key developments in ip -...

KEY DEVELOPMENTS IN IP

February 2012

Case Law Summaries

Real Intellectual Property Case Law

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Edwards Wildman - Key Developments in IP - 2012

Contents

Court of Justice Prevents Patentability of Human Embryonic Stem Cells in Europe 6

English High Court considers the limit of the prior use defence under Section 64 of the Patents Act 1977 and the effect of a failure to register an assignment in the UK of the patent in suit 8

European Court holds that an SPC cannot be awarded for products placed on the market before an Administrative Authorisation under Directive 65/65 10

Selection from lists – Added Subject Matter? 11

English Court of Appeal dismisses appeal by Gemstar against judgement holding three of its European patents relating to electronic programme guides to be invalid for lack of novelty or inventive step 12

Multi-jurisdictional patent wars: no clear winners in HTC’s fight for expedited trial of UK actions involving Apple patents 14

High Court reverses UK Patent Office decision on computer related inventions 16

UK Supreme Court follows EPO Boards of Appeal 18

High Court holds protein isolation method ‘Phage Display’ patent invalid 20

Court of Appeal rules that costs penalty on the failure to register an exclusive patent licence only applies during period of non-registration 22


The Enlarged Board of Appeal of the European Patent Office issues its decision on the allowability of undisclosed disclaimers that disclaim a specific embodiment of an invention - G2/10 24

Registered Design Rights: establishing a different overall impression is key in cases of alleged infringement 26

EU General Court clarifies approach for determining individual character of components 28

The Court of Justice gives guidance on the “informed user” concept in design law matters 30

CJEU rules that use of a trade mark with a reputation as a key word may be prohibited 32

Court of Appeal sets its sights on supermarkets living dangerously 34

Advocate General recommends stricter approach to use of class headings in trade mark applications 36

Court of Justice calls time on beer dispute 40

English High Court holds that post-sale confusion is relevant to likelihood of confusion 42

Three-Dimensional Trade Marks and OHIM Examination Procedure: Style or Substance? 44

EU General Court holds that figurative mark “GSS Galileo sistemas y servicios” mark is not similar to the earlier GALILEO word and figurative marks 46


VICTORY RED mark defeated by earlier VICTORY marks 48

Colour mark allowed to proceed to registration on basis of acquired distinctiveness through use in the United Kingdom 50

UK High Court confirms customer base required to prove goodwill in passing off action 52

Evidence not translated into the correct language cannot be considered in opposition proceedings 54

The General Court rules on the issue of genuine use in the European Union 56

Counterfeit and pirated goods in transit via European Union ports are not liable for destruction by EU Customs authorities 58

Software owner loses battle to protect software functionality 60

ISP’s and Rights Holders: A Floodgate Averted? 62

Advocate-General considers database copyright not to subsist in football fixture lists 64

The Patents County Court rules on infringement of the sui generis database right 66

A clause in a selective distribution contract banning the distributors from selling its products online amounts to a restriction on competition by object, unless that clause can be objectively justified 68

Contract abandonment: Walking away from unprofitable IT contracts 70


Data Security Breaches: Credit card data theft 72

Failure To Obtain Ladygaga.Org Demonstrates Need To Approach Fan Sites With Caution Especially Given The Existence Of Two Interpretations To Fan Sites 74

Commercial Gain Does Not Need Flow To Respondents For Sufficient Bad Faith To Exist 76

6 Edwards Wildman - Key Developments in IP - 2012

Court of Justice Prevents Patentability of Human Embryonic Stem Cells in Europe

Oliver Bruestle v Greenpeace e.V., ECJ Decision C-34/10 of 18th October 2011

The Court of Justice of the European Union (“CJEU”) has ruled that inventions based on hESC obtained from a human embryo are unpatentable whatever the stage at which the embryo was destroyed. This means that hESC cell line based inventions are also excluded.

Key Practical Consequences• Stem cell research involving human embryos cannot be patented

in Europe.• However, the lack of a patent on a basic technology does not in itself

impede development of that technology. • The decision may well encourage investment in the products of

this research, which will promote human treatments based on technology which is ethically far less controversial.

DiscussionThe case concerns interpretation of the European Directive on the Protection of Biotechnological Inventions (98/44/EC) in respect of the patentability of human embryonic stem cells (hESC). Article 6 of the directive reads as follows:

Article 6

1. Inventions shall be considered unpatentable where their commercial exploitation would be contrary to ordre public or morality; however, exploitation shall not be deemed to be so contrary merely because it is prohibited by law or regulation.

2. On the basis of paragraph 1, the following, in particular, shall be considered unpatentable: … (c) uses of human embryos for industrial or commercial purposes;

The language of this article has been incorporated into the European patent convention, and the national patent laws of the member states. In its decision G2/06 (WARF), the Enlarged Board of Appeal of the European Patent Office held that this excluded from patentability claims directed to products which at the filing date ‘could be prepare exclusively by a method which necessarily involved the destruction of the human embryos from which the said products are derived, even if the said method is not part of the claims’ (Headnote 2 of the decision). Under this decision, stem-cell based inventions have been considered patentable since the date of general availability of hESC lines, which are propagated in vitro and thus are not directly derived from a human embryo – even though an embryo would have been destroyed at some stage in the past to create the cell line. However, the Enlarged Board of Appeal never addressed the question of the nature of a human embryo.

