IP Update/4th Quarter 2015 Also in this issue UK Consumer Rights Act now in force The Trans-Pacific Partnership – An IP perspective Chinese Court recognises merchandising rights in Kung Fu Panda case Refreshing the Community Trade Mark – EU trade mark reforms Keeley Millar The unitary Community Trade Mark (CTM) was introduced in 1996. Since then, there have been no major changes to the system. However, the IP landscape and business environment have changed dramatically leaving Europe’s trade mark system behind. To review and remedy this problem, the European Commission carried out a comprehensive evaluation of the overall functioning of the CTM in 2008, finding that many aspects of the system continue to meet business needs and expectations, but that the system needs modernising to bring it up to speed with the internet era and to ensure it functions more effectively, efficiently and consistently as a whole. For these reasons, the European Council called on the Commission to present proposals for the revision of the European trade mark system. The Commission has recently published draft legislation in relation to the proposed reforms of the European trade mark system. These are the key reforms which will overhaul existing CTM law: • Terminology The term “Community Trade Mark” will be replaced with “European Union Trade Mark” and the OHIM is to be replaced with “European Union Intellectual Property Office” or “Agency”. • Graphic representation At present, the EU trade mark system requires a sign to be represented graphically in order to be protectable as a trade mark. This requirement has made it virtually impossible for proprietors to register non-conventional trade marks such as sounds, smells and tastes, which cannot be represented graphically in a way that is clear, precise, self-contained, easily accessible, intelligible, durable and objective – criteria set by the European Court of Justice and known as the Sieckmann criteria. The Commission has now abolished the graphic representation requirement from the definition of an EU trade mark. Instead, “any appropriate form” is allowed as long as it fulfils the Sieckmann criteria. This may open the flood gates for the registration of non-conventional trade marks such as sounds and smells, particularly as the definition of a trade mark has been expanded to include “sounds” and “colours”. • Use of general terms In the landmark decision of “IP Translator”, the Court of Justice of the European Union Keeley Millar email@example.com Marks & Clerk London (UK) 2 ReMarks IP Update/4th Quarter 2015 Contents The changing landscape of the Community Trade Mark application – EU trade mark reforms 2 UK Consumer Rights Act now in force 3 The Trans-Pacific Partnership – An IP perspective 4 Chinese Court recognises merchandising rights in Kung Fu Panda case 5 Singapore High Court refuses post-grant patent amendments 6 Now is the time to review patent portfolios before Patent Box changes come into effect 7 Data protection – No grace for violators 7 The changing landscape of the Community Trade Mark application – EU trade mark reforms IP Update/4th Quarter 2015 ReMarks 3 Jake Hayes firstname.lastname@example.org Marks & Clerk Solicitors London (UK) decided that the use of general terms in a specification should be interpreted as including all goods and services covered by the literal meaning of the term, and that specifications must meet the requisite standard of clarity and precision. To ensure all trade marks comply with this, the Commission is giving proprietors of European Union trade marks applied for before 22 June 2012 registered in respect of the entire class heading an opportunity to amend their specification. Proprietors can do this by filing a declaration at the Office within six months of the entry into force of the new Regulation, confirming that their intention on the date of filing had been to seek protection in respect of goods or services beyond those covered by the literal meaning of the class heading with an indication of those goods or services. Where no declaration is filed, the trade mark will be deemed to cover only the goods or services covered by the literal meaning. It is strongly recommended that owners of CTM marks filed prior to 22 June 2012 review the coverage of their registrations and contact us immediately should they have concerns. • Bad faith Previously, bad faith could only be raised as a ground for invalidation, but the reforms have now introduced bad faith as a ground for opposition making it possible for a third party to oppose a registered trade mark on the grounds that the proprietor was acting in bad faith when they applied to register their mark. • Filing and fees The filing of CTMs at national offices will be abolished: EU trade marks may only be filed at the EU Trade Mark Office. Currently filing fees are payable within one month after filing. This enables applicants to file ‘test applications’ to see whether their mark encounters objections during examination and if it does, they can avoid paying the filing fees by not responding to the examination report. To prevent this, filing fees will now be due immediately