995] FSR 325 (as a general rule a defendant who interferes with a

proprietary right will be injuncted).

°6 Proctor v. Bayley (1889) 6 RPC 538, 541.

7 The leading authority is Shelfer v. City ofLondon [1895] 1 Ch 287. Cf. CTMR Art. 98, which requires a Community trade mark court to grant an injunction ‘unless there are special reasons for not doing so’. °8 Sterwin v. Brocades [1979] RPC 481. : % Raleigh v. Miller (1949) 66 RPC 23; Frayling Furniture v. Premier Uphostery (5 Nov. 1999) (no injunction where infringement had taken place 5 years earlier apparently inadvertently and had not been repeated). 100 RDA 1949, s. 11B(1)(a); PA s. 46(3)(c); CDPA s. 98(1)(a), s. 191K, 101 Chiron v. Organon (No. 10) [1995] FSR 325. Cf. Roussel Uclafv.Searle [1977] FSR 125, 131. 102 MacMillan v. Reed [1993] FSR 455; Mawman v. Tegg (1826) 2 Russ 385.

103 Wadlow, para. 8.51 ff. 104 Spectravest v. Aperknit [1988] FSR 161, 174. 105 [1999] FSR 473, 476. For commentary, see H. Hurdle, ‘What Should be the Scope of a Permanent Injunction in Patent Infringement Actions’ (June/July 1999) 113 Patent World 17. In Aktiebolaget Volvo v. Heritage [2000] FSR 265-6, Rattee J followed Spectravest rather than Coflexip.

REMEDIES

1021

practice. He explained that while the purpose of an injunction is to protect the claimant from further infringement, it is important that the order was also fair to the defendant. The standard approach did not always meet this objective. This is particularly the case with patent litigation where the scope of protection is often uncertain. On the basis that most defendants are not untrustworthy but are respectable and honest traders, Laddie J said that a narrow injunction provided sufficient protection to the claimant. (Laddie J did acknowledge, however, that in the case of counterfeiting,

usually involving infringement of copyright, trade marks, or passing off, an injunction formulated in broader terms might be the only reasonable way of giving claimants the protection they need.) Although Coflexip was concerned with patent infringement, it was subsequently adopted in copyright and trade mark cases.’ However, on appeal, Laddie J’s approach was rejected.'”’ This was because the form of injunction Laddie J had granted, which was in many respects more narrowly drafted than the traditional form of relief, had failed to limit the prohibition to the rights conferred by the patent and to its term. In certain respects, then, Laddie J had given the patentee rights which patent law did not offer. In the light of this, it was clear to Aldous LJ that the injunction would have to be discharged and a more appropriate form substituted. In deciding the appropriate form, he acknowledged that the injunction should be drafted so as to set out with such clarity as the context admits what may not be done. But, as regards patent infringements, Aldous LJ thought the traditional form of injunction best achieved those aims. This was because the Patents Act, and the claims, formed critical background to the order that the defendant does not infringe the claimant’s patent. However, the reversal of Laddie J’s decision has not taken the law back precisely to where it was before the Coflexip litigation. This is because Aldous LJ made it clear that his approval of the general form of injunction applied only in the context of patents. He said that an order that simply restrained ‘breach of confidence’ would not be precise enough. Moreover, Aldous LJ reiterated that “each case must be determined on its own facts and the discretion exercised accordingly.’ It seems likely, therefore, that in the near future we will continue to see a variety of forms of injunction, depending on the right involved, the honesty of the defendant, and all other circumstances.

4

DELIVERY

UP

As an adjunct to a final injunction,!°* a court may Y order the delivery y up up or destrucJ J

tion of infringing articles.!°” While the defendant usually chooses which option to 106 Microsoft v. Plato Technology [1999] FSR 834 (CA); Beautimatic v. Mitchel Pharmaceuticals [2000] FSR 267, 284.

107 Coflexip v. Stolt Comex Seaway [2001] RPC 182. 108 An order for delivery up is a type of mandatory injunction and can be awarded in interim proceedings: see Films Rover International v. Cannon Film Cells [1986] 3 All ER 772.

109 A. Burrows, Remedies for Tort and Breach of Contract (1994), 458-61; P. Meagher, W. Gummow, and J. Lehane, Equity: Doctrines and Remedies (1992), ch. 27.

1022

LITIGATION

AND

REMEDIES

take,''° if they have shown themselves to be unreliable the court may demand delivery up.''! The longstanding inherent equitable jurisdiction to make an order for delivery up is not based on the idea that the claimant owns the infringing material.'!” Rather, it aims to ensure that a defendant is not tempted to put the infringing copies into circulation in breach of the injunction.'! If the infringement relates to a separable part of an article, the order will be for delivery up of that part.'"* In the case of trade marks and passing off, if a sign can be removed the court will order that this be done rather than order delivery up of the goods.’ No order can be made once the right has expired.'!© Moreover, the order does not extend to third parties who have come into possession of infringing articles.!! In the case of patents and trade marks, there is an express statutory power to order delivery up and/or obliteration.''® The statutory provisions, like the inherent jurisdiction, provides that in cases where it appears ‘likely that such an order would not be complied with’ the court can order delivery up to the claimant (or some other person) for erasure or destruction. A more significant statutory extension has been made available in respect of the

infringements of trade marks, performers rights, unregistered design right, and copyright.” More specifically, a statutory procedure exists for the delivery up of infringing goods, illicit recordings, infringing articles, and infringing copies for the purposes of ‘destruction’ or ‘forfeiture’. In most cases the power is only available where a person has infringing goods (etc.) in their possession, custody, or control ‘in the course of business’. The power also applies where a person has in their possession anything specifically designed or adapted for making infringing goods (etc.), knowing or having reason to believe that it has been or is to be used to make infringing goods (etc.). The court may order delivery up to the right owner (or some other person), pending a further order either for destruction or forfeiture as the court thinks fit. The ability to order forfeiture goes well beyond the inherent power which is confined to delivery for destruction.’”° In considering whether the discretionary order for destruction or forfeiture is

110 Lady Anne Tennant v. Associated Newspapers [1979] FSR 298, 305. "1 Industrial Furnaces v. Reaves [1970] RPC 605. The claimant is entitled to be present to ensure destruction is carried out: Slazenger v. Feltham (1889) 6 RPC 531. 12 The position may also be different in relation to confidential information, where infringing material has been likened to ‘trust property’: Industrial Furnaces v. Reaves [1970] RPC 605. 113 Mergethaler Lionotype v. Intertype (1926) 43 RPC 381. ‘14 Mergethaler Lionotype v. Intertype (1926) 43 RPC 381. Cf. Industrial Furnaces v. Reaves [1970] RPC 605. 15 Warwick Tyre v. New Motor and General Rubber (1910) 27 RPC 161, 171. 16 Leggatt v. Hoods Darts Accessories (1950) 67 RPC 134, 143. "7 Knowles v. John Bennett (1895) 12 RPC 137, 148 (shipper). 18 PA 61(1)(b); TMA s. 15. Under the Engravings Act 1735 (8 Geo. 2, ch. 13) provision was made for forfeiture of plates and sheets for destruction and damasking. 19 TMA s. 16; CDPA ss. 195, 199 (criminal proceedings); CDPA ss. 204, 230, 231; CDPA ss. 99, 108 (criminal proceedings). 120 Cf. TMA s. 97(6) (where forfeiture of ‘infringing goods, materials or articles’ acquired in the course of investigating or prosecuting ‘an offence’ requires destruction).

REMEDIES

1023

appropriate, the court is directed to take into account ‘whether other remedies available in an action for infringement would be adequate to compensate the right-owner and protect their interests.’ This has been described as ‘a strange provision, the purpose of which is not entirely clear’.'*! As yet, there is little indication as to when a forfeiture order will be made.'”” However, one obvious case where the other remedies might be inadequate is where the defendant is bankrupt or unable to pay damages.'”* As the order may affect the rights of third parties having interests in the goods, third parties may appear in proceedings.'4

5 DAMAGES The most common remedy for infringement of intellectual property rights is an award of damages.’ The damages recoverable are the same as with other torts: the aim is to restore the victim to the position he or she would have been in if no wrong had been committed: it does not aim to punish the defendant.'”° In some cases, damages will not be available where the defendant’s infringement was innocent. More specifically, damages will not be awarded in an action for infringement of a registered design or a patent where the defendant proves that at the date of infringement they were not aware and had no reasonable grounds for supposing that the design was registered or the patent existed.'”’ In either case, a person will not be deemed to have been aware or have had reasonable grounds for supposing that the design was registered or patent existed merely because the article is marked ‘registered’ or ‘patented’. This does not apply, however, where the marking is accompanied by the registration or patent number. In the case of copyright, rights in performances and unregistered design right, the legislation provides that damages will not be awarded in an action for infringement where it is shown that at the time of the infringement the defendant did not know, and had no reason to believe, that copy-

right (etc.) subsisted in the work to which the action relates.'** In certain cases of infringement of performers’ rights by a person who ‘innocently acquired’ an illicit recording, the only remedy available is damages ‘not exceeding a reasonable royalty in respect of the act complained of.!”? In contrast, in the case of trade mark 121 Arnold, para. 6.52. 122 In Ocular Sciences v. Aspect Vision Care [1997] RPC 289, 407 Laddie J refused delivery up on the ground that it would cause much greater harm to the defendant than was necessary to safeguard the legitimate interests of the claimants. 123 Laddie et al., para. 24.36.

124 TMA s. 19(3). 125 PA 1977, s. 61(1)(c); CDPA

1988, ss. 96(2), 1911(3), 229(2); TMA

1994, s. 14(2) PVA 1997, s. 13(2);

CPVR Art. 94.

126 General Tire & Rubber v. Firestone Tyre & Rubber [1976] RPC 197, 214. 127 RDA 1949, s. 9; PA 1977, ss. 62(1), 191J, 233.

128 CDPA ss. 97(1), 191J, 233(1). Note also CDPA s. 233(2) as regards innocent acquirers.

129 CDPA s. 184(2).

1024

LITIGATION

AND

REMEDIES

infringement and passing off,'*° it seems that damages will be awarded even against an innocent defendant. It is difficult to conceive of any rational basis for such inconsistent approaches. The normal measure of damages is ‘the depreciation caused by the infringement of the value of the intellectual property right as a chose in action.’!3! As we will see the courts have also allowed claims relating to indirect or consequential losses. It is for the claimant to prove the loss, though this is not a matter of scientific precision.'*? Given the varied circumstances in which infringement can occur, the courts have been

reluctant to lay down more detailed rules as to how damages should be computed.!*3 In the following sections, we look at some of the factors that are taken into account

when assessing the damages that are payable.'*4 5.1

LOST

PROFITS

One way in which damages may be calculated is by reference to the profits which the claimant lost as a result of the competing sales of infringing goods (or services) made by the defendant. For example, if prior to an infringement a patentee of a widget was selling 200 widgets per year, but only sold 150 widgets after the infringement (the defendant selling fifty widgets), the damages are likely to be calculated as the profits the patentee would have made on the fifty widgets. Clearly, this method of calculation will only be used where the intellectual property right-owner exploits the right by manufacturing goods. Although the courts have indicated that proof of lost profits need not be minutely accurate, a claimant will often encounter difficulties.!2> In particular, problems may arise in relation to causation. For example, where an infringer sells an infringing product at a cost which is less than that of the claimant’s product, it will often be difficult to be certain that sales which went to the defendant would, absent infringement, have gone to the claimant.!*° Other difficulties may arise: discovering how many infringing items the defendant sold; establishing that the claimant’s expected sales figures were justified; that the claimant would have had sufficient stock to cover the defendant’s sales; and that the defendant’s sales would not have gone to a competitor of the claimant (rather than the claimant).!°” In certain 130 Gillette UK v. Edenwest [1994] RPC 279, 291-4; cf. Marengo v. Daily Sketch (1948) RPC 242 (leaving undecided whether there could be damages for innocent passing off); C. Best, ‘Damages against the Innocent Infringer in Passing Off and Trade Mark Infringement’ (1985) 1 IP] 205. 131 Sutherland Publishing v. Caxton Publishing [1936] Ch 323, 336. 132 Watson Laidlaw v. Potts, Cassels & Williamson [1914] 31 RPC 104, 109; Khawam v.°Chellaram [1964] RPC 337, 343. 133 Meters v. Metropolitan Gas Meters (1910) 28 RPC 157, 163.