Edwards Wildman - Key Developments in IP - 2012 7

Professor Oliver Bruestle of the University of Bonn, Germany, was granted a German patent in 1990 for a method for producing neural progenitor cells from hESC lines. The patent was opposed by Greenpeace in 2004. The German Federal Patent Court referred the case to the CJEU. The questions which were put to the CJEU were as follows:

• What is meant by the term ‘human embryos’ in Article 6(2)(c) of Directive 98/44/EC… ?

• What is meant by the expression ‘uses of human embryos for industrial or commercial purposes…’ ?

• Is technical teaching to be considered unpatentable pursuant to Article 6(2)(c) of the Directive even if the use of human embryos does not form part of the technical teaching claimed with the patent… ?

In its decision, the CJEU surprised many observers by deciding that a human ovum is to be considered an embryo as soon as it is fertilized, as are “cloned” embryos obtained by nuclear transfer. Moreover, it held inventions based on hESC obtained from a human embryo to be unpatentable whatever the stage at which the embryo was destroyed, which means that hESC cell line based inventions are also excluded.

Most commentaries on this decision have been negative, largely because most commentators feel that the result is “wrong” and bad for industry in Europe. However, there have been few, if any, considered legal criticisms of this decision. If such a criticism can be made, it is suggested that the logic in paragraph 34 is questionable. This paragraph reads as follows:

The context and aim of the Directive thus show that the European Union legislature intended to exclude any possibility of patentability where respect for human dignity could thereby be affected. It follows that the concept of ‘human embryo’ within the meaning of Article 6(2)(c) of the Directive must be understood in a wide sense. (emphasis added)

Quite simply, it is not believed that the second sentence “follows” from the first, because the premise of the first sentence does adequately define human dignity. If a fertilized ovum is not a human being, then human dignity is not affected by the grant of patents concerning hESC, which can be seen as the equivalent of fertilized ova.

It must be pointed out that, although it cannot be concluded that the directive directly supports the conclusion of the CJEU, neither does it deny it; there is no basis for concluding that directive 98/44/EC did not intend for fertilized ova to be considered to be embryos. It is to be noted that public opinion in Europe is somewhat less swayed by utilitarianism than public opinion in the UK, and that many (including, it seems, the CJEU) would tend to support the position taken here. It is therefore very plausible that the original intention of directive 98/44/EC was precisely to restrict this type of activity. As pointed out in the CJEU decision, this is supported by the Recitals, even if the language of the final form of the Articles is open to interpretation. Moreover, the position taken by the CJEU on the derivation of hESC cell lines is ethically more honest than the position taken by those following the decision of the Enlarged Board of Appeal in G2/06.

Therefore, this author believes that this controversial decision faithfully follows what its writers believed to be the intention of the legislator in 98/44/EC, and applies its conclusion to current legal and technical situations in a refreshingly uncompromising manner. In so much at least, it is to be applauded.

CommentAs to the criticism that this decision will compromise stem-cell based research in Europe, this position is to be refuted. The invention of monoclonal antibodies by Nobel laureates Kohler & Milstein was, notoriously, not patented; today, however, the overwhelming majority of biotherapeutic treatments in the clinic are antibody drugs. The lack of a patent on a basic technology does not in itself therefore impede development of that technology. Moreover, today, there is a large body of research which involves artificially-induced pluripotent stem cells which are not derived at any stage from human embryos. If the decision of the ECJ encourages investment in the products of this research, it will be promoting human treatments based on technology which is ethically far less controversial. as it follows the Google France decision. However, his view on prohibiting the use of a mark with a reputation for dissimilar goods and services in a generic manner or in a way that benefits from that reputation is a very interesting development.


English High Court considers the limit of the prior use defence under Section 64 of the Patents Act 1977 and the effect of a failure to register an assignment in the UK of the patent in suit

H. Lundbeck A/A v (1) Novapharma SPA, (2) Infosint S/A [2011] EWHC 907, 14 April 2011

The patent in issue related to a method to make the first intermediate compound used to make Novapharma’s blockbuster anti-depressant drugs citalopram and escitalopram. In addition to the usual validity and infringement arguments, the English High Court considered a prior use claim in the context of a patent having a claim for both a chemical process (Claim 1) and a “reach-through” claim (claim 22) covering a process for the synthesis of citalopram in which the process in claim 1 was contained.

The Court held that the prior use defence was only available to acts that had been carried out prior to the priority date. It would not apply, therefore, to a substantially different process used by the defendant; it would also not apply to the importation of a specific enantiomer. Infosint, the owner of the patent in the UK, had also failed to register the assignment from Novapharma on the UK register. The Court found that this failure meant that any damages for infringement against Lundbeck would be restricted, even though the assignment had been registered at the European Patent Office.

Key Practical Consequences• A prior use defence is applied narrowly and only applies to the

continuation of acts that had been carried out prior to the priority date.

• It is important to register any transaction (such as an assignment or exclusive licence) in relation to a UK patent on the UK register in order to maximise any damages available. Registration at the European Patent Office was not sufficient.

DiscussionMr Justice Floyd found the patent to be invalid, but he went on to consider Lundbeck’s prior use defence under s. 64 of the Patents Act 1977 and also to comment on Lundbeck’s ability to restrict any damages for infringement as a result of the failure to register the assignment of the UK patent to Infosint on the UK register.