upon filing. To help balance the budget of the Office the fees payable directly to the Office have been reconsidered. The most significant change is class coverage. Under the current system it is the same price to register a CTM in three classes as it is in one class. Under the new system, a European Union trade mark will only cover one class and the cost to cover a second class and subsequent classes has been reduced from EUR 150 to EUR 50. The new fee structure discourages broad filings and encourages smaller businesses to seek protection, with the European Commission claiming that the changes will lead to savings of up to 37 per cent for businesses that seek protection of their EU trade marks beyond an initial period of 10 years. Many of the other fees payable directly to the Office have been reduced. The first reading of the draft legislation took place on 10 November 2015 before the European Council. The majority of the EU member states approved the draft legislation with the exception of the UK which voted against the adoption of the draft and the Netherlands which abstained from voting. A second reading will take place before the European Parliament in mid-December 2015, after which the texts will be published early 2016. It is expected that the amended Regulation will come into force the second quarter of 2016 and a period of three years will be set for member states to implement the new rules into national law. Overall, the changes cater for a more modern and streamlined system of trade mark protection ensuring the system is brought into the internet era. While some commentators believe the proposed changes may not represent a major overhaul of the existing system, the new legislation includes some important changes that will modernise trade mark law and impact brand owners, in particular those regarding use of general terms. UK Consumer Rights Act now in force It is strongly recommend that owners of CTM marks that were filed prior to 22 June 2012 review the coverage of their registrations… The UK’s new Consumer Rights Act 2015, which came into force on 1 October 2015, consolidated UK consumer law in several ways. Of particular interest is the new regime regarding digital content. Suppliers and developers must now ensure that paid for digital content meets certain standards, such as being of satisfactory quality, fit for purpose and as described. In the event of non-conformity, consumers now have a right of repair or replacement within a reasonable time and, where this is impossible or has not been done within a reasonable time, the right to a refund on some or all of the price paid. There is now also a special remedy of repair or compensation where the digital content causes damage to a device or to other digital content and would not have occurred had the trader exercised reasonable care and skill. In this context “paid for” includes content 1) supplied under a contract, 2) supplied free of charge with goods or services which are paid for (such as software to access a paid-for streaming service), and 3) which is not generally available to consumers unless they have paid for it (which includes products with content preloaded on goods like phones, tablets and smart TVs). Content developers and suppliers will therefore need to review how their content is described, their terms and conditions of sale and their refund policies to ensure compliance with the Act. 4 ReMarks IP Update/4th Quarter 2015 On 5 October 2015, after five years of negotiations, Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the USA, and Vietnam entered into a landmark trade agreement known as the Trans-Pacific Partnership (TPP). This agreement covers 40 per cent of the global GDP. A month later, the full text was published by both the New Zealand and US governments. Chapter 18 of the TPP text broadly discusses various IP rights and matters such as traditional knowledge, copyright, patents, software, cybersquatting, geographical indications and trade marks, even going as far as to specifically encourage member countries to allow registration of scent marks. Because each participating country’s IP systems differ, the issues that have been thrown up by the TPP vary. In nonparticipating countries alike, governments have been keenly watching the TPP. The Chinese authorities, for example, will see how this can complement other existing (eg ACFTA, ChAFTA, etc) and regional treaties currently under negotiation (C-JKFTA, RCEP, etc). Canada Impacts in Canada will largely be seen in pharmaceuticals and copyright. The TPP is proposing patent term extensions. At present, Canada is the only G7 country that does not offer patent term extensions. However, a two-year patent term extension is being proposed in a trade agreement with the European Union (CETA), which has yet to be ratified. Furthermore, Canada allows the manufacturer of an innovative drug a period of eight years of market exclusivity which is more than the fiveyear market exclusivity period in the TPP (eight years for biologics). With respect to copyright, Canada currently has a copyright term of life of the author plus 50 years whereas the TPP is