!34 Many of the intellectual property statutes provide that where licences of right are made available an award of damages is not to exceed double the amount which would have been payable as a licensee if such a licence on those terms had been granted before the earliest infringement: RDA 1949, s. 11B(1)(a); PA s. 46(3)(c); CDPA ss. 98(1)(a), 191K, 239(1)(c).

135 Watson Laidlaw v. Potts, Cassels & Williamson [1914] 31 RPC 104, 113. 136 Columbia Pictures Industries v. Robinson [1988] FSR 531, 535. See also Prior v. Lansdowne Press [1977] RPC511.

137 Cow v. Cannon Rubber Manufacturers [1961] RPC 236, 240.

REMEDIES

1025

circumstances, the courts have got over these difficulties by presuming that the claimant would have made the sales.'**

512°

ROYALTY

If a claimant is unable to claim damages on the basis of lost profits, the court may make an award on a royalty basis. That is, the court can award the claimant a notional

fee for each infringing act.'*? Here the damages compensate for the misappropriation and represent the fee that the defendant would have paid for a licence for the use of the rights he infringed. Such a royalty will be easy to determine where a claimant has been in the practice of granting licences: it will be the “going rate’. In these cases, the claimant will need to show that the circumstances in which the going rate was being paid by others are the same or comparable with those in which the patentee and infringer are assumed to strike their bargain.!*° Where the claimant has not been in the practice of granting licences, the claimant will have to find some other basis from which the court can estimate an appropriate

royalty. This ‘may consist of the practice, as regards royalty, in the relevant trade or in analogous trades; perhaps of expert opinion expressed in publications . . . possibly of

the profitability of the invention; and any other factor on which the judge can decide the measure of loss.’'*! The aim of the evidence is to establish what royalty a willing licensee would have been prepared to pay and a willing licensor to accept.'*” That is, the goal is to establish what terms would have been reached between the actual licensor and the actual licensee, bearing in mind their strengths and weaknesses and the market as it exists, on the assumption that each was willing to negotiate with the other.'* Where neither avenue suggests itself as the most appropriate, the choice between the ‘lost profits’ and ‘royalty’ approaches to the calculation of damages is left to the claimant (even in ‘licence of right cases’).'** In some circumstances it may be appropriate to choose both. For example, if a defendant sold twenty-five infringing works and the claimant would only have made fifteen sales, then the claimant may claim for lost profits on those fifteen sales plus a royalty in relation to the other ten sales.'*

138 Catnic Components v. Hill & Smith [1983] FSR 512, 524. 139 Where the claimant has granted licences at a royalty rate, it is ‘almost a rule of law’ to assess damages as the amount the defendant infringer would have had to pay for the number ofinfringing articles at the royalty rate had he had a licence: Meters v. Metropolitan Gas Meters (1911) 28 RPC 157, 164; Catnic Components v.

Hill & Smith [1983] FSR 512, 518. But the lost profits approach is preferred in cases of trade marks and passing off: Games Workshop v. Transworld Publishers {1993] FSR 704, 713-14; Domeuil Freres v. Feraglow [1990] RPC 449. 140 General Tire & Rubber v. Firestone Tyre & Rubber [1976] RPC 197, 213. 141 = |bid., 214.

142 Tbid., 225. I [bids 221, 144 Gerber Garment Technology v. Lectra Systems [1997] RPC 443, 486. 145 Watson Laidlaw v. Potts, Cassels & Williamson (1914) 31 RPC 104; Catnic Components v. Hill & Smith [1983] FSR 512, 522; Gerber Garment Technology. v. Lectra Systems [1997] RPC 443, 486 (CA).

1026

5.3

LITIGATION

SECONDARY

AND

REMEDIES

LOSSES

Although the sum awarded is usually calculated on the basis of the loss to the value of the intellectual property right as a chose in action,'*° other secondary losses may also be recovered.'*’ These are sometimes referred to as consequential or parasitic damages. The ability to claim such losses may be particularly important where goods incorporating intellectual property are marketed at low-profit margins and the profits are largely made from the sale of associated goods or services. Such losses can be claimed if they are foreseeable, caused by the wrong,'*® and not excluded from recovery by public policy.’ A conceivable but remote result could not be deemed to be reasonably foreseeable. Applying these principles the courts have held, for example, that a copyright infringer would not be liable for cash-flow consequences for the copyright owner;'°° nor would an infringer be liable for losses on sales of the claimant’s goods as a result of the defendant’s distribution of an infringing catalogue.!°!

5.4

EXEMPLARY

DAMAGES

According to the House of Lords in Rookes v. Barnard,!* a court may award exemplary damages where, in cynical disregard of a claimant’s rights, a defendant infringed those rights calculating that they would make a profit which would exceed the compensation payable to the claimant. The award is proper ‘whenever it is necessary to teach a wrongdoer that a tort does not pay.’ Despite the generality of this view, it has been said that it was not intended to expand the circumstances in which exemplary damages are available. As a result, exemplary damages may not be awarded unless, prior to Rookes v. Barnard, the cause of action was one which was recognized as capable of giving rise to an award of exemplary damages.’ Consequently, no award of exemplary damages may be made for infringement of a patent or copyright.!*4 Probably, infringement of trade marks, being based on the 1994 Act and performers’ rights (being based on the 1988 Act and the Rental Rights Regulations), are not causes of M46 Sutherland Publishing Company v. Caxton Publishing [1936] 1 All ER 177, 180. ‘47 Cf. Catnic Components v. Hill & Smith [1983] FSR 512, 534 (loss of profits due to sale of non-patented lintels not recoverable).

M48 Work Model Enterprises v. Ecosystem & Clix Interiors [1996] FSR 356, 362 (a matter of common sense). 149 Gerber Garment Technology v. Lectra Systems [1997] RPC 443, 452. 150 Claydon Architectural Metalwork v. Higgins & Sons [1997] FSR 475. 151

Work Model Enterprises v. Ecosystem & Clix Interiors [1996] FSR 356; Paterson Zochonis v. Merfarken

Packaging [1983] FSR 273, 295 (Robert Goff LJ) (where it was said to be undesirable as a matter of policy to extend the scope of recoverable damages in this way to cover a different proprietary interest).

152 [1964] AC 1129, 1226-7. 153 AB y. South West Water Services [1993] QB 507. For examples which pass the “cause of action’ test, see

Law Commission, Report No. 247: Aggravated, Exemplary and Restitutionary Damages (1997), para. 1.108. 154 Catnic Components v. Hill & Smith [1983] FSR 512, 541 (patent); Beloff v. Pressdram [1973] RPC 765, 789-90 (copyright code excludes possibility). Cf. Morton-Norwich Products v. Intercen [1981] FSR 337, 353 Graham J (power exists to award exemplary damages for patent infringement but it would require a very strong case with very peculiar circumstances before a court would exercise that power).

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action for which such damages can be granted. There is no clear position on breach of

confidence.'°° 5.5

ADDITIONAL

STATUTORY

DAMAGES

In relation to copyright and rights in performances'*® as well as unregistered design right,'*’ a court may consider all the circumstances, particularly the flagrancy of the infringement and any benefit accruing to the defendant,'** and award such additional damages as the justice of the case requires.!*? The nature of additional damages is unclear. In particular, it is unclear whether they are compensatory, exemplary, or restitutionary.'®° However, it has been held that their award is the exception rather than the rule, and a claimant needs to show special circumstances which would justify the imposition of an additional financial penalty.'*' Ideally this should be done by full pleading, and the determination as to whether such damages should be awarded may be dealt with by the trial judge or the inquiry.'®* However, if there are issues on which evidence has not been given during the trial which might be relevant, the court will probably leave the assessment of additional damages to the inquiry stage.'®? Factors which may be relevant in deciding to award additional damages include whether the defendant was acting on legal advice,“ was merely out to make money or had other motives,'®? whether there are any other mitigating circumstances, and possibly the means of the defendant.'® Additional damages are not available in addition to an account of profits.!°

155 See Law Commission, Report No. 247: Aggravated, Exemplary and Restitutionary Damages (1997), para. 1.110, 62.

156 CDPA ss. 97(2), 191J (that is the performers’ property rights but not for infringement of the nonproperty or recording rights).

157 CDPA s. 229(3). 158 Ravenscroft v. Herbert [1980] RPC 193, 208 (benefit implies that the defendant has reaped a pecuniary advantage in excess of damages he would otherwise have to pay).

159 CDPA s. 97. This amended and replaced CA 1956, s. 17(3) which had confined such damages to circumstances where ‘effective relief would not otherwise be available’. 160 Redrow Homes v. Bett Bros. [1998] 1 All ER 385, 391 per Lord Jauncey (no need to decide whether punitive or compensatory); 393 per Lord Clyde (probably aggravated). C. Michalos, ‘Copyright and Punishment: The Nature of Additional Damages’ [2000] EIPR 470.

161 Ravenscroft v. Herbert [1980] RPC 193, 208 (flagrancy implies the existence of scandalous conduct, deceit, and such like; it includes deliberate and caiculated infringement).

162. Z7YX Music GmbH y. King [1997] 2 All ER 129, 149 (CA) (whether the justice of the case requires an award of additional damages can only be determined on the inquiry).

163 ©’Mara Books v. Express Newspapers [1999] FSR 49, 57-8. 164 Pro Sieben Media v. Carlton UK Television [1998] FSR 43, 61-2. 165 ZYX Music GmbH v. King [1995] FSR 566, 587; affirmed [1997] 2 All ER 129 (CA).

166 ©’Mara Books v. Express Newspapers [1999] FSR 49, 57-8. 167 Redrow Homes v. Bett Bros. [1998] 1 All ER 385.

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6 ACCOUNT

OF PROFITS

In relation to most intellectual property rights,'®* a claimant may elect for an ‘account of profits’, instead of claiming damages.’ An accounting of profits is an equitable remedy which deprives the defendant of any profits made as a result of their infringement. Because account of profits has its origins in the Court of Chancery, it is an alternative financial remedy to damages. It cannot be claimed in addition to damages, even where the loss to the claimant and profit to the defendant are unrelated so that when combined the two remedies would not result in double liability.!”° Usually, election is solely a matter for the claimant, but as the remedy for account of profits is equitable (and therefore discretionary), the court may refuse it.'7! Traditionally the remedy of account was said to have been conditional on the availability of injunctive relief. However, at least where the remedies for infringement of intellectual property rights are specified by statute, this precondition seems to have been abandoned.’” In the case of patents, passing off, and trade marks,!”* no order of

an account will be made where a defendant acted innocently. That is, no order will be made if at the date of infringement the defendant was not aware and had no reasonable grounds for supposing that the intangible property right existed. For some time it

was thought that the decision to elect for an account of profits had to be made at the time of judgment. However, since a claimant would not necessarily have sufficient information to base the election, greater flexibility has been introduced so that the election should optimally take place only when the claimant can make an informed decision.!”4 The main difficulty raised by the remedy of an account concerns the way the profits are calculated. In part this is because it will be very rare for the infringement of the intellectual property right to be the single cause of any profit. It is more likely that only part of the product sold by the defendant will have been infringing. In such cases 168 But perhaps not registered design right. However, RDA s. 11B(1)(b) suggests that such a remedy is available. 169 PA s. 61(1)(d); CDPA s. 96(2); TMA s. 14(2); My Kinda Town v. Soll [1982] FSR 147 (passing off); Peter Pan v. Corsets Silhouette [1963] 3 All ER 402 (breach of confidence).

170 Neilson v. Betts (1871) LR 5; HL 1; Redrow Homes v. Betts Bros. [1998] 1 All ER 385, 393 (HL) (explaining requirement on basis that the two remedies are inconsistent); PA s. 61(2). Cf. Watson Laidlaw v. Potts, Cassels & Williamson [1914] 31 RPC 104, 119 (explaining the requirement of an election as a mechanism to prevent overlapping). '71 Sir Terence Conran v. Mean Fiddlers Holding [1997] FSR 856, 861; Van Zeller v. Mason (1907) 25 RPC 37, 41; Electrolux v. Electrix (1953) 70 RPC 158.

\72 L. Bently, ‘Accounting of Profits Gained from Infringement of Copyright: When Will It End?’ [1990] EIPR 5, 7-8.

