article
IPso facto
1 July 2010
Peter Ellis provides an update on developments in
intellectual property law, including a clampdown on illegal
file-sharing, challenges to the legality of keyword advertising,
and recent cases with implications for patent ethics
As we head towards the summer of 2010, there are a number of
important developments of which all intellectual property (IP)
practitioners should be aware. The Digital Economy Act 2010
received royal assent in early April, but its provisions to prevent
persistent illegal file-sharers from accessing the internet remain
highly controversial. This article provides an update on all these
developments.
Digital Economy Act
The Digital Economy Act 2010 (DEA 2010) includes provisions for
dealing specifically with illegal file-sharing. It represents a
major change in the attitude of government towards PI, which had
not previously attracted such excited interest from legislators.
The act was pushed through in the last few days of the former
government, which was criticised for rushing it onto the statute
books without full consultation and consideration of its
effects.
The DEA 2010 makes provision, among other things, about the
online infringement of copyright and about penalties for
infringement of copyright and performers’ rights. Sections 3 to 18
deal with online infringement of copyright, chiefly by making
amendments by addition to the Communications Act 2003 (CA 2003).
The DEA 2010 imposes on internet service providers (ISPs) an
obligation to respond to rights holders who assert copyright
infringement, and to take active steps to prevent a persistent
infringement of copyright, by denying infringers access to the
internet.
Its method of operation is relatively straightforward.
Internet service providers must write (within one month) to
their subscribers, where a “copyright infringement report” has been
provided to the ISP by the copyright owner within one month of an
alleged incident of copying by that subscriber.
Further, ISPs must, on request, provide copyright holders with a
copyright infringement list showing the infringement notices sent
on its behalf. Ultimately, subscribers may even see their
connections cut off through "technical measures" forced on the ISP
by the copyright holder.
Further still, section 8 of the DEA 2010 provides that the
Secretary of State can block “a location on the internet which the
court is satisfied has been, is being or is likely to be used for
or in connection with an activity that infringes copyright.”
The act will be enforced by Ofcom, the communications regulator,
through a code of conduct. The code, in accordance with Ofcom’s
statutory obligations, must allow the alleged infringer an
opportunity to appeal to a tribunal. If an infringer is a
persistent offender, then his right to use the internet will be
withdrawn.
Ofcom will publish a draft DEA 2010 code of practice for
consultation during the course of May 2010 and will then publish a
statement no later than the end of September 2010 and, at the same
time, submit a draft statutory instrument embodying the approved
code for submission to the European Commission for consideration.
It is consulting with a range of stakeholders including consumer
groups, ISPs and copyright owners on the content of an obligation
and on how best to identify the levels of unlawful file sharing.
The challenge will be for Ofcom to achieve its intention of
securing a coordinated approach involving both copyright owners and
ISPs.
At present, it is expected that ISPs with fewer than 400,000
subscribers will be exempt from the obligations imposed by the DEA
2010. Also, some larger ISPs have indicated that they will not
comply with an obligation to shut down alleged infringers’ sites
without an order of the court.
The DEA 2010 remains controversial. The differing views on
striking the right balance between the rights of consumers, ISPs,
rights holders, and originators and creators of new work were not
reconciled during the course of this debate. Arguably, the
legislation now focuses too much on illegal file-sharing rather
than on nurturing creativity, which was the original aim of the
Digital Economy White Paper, put forward by the last Labour
government.
The act’s provisions are regarded by some as an infringement of
human rights and the liberties of the individual. The penalties are
draconian and, arguably, there is a reversal of the burden of proof
implicit in the mechanism of the act because, by section 13 (now
section 124(k) of the CA 2003), a subscriber must use an appeal
process to establish innocence. The subscriber is presumed guilty
simply because of the assertion of the copyright owner. The appeal
process will be prescribed by a code to be written by Ofcom, the
communications regulator, pursuant to section 11 (section 124(i) of
the CA 2003).
At its recent conference, the Liberal Democrat party proposed
the repeal of the website blocking and ‘three strikes’
disconnection elements of the act. How this proposal will pan out
in the new coalition government remains to be seen.