proposing life of the author plus 70 years. Penalties for copyright infringement are only up to CA$5,000 for non-commercial infringement, whereas the TPP is proposing that judicial authorities can consider any legitimate measure of value the right holder submits. Furthermore, Canada has a “notice-and-notice” system where, at most, an ISP may be required to forward a notice of alleged infringement from a rights-holder to a subscriber who is allegedly hosting or sharing infringing material. Provisions of the TPP, however, are more similar to the USA’s “notice-and-takedown” system. Singapore Singapore IP laws in their current form are generally compliant with the IP provisions of the TPP Agreement. This is in part a consequence of bilateral trade agreements signed with various trading partners over the years. Nevertheless, it does appear that some aspects of Singapore patent and design law may need to be finetuned so as to be fully compliant with the TPP provisions. One such area is the 12-month grace period provision for prior public disclosures. At present, Singapore patent law provides that certain prior disclosures may be disregarded in limited circumstances: disclosures obtained unlawfully, in breach of confidence, at international exhibitions or to a learned society. The corresponding TPP provision, however, includes no such restrictions. Another notable area is in respect of partial designs. Under current Singapore design law, design protection is available in respect of a part of an article provided that part can be made and sold separately. The corresponding TPP provision however includes no such qualifier. Malaysia Currently, there are no provisions for patent term extensions in Malaysia. The TPP will introduce an obligation to prevent unreasonable delays to the application process, which imposes a duty on signatory states to adjust patent terms to compensate for any unnecessary delays. Under TPP rules, both data and marketing exclusivity for new agricultural products are set at a minimum of 10 years. For new pharmaceutical products, both data and marketing exclusivity will be granted for at least five years. For new biologics, data exclusivity will be granted for at least eight years, while marketing exclusivity is set at a minimum of five years. However, Malaysia recently affirmed that it will set a five-year limit on data exclusivity periods for new biologics – a class that includes new cancer treatments. The implementation of the TPP will also require Malaysia to increase the current 50 year period of copyright to a 70 year protection. The TPP builds on Malaysia’s recently amended copyright laws concerning web-hosting, streaming and linking. The Agreement’s practical effects on Malaysia will be clarified with the release of two cost-benefit analyses commissioned by the Government and available in early 2016. Australia There appears to be no requirement for Australia to make any substantive changes to its IP laws in connection with the TPP agreement, which is supported by a statement made by Australia’s Department of Foreign Affairs and Trade. This is partly as a consequence of previous free trade agreements, such as the Australia-USA Free Trade Agreement of 2004, where Australia was required to amend its IP laws for example in relation to copyright term to protect Disney characters. In addition, Australia refused to accede to various demands made during the TPP negotiations, such as the US request to increase the period of data exclusivity in relation to pharmaceutical patents for biological drugs from five to 12 years. Authors: Simmi Mangat, Ottawa (Canada) Magdelene Ong, Singapore Fiona Jeffrey, Kuala Lumpur (Malaysia) Bruce Dowsing, Singapore Michael Lin, Hong Kong (China) The Trans-Pacific Partnership An IP perspective IP Update/4th Quarter 2015 ReMarks 5 A recent decision by the Beijing Higher People’s Court signals official recognition of merchandising rights. In DreamWorks Animation LLC vs Trademark Review and Adjudication Board (TRAB), the Higher Court recognised the right of DreamWorks to exploit its merchandising rights in the title of its popular Hollywood film Kung Fu Panda and ordered the TRAB to re-examine a trade mark opposition on the basis of these rights. Merchandising rights allow the rights holder to commercialise a specific name or image often associated with a work of literary fiction, a motion picture film, a sportsman or some other real or fictional character. While such rights have been recognised and afforded protection in other jurisdictions, they have not until now been officially recognised in Chinese jurisprudence. In past cases involving the imitation of names or images in China, the rights holder has found it difficult to prevent third party misappropriation. In 2008, shortly after the release in China of the successful Kung Fu Panda film by DreamWorks, a Chinese individual applied to register “Kung Fu Panda” as a trade mark for goods such as steering wheel covers, vehicle seat covers and car seats for infants. DreamWorks opposed the application claiming, inter alia, that the published mark was identical to its registered trade mark (although