A High Court decision at the end of August 2017 provides a useful reminder of the legal protection available for innovative products/services, in this case, for health diagnostics. If you are a business seeking to protect your products and services, this will interest you.
Technomed created an internet based ECG analysis and reporting system called the ECG Cloud. The ECG Cloud uses mobile ECG machines to take readings from patients, which are transmitted into the ECG Cloud via a web based processing system and then reviewed remotely by cardiac physiologists, who select reporting statements from a range of options in a menu, which correspond to each ECG variable in a database in order to produce a patient report.
Following three months of negotiations, Technomed entered into a 2 year contract with Bluecrest at the end of October 2012 to provide cardiac screening services for Bluecrest’s customers/patients. The Technomed screening reports were provided to patients as part of a wider Bluecrest health screening report.
In February 2013, Bluecrest asked Technomed for a copy of the ECG Cloud database. Technomed supplied electronic copies of a diagram of two hearts, a diagram of a heart wave and a pdf containing the cardiac classifications, the options for the physiologist to choose from, the traffic light classification system and the patient definitions (the Database).
Relations did not proceed well and Bluecrest asked Technomed for a price reduction, threatening to send its business to Technomed’s competitor unless Technomed agreed. Technomed agreed, subject to the contract being amended and Bluecrest agreed to work towards signing a new contract in January 2014. At the same time and unknown to Technomed, Bluecrest was gearing up to replace Technomed with a competitor, Express. The court was shown an internal e mail from Bluecrest in which the MD told his team that he would try to speak with the Technomed’s MD to give him the impression we are going to agree his terms…..(being ultra-nice to him and giving him a lot of bullshit) but in the background can we work to make the switch asap?
Bluecrest sent Express Technomed’s diagrams, the pdf containing Technomed’s Database and an XML file which was used by Technomed to generate its patient report.
In January, Bluecrest informed Technomed that it was cancelling their contract.
Express then replaced Technomed as Bluecrest’s service provider, using a different system from Technomed’s ECG Cloud, but the output was virtually identical to that produced by Technomed.
Technomed commenced infringement proceedings.
The key findings
The judge decided that Bluecrest had infringed Technomed’s intellectual property rights:
- The pdf of Technomed’s Database was protected by database right and copyright;
- The XML format of the database was protected by copyright as a literary work because it contained content as well as structure;
- The heart and wave diagrams were protected by copyright as artistic works, and;
- The explanatory materials and patient definitions were protected by copyright as literary works.
The Key learning points
- Bluecrest’s argument that database right cannot exist in a pdf because a pdf is like a photograph, rather than the database itself failed. The judge decided a pdf is no different from a telephone directory. Database right protects the substantial investment in a database and lasts 15 years from the creation or substantial modification of the database. It is potentially a very valuable right.
- Bluecrest argued that Technomed’s Diagrams and explanatory materials and patient definitions were generic, widely available, text book stuff and bog-standard. The heart diagram had been created from a stock image which Technomed had acquired under licence. The wave diagram was a fairly basic way of representing a heartbeat which Technomed’s director had drawn. Nevertheless the judge decided that copyright subsisted in the diagrams because sufficient non-negligible intellectual effort had been expended by Technomed in their creation, so provided a drawing/diagram/text has not been slavishly copied and some intellectual effort has been put into making an adaptation, copyright can protect the adapted/amended work.
- The artistic/literary merit threshold is very low in order for materials to qualify for copyright protection as artistic/literary works. In this case stock images which had been altered in a non-negligible way and basic factual statements about ECG results qualified.
- You may have key valuable intellectual property rights that you have not recognised. It is worth analysing the portfolio of rights in your products/services, considering the rights you have and whether any need to be registered and checking that your contracts and business dealings provide the right level of protection for your business.
And finally…remember that internal communications are disclosable in court proceedings and in this case, Bluecrest’s e mails led the judge to conclude that they had flagrantly infringed Technomed’s copyright.