'73 PA 1977, s. 62(1); see Sir Terence Conran v. Mean Fiddlers Holding [1997] FSR 856, 861 (account refused where infringement of trade mark was innocent and causal connection between use of mark and profits of

bar would be difficult to establish); Wadlow (1995), para. 7.15—6, pp. 491-3; Gillette U v. Edenwest [1994] RPC

279, 290 (accepting that different principles might operate so that while damages were available for innocent infringement of trade marks or passing off, an account was not); Edelsten v. Edelsten (1863) 1 De GJ &S 18, 46 ER 72; Spalding v. Gamage (1915) 32 RPC 273, 283. 174 Island Records v. Tring International [1995] FSR 560; Brugger v. Medicaid [1996] FSR 362, 364.

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the court must try to determine what profits have been caused, in a legal sense, by those acts.'”? Under what is called the ‘incremental approach’, it has been suggested that to determine the profits payable, the courts should compare the profit the defendant made with that which they would have made had they not used the infringing material or process: the ‘increment’ being the profits attributable to the infringement.'”° However, this approach has been rejected on a number of occasions in favour of a less refined approach, where the courts simply apportion the total net profits.!”” With the ‘apportionment approach’, the court first ascertains the total net profits made by the defendant from the activity in question.'”* In calculating net profits the court will deduct relevant expenses such as costs, overheads, and taxes,'”? from the

revenue received in relation to the infringing project. The court then attempts to locate a principled means for dividing up the profits, so as to define the portion attributable to the infringement. This is not a mathematical exercise but one of reasonable approximation.'®° So if the infringing process is one of five steps in the production of a particular product, in the absence of evidence suggesting otherwise, one-fifth of the profits from the sale of the product would be attributed to the infringement. The courts have recently favoured the view that the proportion of profits attributable to the infringing activity might best be determined by looking at the corresponding costs of the process of production.'®! In some, though probably rare, circumstances the court will ask itself what is the importance of the infringing activity or part to the ultimate profits.'** As with damages, where licences of right are made available the amount to be rendered in an account of profits is not to exceed

double the amount which would have been payable by the defendant as a licensee if such a licence on those terms had been granted before the earliest infringement.!*

7

TIME

LIMITATIONS

Delay in bringing proceedings may lead to an action for infringement being barred, either under statutory provisions or equitable principles. An action for infringement 175 Celanese International v. BP Chemicals [1999] RPC 203. 176 An approach that seemed to have been taken in Siddell v. Vickers (1888) 5 RPC 416 and My Kinda Town v. Soll [1983] RPC 15.

'77 Potton v. Yorkclose [1990] FSR 11 (incremental approach is only suitable where the infringement was in the process of producing the work); Cala Homes (South) v. Alfred McAlpine Homes East (No. 2) [1996] FSR 36, 44; Celanese International v. BP Chemicals [1999] RPC 203. See T. Moody-Stuart, ‘Quantum in Accounts of Profits: The Acid Test’ [1999] EIPR 147.

178 Potton v. Yorkclose [1990] FSR 11. 179 Celanese International v. BP Chemicals [1999] RPC 203, 249.

180 My Kinda Town v. Soll {1983] RPC 15. 181 Potton v. Yorkclose [1990] FSR 11, 18 (in the absence of some special reason to the contrary, the profits of a single are attributed to different parts or aspects of the project in the same proportion as the costs and expenses are attributed to them).

182 Celanese International v. BP Chemicals [1999] RPC 203, 225. Cf. Potton v. Yorkclose [1990] FSR 11, 18. 183 RDA s. 11B(1)(b); PA s. 46(3)(c); CDPA ss. 98(1)(a), 191K, 239(1)(c).

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of copyright, patent, or trade mark must be commenced within six years of the wrongful act.'** If proceedings are commenced within the requisite period, it will only be struck out for want of prosecution if there is real prejudice to the defendant, as well as inordinate delay.'® Where a claimant expressly or impliedly represents that the defendant’s conduct is non-infringing, he will thereafter be estopped from asserting his right. Where the claimant knows of his right against the defendant and that the defendant mistakenly believes that he is entitled to do what he is doing, yet the claimant stands by without asserting his right, he will be taken to have acquiesced in the wrong.!*°

8 CRIMINAL

REMEDIES

For the most part, there has been little demand for criminal sanctions to protect intellectual property rights. In part this has been because the rights-holders have preferred the lower standard of proof associated with the civil action.'*” Recently, there has been increased interest in the scope of criminal liabilities and sanctions, especially in the case of piracy and counterfeiting.!** Criminal prosecution is attractive because of the publicity that a criminal trial can attract and the deterrence effect of the sanction.’*? There are four categories of crime that concern us here. These are: crimes relating copyright and trade mark infringements under the relevant statutes; the common law crime of conspiracy to defraud, the crimes created by the

Trade Descriptions Act 1968; and finally special crimes created by the intellectual property statute which are intended to protect the integrity of intellectual property registers.

If a right-owner chooses to pursue a criminal prosecution, they can do so by three routes. First, the right-owner or a representative!” may commence criminal proceedings by ‘laying an information’ (or complaint) at a magistrates’ court,!®! on the basis

184 Limitation Act 1980, s. 2. 185 Birkett v. James [1978] AC 297; Compagnie Francaise de Télévision v. Thorn [1978] RPC 735. 186 See Film Investors Overseas Services SA v. Home Video Channel [1997] EMLR 347, 365; Farmers Build v.

Carier Bulk Materials Handling [1999] RPC 461, 486-9 (mere delay in bringing proceedings is not acquiescence). ‘ 187 See Worsdall and Clark, chs. 5 and 6. 188 Note the recent formation of a new lobbying group, the Alliance against Counterfeiting and Piracy. 189 Tn addition, criminal prosecutions are likely to be quicker than civil actions, and a losing prosecutor may avoid paying costs: Prosecution of Offenders Act 1985, ss. 16-18. TRIPs Art. 61 requires members to provide for criminal procedures and penalties at least in cases of wilful trade mark counterfeiting and copyright piracy ‘on a commercial scale’. 190 e.g. a representative organization such as the Federation Against Copyright Theft (FACT), the Federation Against Software Theft, or a collecting society. See Thames & Hudson v. DACS [1995] FSR 153. 191 There should be a separate ‘information’ for each individual copyright work: R v. Ward [1988] Crim, ERS 7s

REMEDIES

1031

of which the court will issue a summons.'”’ Alternatively, the claimant may seek the assistance of the police, which may be advantageous because the police may obtain a search warrant and police action carries a significant social stigma. However, if a charge is made by the police, the prosecution must be conducted either by the Department of Public Prosecutions or the Crown Prosecution: it cannot then be handed back to the claimant.'”? This may be a dangerous tactic, because the Crown Prosecution Service may decide not to prosecute.’ The right-holder may also enlist the help of administrative authorities, in particular Trading Standards Departments or Local Weights and Measures Authorities. These authorities are obliged to enforce the Trade Descriptions Act and the criminal provisions of the Trade Marks Act. They may soon also be placed under a duty to enforce criminal copyright provisions relating to copyright and performances.'”° A provision to this effect has been enacted, but it has yet to be brought into force.

8.1

STATUTORY

OFFENCES

In order to buttress the civil remedies and to help combat piracy, bootlegging, and counterfeiting, a number of statutory criminal offences have been introduced in relation to copyright, performers’ rights, and trade mark law. There is no criminal sanction for the infringement of patents or designs (whether registered or unregistered). In relation to copyright, criminal infringement covers most acts of primary and secondary infringement.!”° However, unlike primary civil liability, criminal relief requires proof of knowledge or reason to know that copyright was being or would be infringed.!”” It should be clear, therefore, that criminal liability is not confined to those normally considered to be pirates.'?* A successful criminal prosecution can result either in a fine or imprisonment, and the maximum penalty is two years’

192 Any citizen may bring a private prosecution: Prosecution of Offences Act 1985, s. 6(1). See G. Har-

bottle, ‘Criminal Remedies for Copyright and Performers’

Rights Infringement under the Copyright,

Designs and Patents Act 1988’ [1994] Ent LR 12.

193 See R v. Ealing Justices, ex parte Dixon [1989] 2 All ER 1050 (proceedings begun by police could not be prosecuted by FACT); cf. R v. Croydon Justices, ex parte Holmberg (1992) 157 JP 277. 194 The Director of Public Prosecutions is under a duty to prosecute certain offences and may in its discretion prosecute others: Prosecution of Offenders Act 1985, ss. 3, 6(2).

195 CDPA s. 107A (introduced by the Criminal Justice and Public Order Act 1994, s. 165). In Northern Ireland, enforcement is the responsibility of the Dept. of Economic Development: CDPA s. 107A(3). A similar enforcement provision exists with respect to performances. No such duty or authority applies in relation to proceedings in Scotland. 196 CDPA ss. 107-10. Note also: CDPA s. 297 (fraudulently receiving programmes), s. 297A (making, etc. unauthorized decoders), s. 198 (illicit recordings of performances); Related Rights Reg. 17(1), 17(3) (applying offences to publication right but with modified penalties). There are no criminal offences in relation to the database right. 197 CDPA ss. 107-10. The presumptions of authorship etc. do not apply, and problems of proving copyright ownership may arise: Musa v. Le Maitre [1987] FSR 272. 198 Thames & Hudson v. Designs & Artists Copyright Society [1995] FSR 153. On pirates see, D. Halbert, ‘Intellectual Property Piracy: The narrative construction of deviance’ (1997) 10 International Journal for the Semiotics of Law 55.

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REMEDIES

imprisonment.’ In sentencing, the courts have indicated that they consider copyright infringement to be an offence of ‘real dishonesty’ equivalent to cheating or stealing.*”? Conscious of the prevalence of such offences and the difficulties of detection,””' the courts have emphasized that criminal copyright infringement is to be regarded as a very serious matter. Even small-scale infringement, such as the copying of forty-eight videos, has led to custodial sentences.” The greater the numbers of copies made*”’ and the greater the value of each copy, the more severe the sentence.

Criminal offences also exist to protect performers.” These largely correspond to civil infringements and deal with the making, importation, and commercial dealing with illicit recordings, without sufficient consent. Sufficient consent is defined in relation to performers’ rights as the consent of the performers or owner of the performers’ property rights; and in relation to recording rights the consent of the performer or the owner of the recording rights. Liability depends on proof of knowledge or reason to believe that the recordings are ‘illicit’.°° The penalties are equivalent to those for infringement of copyright: so that a person convicted on indictment may receive a prison sentence of up to two years.” Special criminal provisions also exist to deal with trade mark infringement. In particular, section 92 of the 1994 Trade Marks Act states that a person commits an

offence if they apply to goods or their packaging a sign ‘identical to, or likely to be mistaken for, a registered trade mark’ without the consent of the proprietor and ‘with a view to gain for himself or another, or with intent to cause loss to another.’ The section goes on to create further offences that capture parties who deal commercially in goods bearing such a sign.”** The requirement that the sign be ‘identical to, or likely to be mistaken for, a registered trade mark’ uses language that differs from that used

199 A maximum of 6months for showing a film in public: CDPA s. 107(5).

200_R v. Carter [1983] FSR 303; R v. lan Dukett [1998] 2 Cr App R (S) 59; R v. Roy John Gibbons [1995] 16 Cr App Rep (S) 398. 201 Rv. Paul Godfrey Kemp [1995] 16 Cr App Rep (S) 941; R v. Roy John Gibbons [1995] 16 Cr App Rep (S)

398.

202 R v. Kemp [1995] 16 Cr App Rep (S) 941 (6 months). See also R v. Lloyd [1997] 2 Cr App Rep (S) 151 (6

months); R v. Gross [1996] 2 Cr App Rep 189 (9 months); R v. Gibbons [1995] 16 Cr App Rep (S) 398 (7 months). 203 R y, Lewis [1997] 1 Cr App Rep (S) 208 (sentence of 12 months for a person who ran a computer

bulletin board for ‘swapping’ computer games. The system contained over a thousand games, and thus was a significant enterprise).

:

204 R v, Dukett [1998] 2 Cr App R (S) 59 (27 months’ imprisonment for 4 copyright offences of distributing CD-ROMs was justified because, while the numbers sold were relatively small, each CD contained material worth several thousand pounds).

205 CDPA s. 198. See Arnold, ch. 7. 206 On what is acceptable proof, see Radford v. Kent County Council (unreported, 18 Feb. 1998) (Queen’s

Bench Division).

207 CDPA s. 198(5)—for making, importing, and distributing illicit recordings; other offences carry a maximum of 6months’ imprisonment. 208 But not importation: which may be a failure to implement Council Regulation 3295/94 Art. 11. See Worsdall and Clark, para. 7.41.