its registrations did not cover the same/similar goods); that it should enjoy an exclusive “merchandising” right to commercialise the title of its own movie; and that registration or use of the applied-for mark would be against the public interest. The opposition was dismissed by the China Trademark Office (CTO) and by the TRAB on appeal. The TRAB held that the goods covered by respective marks were dissimilar, coexistence would not give rise to confusion, and a “merchandising right” was not an established legal right in China. DreamWorks appealed the case to the Beijing No. 1 Intermediate People’s Court for judicial review. It lost at first instance, but then appealed to the Beijing Higher People’s Court. This finally resulted in the groundbreaking support from the Higher Court. The Higher Court found that once a film becomes sufficiently well-known, its title and characters are no longer confined to the specific film itself but can be associated with other business and commercial activities. The audience may transfer affection for the film and its characters to other goods and services and this generates commercial value for the film makers beyond film distribution and exhibition. Thus, it gives rise to “merchandising rights” to commercially exploit the title and characters of the film on non-film related goods and services. The Court explained that while “merchandising rights” may not be expressly recognised by law, to exclude such rights from legal protection, and to allow others to willfully register film titles and characters as trade marks for the purpose of trading on the reputation and goodwill established by the film producers, would encourage trade mark squatting and “disturb market order” which is contrary to the legislative intent of the trade mark law. As DreamWorks had made a significant investment in producing its film, it should be allowed to enjoy the right to commercialise the film title and character names and images and, importantly, that such rights should constitute one of the “earlier rights” prescribed in the trade mark law. The Court observed that “merchandising rights” will not automatically cover all goods and services. The scope shall be determined on a case-by-case basis and will depend to a large degree on the extent of reputation and goodwill attached to the subject of the merchandising rights. In this case the Court did not comment on whether the applied-for goods fell within the scope of the goods/services covered by DreamWorks’ merchandising rights. It left the question open for the TRAB to decide on its re-examination of the opposition. This brave recognition of merchandising rights and the expansive interpretation of the trade mark law by the Beijing Higher People’s Court may have an impact on administrative and judicial practice regarding the protection of the names and images associated with well-known films, books, sporting figures and other celebrities. Although China has no common law tradition, it is hoped that the prestige of Beijing Higher People’s Court in the IP arena will mean that its decision will be followed by other courts and may persuade the CTO and TRAB to revise their examination criteria in trade mark disputes. The decision also offers encouragement to rights holders who have been waging a long and difficult battle in China to protect important trade mark rights against unauthorised third party exploitation. Xuefang Huang email@example.com Marks & Clerk Beijing (China) Chinese Court recognises merchandising rights in Kung Fu Panda case The Higher Court found that once a film becomes sufficiently well-known, its title and characters are no longer confined to the specific film itself… 6 ReMarks IP Update/4th Quarter 2015 In a recent case, Ship’s Equipment Centre Bremen v Fuji Trading (Singapore) and others  SGHC 159, the Singapore High Court departed from its “lenient approach” advocated by earlier decisions and rejected an application by the patentee for leave to amend a patent post-grant. Ship’s Equipment Centre Bremen (SEC) is the owner of two Singapore patents relating to a coupling device used to secure shipping containers, commonly known as a twistlock. In 2010 and 2011, SEC initiated proceedings to sue a number of Singapore and Japanese companies (the Defendants) for alleged infringement. The Defendants denied infringement and challenged the validity of the Singapore patents. While the infringement proceedings were still ongoing, in late 2012, SEC applied to the Singapore High Court to request leave to amend the claims of one of the patents. The Singapore High Court rejected the application on the grounds of undue delay and unfair advantage. It would be useful to consider the chronological events to appreciate the Court’s decision: I. On 5 May 2010, SEC commenced infringement proceedings based on the patent; II. On 10 November 2010, SEC filed amendments to its corresponding European patent, which had been opposed on the basis of prior art; III. On 25 November 2010, the Opposition Division of the EPO found the European patent to be invalid; IV. On 21 January 2011, SEC filed an appeal against the invalidity decision with