Mr Justice Floyd held that s. 64 provided a defence in relation to any acts which were done in good faith in the UK prior to the priority date of the patent. Lundbeck had used 10 different processes for the synthesis of the intermediate compound out of which 5 fell within the ambit of the claims. Out of those 5, 2 had been used prior to the priority date and the other 3 had been developed after the patent was published in order to avoid infringement.

The Court held that the prior use defence only applied to the 2 ‘infringing’ processes that had been used prior to the priority date; the other 3 processes were not in substance the same as the earlier ones and therefore the prior use defence did not apply. In relation to the failure to register the assignment at the UKIPO, Mr Justice Floyd said that a defendant could not be expected to check the EPO register in these circumstances and that the assignment should therefore have been registered at the UKIPO. As a result, any damages that might be claimed for infringement would be limited.

CommentThe most important aspect of this judgment is that it highlights the importance of properly registering an assignment at the UKIPO. Failure to register within 6 months of the assignment may mean that no damages are awarded despite a finding of infringement. Further, defendants to patent claims need to consider seriously whether any prior use defence they may have will be applicable.


European Court holds that an SPC cannot be awarded for products placed on the market before an Administrative Authorisation under Directive 65/65

Synthon BV v Merz Pharma GmbH & Co – C-195/09, 28 July 2011

The Court of Appeal held that the online use of live match data from football matches did not infringe copyright as the material taken was mere data. However, the Court of Appeal did allow a claim of database right infringement in respect of such use to proceed to trial, but referred to the Court of Justice of the European Union the question as to whether the infringement occurred where the data was transmitted from the defendants’ servers, or where it was received by the public.

DiscussionMerz had an SPC granted on 14 August 2003 in respect of a patent for a second medical use of a compound called memantine. The SPC had been granted on the basis of EU-wide marketing authorisations (under Directive 65/65) granted in 2002, memantine had already been on the market in Germany (but not the UK) for about 25 years using an authorisation from Germany in 1976 (which did not require testing).

Synthon sought revocation of the SPC on a number of grounds. Mr Justice Floyd of the English High Court referred the matter to the CJEU. The CJEU held that the SPC Regulation only covered products which had not been placed on the market prior to the marketing authorisation being obtained and that any SPC awarded outside the scope of the SPC Regulation was invalid.

CommentThe purpose of SPCs is to provide additional protection to pharmaceutical or medical products protected by patent as a way to compensate patent owners for lost revenues caused by the very lengthy procedure for obtaining Marketing Authorisation under Directive 65/65. It makes sense, therefore, that the CJEU would decide that SPCs are not available for products which have been placed on the market prior to the Marketing Authorisation since there would be no loss of revenues for which an SPC would be needed to compensate.


Selection from lists – Added Subject Matter?

T 073/09 of the EPO Technical Board of Appeal

The Board of Appeal (“BoA”) considered an appeal by the Proprietors of European Patent No. 1 238 604 against the Opposition Division decision to revoke the patent. The Opposition Division held the patent invalid under Article 123(2) EPC (i.e. the patent constituted added subject matter).

DiscussionDuring the Appeal proceedings the Appellant filed a main request, claim 1 of which was directed to a combination of a specific compound (herein referred as “compound A”) and at least one further compound from a list of three specific compounds.

Compound A was disclosed in the specification as one of two very preferred compounds. The three further compounds were disclosed in the specification amongst a list of twenty-two preferred compounds

The Appellant argued that claim 1 complied with Article 123(2) EPC because the application disclosed the combination of compound A with either of the three specific further compounds in an individualised manner, and that it did not matter that other individual combinations were also disclosed as “preferred”.

The BoA considered (i) whether claim 1 contravened Article 123(2) EPC and also (ii) whether or nor claiming only three of the forty-four combinations extended the content of the application as filed in an unallowable way.

With regard to (i), the BoA argued that the skilled person would directly and unambiguously recognize forty-four individual combinations, among them the three combinations referred to in claim 1. They however concluded that each of the combinations according to claim 1 is disclosed in an individualised manner in the application as filed and therefore there is no breach of Article 123(2) EPC.

With regard to (ii), the BoA argued that the application as filed is such that a skilled person is taught that each of the forty-four combinations has the same quality. Therefore, claim 1 cannot be considered as the result of a “selection” of three qualitatively equal elements from a list of forty-four qualitatively non-equal elements, rather the group of claim 1 is to be considered as the result of the deletion of forty-one elements from a list of forty-four qualitatively equal elements. The BoA therefore concluded that claim is not directed to subject matter extending beyond the content of the application as filed.

As a result of the Appeal, the BoA remitted the case back to the department of first instance (i.e. the Examining Division) for further prosecution on the basis of the main request filed during the Appeal proceedings.


English Court of Appeal dismisses appeal by Gemstar against judgement holding three of its European patents relating to electronic programme guides to be invalid for lack of novelty or inventive step

Gemstar-TV Guide International Inc and others v Virgin Media Ltd and another [2011] EWCA Civ 302, 29 March 2011

In one of his last judgements prior to retirement, Lord Justice Jacob comprehensively dismissed Gemstar’s appeal against the Patents Court’s ruling that its European patents relating to electronic programme guides (“EPG”) were invalid for lack of novelty or inventive step. Jacob LJ focussed his ruling on the question of novelty; if Gemstar’s patents could not satisfy this preliminary hurdle, the appeal as a whole would be dismissed.

However, despite serving to abbreviate the subsequent judgement, legal commentators and professionals alike have expressed disappointment that this approach precluded the Court from proceeding to clarify the law regarding excluded subject matter, in particular in the arena of computer programs.