REMEDIES

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in civil infringement.” Moreover, it is only an offence to apply the sign (etc.) to goods for which it is registered, or ‘if the trade mark has a reputation in the UK, and the use

of the sign takes ... unfair advantage of; or is ... detrimental to, the distinctive character or repute of the mark.’ There is near absolute liability which does not depend on proof of the trader’s knowledge of the existence of a registered mark.?!° It is a defence to a criminal prosecution to show that the accused ‘believed on reasonable grounds that the use of the sign in the manner in which it was used . . . was not an infringement of the registered trade mark.”*"! It is for the defendant to establish on the balance of probabilities an affirmative case of reasonable belief.’!” It is not clear what ‘infringement’ means in this context: whether it means criminal infringement under section 92 of the 1994 Trade Marks Act or civil infringement under sections 9-112 In Torbay Council v. Singh’\* the Court of Appeal explained that this did not enable a defendant to avoid liability on the ground that he did not know the mark was registered, for that could be easily checked. They added that the defence was only available if the defendant could demonstrate that, presupposing he knew the mark was registered, he did not believe that use ‘in the manner in which it was used’ was infringing. Consequently, the defendant could not use the defence where a supplier of children’s garments bearing the Teletubbies logo said they were not counterfeit and the defendant had merely checked the (rag trade journal) Drapers’ Record, since these matters did not relate to the manner of use. The criminal penalties for infringement of trade marks are potentially more severe than for criminal copyright infringement. A summary conviction can result in a custodial sentence of six months or a fine of up to £5000; a conviction on indictment a fine or imprisonment for up to ten years. The courts have not been swayed by pleas that counterfeiting has not misled anyone,”!” and have repeatedly emphasized that trade mark infringement is ‘properly a criminal offence’ akin to stealing goodwill.”° Consequently, it has been said that it is important that sentences be serious enough to operate as a deterrent.’!’ The punishment will depend largely on the gravity and the scale of the infringement and the persistence of the defendant.*'® As to gravity, the courts have treated the counterfeiting of pharmaceuticals as particularly heinous, because of the potential effects on public safety.’ As to scale, the Court of Appeal has 209 TMA s. 10(2). Note also Infringing Goods Reg. Art. 1(2) referring to an identical sign or one ‘which

cannot be distinguished in its essential aspects from such trade mark’ in the definition of counterfeit goods. 210 Torbay Council v. Singh [1999] 2 Cr App Rep 451, 455.

211 212 213 214

TMA s. 92(5). Torbay Council v. Singh [1999] 2 Cr App Rep 451, 453. Morcom et al. 454-5, [1999] 2 Cr App Rep 451.

215 R y, Priestly [1996] 2 Cr App Rep (S) 144.

216 R y, Bhad [1999] S Cr App Rep (S) 139. 217 Ry, Adam [1998] 2 Cr App Rep (S) 403. 218 R y, Kelly [1996] 1 Cr App Rep (S) 61 (defendant’s persistence in dishonest conduct justified imprisonment).

219 R y, Yanko [1996] 1 Cr App Rep (S) 217 (4-5 years for counterfeiting of medicinal products (steroids) under signs SYNTEX and ANAPOLON was not excessive).

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held three years was appropriate sentence for applying false trade marks to perfume such as Chanel No 5, on a scale of 5-10,000 bottles per week.””° With regard to

persistence, an isolated lapse by a generally honest businessman will merely warrant a fine,”*! though small-scale dealing in counterfeit watches has been held to warrant a prison sentence of three months.” On convicting a defendant either for criminal copyright infringement or trade mark infringement, the courts also have the power to order delivery up of infringing copies or goods and to make certain compensation and confiscation orders.??? Moreover, criminal proceedings concerning copyright are not subject to any statute of limitations.

8.2

CONSPIRACY

TO DEFRAUD

In some cases, the general common law crime of conspiracy to defraud may be used to protect intellectual property rights. This crime will be committed where someone dishonestly tries to obtain an economic advantage without the need to show that anyone was deceived.” It will be useful only in cases of organized piracy where there is some agreement between the parties. One advantage of bringing a charge of common law conspiracy to defraud is that the courts’ discretion to imprison or fine an adult offender is unlimited.’ 8.3 TRADE DESCRIPTIONS ACT 1968 Another source of criminal sanctions for intellectual property infringement is the

1968 Trade Descriptions Act. Under this Act, a person commits an offence if, in the course of trade or business,**° he or she applies a false trade description to goods, or supplies or offers to supply any goods bearing such a false description.?”” Although typical trade descriptions cases cover misdescriptions as to quality, ‘trade description’ is defined broadly to include, inter alia, indications of ‘approval by any person or 220 R v, Priestly [1996] 2 Cr App Rep (S) 144. See also R v. Ansari, Horner, Ling & Ansari [2000] Cr App Rep (S) 94 (3 years).

221 R y, Bhad [1999] Cr App Rep (S) 139. 222 R y. Kelly [1996] 1 Cr App Rep (S) 61 (possession of 30 watches). 223 Powers of Criminal Courts Act 1973, ss. 35, 43 (property deprivation order); Magistrates Courts Act 1980, s. 40 (power to award compensation up to £5000); Criminal Justice Act 1988, as amended by the Proceeds of Crime Act 1995 and Criminal Justice Act 1988 (Confiscation Orders) Ordér 1995 (SI 1995/ 3145) (court may make confiscation order under Powers of Criminal Courts Act 1973 s. 43 in relation to offences under TMA s. 92 and CDPA s. 107).

224 Scott v. Metropolitan Police Commissioner [1975] AC 819; R v. Bridgeman & Butt [1996] FSR 538. In Scott, the defendant bribed cinema employees to hand over films so that they could be surreptitiously copied. The House of Lords held that this amounted to a conspiracy to defraud the owners of the copyright. 225 See Criminal Law Act 1977, s. 5. 226 Although the courts wili infer the existence of a business from numbers of articles in a person’s possession (see e.g. Elder v. Crowe [1996] SCCR 38) it is thought the requirement might make it difficult to secure counterfeiters who operate through ‘car boot sales’. 227 TDS.

1.

REMEDIES

1035

conformity with a type approved by any person’ and as to the ‘person by whom

manufactured, produced, processed or reconditioned.””* As a result, the application of a trade mark to goods may be a false trade description.””’ In some cases, it has been held that a disclaimer to the effect that the goods are ‘replicas’ or ‘counterfeits’ is sufficient to negate the initial misdescription.”*° There are also certain defences, which

can protect innocent distributors of counterfeit goods.”?! The Trade Descriptions Act is enforced by trading standards officers employed by local authorities (which are under a statutory duty to enforce the Act). The officers are

empowered to make test purchases, enter premises, and inspect and seize goods. They do not have power to arrest offenders.”” The authorities also bring proceedings but if prosecution is not thought appropriate they have power to issue ‘formal cautions’. Offences under the 1968 Act carry a maximum of two years’ imprisonment.””° 8.4

PROTECTING

REGISTRATION

A number of criminal sanctions exist which aim to maintain the veracity of the registration regimes. In particular, it is an offence to make false entries on the register?** and to make unauthorized claims to rights.’*? An interesting variation is contained in section 201 of the 1988 Copyright Designs and Patents Act which makes it an offence for a person ‘falsely to represent that he is authorised by another to give consent . . . in relation to a performance unless he believes on reasonable grounds that he is so authorised.’

9 REFORM There are plans for reform of litigation and remedies at both the domestic and European levels. In the UK, the Copyright Directorate has issued a consultation paper 228 TA. 3.2: 229 TDA s. 34; Horner v. Kingsley did bear false trade description that (Manchester United FC merchandise 230 Kent County Council v. Price market stall, and were accompanied told customers orally that the goods

Clothing [1989] Crim LR 911 (sweatshirts bearing Mare O Polo mark goods were produced by Marc O Polo). Cf. R v. Veys [1993] FSR 366 did not signify approval or that manufactured by the club). (unreported, 1995) (89 T-shirts bearing marks were being sold on a by cards stating they were ‘Brand Copies’. In addition the stall-holder were copies. It was held that the Crown Court was justified in reaching

the conclusion that there was no false trade description). But cf. Lewis v. Fuell [1990] Crim LR 658 (oral

disclaimer did not nullify trade description of use of ROLEX on watches). See Worsdall and Clark, para. 5—20. 231 TDA s. 24; s. 28(3) (that defendant did not know and could not with reasonable diligence have ascertained that the goods did not conform to the description applied to the goods). See Worsdall and Clark, para. 5.21—22.

232 TDA ss. 27-8. 233 R y, Ahmadi (1993) 15 Cr App Rep (S) 254 (6 months for supplying recycled toner cartridges); R v. Shekhar Kumar (1992) 13 Cr App Rep (S) 498 (hirer of 26 counterfeit videos fined £5000). 234 PA s. 109, TMA s. 59, RDA s. 34.

235 e.g. see PA s. 110, TMA s. 60; Trade Marks (International Registration) Order 1996 (SI 1996/714) r. 18; Community Trade Mark Regulations 1996 (SI 1996/1908) r. 8; RDA s. 35.

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on possible changes to the criminal provisions.”*° The main proposals are that (i) the penalties for criminal copyright infringement be raised to those of trade marks; (ii) the trade mark regime recognize a distinction (present in the copyright provisions) between the less serious downstream offence of ‘selling’ counterfeits and the more serious upstream offence of ‘making and distributing’ counterfeits; (iii) search warrants be more readily available, either explicitly, or by making infringements arrestable offences so that they fall under the general powers of the 1984 Police and Criminal Evidence Act; and (iv) further provision be made for the forfeiture of goods

seized during investigation of criminal copyright infringement even where no prosecution follows.

A number of changes are also planned at the European level. In a follow-up to the 1998 Green Paper on counterfeiting and piracy,”*” the Commission has launched an ‘action plan’ to combat piracy in the Community.”** In particular, the Commission has proposed as a matter or urgency, to introduce a Directive aimed at strength-

ening the means for enforcing intellectual property rights and to set out a general framework for the exchange of information and administrative cooperation. In addition, the Commission plans to develop training activities and launch a study for defining piracy and counterfeiting. In the medium term the Commission’s plans include the harmonization of minimum thresholds for criminal sanctions, and to extend Europol’s powers to combat piracy. 236 Consultation Paper On Possible Changes to the Criminal Provisions in Intellectual Property Law (2000).

237 COM(98) 569 final.

238 Communication from the Commission to the Council, the European Parliament and the Economic and Social Committee (Brussels, 17 Nov. 2000) COM(2000) 789.