At present, there is little of immediate interest to
practitioners in relation to the act, although they may be seeing
evidence of rights owners’ becoming more aggressive in their
determination to prevent online copyright infringement and illegal
file-sharing. Such campaigns have resulted in a large number of
letters containing threats of action coming through the letterboxes
of consumers, many of whom have either been wrongly identified, or
have allowed their computers to be used by younger members of their
family or friends. The tone of the letters is causing distress,
resulting in a proposal that the anti-threats provisions contained
in other aspects of IP law (trade marks, designs and patents) be
extended to copyright. Fortunately, this proposal was unsuccessful.
There is a respectable body of opinion which takes the view that
the threats provisions contained in other aspects of IP legislation
are inappropriate, and other regulations such as article 7 of the
Unfair Commercial Practices Directive (2005/29/EC) might be
sufficient to cover such aggressive conduct.
The scheme of the DEA 2010 reduces the role of the courts in
determining whether or not there has been an infringement, even
though the consequences of infringement are serious. Provided a
tribunal exists to enable a decision to be made as to whether or
not the allegation is correct, the court is unlikely to interfere
with the procedure.
In the meantime, some of us may ask what was wrong with section
97(a) of the Copyright Designs and Patents Act 1988, inserted by
the Copyright and Related Rights Regulations 2003, which gave the
court power to grant an injunction against a service provider,
where the service provider had actual knowledge of the infringement
of rights. It is undeniable that that section gave rise to a
significant quantity of letter-writing in order to gain evidence of
actual knowledge, but the new scheme will not reduce the quantity
of hostile correspondence, and may result in a large number of
unjustified complaints being used to cut people off from the
internet. This provision can arguably be seen in conjunction with
the E-Commerce Directive, which exempts ISPs from pecuniary and
criminal liability but does not exempt them from injunctive relief,
as already providing an appropriate legal framework for dealing
with copyright infringement on the internet.
Keyword advertising
Recent months have seen a number of legal challenges, in courts
throughout the European Community, to the commercial practice of
offering advertisers on search engines key words which are
identical to registered trade marks, but without the consent of the
trade mark owner, so that, when searching using the trade mark, the
results include not only the proprietor’s site, but also
advertising sites owned by third parties offering the same or
similar goods or services. The advertising sites identified by
these key words usually appear either at the head of the page, or
in a side panel, and are typically in a font of different colour to
the main results. These keyword advertising products are big
business; 85% of the income of one well known search provider comes
from this.
In the recent cases, trade mark proprietors have alleged that,
in order for an advertiser to display his name on a web page with
search results, the advertiser was using, in the course of his
trade, a sign which was either identical with or substantially
similar to that of the registered trade mark. The search engine
provider offering these key words for sale was also using marks.
Proprietors were concerned that, by offering such key words, these
search engines were providing opportunities for counterfeiters to
sell their goods.
Google was the principal defendant in proceedings across Europe,
relating to its AdWords flagship advertising product. It argued
that, among other things, the use occurred when a searcher entered
the key word into the search engine. After various findings in
France and Germany, as well as the UK, it was inevitable that the
matter would eventually come to be determined by the Court of
Justice in Europe.
In Autumn 2009, the Advocate General gave his opinion, which
provided that it was not an infringement of a trade mark for a
business to purchase key words designed to trigger, in the event of
a request using that word, a connection to a site operated by that
business for the purposes of offering for sale goods or services
which reproduce or imitate a trade mark registered by a third
party. The use by the business did not, of itself, constitute an
infringement of the trade mark.
Secondly, the Advocate General advised that the service offered
by organisations such as Google should not be regarded as an
infringement of trade marks on the basis of those key words,
although the Advocate General did advise that it should not be open
to organisations such as Google to contend that they are providing
a service in accordance with the Electronic Commerce Directive
(2000/31/EC).
In late March, the Court of Justice ruled in Google’s favour,
although by its judgment, the court left it open to rights owners
to argue that some key words may still amount to an infringement.
The court decided that a proprietor of a trade mark is entitled to
prohibit an advertiser from advertising on the basis of key words,
where the advertisement does not enable an average internet user,
or enables that user only with difficulty, to ascertain whether the
goods or services originated from the proprietor of the trade
mark.