Key Practical Consequences• This decision appears to reflect a new approach by the Court

of Appeal to patents cases, namely concisely to identify the pertinent issues and provide an expedited judgement, if appropriate.

• However, in so doing, the Court arguably missed an opportunity to comment on the contrasting approaches taken by the English Court and the European Patent Office on excluded subject matter. As a result, the ‘technical contribution’ test outlined in Aerotel continues to operate in unison with the European ‘any hardware’ approach.

DiscussionThe original claim began in 2008 in the Patents Court, with Gemstar bringing infringement proceedings against Virgin Media on the basis of its three European Patents for EPGs. In his decision, Mr Justice Mann found that patents were invalid for lack of novelty and inventive step and that Virgin Media had therefore not infringed. Two of the patents in question were also found to be inherently unpatentable as they comprised excluded subject matter – being patents for computer


programs. In this regard, Mr Justice Mann found that neither patent made a technical contribution to the art under the principles set out in Aerotel and that therefore they were not patentable.

Gemstar appealed the Patent Court’s decision, but in a surprisingly brief judgement led by Lord Justice Jacob, the Court dismissed that appeal, confirming that the patents were invalid due to lack of novelty. Applying the test for anticipation set out in Synthon, Jacob LJ found that a patent filed by Toshiba immediately prior to the filing date of Gemstar’s patents would enable a person skilled in the art to perform the inventions, thereby invalidating Gemstar’s patents.

CommentAs discussed above, the abbreviated form of Lord Justice Jacob’s judgement surprised some and has led to commentators surmising that the Court of Appeal appears to be adopting a more proportionate approach to patent cases. However, in this instance, once the Court had found that the patents were invalid for lack of novelty, its failure to then proceed to examine whether those patents comprised excluded subject matter seems to have constituted a missed opportunity to revisit the law in this area.

Currently, in determining whether a patent falls within the ‘excluded subject matter’ exception, the English Court applies a test based on assessing whether the invention makes a technical contribution to the art. This principle was most recently formulated into a four stage test by Lord Justice Jacob himself in Aerotel. However, the European Patent Office has chosen to take a divergent path, its decision in Pension Benefit Systems dictating that any analysis of excluded subject matter should focus on the presence of ‘any hardware’ in the invention. While some, most notably Peter Prescott QC, believe the distinction to be artificial, competing lines of authority ultimately detract from legal certainty. However, in view of the role Jacob LJ took in initially formulating the law in this area, coupled with his own criticism of the European Patent Office’s approach in Aerotel itself, it was perhaps wishful thinking to believe that this case would signal a change in attitude.


Multi-jurisdictional patent wars: no clear winners in HTC’s fight for expedited trial of UK actions involving Apple patents

HTC Europe Co. Ltd v Apple Inc. [2011] EWHC 2396 (Pat)

In the long-running saga between HTC and Apple relating to smartphones, involving patent litigation between the parties in a number of European countries, HTC was partially successful in its application in the English High Court for an expedited trial of its action for revocation of one of Apple’s UK patents and Apple’s parallel infringement claim. Although the Court did expedite proceedings to some degree, it did not order the trial as early as HTC had asked, since it was not convinced by HTC’s argument that an early trial and judgment in England would assist in parallel infringement proceedings brought by Apple against HTC in Germany in respect of the German equivalent patents.

Key Practical Consequences • The Court accepted that patent disputes may be expedited if

there was sufficient commercial significance to the claims, due, for example, to the fast pace of technological development in the relevant market so long as it would not interfere with the good administration of justice or cause prejudice to the other party.

• Although the fact that a decision on the validity of a patent may assist a party in seeking to expedite proceedings for an equivalent patent in another jurisdiction, it is not an overriding factor and other good reasons should be shown.

Discussion Apple commenced infringement proceedings against HTC in Germany on 1 July 2011 in respect of Patents 022 and 868 before a court in Munich, and in respect of Patent 859 before a court in Mannheim. In response, HTC commenced two actions for revocation of the United Kingdom equivalents of those patents on grounds of invalidity (the “Invalidity Action”). Apple subsequently brought an action for infringement against HTC in the United Kingdom in respect of those three patents and a fourth, Patent 948 (the “Infringement Action”).

HTC sought expedition of the Invalidity and Infringement Actions, requesting that in respect of Patent 859, the action came on for trial in January 2012. With respect to Patents 022, 868 and 948, it sought a trial on the first available date on or after 26 March 2012, and also in a window ending on 30 April 2012.


Apple did not consent or strongly resist the expedition of the trial of the actions relating to Patents 022, 868 and 948 to March or April 2012, but resisted expedition of the trial of the 859 Patent to an earlier date. Apple argued that HTC had not shown good reason for the expedition, which would in any event cause Apple prejudice.

The Court saw no problem in granting the expedition of the trial relating to all four patents to commence in March or April 2012, since Apple had not seriously resisted it. Further, the Court considered this to be a dispute of commercial significance to the smartphone market which, the Court agreed, is a “large and expanding one in which there is rapid technological development”. It was crucial, therefore, that HTC and its customers knew as quickly as possible whether or not HTC was infringing any valid Apple patent.

With respect to the expedition of the trial relating to Patent 859, the Court accepted HTC’s argument that an English decision on validity might be of assistance to it in the infringement proceedings in Mannheim, and that this was a factor that could be relied on in support of its application. However, the Court refused to treat it as an important or overriding factor.