INDEX absolute grounds of validity 747, 751, 752, 761-75, 776-810; see also bona fide intent to use, capacity to distinguish, distinctiveness, misleading trade marks abstract 332, 333-4 abstraction, levels of 163, 168 abstraction-filtration-comparison 170-2

abstracts of scientific or technical subjects 226 abuse of a dominant market position

15, 265-7, 288-9,

abuse of monopolies 192 abuse of process 923, 994

acceptance of trade mark application 743 accessories 878; seealsospare parts

accounts of profits 517, 974, 1027

acknowledgement 198-9; see also attribution, sufficient acknowledgement acquiescence 875-6, 1030 acquired distinctiveness 675, 784, 797-804; see also secondary meaning

act in good faith before priority 284, 521,911

357-61, 463-8 trade marks, of 744-5, 746, 750, 753

animals and plants 395-400; see also biological subject matter annexes

774,775, 823, 852, 866

anonymous source doctrine 696n 798n

anonymous works 112, 198 anthologies 213 anti-circumvention 188-90; see also encryption, protection

anti-competitive agreements

Actors’ Equity 295

adaptations 123, 124, 139-40, 181

added matter 463-7 adverse effects, doctrine of 887 advertising nature of 663-4 persuasive advertising 663—4 sale of artistic works 217, 231

sale of goods 891 trade mark use, as see also Brown R., advertising advertising function 664 advertising standards

amendment patents, of 324, 333, 348,

technological systems of

date 508-9

872-4

544-5

aid and abet 186-7 alteration of goods bearing trade mark 883 alteration of trade mark 889-90 alternative dispute resolution 1007

526

active sales

advertising style, protection of 678-9 aesthetic considerations 62,68—70 affixation 864-5 agent, registration of trade mark by 809 agriculture 364, 511, 539-40 agrotechnical requirements

862 comparative

authority

arrangements (of musical works) 140, 247

articles application of design to 581-2 associated, design protection of 602 definition of 574-5, 582, 614-16

distinction between designs and 581, 593

infringement of registered designs, and 613 infringement of unregistered design right , and 643-4 primarily literary and artistic character, of 583, 648 artificial partitioning 885 artistic craftsmanship copyright protection 68-72, 150, 216

protection of design as 624 artistic quality 68-70 artistic works copyright protection 62-72 protection of designs as 623, 625

assertion 238-9 assignment

copyright, of 121-2, 254-7 database right, of 303 exclusive licence distinguished 258-9

14-15, 278-9, 283, 519-20,

goodwill, of 691

895-6, 908; see also block exemption, chapter 1 prohibition, technology transfer regulation, vertical

market sharing 12 patents, of 514-15 performers property rights, of

restraints

anticipation 413-38; see also novelty Anton Piller order, see search order applicable law 860, 898, 905, 906, 1005-6

application ofdesign to an article 656, 658,

architecture 67-8, 132

581-2

application procedure trade marks, for 747-53, 755 applied art 132, 282

impact on exhaustion

12

297)

registered designs, of 610 trade marks,of 659, 901—2, 906 associated articles, design protection of 602 associated marks 847 association 823-5 as such proviso 371-2

attribution right 236-42 authorial works authorize

237-8, 244

124, 140-2

authorship 108-16, 236

1038

INDEX

false attribution of 233-4, 242-4

first ownership, and 108-16

design, of 609-10 means of qualification for copyright, as 101-3 moral rights, and 233-52 right to be named 236-42 average consumer

822

copyright works created in breach 122 doctrinal basis 921, 976, 1001 history 920

protection of designs by 563 remedies 970-6 requirement of obligation 939-55 state of the art, and 418, 600, 608

when breach is justified 964-70,

back-up copies of computer programs

43, 219

bad faith 807-10 bankruptcy 261 benefit to employer 532-4 Berne Convention 5, 6, 7, 34-5, S79 257351935234; 2375 242, 246, 247n, 249n, 295, 567, 979

biological processes 400-3 biological subject matter 394405, 491-2, 494, 510-11, 529-30, 557

bio-prospecting 313, 322, 477, 530

matter

black list 520-1 blank tape levy 229 blasphemous works 105-6 block exemption

908-10; see

also, anti-competitive agreements, technology transfer, and vertical restraints blurring 828, 833-5

body parts 379, 477 Bogsch theory, see broadcasts, location of bona fide intent to use 742-3,

749; see also bad faith bona fide purchaser 944-5 book club rights 285 books, copyright protection of 53; see also literary work bootlegging 295 border measures

981, 1017-19

158-9, 642,

960-1 central attack 754, 757

certification mark 729-30 cessation of business, impact on

goodwill 682-3 chapter 1 prohibition 279-80, 283, 519-20, 910 characterizing portion (of claim) 337

character merchandising 628, 701-2, 719, 802

when obligation is breached 945-64

British Code of Advertising 872-4

British Phonographic Industry (Anti-piracy unit) 988 Broadcasting Standards Commission

223

broadcasts infringement of copyright 35, 45-6, 123, 124, 136-7

infringements of performers rights 296, 297 location of 45-6 protection by copyright 30,

biotechnology 318-19, 330; see also biological subject

causal connection

35, 37, 75-6, 114, 115, 129, 152

Rental Rights Directive 45 Rome Convention

35-7

satellite, by 45 sound recordings, of 264—5 Brown, R. 663-4

charitable uses 222 citizenship 47 claims 332, 336-9 amendment of 467-8

functional claims 337 omnibus claims 337 Swiss claims 428-33 support for 461-3 trade mark analogues of 739 classification system 738-9, 822-3

clean hands 227, 966, 970, 998 click through contracts 286-7 cloning 411 collages 62 collecting societies 297

139, 267-71,

control of 286-7 examples 267-8 international aspects of 271 member-society relations 269

browsing 123, 143 business paper 865

reasons for 267-8, 270-1 society—user relations 269-70 collective bargaining 295

business method patents, see

collective management, see

Brussels Convention

1001-6

method of doing business

cable programmes

30, 76-7, 114,

151

cable transmission right 45, 138-9 retransmission

collecting societies collective mark 729-30 colour registered design protection of 580, 605-6

trade marks 741-2, 761, 773, 786, 788

139, 224

colourization 243, 244

caching 48, 143, 144

commercial success

calico printers 564

commissioned designs 609-10,

cancellation of trade mark registrations 751, 753, 761 capacity 254; see also minors,

455-6

641 commissioned works

114, 121

action 999

undue influence capacity to distinguish 769-73; see also distinctiveness

aims of 919-20

common design 986—7 common field of activity 711-12 common general knowledge 446, 458

cartoons

common origin 882n

brands

653, 657, 669

breach of confidence 917-76

61

1039

INDEX

commonplaceness 639-41, 649 communication right 39, 40, 144 Community courts 980, 1005 Community patent (EC

proposal) 325-6 Community Patent Convention

319-20 Community Plant Variety Right 396, 541 Community Trade Mark 667, 735, 747-53, 801, 813, 898,

902, 906-7 Community Trade Mark Courts 860 Community Registered Design (proposed) 569 Community Unregistered Design Right (proposed) 569

comparable royalties 536 comparative advertising 869-75 history of regulation of 664, meaning of 869 passing off and 704 comparison of terms 46, 148; see also duration compensation for employee inventors 530-6 15, 521-3,

908-10

decompilation 43, 58, 201, 219-21

defences 43, 218-21 EC Computer Programs Directive 43 infringement of copyright 43 moral rights 237-8, 244-5 originality 42-3, 94-7 ownership 42-3 patentability of 324, 326, 370,

registration 762-9

EC rules on 14-15, 265-7, 278-9, 291-3, 520-1, 908-10

UK law on 279-80, 288-9, 519-20

compilations copyright protection of 38, 56-7, 58, 91-4

protection as confidential 934-6

complex products 593, 594 compromise agreements

277

Comptroller of Patents, Designs 471,

copyright, of 148, 261-7 designs, of 611 exhaustion, and 13 Paris and 313n

constructive trusts 940, 974—5 consumers 860 average 822

contract affirmation of 278 copyright defences, relation to 193, 218, 286-7 moral rights, relation to 252 obligation of confidence, basis

for 935-6 contract theory of patents 309, 311, 314, 331, 413-14 control test 118; see also

employee cooling off period 744n, 752n co-ownership 984 confidential information, of 959-60

copyright, of 254, 273 patents, of 514, 515,516

secondary infringement 43

COPAC (Community Patent Appeal Court) 320, 981

TRIPs 38

copy-protection, see

390-4

557

computer-generated works author of 109, 111-12 duration of 149 moral rights 238, 244

originality of 97-8 computer-related inventions 381-94

confidential information,

considerations in trade mark

And Trade Marks 996-7 compulsory licence

42,57 databases, as 58

utility model protection by

669, 869-70

competition Block Exemptions

plant varieties, of 549 patents, of 313n, 321, 519, 524-30 trade marks, of 668, 907 TRIPs and 321 computer programs back-up copies 43,219 copyright protection of 30, 38,

acquisition of 956

confidential quality 923-38 abandonment 933-4 comparison with novelty 937-8

configuration 580 confusion passing off, and 706-8 trade marks, and 798, 822-3 connecting factors in copyright 101—5; see also qualification

consent of owner to marketing of goods, meaning of 894-5; see also exhaustion, implied consent

consent to registration oftrade mark 811, 840, 913-15; see also delimitation agreements

conspiracy 986, 1034; see also

joint tortfeasance, criminal liability

technological systems of protection copying

copyright 123, 124, 126-30, 143; see also causal connection, reproduction

registered design 612 copyright 27-293

breach of confidence, and 920

codification of 29-30 common law 29, 920

database right, and 300, 301n

designs, and 625-30, 646-8 droit d'auteur, and 22, 41-2, 51, 109, 235, 273 duration 42, 146-54

enforcement of 997 expansion of 29, 123-4, 146

exploitation of 253-71 harmonization of 40-8 history of 29-31, 123-4, 146

infringement 155-91 justifications for 28, 31—4 limits on exploitation of 271-93

meaning of 27 neighbouring rights, and 28-9, 30, 35-6, 41, 51-5

patents, and 309

1040

INDEX

copyright (cont’d.)

element of action for breach of confidence 961-2 element of action for passing

performers, and 294 property, as 253

registered designs, and 563, 564—5, 623-31, 626

registration and 30 rights conferred by 123-45 subject matter, see copyright works subsistence 78-107; see also originality, qualification unregistered design right, and 627-46 trade marks, and 762

copyright infringement 155-91 criminal liability for 50, 1031-2

earlier right in relation to trade mark 839-40 Copyright Licensing Agency 268 Copyright Tribunal 30, 148, 263, 280, 289-91, 297, 303 copyright works 27, 30, 51-77

categorization of 52

off 718-24, 728-9

exemplary 1026 dance 59 database, meaning of 301

databases (copyright) defences 42, 201, 218-19, 221

definition of 47, 58 EC Database Directive 58 infringement of 47 originality 42, 47, 94-7 protection of 47 databases (sui generis) 300-5

criticism of 301 definition of 47, 58, 301 duration 48, 298, 301 EC Database Directive 47-8, 58, 300-1 exceptions 47-8, 304-5 extraction right 47, 303

impact of 301

infringement 47, 303-4 maker 47, 302-3

proper domain of 626

correcting errors in computer

origins of 47, 300-1

derivation breach of confidence, and 960-1

copyright, and 158-9 see also causal connection derivative varieties 492, 547-8 derivative works originality of 85-91 right to control 139; see also adaptation

derogatory treatment 245-9 description 332, 334-6

descriptive signs 675-7, 791-6 descriptive uses 877-8

designations of origin 669, 729, 806

design documents 65, 626-8 design field 640 design, meaning of copyright, in 627-8 registered designs, in 579-92 unregistered design right, in 633-9 designs

protection by copyright 623-31

ownership of 302-3

relation with trade mark

corresponding designs 601

problems with 263-4

costs approach

qualification for 305 subsistence of 301-2

protection 762, 766, 768 see also registered designs,

programs

221 536

Council of Europe 23 counterfeit goods 1018 exhaustion 12 County Court

dates 785 deceit 657, 671, 692 deception 704-16; see also

996

country of first publication 48 course of employment 119-20 course of trade courts

185-6, 862-3

marks

declaration of non-infringement

320, 994-9

criminal offences 294, 296, 548, 729, 747, 861, 976, 984, 1030-5

984—5 decompilations

58, 201,

219-21

criticism and review 230

194, 202-3,

Crown copyright 120, 150, 238 Crown database right 302 Crown prerogative 311 Crown use 512, 529, 537-8

cultural purposes funds 269 cumulation of protection 568, 631, 762, 768

565,

customer lists 924 customs measures

981, 1017-19

damages 360, 517, 973-4, 1023-7 additional

likelihood of confusion deceptive marks, see misleading

1027

defamation

243, 252

defences breach of confidence 964-70 contracting out 193 copyright 35, 192-232

databases 42, 301, 304—5 moral rights 250-1 patents 505-12 performers 298-9

trade marks 869-97 defensive registration 341 delivery up 972, 1021-3 deposit of micro-organisms 335-6

unregistered design right destruction of work 233, 249

destruction order, see delivery up, border measures devoid of distinctive character 77, 785-91

diagnosis 367 dictated by function 565, 587-90, 595-6, 616, 766; see also functional designs dictionary, uses of trade marks in 856, 866

digitization 286 infringement by 128 originality of 99 digital agenda 38—40; see also Information Society Directive, internet,

technological systems of protection dilution 659, 661, 664, 673, 722-4, 728-9, 731, 828

direct product of patented process 493—4

Director General of Fair Trading 874

1041

INDEX

directors authors, as 109, 113-14 equitable remuneration 280 moral rights 233, 237, 241, 244

term of film copyright 151 disability 225-31 disc jockey exception 240 disclaimer misrepresentations in passing off, and 714-15 registration of trade marks, and 745-6, 751

remedy for infringement of moral rights, and 251 similarity of trade marks, and 814n, 817 discoveries 378-81, 543

discovery orders 988 disintermediation 286 dispose 489-90 dispute resolution 744n, 752, 1007

dissimilarity of goods 829 distinctive character, detriment

716-17; see also ICANN, internet domicile 47, 100, 1001n double patenting 417 dramatic works copyright protection of 59-61,