the EPO; V. While the EPO appeal was still pending, SEC applied to the Singapore Patent Office to amend the patent around December 2012. SEC knew of the prior art cited in the EP opposition in November 2010, but only applied to amend the Singapore patent around December 2012 – about two years later. Singapore High Court refuses post-grant patent amendments Daniel Poh firstname.lastname@example.org Marks & Clerk Singapore Despite arguing that it did not think that the EP cited prior art was relevant to the Singapore patent, SEC applied to amend the Singapore patent before the EPO rendered its decision on SEC’s appeal. This apparent volte-face by the patentee cast serious doubts on the patentee’s honesty, leading the Singapore High Court judge to doubt it genuinely believed the Singapore patent was valid. The judge distinguished this case from the “lenient approach” advocated in an earlier Singapore Court of Appeal decision and instead found that there was undue delay on the part of the patentee in applying to amend the patent. The judge also adopted the legal principle that there is unfair advantage “where a patentee threatens an infringer with his unamended patent after he knows or should have known of the need to amend”. Further, the judge took the view that the undue delay was aggravated by the patentee who obtained an unfair advantage from the patent by commencing litigation proceedings based on the unamended patent even though they knew the patent should have been amended to avoid prior art. The judge consequently refused the patentee’s application to amend the patent claims. Since the post-grant amendments were refused, SEC may be left with a partially valid patent (assuming that the amendments sought by SEC would have cured the invalidity). Section 70(1) of the Singapore Patents Act provides the Court has discretion to grant relief in respect of that part of the patent which is found to be valid and infringed. However, Section 70(2) of the Singapore Patents Act clarifies that the Court shall not grant any monetary relief in respect of that part found to be valid and infringed unless the patentee proves that the specification for the patent was framed in good faith and with reasonable skill and knowledge. As the Singapore High Court found that there was undue delay in amending the patent and SEC had obtained an unfair advantage, it would seem highly unlikely that SEC could successfully argue its patent was “framed in good faith and with reasonable skill and knowledge”, making it difficult to obtain relief based on this patent. Of course, SEC still has its other patent to rely on. This case highlights the importance of amending a Singapore patent expeditiously when new prior art affecting the patent’s validity is known. This can be onerous especially if the patentee has filed patent applications in many jurisdictions. The prosecution of patent applications in different countries progresses at different speeds, so new prior art could surface sporadically. Nevertheless, the patentee should strive to consider the impact of any new prior art found on its Singapore patent and consult with a qualified Singapore patent attorney on the need to amend (particularly since prior art citable in a foreign jurisdiction might not be citable in Singapore) as soon as possible. If this is not practical, a thorough review should be carried out prior to any enforcement action to ascertain that the Singapore patent is valid to the best of the patentee’s knowledge. This should assist the patentee in proving that it had not obtained any unfair advantage by initiating proceedings based on an unamended patent and had not abused its monopoly. For third parties, a patentee’s failure to obtain post-grant amendments may be beneficial since relief may be restricted in the event a third party is found to have infringed the patent. This case serves as a timely reminder for third parties to seek professional legal advice when they are served cease and desist letters by a patentee so that the merits of the allegations may be assessed. This is particularly important in the Singapore context since prior to 14 February 2014, Singapore patents were granted on “selfassessment” which meant that a patentee could obtain grant of a Singapore patent without a local adjudication of whether or not the claims were patentable. With this latest decision, it may be more difficult for patentees to enforce their rights or apply to amend their patent post-grant unless they can show that at time of grant, they genuinely believed that the Singapore patent to be valid. IP Update/4th Quarter 2015 ReMarks 7 Keith Hodkinson email@example.com Marks & Clerk London (UK) The UK’s Data Protection Act (along with related regulations) governs how personal data is treated. Two recent cases have highlighted the importance of this issue. Firstly, in September, an HIV clinic which is part of the Chelsea and Westminster NHS Trust sent a group email to hundreds of patients, CC not BCC. As a result, it disclosed the personal data of each patient on the list to all the others. The fact that this included sensitive personal data in the form of actual