The Court noted that a timetable had not yet been set in the Mannheim proceedings. Furthermore, it was not certain that the trial in Mannheim would take place in January or February 2012, as HTC alleged. The Court found that even if the trail in Mannheim took place in January or February 2012, a judgment would be handed down in four to six weeks thereafter. Further, it considered that HTC could apply for the decision on the grant of an injunction to be delayed, or for any injunction which was granted to be suspended once the UK Court’s judgment became available.

The Court also considered the practice in German courts to require patent holders to provide security for damages caused by an injunction. It held that this would provide HTC with a remedy if the Mannheim court granted the injunction sought by Apple, but was subsequently found to have been wrongly granted. The Court dismissed HTC’s argument that the security would not provide a sufficient remedy, since irreparable harm would have been caused. Instead, the Court stated that those were submissions to be made to the Mannheim Court in an application to stay the proceedings, or delay a decision to grant the injunction.

The Court held that the expedition would also be contrary to the good administration of justice, since it would involve having a separate trial of the actions relating to Patent 859 from those for Patents 022, 868 and 948. This would be despite the fact that the allegations of infringement were essentially the same in all four cases same, and the representation on each side was likely to be the same. Moreover, even though there were some differences, the technical and legal subject matter of the actions relating to the four patents overlapped.

Finally, the Court held that it was not practical to expect Apple to be ready for trial in January 2012, given the technical complexity of the Actions and the interposition of the Christmas and New Year Holidays. Expediting the trial of the Patent 859 Actions would be prejudicial to Apple.

CommentThe stakes are usually very high in patent disputes. Considerable amounts in damages may be payable and often this is “bet the company” litigation. These disputes are also often global and sophisticated players are well aware of each country’s reputation with respect to patents, whether deserved or not. In this case, HTC clearly wanted to take advantage of the English court’s reputation as an invalidating court, and obtain an early judgment for revocation of Apple’s patent. This would then enable HTC to take this judgment to the supposedly pro-patentee German court.

Notwithstanding differences between European courts, the English court’s decision would be viewed as reasonable given the other patents involved and the situation in Germany. In practice, a favourable English judgment on a revocation may indeed cause a German court to consider staying an infringement claim pending a determination of validity, since in Germany validity and infringement are tried separately. However, this strategy is certainly not guaranteed.


High Court reverses UK Patent Office decision on computer related inventionsHalliburton Energy Services Applications [2011] EWHC 2508 (Pat), 5 October 2011

This was an appeal to the High Court from the Patent Office’s rejection of four patent applications relating to computer software for designing drill bits of the type used in oil exploration. The patent applications were rejected on the basis that they related to subject matter excluded from patentability under Section 1(2) of the Patents Act 1977, as schemes, rules or methods for performing a mental act and as computer programs.

DiscussionIn an earlier case relating to similar subject matter, Halliburton Energy Services, Inc. v Smith International (North Sea) Ltd [2005] EWHC 1623 (Pat), Pumfrey J decided that a claimed invention that would otherwise fall foul of the exclusions of section 1(2) of the Patents Act could be remedied by adding step directed to the manufacturing of a drill bit in accordance with the computer generated design.

However, from a practical perspective, such claims can be difficult to enforce as the design and the manufacture of drill bits may be carried out by different entities in different countries. This can leave the patentee relying on making a case for contributory or joint infringement in order to enforce their patent.

The claims in the patent applications in question did not include a manufacturing step.

The analysis was restricted to only one of the four applications, GB 0523735.9, on the basis that all four applications would stand or fall together.

The application relates to improving the design of roller cone drill bits of the type used in oil exploration, and in particular for drilling oil wells. The invention uses a mathematical computer simulation of the interaction of the drill bit with the rock formation being drilled to optimise various design features of the drill bits. This reduces or eliminates the need for expensive field testing.

Claim 1 was directed to the method used to design such a drill bit, the method being limited to being carried out by a computer. An initial drill bit design is specified by a user and the computer simulates the drilling of the rock formation by that drill bit. The simulation uses the drill bit design and also at least one drilling parameter such as rate


of penetration. A modified design is made by the user by varying at least one of the parameters making up the design. The computer then simulates the drilling of the same rock formation using the same drilling parameter but with the modified design. The user compares the simulated drilling performance of original design with the modified design. The results are output to a “resource” (eg printer, computer storage medium). Further steps of the claim recite in detail the mathematical method (finite element analysis) used by the computer to carry out the simulation of the drilling.

The key issues that needed to be decided were whether the scope of the mental act exclusion applied by the Patent Office was the correct one and then whether the patents contained purely excluded matter according to Aerotel (Aerotel Ltd v Telco Holdings Ltd. (and others) and Macrossan’s Application [2006] EWCA Civ 1371) .

It was decided that claim 1 satisfies the requirement of patentability following the Aerotel approach. It is not a method performed by purely mental means and it is more than a computer program as such, it is a method for designing a drill bit.

Regarding the scope of the mental act exclusion, HHJ Birss QC considered that there are two possible interpretations of this exclusion, a broad one and a narrow one.

The broad construction is that a method is “a scheme, rule or method for performing a mental act” if it is capable of being performed mentally regardless of whether it is in fact performed mentally or how it is claimed. Under this interpretation, the Halliburton applications would fall within the exclusion, even though the claims did not cover performing the calculation mentally and were limited to using a computer.