544

distinctiveness of trade marks depletion and 786, 789, 791 evidence in support 783-4 factual, see acquired distinctiveness, secondary meaning functionality and 786-7 guiding principles 778, 798 inherent, see descriptive signs nature of inquiry 779-80 purpose of requirement 777-8, 791, 798 relation to reputation 830

relevance to similarity 817,

films as 59-61 drawings copyright protection of 64-5 patent, in 332, 339

see also design droit @auteur 28, 109, 235, 273 droit de suite 49-50, 281-3 droit voisin 29, 51; see also neighbouring rights due cause 836-7 duration comparison of terms 46 copyright 42, 112, 146-54 copyright protection for designs 629-30 databases (sui generis) 301-2 EC harmonisation 46 films 46, 147-8, 151 patent 309, 317, 318, 321n, 355 patent royalty agreements,

and 522-3 performers’ rights 298

901

distribution right 38 123, 130-1, 185-6

plant varieties 546, 548

application 745

divulgation 130, 234 domain names

669-70, 694-5,

117-20 302

ownership of design rights 641

ownership of performers’ rights 295 ownership of registered designs 609-10 whether fiduciaries 940 employer vicarious liability of for acts of employees

986

see also employees enabling disclosure 421-3, 460 encryption protection of copyright works

by 188-90

whether encrypted information confidential 932-3

whether leading to obligation of confidentiality 942-3 engravings copyright protection of 65-6 protection of designs as 623-4

entitlement to patents 348-50; see also, employees, ownership

trade marks 756, 861

entrepreneurial works

668, 749, 753,

unregistered design right 642 utility models 558 DUS

98-9; see

also authorial works, neighbouring rights ephemeral copies 223, 231

542, 544-5; see also

equitable owner

agrotechnical requirements, plant variety rights

equitable remuneration farm saved seed 511, 549 performers’ rights 39, 280

earlier marks 813-14 earlier rights 839-40 educational establishment 212n educational use 200, 212-15, 230-1, 304

distributor owner of goodwill, as 690-1 registration of mark by 809 division of trade mark

950—4

ownership of copyright

publication right 46, 153-4 supplementary protection certificates 554-5

819-20

when assessed 783 distribution agreements 896,

241, 250-1

obligations of confidentiality

ownership of database rights

133-4

moral rights 233-4, 236, 242

to 833

distinctiveness of plant varieties

limitation of moral rights of

electronic commerce, EC Directive on 48, 144-5

electronic copies 221-2 employees inventors 470n, 479-85, 530-6, 545; see also compensation

255, 983

rental 42, 280

see also Copyright Tribunal equivalents, patent law doctrine of 323, 504-5

essential facilities 265-7 essential integers 499-505 estoppel, prosecution history; see interpretation of specification ethical limitations on patentability

405-12

365-6, 395,

1042

INDEX

Euro-defence 14; see also exhaustion, competition Europe Agreements 22 European Commission, role of 10, 265

European Community, external relations 20-1

from state of the art 418, 601

existence and exercise of rights, see exhaustion experimental purposes 506-8, 548, 559, 612

expert evidence 448-9, 499, 606,

extended passing off 690, 698,

European Patent Office choice between UK and EPO

extension of British copyright law

621, 708-9, 826-7, 999— 1000 expert systems 388-90

exploitation of copyright 253-70 expression, freedom of 204, 961, 971, 1012-13 724-9

342-4

to colonies

747

jurisprudence of on mental steps 386-90 examination patents

343, 346-7, 351-3,

354-5

102-3

extraction right 303 extraneous matter

jurisprudence of on inventive step 440-1

814

eye test of infringement 617-18,

743, 750-1

utility models 556 exceptions, see defences

infringement 128 moral rights 244, 250 originality of 99 production contracts 256, 297 Rental Directive 45

first sale, doctrine of, see exhaustion, implied licences first to file/invent 328, 346 fixation 79-80, 129 flags 805n, 810 foreign description 782 formalities assignment of goodwill 691 copyright 34-5, 109, 238, 255 patents 515-16

trade marks 902, 903, 905 formats

645

test of novelty 603 see also visibility eye-appeal 583-5, 593, 616-17, 633

plant varieties 542 trade marks

151

first fixations 45, 46

European Economic Area 21-2, 882 European Free Trade Area 21-2, 893-4 European Patent Convention 23, 316-17, 414, 551 revision of 323—4, 393-4

comparison with the OHIM

cinematographic works 46 copyright protection of 72-4 dramatic works and 59-61 duration of copyright 46, 147,

copyright protection 59-61

protection by breach of confidence 924, 926-7 reform 50, 61

FACT (Federation Against Copyright Theft) 988 factual distinctiveness

675; see

forum conveniens 1004 forum shopping 1000, 1004, 1005 franchising 904

excessive criticism 263

also acquired

exclusive licence copyright 257-9 distinction from assignment

free movement of goods

distinctiveness, secondary meaning

see also exhaustion, internal market free public showing 224

258-9 patents 515-16

rights oflicensee 257, 984 trade marks

860

exclusive recording agreements 276, 277, 298

exclusive territoriality 521, 910-11

exhaustion of rights copyright 130-1, 132, 186 database

303

general 11-13 international 13, 892-6 patents

489, 510

plant varieties 548

registered designs 612 trade marks 880-96, 901 utility model 559

exhibition artistic work, of 240, 250 contents of excluded

fair compensation 229 fair dealing defence to copyright 194-207, 250

defence to database right 304 fair use 194 false attribution right 233-4, 242-4

false representations 1035 false trade descriptions 1034-5 falsification of register 1035 farmers’ privilege 510; see also farm saved seed PAST (Federation Against Software Theft) 988

fidelity, duty of 950-1 fiduciary relations 940 field of use limitations 521 filing 350-1, 737 films authorship of 109, 113-14, Se

10-13;

freedom of speech, see expression,

freedom of freezing orders 990 function of trade marks 656-7, 882, 884

functional designs 571, 579, 587-90, 595-6, 616, 633, 645, 678

garden leave 952 generic signs 677, 791, 796-7, 854—7

genes confidentiality and 924, 933 patentability of 364, 379-81 genetically modified human beings 411 genetically modified organisms, see animal varieties, biological subject matter, plant varieties,

1043

INDEX

geographical indications 725, 729, 806 geographical signs 675-6, 758n, 779, 794-6, 806 gestures 761

home taping 223, 229 honest concurrent use 841-2 honest practices in industrial and commercial matters 871, 876-7, 878

get-up 677-8, 787-9; see also packaging ghost marks 807, 850 Gillette defence 332, 511-12, 1003

goodwill 657-8, 672-91 definition of 674 extended passing off, in local nature of 684-9 manifestations of 674-80 need for trade 680-9 grace periods 417, 543, 601-2, 608

grammatical variants 780-1 grant, of patent 355 grant-backs 523 graphic representation grey terms 521,522 guilds 655-6, 671n

human genome project 364

human rights 23; see also expression, freedom of hyperlinking 138 ICANN 670,1007; see also domain names, internet

769

567-8

handicapped 225, 231 harmonization of national laws border measures 981 challenges to 18 constitutional basis of 16 _ copyright 17, 40-8, 109, 147, 228, 280, 281, 282, 293

design law 18, 568-9, 607 future 1036 goals of 40-2 history of 16-18, 40-2 implementation of 18-19, 147, 220-1

interpretation of 19-20 jurisdictional issues 981 patent law 17, 317-18, 325-7, 393

plant varieties 18 reasons for 16, 40-1, 300

supplementary protection certificates 550-2, 554-5 trade mark 17, 874—5 utility model 18, 556-7 harvested material 547; see also

farmers’ privilege, farm-saved seed

individual character 608 inducing infringement 386-7; see also joint tortfeasance industrial application 363-9 industrial process 629 information advertising and 663-4 property in 919

protection by confidentiality

confidential, when 925-6 copyright and 38, 168-73 designs and 587, 625 no property in 919

identification of owner 315 identity marks, of 814-15 goods, of 815-16 illegally obtained information 946-7

>

illicit recordings 296, 1032 image

Hague Convention

patents 496-8

hosting 48, 145

ideas

724-9

indigenous knowledge 924; see also bio-prospecting indirect infringement registered designs 613

679, 699; see also

personality merchandising immaterial details 605 immorality confidence, of 925 designs, of 592 marks, of 797 works, of 105-6, 210 imperfect recollection 619, 817, 818

923-38

trade marks and 662-4 types of 384-5, 919 information function 314, 334, 414, 735, 739

Information Society Directive (EC) 49, 126, 143-5, 189-91, 193, 228-32 information technology, see

computer programs, computer related invention,

presentation of information infringement copyright 48, 155-91, 263 database right 303-4 patents 486-505

performers rights 295-6 registered designs 611-21 trade marks 668, 860-8 infringing copies 185-6 inherent distinctiveness 779, 784; see also invented signs

implied assignment 121-2 implied consent 895 implied licence 259-60, 490

inherent uses 424-6

importation

injunctions 972, 980, 1020-1

breach of confidence, as 964 copyright , and 130-1, 185-6

infringement of patent 490 passing off 697 trade marks, and 864 imported inventions, patentability of 314 incentive theory 4, 118, 312, 314, 540, 733

incidental copying 126, 143 incidental inclusion 207-8, 231, 241

incitement, see joint tortfeasance

indications of origin 656, 658, 882; see also origin function

iniquity 965-6 injurious falsehood 994 innocence

breach of confidence 961 copyright 156, 187-8 damages 1023-4 patents 487-8

passing off 693, 713-14 trade marks 861 innocent recipients 943-5

insolvency 261 instruments of fraud 716-17 insubstantial part 303

integrity right 152, 244-52 intellectual property concept of 1-3

controversial nature of 3

1044

INDEX

intellectual property (cont’d.) distinction from tangible property

1-2, 52

history of 1 justifications for 3—4

Union for Protection of Plant

opponents of 3, 8-9, 31 intention

copyright 156, 187-8 passing off 713-14 patents 487-8

see also innocence interactivity exclusion 76, 138; see also cable programmes interconnections, see interfaces,

must fit, must match interfaces

copyright 219 registered designs 590, 596 unregistered designright 634-9 interim injunction

328, 392-3, 396, 524, 541, 550, 568, 667-8, 729, 920-1, 979-80

227, 971-2,

1008-17 interlocutory injunctions, see interim injunction

internal market 9, 10-13, 911; see also exhaustion,

harmonization international conventions Berne 5, 6, 7, 34—5, 37, 52, 73,

193, 234, 237, 242, 246, 247n, 249n, 295, 567, 979

bilateral 5 European Community and 20-1

European Convention on

Human Rights 9 GATT 7

Varieties 396, 541, 550 WCT 8, 38-9, 126, 143, 980 WIPO Patent Law Treaty 326-7 WPPT 8, 39-40, 295, 980

international exhaustion of trade marks 892-6 international organizations BIRPI

6 10, 541-2

copyright of 121, 150 European Patent Office 23, 316-17, 342-4, 356-7, 358, 414n

IC] 7 Office of Harmonisation in the Internal Market

10, 667,

735

UNESCO

6

WIPO 6, 38, 660, 670, 735, 754, 755, 756 WTO 7, 37, 234, 238

international preliminary examination

321

international protection of trade marks 665-8, 735, 753, 757 international search authority 321 internet 138, 144-5, 286, 669-70, 911, 1000, 1007 internet service providers

Hague 567-8

copyright liability 48, 142, 985

Madrid Agreement 5, 666,

interoperability 219 see also Electronic Commerce, Directive on

753-4

Madrid Protocol 666, 755-7,

interpretation of specification

813

negotiation of 20-1 Paris 5, 7, 313, 524, 567, 576, 666, 667, 668, 730, 921, 979 Patent Co-operation Treaty 5, 310, 321, 344 Rio Convention 322 Rome Convention 35-7, 52

Strasbourg Treaty 23 Treaty of Amsterdam

499-502 invalidity of trade marks 747, 760, 776, 843, 875; see also cancellation

invented words 779, 784 inventions identification of 415

image of 310, 370, 376, 389, 9

Treaty of Nice 9 Treaty of Rome (EC) 9 Treaty on European Union (Maastricht) 9 TRIPs 6-8, 37-8, 238, 321,