or possible medical conditions made the breach all the more serious. Misuse of personal data therefore gives rise to serious legal, ethical and commercial implications and any organisation getting it wrong and storing or transferring such data in breach of the rules can face severe financial penalties. In the UK, over the last year, the Information Commissioner’s Office imposed fines of over £1 million and secured 10 criminal convictions for unlawfully obtaining or disclosing personal data. Although the details of the new UK Patent Box regime to come into force in 2016 are still under consultation, we know the existing Patent Box regime will cease to be available for patents filed after 30 June 2016 and for patents filed before then the old regime will expire on 30 June 2021. The consultation overseen by HMRC follows from the Organisation for Economic Cooperation and Development’s (OECD) coordinated multinational effort to address Base Erosion and Profit Shifting (BEPS). This is tax planning by multinational enterprises that exploits gaps and mismatches in tax rules to artificially shift profits to low tax locations where there is little or no economic activity. This has resulted in a new international framework for preferential IP tax regimes. The consultation paper seeks views on how the Patent Box regime should be altered so that it will comply with this international framework, whilst protecting the availability of this benefit in order to continue to promote growth and drive investment in the UK. The consultation closed on 4 December 2015. Simon Portman firstname.lastname@example.org Marks & Clerk Solicitors Cambridge (UK) Now is the time to review patent portfolios before Patent Box changes come into effect Data protection – No grace for violators After 1 January 2016 new patent acquisitions will not be able to benefit fully from the transitional provisions envisaged. Accordingly, it will not be possible to move patents to jurisdictions that have advantageous regimes from those without after that date. Transfers of patents after 1 January 2016 will only benefit from existing Patent Box regime rules until 30 June 2021. This will not prevent patents that qualify under the proposed new “nexus” test from being transferred, nor moving the ownership of the patent within a jurisdiction to a qualifying owner from a non-qualifying owner/exclusive licensee (so as to “re-create” the nexus between the owner and the qualifying R&D expenditure). Consequently, those who are responsible for managing taxation for owners or exclusive licensees lacking the required new nexus (that the qualifying R&D expenditure/acquisition costs was incurred by the company itself and not by others in its group) should consider whether to move holdings before the cut off dates to maximise their “grandfather” rights, and whether international holdings need relocating. As this embarrassing episode illustrates, since most organisations hold personal data, whether it be on employees, patients, customers, suppliers or other personnel, they ignore this legislation at their peril. The second development has not given rise to the same level of personal distress but has more far reaching ramifications. In October, the European Court of Justice (ECJ) issued a landmark ruling. EU data protection laws (which the UK regime is based on) preclude EU citizens’ data from being exported to countries outside the EU without adequate levels of protection. Under the Safe Harbour agreement, US companies could circumvent this requirement, as long as they met key data protection criteria. However, the ECJ has now turned this principle on its head by ruling that, since data sent to the USA is potentially vulnerable to surveillance by the US intelligence community, the Safe Harbour regime may not offer an adequate level of protection. Numerous companies whose business model depended on the seamless transfer of personal data across the Atlantic now face a real problem. In particular, while the USA and EU thrash out the terms of “Safe Harbour 2.0”, which may take some months, it looks unlikely that any sort of grace period will apply. Anyone transferring personal data to the US would therefore be well advised to ensure that an adequate level of protection is reflected in its procedures and contracts, so that, if necessary, it can demonstrate that it is complying with the spirit of the law, as it were, even if the law in question is in a state of limbo. ReMarks is a quarterly newsletter produced by Marks & Clerk LLP. Articles featured are intended to provide a summary of the subject matter only. Readers should not act on any information without first obtaining specialist professional advice. Copyright Marks & Clerk LLP, December 2015 Marks & Clerk Group | UK offices: Aberdeen Birmingham Cambridge Edinburgh Glasgow London Manchester Oxford. International offices: Australia Canada China France Hong Kong Luxembourg Malaysia Singapore. Law firm: Marks & Clerk Solicitors | Consulting firm: Marks & Clerk Consulting
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IP Update - 4th Quarter 2015
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