The narrow construction only excludes acts which are carried out mentally, and which are claimed in a way which would cover the method being carried out mentally. Under this interpretation, a claim to any method carried out on a computer would never fall within the mental act exclusion.

HHJ Birss QC considered that the balance of authority in England is in favour of the narrow construction of the mental act exclusion and that the broad construction is uncertain in scope. There is no reason why the exclusion needs to be interpreted broadly, whereas there is a logic behind the narrow interpretation, which prevents claims being granted which could be infringed by a purely mental process.

Therefore, the decisions of the Patent Office were overturned.

CommentThe previous decisions of the Patent Office relating to these applications had widely been considered to diverge from the approach to computer implemented inventions taken by the European Patent Office. This decision brings the UK closer to the arguably more lenient approach of the EPO.


UK Supreme Court follows EPO Boards of AppealHGS v Eli Lilly [2011] UKSC 51

In the most recent decision of the Supreme Court concerning biotech patents, Lord Neuberger has aligned UK jurisprudence squarely with the case law of the EPO Boards of Appeal.

Facts of the caseIn the Neutrokine-α case, HGS claimed a gene sequence. The gene product had been identified, by bioinformatic analysis, to be a member of the TNF family of proteins. No data concerning potential uses of the protein were provided. Additionally, the specification contained an extraordinarily vague and unfocussed list of diseases that could allegedly be treated using the protein.

The substance of the Judgment turns on whether it was plausible, on the basis of the specification, that Neutrokine-α is a member of the TNF family, and if so whether a plausible use for the polypeptide had been set forth in the specification. The concept of plausibility was first proposed in decision T1329/04 of the EPO Technical Boards, which was taken in respect of inventive step; the concept was extended to industrial applicability in T898/05, where it was remarked that a product that is plausibly shown to be usable meets the required standards.

It is this standard, as set forth in T898/05, which the Supreme Court applied. It found that it was plausible that Neutrokine- α would have the same function as other members of the TNF family, and that this was enough to satisfy the industrial applicability requirement of UK law. Notably, the Court held that the inclusion of a self-contradictory “laundry list” of potential uses would only have a negative impact if it had the effect of diverting the skilled person from would otherwise have been understood as being revealed by the specification (see paragraph 116).

Application of EPO law in the UK CourtsLord Neuberger devotes 15 pages of the Judgment to discussion of the case law of the EPO Technical Boards of Appeal relating to industrial applicability and inventive step, and makes it perfectly clear that the UK courts should adhere to the principles of EPO case law. As stated at paragraph 87 of the Judgment, “it would require very unusual facts to justify a national court not following this approach”. The Judgment makes it clear beyond any doubt that the legal standard to be followed is that set forth by the EPO Boards of Appeal.


CommentThe immediate impact of this decision is to reverse the rise of industrial applicability as a ground for objection and invalidity of patents in the UK. The bar set, that a plausible use should be described, is relatively low and it should not be beyond the reach of any but the most speculative inventions, assuming the specification is competently drafted.

More importantly, however, this decision emphasizes the relevance of EPO case law in UK patent law. It is going to be very difficult, in view of this decision, for a UK Judge to take a decision that does not follow a direction taken by the EPO Boards of Appeal.


High Court holds protein isolation method ‘Phage Display’ patent invalid

MedImmune Ltd v Novartis Pharmaceuticals UK Ltd and another [2011] EWHC 1669 (Pat), 5 July 2011

On 5 July 2011, the Patent Court held that two patents owned by MedImmune were not entitled to the priority claimed and were therefore invalid. The Court further considered that the infringing products were not produced by a method falling within the claims and would not have infringed the patents.

Key Practical Consequences• Although on the facts, it was held that Novartis’ product was

not produced using a process described in the patent claims as contested, Arnold J held that in principle it was open to a patentee to claim infringement based on ‘reach-through claims’.

DiscussionMedImmune was the proprietor of two European Patents (the ‘Patents’). The invention disclosed in the Patents consisted of a biotechnological technique (‘phage display’) for selecting a binding molecule of interest. MedImmune claimed that the Patents had priority derived from a priority document (PD3) and that Novartis had infringed the Patents through sales of ranibizumab (Lucentis), a drug for the treatment of the eye condition wet age-related macular degeneration.

Novartis disputed that the drug was not a direct product of the patented process, nor that it was produced by a process which fell within the scope of the claims, or that it was a product ‘obtained directly by means of’ any of the claimed processes. Novartis also claimed that the inventions were not disclosed by PD3 and were therefore invalid, which would not entitle MedImmune to priority. Novartis further argued the Patents were invalid on grounds of obviousness and insufficiency, as the claims exceeded the technical contribution to the art made by the invention.

Reach-through claims are attempts to capture the value of discovery before it becomes a complete invention. For example, if a patent is filed for an invention in a widely applicable basic research technology and the inventor then attempts to claim for envisaged future technologies which have not actually been produced.

There are several requirements of the European Patent Convention which have implications for reach-through claims; (1) novelty and inventive step, (2) industrial application, (3) sufficient disclosure, (4) that the claims to be supported by the description, and (5) that the claims to be clear and concise.