440

function of 440 meaning of 449-50 plant varieties 540 utility models 558 inventors

identification of 474~9 romantic conception of 341, 346n, 473

see also compensation of employee inventors investment

Community Plant Variety Office

compared with novelty 413,

449

lack of definition 369 see also technical character inventive concept 353, 443, 447-8, 475 inventive step 439-56

301

issuing copies to the public 123, 124; see also distribution right ITC (Independent Television Commission) 223 ITMA (Institute of Trade Mark

Agents) 736 joint authorship 72, 111, 112n, 115-16, 149 joint owners, see co-owners joint tortfeasance 498, 986-8

journalists 117; see also reporting current events

Judicial attitudes to patents 312 judicial proceedings

215, 231

Juke-box licence 262 Jurisdiction 472-3, 981, 1000-4; see also Brussels Convention

justifications breach of confidence, for 919-20

disclosure theory 4, 309, 311, 314, 331

ethical 4, 313, 540, 664—5, 733

incentive theory 4, 312, 314, 733

instrumental 4 intellectual property 3—4 natural rights 4, 32, 313 need for 31, 659-61 registered design protection,

fon 565) 0) trade marks, for 664-5, 733, 844—5 unjust enrichment

4

unregistered design right, for 632

keep 491 kits 489, 503, 613

know-how

332

1045

INDEX

know-how licence 965

Madrid Protocol 666, 755-7, 813

kort geding 1000

maker (of database)

labels 892 language requirements 350, 748,

making an invention 488-9 making available 144 malicious falsehood, see injurious falsehood

754, 755, 758

lawful use 221, 304 legitimate reasons for opposing

further circulation of goods 883 lending

123, 124, 132-3, 212,

215; see also libraries, public

lending right, rental right letters 785-6

liability rules 262, 270-1 libellous works 105 libraries and archives

133, 200,

copyright 256-60 nature of 256, 902-3 of right 518,554, 1024n trade marks 860-1, 902-3, 906, 907

653

figurative marks 653 identity of 814-15 indicating ownership 655 indications of source 656, 657,

representation of 739-42 sensory marks 653, 761 service marks 668 similarity of 817—20 well-known marks. 667, 688-9, 813-14, 830-1

licensee estoppel 515n licensees, rights of 252, 984 licensing body 289-91 licensing revenues, as damage in passing off 719-20 licensing schemes 214, 289-91 likelihood of confusion 822-7 proof of 825-7 ; 813, 837-8

see also deception likeness 679; see also personality merchandising limitation

orders market failure 192, 505 marks

658 picture marks 653, 786, 797

211-12, 230-1

licences blanket 270

when unnecessary

management agreement 274-5 manner of new manufacture 369 Mareva injunctions, see freezing

composite

1029-30

limited purpose test 941-2, 957 limping marks 803 lis pendens 1002 literary works authorship of 110-11 copyright protection of 53-9 meaning of 53-5 protection of designs as 625 local uses of marks 880 long-felt want 455 look-alikes 669, 734 look and feel 164 lost profits 1024-5

word marks 653, 740 mass production, impact on copyright of 629 material appearance 585-6 material form

127, 181

material time 48 Mechanical Copyright Protection Society 290

mechanical right 127, 262, 268 medical patents extemporaneous preparation

of medicines 512 medicinal products 551 uses 369, 427-33 megamix 99

mental acts, see method of performing a mental act mental condition of mark 889 mental steps, see method of performing a mental act

merger copyright doctrine 169 trade mark applications, of 745

act 386-90

method of playing a game 557 me-too 669 micro-biological processes 403-5 mime

59

minor agreements 908; see also anti-competitive agreements

minors 254-61 misleading advertisements

method of medical treatment 365-9, 557; see also medical patents

731;

see also comparative advertising misleading trade marks 806-15, 857-9, 902, 907 misrepresentation 671, 692-717

extended passing off, in 728 form of 693-5 nature of 695-705 origin, as to 696

quality, as to 696-8 responsibility, as to 698 modular systems 596 monopolies opposition to 312

statute of 311, 369 trade marks as 659 Monopolies and Mergers Commission

263, 264

moral rights 30, 35, 117, 152, 233=52 criticism 235-6

duration 233-4 history 234-5 meaning 233 performers 39-40, 49, 296 see also attribution right, divulgation, excessive criticism, false attribution, integrity right mortgages

260, 516, 905, 906

mosaicing 419, 445, 603 multimedia works 58, 236 musical works 61 must match 590-2, 637-9 must-fit 634-7

method of construction 586-7 method of doing business 372-3, 383-4

made available, see enabling disclosure Madrid Agreement 666, 753-4

method of performing a mental

302

names copyright protection of 54-6

plant varieties 548

1046

INDEX

names (cont’d.)

trade mark registration of 758n, 789-90, 840n

use of own 693, 876-7 national treatment 5, 34, 100-1, 148, 313, 666 natural rights 4, 118, 313, 346

natural substances 378-81 nature of goods, shapes resulting from 763-4 necessity reference to mark, of 878-9 repackaging, of 885-6

needletime 264-5 neighbouring rights 28-9, 30, 35-6, 41, 51-5, 294-5 Net Book Agreement 285

newuses ofold technology 426-36 news reporting 203-7; see also reporting current events

Nice system of classification of goods and services 738 no-challenge clauses 521-2, 913 non-competition obligations 911-12

obvious to try 451 obviousness, see inventive step offences, see criminal offensive marks 805 Office for Harmonization in the Internal Market (OHIM) 667, 735

opposition

Paris Convention 313, 524, 567, 576, 666, 667, 668, 730, 979

Parliamentary copyright 121, 150 Parliamentary and judicial proceedings 215, 231 304 parodies 236, 231, 715-16

passing off 671-734 action 999

EPO, at 316n, 344, 356-7

extended

trade marks

history of 657-8, 671, 731-2 moral rights, and 237, 243 nature of 671

744, 751, 814,

843n origin function 656, 658; see also indication of source, marks

originality 63, 80-99 authorship, and

110

compilations, of 38, 91-3 computer-generated works 97-8

computer programs 42-3, 94-7 databases 42, 94-7 derivative works 85

designs, and 625, 639-41, 649 entrepreneurial works 98—9 European concept of 42, 81,94 infringement relation with 83, 167-8

690, 698, 724-9

protection of designs, and 563

registration of trade marks, and 653, 839, 861, 898, 901

requirements of 672-3 unfair competition, and 668, 731-2 passive sales 284, 521, 911 patent agents

331, 342

Patent Cooperation Treaty 310, 321, 344

patent pooling 523 patents 309-538

non-derogation from grant 227 non-discrimination (EC principle of) 281, 288 non-literal copying 163-5

kinds of labour 90-1 meaning of 81-2

non-obviousness patents, in, see inventive step

abolition movement 311-12 acquisition of 340-61 benefits of 340-1 chemical patents 436-8, 557 copyright compared 309

novelty, contrast

costs of 341-3, 556

photographs, of 42, 82, 94-7

registered designs, in 604—5

non-property rights 296-7 non-use

814, 844-54

Norwich Pharmacal order, see

discovery orders notice, as prerequisite to

repackaging 888-9

novelty confidentiality, and 937-8 function of 413-14 patentability, and 413-38

plant varieties, and 543-4 registered designs, and 598,

84

drafting of 331-2 duration of 309

outstanding benefit 534—5 ownership copyright 108-22 database right 302-3

history of 310-13 infringement of 486-505 justification for 313-15

numerals

785-6

medical patents 369, 427-33, misuse of 497n, 861

packaging protection of 677-8, 787-9

use of 863 paintings 63-4

breach of 956-9

observations 354, 744, 751 obscene works 105-6, 272

exploitation of 513-38

plant varieties 545 registered designs 609-10 trade marks, of 899 unregistered design right 641

see also get-up, shape

objective similarity 183-4 obligation of confidence 939-5

505-12

patents 469-85

602-8

trade marks, and 811 utility models, and 557-8

defences to infringement of

purpose of 80-1 TRIPs 38 ornament 580

PAMRA

297

paperback 254 parallel importing 267, 697-8, 870n, 881; see also

exhaustion

512

nature of 329 novelty requirement of 413-38 obviousness requirement of 439-56

ownership of 469-85, 1006 pharmaceutical patents 365, oo

relation to plant varieties 318, 529-30 relation to trade marks 765-7

762,

rights conferred by 487—99 subject matter of 362-412, 540 validity of 457-68

1047

INDEX

Patents County Court 995-6 Patents Court 994—5 paternity right, see attribution pattern 580

proprietor, see ownership prosecution of patents 355 pseudonymous works

549-50

pattern recognition systems 388-9 performers’ rights 294-300 audio-visual performances 49 equitable remuneration

39,

45, 297 history 30, 45, 294

subject matter of 542-3 validity of 543-5 playing games, see method of playing a game plots 163 policing infringement 988 portraits 592, 790, 840n

moral rights 39-40, 49, 296

non-property rights 295-6 property rights 296 protected performances 295 Rome Convention WPPT 39-40

ownership of 545 relation to patent system 396—400, 529-30, 540,

35-7

performing right 35, 37, 133-6 Performing Right Society 288 Performing Rights Tribunal 289; see also Copyright Tribunal periodical articles 237, 244; see

also reporting current events

permanent/perpetual injunctions, see injunction

person skilled in the art 443-4, 458

personality merchandising 243, 603, 679, 699-701, 719, 790,

802, 810, 840n, 865; see also character merchandising © petty patents 555; see also utility models phonetic equivalence 782 photocopying 228-9 photographs copyright 42, 65-6, 82, 94-7, 224

trade marks 790

piracy 981, 1018, 1031 pith and marrow, see interpretation of specification plant protection products 551 plant varieties, patentability of 394-400

plant variety rights 318, 539-50, 998

acquisition of 541-2 compulsory licences over 549 duration of 545 exceptions '548—9

infringement of 546-8

954—5

post-sale confusion 707 PPL 297 pre-launch publicity 681-2 preliminary measures 1001,

public domain 928-37 public interest breach of confidence, and 965-70

copyright, and 208-11, 231 injunctive relief, and 1015,

1003-4

presentation of information 384-6 preservation

112, 239

public meaning of 134-6 nature of 705-6 public administration 215, 231 public art 216, 231 public bodies, confidentiality of information acquired by

192, 212, 216, 231

presumptions 110, 113, 256, 297, 303, 470, 747, 990-1, 1031n price maintenance 285, 523, 913; see also anti-competitive

agreements, black list, chapter | prohibition

1020 public lending right 133, 236, 305-6

public performance equitable remuneration of performers 297 infringement of copyright 123, 124, 133-6, 214,224, 226,231 public records 215

primary infringement 155 prior applications 600

prior publication use of corresponding artistic work, by 601-2 prior registration 783

public order 272 public policy 227, 625 copyright 105-7, 277 trade marks contrary to 805

prior users rights 508-9, 544 priority date

publication acquisition of copyright by 103-5

patents 313, 351, 416-17 trade marks 666, 737-8, 748

infringement of copyright by

privacy in photographs and films

patent application, of 353-4 trade mark application, of

234

private information 919, 922,

130

744, 751

948-9, 959, 961-2, 971n private purposes 192, 194, 506, 548, 622 private recordings 295-6, 299 private study, see private purposes problem and solution approach 440-1, 447 process patents 330, 492-5

publication right 46, 153-4

producer 112-14 product by process claims 330

qualification copyright, for 101-5 database right, for 305 patents, for 348 performers’ rights, for 298,

product patents 330, 401, 488-92

profits available 537 propagating material 510, 546-7 proper reason for non-use

853-4

property rights of performers 295 property rules 262, 270-1, 272, 857, 898

publicity rights, see personality merchandising published editions, see typographical arrangements

publishing contracts 236 purposive interpretation

500-2

299-300 plant variety rights, for 541

public lending right, for 306 publication right, for 154

1048

INDEX

qualification (cont’d)

registered designs, for 571, 609-10

registration

trade marks, for 754, 843n unregistered design right, for 641, 649

quality guarantee function of trade marks 656, 882, 911 Radio Authority 223 reap-so principle 664-5; see also justifications, unfair competition reciprocal representation contracts 271 reciprocity 100, 648-9

recognition of judgments 1006 reconstructing buildings 216, 232 record of spoken words 225 registered designs 571-622 application for 571, 575-7, 609-10

function of registration 577-8 history 564-5 infringement of 611-21

international 567 novelty requirement 598-608 ownership of 609-11 593-7, 607-9, 621-2