An internet referencing service provider which stores, as a key
word, a sign identical with a trade mark, and organises the display
of advertisements on the basis of that key word, does not use that
sign within the meaning of the legislation.
It also ruled that, if the service provider has not played an
active role in gathering and storing data, it cannot be held liable
for the data which it has stored at the request of an advertiser,
unless having obtained knowledge of the unlawful nature of those
data, it failed to remove or disable access to the data
concerned.
Judgments in further cases all followed similar lines – namely,
that a keyword in this context may be an infringing activity if the
average internet user is unable to ascertain whether the goods or
services originate from the proprietor of the trade mark.
The decision is consistent with the legislative theory behind
the Digital Economy Act 2010, in that both impose risk and
obligation on ISPs to ensure that rights’ owners are protected.
Patent law
Software patents
In the field of patents, the question of whether or not software
is patentable came before the Enlarged Board of Appeal of the
European Patent Office (EPO) on 12 May 2010 in case G3/08. There
was a reference from the president of the board on the application
of the exclusion of computer programmes as such within the meaning
of article 52(2)(c) and (3) of the European Patent Convention. The
board carried out a detailed analysis of the case, before
concluding that, although there were some differences in the
various cases under review, those differences were insufficient to
amount to conflicts, and so declining to rule on an important point
of patentability. Consequently, patent lawyers are left continuing
to try to decide whether or not a software application has a
technical effect sufficient to bring it within the rules governing
patentability.
Consistency of statements
There have been two recent non-UK cases which remind patent
lawyers of the need to ensure consistency of statements. In a case
in the USA, Therasense Inc v Becton, Dickinson & Co [2010], and
a German case in the Federal Court, statements made in the course
of patent applications returned to haunt the maker. In the US case,
statements regarding disclosure of the invention were inconsistent
with statements which had been made in applications in the EPO and
the UK’s Intellectual Property Office (IPO). The US courts decided
that such inconsistency amounted to inequitable conduct, because
the previous inconsistent statements had not been disclosed.
In the German case, a patentee was sued for unfair competition
and general tort because of allegedly incorrect and disparaging
statements made in the patent specification. The action failed, but
only because German patent law did not foresee a claim for the
amendment of an incorrect description, and so the claim for
amendment by deletion of the alleged disparaging remarks was
unsuccessful.
Patent ethics
These cases point generally towards the question of ethics in
patenting, and how much could be applicable for patent protection,
particularly now that the human genome has been mapped. A patent
may not be granted for an invention the commercial exploitation of
which would be contrary to public policy on morality. The extreme
vigilance of many pharmaceutical companies to ensure that there is
no abuse of monopoly situations by their competitors means it is
unlikely that there will be any creeping monopolisation of those
parts of the body which patent law should not reach. Moreover, as
patents must be capable of industrial application, anything which
might be regarded as scientific curiosity will not be
patentable.
This proposition was recently upheld by the UK court, when a
scientific theory capable of industrial application was held not to
be patentable (Eli Lilly & Co v Human Genone Sciences
Incorporated [2010] EWCA CIV 33).
The case has a point of general interest in that the conclusions
of the Court of Appeal were contrary to the decision made by the
EPO. The Court of Appeal therefore took great care to explain and
contrast the functions of the EPO and the Court of Appeal, and the
manner in which each reached its decision, before concluding that:
“The Board, working on different evidence and using a different
procedure, came to a different conclusion on the facts. We are not
bound to follow, or even give deference to, the Board’s findings of
act.” Accordingly, the Court of Appeal upheld the first instance
decision of the UK High Court, while taking care to explain the
reason it reached different conclusions from an influential
European body.
On the horizon
My next article, which will publish in the October edition of
Solutions, will look at other developments in IP law, including the
gradual strengthening of luxury brand owners protection following
the Court of Appeal’s decision in L’Oreal v Bellure; a recent
ruling affecting the power of the Customs authorities to seize
infringing goods at the ports of entry, the implementation of the
recommendations of the Jackson review on civil litigation costs,
and the work of the IPO to educate the public on IP.
This article was first
published in the July 2010 edition of Solutions, the magazine of
the Law Society's Civil Justice Section (www.lawsociety.org.uk/civiljustice).
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