Although Arnold J stated that patents were invalid in this case, he did consider whether it was possible for a patentee to claim an infringement based on a reach-through claim. While Lucentis had not breached either of the patents, if it had been produced using a method within the scope of the claims it would have been a product obtained directly by means of those claims within s60(1)(c) Patent Act 1977. In his judgement Arnold J concluded that it was possible for screening method patents to be enforced against products obtained using such methods, with a reach-through claim, even if the final product had not been considered by the original inventor.

Regarding the priority of the Patents, reference was made to Intervet UK Ltd v Merial [2010] EWHC 294 (Pat), which provided a summary of the principles relating to priority. Namely, that a claimed invention would be entitled to priority from an earlier application, if it was supported by matter disclosed in the earlier application. There was no entitlement to priority in this case due to differences in disclosure between the documents, particularly with regard to scientific content.

In his judgement Arnold J took the opportunity to provide guidance for instructing lawyers for ensuring an expert witness did not fail his duty to the court to be objective. Specifically, the Judge noted that it was important that even if the expert believed he had complied with this duty it was the instructing lawyers task to make sure this was the case.

CommentPatents can now be enforced, in principle, against products generated from methods laid out in a claim, by way of a reach through claim.

The case also demonstrated that instructing lawyers should take care when instructing expert witnesses, especially with regard to the witnesses duty to provide evidence objectively to the court.


Court of Appeal rules that costs penalty on the failure to register an exclusive patent licence only applies during period of non-registration

Schütz (UK) Ltd v Werit UK Ltd and another [2011] EWCA Civ 927

The Court of Appeal issued a decision concerning costs in a patent infringement action, where the defendant was held to have infringed a patent held under an exclusive licence. In the Court’s opinion, the licensee claimant’s failure or delay in registering its licence did not prevent it being able to claim costs incurred after the date of registration.

Key Practical Consequences• Although licensees should always register their rights under an

exclusive patent licence within six months of the licence coming into effect, in order to comply with section 68 Patents Act 1977, failure to do so will not prevent recovery of costs incurred after registration.

• Where notification of an exclusive patent licence has been registered, and a replacement licence is subsequently entered into, the register does not need to be amended if the parties remain the same.

• The actual licence does not need to be filed, merely notice to the public of the existence of the exclusive licence.

DiscussionTo understand this case it is important to understand both the rather odd facts, and the changes in the relevant law which took place over the period of the relevant licence(s). Schütz entered into an exclusive licence in 1995 with the patent owner. Contrary to the requirements of section 68 Patents Act 1977, it failed to register this licence within six months. Under the law as it then was, the effect of this failure would have been that it would have been unable to claim damages or costs from an infringer until such time as the licence was registered.

In 2006 the Enforcement Directive (2004/48/EC) implemented in the United Kingdom by the Intellectual Property (Enforcement etc) Regulations 2006 took away the sanction of withholding damages for non-registration, with effect from the date the Regulations came into effect – i.e. 26 April 2006. As regards costs, the Directive provides that the unsuccessful party should bear the costs of the successful party, unless this is unfair.


Schütz then did register its exclusive licence – in July 2008. But on 29 November 2009, that licence was terminated by the licensor and licensee and a new exclusive licence was immediately entered into between the parties in substitution. The new licence again was not registered within six months, and appears not to have been registered to this day.

Schütz thereafter proceeded with a successful patent infringement claim against the defendant Werit. On the issue of costs, it was established in the first hearing that Schütz was able to claim damages from the date the Regulations came into effect, whether the exclusive licence was registered or not. It was also established that costs incurred in the relatively short period between the time of actual registration of the 1995 licence (i.e. July 2008) and the termination of that licence (i.e. November 2009) should be borne by the unsuccessful party.

But what about the very considerable costs of over £2 million incurred from the time of the new licence? Counsel for Werit argued that section 68 applied afresh and that as the new licence had not been registered, no costs beyond 29 November 2009 should be awarded.

The Court disagreed. The purpose of registration of an exclusive licence is to inform the public who has real control over the patent. At all times since the 1995 licence was registered, i.e. since July 2008, the public had been able to find out that Schütz was the exclusive licensee. The fact that one exclusive licence was replaced by another exclusive licence between the same parties did not for these purposes make any difference. It would indeed have been unfair and therefore contrary to the requirements of the Directive to deprive Schütz of the damages award merely because it had omitted the ‘bureaucratic step’ of updating the details of its exclusive licence at the Registry, something which would have told the public nothing more in substance than they already knew. Thus Schütz was also entitled to the costs from 29 November 2009 onwards.

CommentSection 68 Patents Act is now largely ineffective since the discovery of an infringement usually results in the licensee putting in a late registration before commencing proceedings, and thus before it incurs most of its costs. Nonetheless, it is good practice to register the fact of an exclusive licence with the Registry as part of post-completion procedures once the licence has been executed, so that all costs can be recovered. Schütz can be counted fortunate that the Court came down in its favour in its reading of the relevant legislation, which in its drafting is not free of ambiguity.


The Enlarged Board of Appeal of the European Patent Office issues its decision on the allowability of undisclosed disclaimers that disclaim a specific embodiment of an invention - G2/10

This decision relates to the question of whether or not it is allowable to amend a claim to exclude subject matter which was disclosed as an embodiment of the invention in the original application, or whether such an amendment adds unallowable subject matter, contrary to Article 123(2) EPC). The Enlarged Board decided that disclaimers which exclude subject-matter disclosed in the application as filed do not necessarily add subject-matter. It was held that the allowability of such disclaimers should be decided based upon the usual assessment of added subject matter before the EPO.