role of 563 scope of monopoly 614-17 subject matter 579-97 transactions

610-11

registered trade marks 735-915 absolute grounds of refusal 761-75, 776-810

acquisition of, see registration

of trade marks defences 869-97 distinction between mark and product 762, 773

exploitation of 900-15 infringement of 860-8 ownership of 899-900 relative grounds of refusal/ validity 811-42 requirement of distinctiveness,

see absolute grounds of validity revocation

advantages of 658 history of 658 international aspects of 5 jurisdiction, and 1002-3 relation to rights granted 345 role of 109, 309, 577-8, 845 transactions, of 517-18, 610-11, 905-7

registration of trade marks 735-915

absolute grounds of refusal 761-75, 776-810

advantages of 735 cost of 758

date of 746, 753 dealings 905-7 defence to infringement 875

community 569 comparative law 567 duration of 571,576 enforcement 998

reform

speed of 758 subject matter 760-75

843-59

rights conferred by 860-8

discretion 804, 805, 809 effect of 747

function of 735-6 history of 735-6 registration process 735-59

relative grounds of refusal 811-42 speed of 758 supervisory role of registrar 905, 907 see also representation,

specification related rights 41, 52 harmonization of 44-5 see also neighbouring rights relative grounds of refusal/ validity 811-42 earlier marks 813-14 earlier rights 839-40 generally 747, 751, 752 honest concurrent use 841-2

purpose of 811 relation with infringement 811-12

see also association, dilution, likelihood of confusion,

marks remedies breach of confidence, for 970-6 civil 1008-30 criminal 1030-5

infringement of trade marks 736-7, 753, 860, 861

remuneration rights public playing of recordings of performers, for 297

rental, for 297-8 renewal patents 355

trademarks 746 Rental Directive 295, 296, 297

rental right defences 44 equitable remuneration 44, 280

42,

history 38, 44

meaning of 44, 123, 124, 132-3 presumed transfer of 256, 297

repackaging of goods 883-9; see also exhaustion, parallel importing repair 227, 231, 260, 488-9, 594 reporting current events 194, 203-7, 230, 237, 241, 245

representation

registered design 572-3, 614 trade marks 739-42, 749, 754 representative actions 984 reproduction copyright 35; see also copying,

unregistered design right 642 reputation 674, 829-31 resale 123, 130, 281-3; see also droit de suite

research or private study 194, 199-201 residence 47, 102 restitution 498-9

restraint of trade 275-8, 910, 912, 915, 951-2, 971-2 retail services 773-5 retention of title clauses 900-1 reutilization 303

reverse analysis 419-20 reverse infringement test of novelty 420-1 reverse passing off 702-3 revived copyrights revocation

147

patents, of 356 trade marks, of 668, 747, 843-59, 902, 907; see also

generic signs, misleading marks, non-use reward theory 310, 313, 540

1049

INDEX

right to privacy, see private information right to work copyright, and 217 defence 508-9 explanation for inventive step

440 explanation for novelty 413-14, 598, 606

rights clearance 272 rights management information 39, 40, 190-1

romantic image of authorship 235

Rome Convention 52, Royal Commission 215 Royal emblems 810 royalty, as basis for assessment of damages 1025-6 sale of work, impact on copyright of 255, 260; see also exhaustion, implied

licence salts 552

saved seed 510-11, 549 Schechter, F. 658 sculptures copyright protection of 66—7 protection of designs as 624 search orders 988-9 search warrants 1036 searches patents 352-3

trade marks 743, 751 utility models 556 second medical use patents 428-33

secondary evidence (of inventive step) 453-6, 607

secondary infringements copyright 125-6, 155, 185-91 moral right of integrity 250 passing off 716-17 trade marks 864, 868 unregistered design right 642 secondary losses 1026 secondary meaning 675-7, 798-9; see also factual distinctiveness secret prior use 424-6 securitization 260-1 security, use of intellectual property rights as 260, 905; see also mortgages,

seizure 988 selection patents 436-8 self-regulation of advertising 872-4 semiconductor products 525, 648-9 seniority of trade marks 750 serial copy management system 188, 190 series of trade marks 743 service outside jurisdiction 1004n

884, 889; see also exhaustion of rights, existence and exercise, and free movement of goods specification requirements for patent 457-61 trade marks 738, 749, 754, 758, 808, 815, 816

spoken words, see record of springboard doctrine 930-1, 934 squeeze arguments

sets of articles 575 shape protection by registered design 580 protection by registered trade marks 740-1, 761, 762-9, 786-7, 789n, 803

protection by unregistered design right 633 signatures 790 signs 720-2 similarity

varieties

standstill plus 596-7 staple commercial product 497 state of the art patents 413, 415-20, 444-6

registered designs 600-2, 607-8 statement of novelty 573-4, 580, 598-9, 614-15 storage

goods, of 820-2 marks, of 817-20 slavish imitation 731; see also look-alikes, unfair competition

small rights 269

616; see also

Gillette defence stability 545; see also DUS, plant

127, 182

strangers, confidential obligations of 946 Strasbourg Treaty 23 subconscious copying confidential information, of 961

copyright works, of 158

smell 742, 761, 773

software 218-21; see also computer programs songs copyright in 61-2 moral rights and 240

subjective views of author 247-9, Pas substantial part 157, 174-81, 303 substantial similarity 617-21, 644-5

songwriter agreements sound-alikes 128

substantial value, shapes which

276

sound broadcasts 30 sound recordings

compulsory licence for broadcast 264-5 copyright protection 30, 74-5, 112—-13128,

152; 222

Rental Directive 44—5 Rome Convention 35-7

sounds 761,773 spare parts and accessories 582-3, 594-7, 634~9, 878; see also repair

special 301: 6 special circumstances in the trade, see proper reason for non-use specific subject matter 11, 882,

give 767-9

sufficiency 331, 457-61 sufficient acknowledgement 198-9

supplementary protection certificates 318, 550-5, 998 procedure for acquisition 552-3

subject matter 553-4 supplying the means 496-7 support 461-3 surface decoration surgery 366

634, 646

surnames, see names survey evidence 709, 803, 827 Swiss claims 428-33, 434n

symbol, trade marks 747 systematic extraction

303

1050

INDEX

tables, copyright protection of 56-7, 58; see also compilations, databases tarnishment 721, 828, 835-6 taste

good, alteration of works offending against 251 trade mark, as 761 technical character (contribution, or effect) 370, 373-7, 380, 382-3, 391

technical result, shapes necessary to obtain 765-7 technological change and evolution of copyright 123

trade and service marks designs, and 563 function of 655-7 history 655-7 identity 661 passing off, and 653, 658, 898 property 659

enforcement 999 registration 658; see also registered trade marks trade associations 680 trade descriptions 729 trade dress, see get-up, packaging trade mark agents 736, 748

trade mark application,

technological systems of protection 39, 40, 188-90

acceptance of 743 trade secrets 953-4

283, 284, 286, 520-3

trailer clauses 482n

television broadcasts 30 television schedules 263-4, 265-6

tell-quelle 666

also market failure transient copies 126 transitional arrangements,

copyright amendments

territorial nature of goodwill 684-9

territoriality 4-5, 880 testamentary disposition 234, 261, 905

text-editing 386-8 textiles 576 texture 579, 593 therapy 366

thick/thin copyrights 128 third-party recipients of confidential information 943-5

threats 991-4 three-step test

copyright defences 35, 38, 193

TRIPs 38 utility models 559 WPPT 40 tie-ins 512,522,911 time-shifting 223 tit for tat 227

titles copyright protection of 54-6, 7D

passing off 694 topography rights, see semiconductor products trade 679-80, 866

218

Vienna Convention 238 typographical arrangements copyright protection of 30, 77, 109, 114, 129, 134, 137, 152, 154, 161-2

unconscionability 276 undertakings 278 undue burden 461 undue influence 274-5 unfair competition 51, 664, 658, 667, 672n, 692, 731-4, 871, 919-20, 931n

transaction costs 192, 199; see

territorial exclusivity 255, 521

667, 668

unfair advantage 831-3, 872

Trade Mark Law Treaty 666

Technology Transfer Regulation

trade marks

trivial information 924-5 t-shirt use 851 typefaces copyright protection of 64,

147, 148

translations copyright infringement 30, 35, 123, 140

moral rights and 247 requirements in relation to patents 320, 324, 341, 343, 356

uniformity 544-55; see also DUS, plant varieties unity of invention 352-3

universality 100 unknown authorship 112, 150, 216, 226 unpublished works 195, 198, 216

unregistered design right 631-49

acquisition 632-41

duration of 642 enforcement

transmission, as connecting factor 105

trap orders 988 treatment

patentability of, see diagnosis, method of treatment, surgery, therapy

998

exceptions 633-9; see also interfaces general 30 infringement

derogatory 245-7

150, 153-4,

642-5

ownership 641 purpose of 632 qualification 641 relation with copyright 627,

TRIPs

632, 646, 647-8

Berne-plus features 37-8

relation with registered

computer programs designs 568

designs 563, 565, 569, 632 subject matter 633-9

38, 392-3

dispute resolution procedure 8 geographical indications 729 impact of 7-8, 392-3 moral rights 238 origin of 6-7 patents

321, 328

remedies 979-80 rental 38 requirements of 7 three-step test 38

unregistered trade marks international protection 667-8

see also passing off, wellknown marks UPOV

396, 541, 550

use of confidential information 961-4

use of trade marks genuine 849-50

1051

INDEX

licensee, by 848-9 location of 852, 862-3 meaning 846-8, 852-3 trade, in the course of 862-8

trade mark, as 867-8 use on other goods 850-2 use on packaging 852, 883 users’ rights 287-8

utility 364

utility model 325, 555-60 acquisition 556 duration 558 infringement 558-9 subject matter 557 validity 557-8 valuation of brands 653, 898 variants common in the trade 606 variety act 295

verification 301 Vertical Restraints Regulation 279, 283, 284, 285, 908-10

vicarious liability for infringements 141, 986

visibility designs law, and 572, 579, 583-5, 585-6, 595, 617-18

unregistered design right, and 633

voice 679; see also personality merchandising waiver

236, 242, 251-2

website, as cable programme 76

WCT, see WIPO Copyright Treaty well-known marks 667, 688-9, 813-14, 830-1 WIPO 660, 670, 735, 754, 755, 756

WIPO Copyright Treaty communication right 39 distribution right 38 implementation of 49, 126, 143

origins of 8, 38 rental right 38 rights management information 39 technological protection 39

WIPO Performances and Phonograms Treaty communication right 39-40 distribution right 39-40 equitable remuneration 39 implementation of 48-9, 143, 296

moral rights 39-40 origins of 8, 39-40, 295 rental right 39-40 rights management information 40 technological systems of protection 39-40 three-step test 40 see also performer’s rights, sound recordings withdrawal, moral right of 233

works general 27, 30, 51, 159-73, 245, 294-5 categorization of 52

WPPT, see WIPO Performances and Phonograms Treaty WTO (World Trade Organization) 234, 238

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This new textbook on intellectual property law provides a comprehensive and authoritative understanding of this burgeoning area of law. It provides a thorough overview of the core rights— copyright, patents and designs, trademarks, passing-off, and confidentiality— and takes full account of developments in database protection, biotechnological patents, parallel imports, internet copyright, and rights in performances. After a general introductory analysis of the concept of intellectual property, there is a clear and comprehensive exposition of the ways in which intellectual property rights are acquired, infringed, and exploited. The text concludes with a general treatment of enforcement of intellectual property rights, litigation, and remedies.

e Full discussion of the accepted classifications of intellectual property, together with recent extensions ofintellectual property rights. @ Examination ofthe international and regional sources ofintellectual property law, as well as the more familiar domestic rules and regulations.

e Integrates the jurisprudence of UK tribunals with the case law oyu ate European Patent Office, the Office of Harmonization in the Internal Market, the Court of First Instance, and the European

Court ofJustice.

Lionel Bently is Reader in Law at Gta Tema @fo)I(exexenm Roya teova y

Brad Sherman is Professor in Law at Griffith University, Brisbane, Australia , and director of the Centre for Intellectual Property in Agriculture at the

Australian National University and Griffith University,

Front cover: Barbara Kruger, Untitled (Raw Material), 51.5 63.5", photograph, 1988. Courtesy of Mary Boone Gallery, New York.

OXFORD UNIVERSITY

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ISBN 0-19-876343-3

PRESS

763437