DiscussionA disclaimer is used when subject matter is to be excluded from the scope of a claim using negative terms – such as “with the proviso that said feature is not…”. They are often used in special circumstances to remove subject matter that is covered by the prior art. This decision considered the circumstances under which it is allowable to amend a claim to disclaim subject matter which was disclosed as an embodiment of an invention in the application as filed. The following question was referred to the Enlarged Board of Appeal:

“Does a disclaimer infringe Art. 123(2) EPC if its subject-matter was disclosed as an embodiment of the invention in the application as filed?”

This question was answered by the Enlarged Board of Appeal in G 2/10 as follows:

la. An amendment to a claim by the introduction of a disclaimer disclaiming from it subject-matter disclosed in the application as filed infringes Article 123(2) EPC if the subject-matter remaining in the claim after the introduction of the disclaimer is not, be it explicitly or implicitly, directly and unambiguously disclosed to the skilled person using common general knowledge, in the application as filed.

lb. Determining whether or not that is the case requires a technical assessment of the overall technical circumstances of the individual case under consideration, taking into account the nature and extent


of the disclosure in the application as filed, the nature and extent of the disclaimed subject-matter and its relationship with the subject-matter remaining in the claim after the amendment.

The Enlarged Board of Appeal’s earlier in decision in G1/03, related to undisclosed disclaimers. It set out a number of strict rules determining when it is allowable to use a disclaimer which was not disclosed in the application as filed. It t was held that a disclaimer which had no basis in the application as filed could comply with Article 123(2) EPC if the disclaimer: a) removed subject matter which was unpatentable for non-technical reasons; b) restored novelty over prior art under Article 54(3) EPC (earlier filed but unpublished European patent applications); or c) restored novelty over an ‘accidental anticipation’.

In this later decision, the Enlarged Board held that the decision in G1/03 only applied to disclaimers where both the disclaimer and the excluded subject-matter were not disclosed in the application as filed. Accordingly, the criteria of G1/03 were held not apply to disclaimers of the type discussed in this later decision. In contrast, disclaimers which exclude subject-matter disclosed as part of the invention in the original application do not necessarily add subject-matter. Whether such a disclaimer is allowable is dependent on the routinely used tests for assessing the addition of added subject-matter before the EPO.

CommentIn determining whether or not a disclaimer that excludes subject matter which was disclosed as an embodiment of the invention in the application as filed is allowable, the EPO will assess whether the skilled person would, using common general knowledge, consider the remaining claimed subject-matter as being directly and unambiguously disclosed in the application as originally filed.

However, the Enlarged Board implied that there are no rules as such that can be used to determine whether an application contains basis for an undisclosed disclaimer – this will ultimately depend upon the specific case and how the skilled person is considered to interpret the specification.


Registered Design Rights: establishing a different overall impression is key in cases of alleged infringementDyson Ltd v Vax Ltd ([2011] EWCA 1206)

The English Court of Appeal dismissed the Claimant’s appeal against a High Court decision that its registered design for a cyclonic vacuum cleaner had not been infringed by the Defendant’s vacuum cleaner. The judgment of the High Court was upheld, and it was affirmed that the two designs created different overall impressions on the mind of the informed user. This was despite similarities between the designs and the very broad protection enjoyed by the Claimant’s design.

Key Practical Consequences• Companies who are considering bringing proceedings for

infringement of their registered designs must bear in mind the importance of the overall design and whether the differences between the registered and alleged infringing designs are therefore sufficient to produce a different overall impression on the informed user

• In considering strategy in infringement proceedings, it should be borne in mind that complex arguments over aesthetic appeal versus functionality, whilst persuasive, will ultimately be of less consequence than the impression created by the overall design, or “what the court can see with its own eyes.”

DiscussionThe Claimant was a very well known manufacturer of vacuum cleaners, who held a registered design for a type of cyclonic dust separating vacuum cleaner. When the Defendant launched a similar product in the UK, the Claimant commenced proceedings for infringement. At the High Court, Arnold J dismissed the claim. He noted that the Claimant’s product enjoyed a high level of protection given the high degree of design freedom available at the time of its design. Protection would not be offered, however, where the design was determined by functional requirements. At the heart of the High Court decision was the finding that an informed user would perceive a difference in the overall impression of the two designs.

The Court of Appeal agreed with the reasoning of Arnold J and held that no relevant error of principle had been made sufficient to overturn the High Court decision. In his judgment, Sir Robin Jacob identified the key legal question in cases of alleged infringement of registered design rights as being whether the Defendant’s design “does not produce on the informed user a different overall impression.” He noted that this was a straightforward question which did not require elaborate arguments and evidence as it ultimately fell to “what the


court can see with its own eyes”, namely, what the registered design and the alleged infringing design actually look like. Although evidence might be important to determine the existing design corpus or the degree of freedom available to the designer in developing his design, its importance would be limited.

The Court of Appeal also considered the characteristics of the “informed user”, so central to determining whether the designs produced different overall impressions. Sir Robin Jacob agreed with the High Court reasoning that the informed user was “neither a manufacturer nor a seller” of vacuum cleaners but a “particularly observant” consumer who has some awareness of previous designs. In other words, the “informed user” is a notional person who is more than a mere consumer of the goods but does not possess the detailed expertise of the manufacturer.

The High Court had observed that the degree of design freedom may vary according to the technical specification of the product being designed. The Court of Appeal agreed and held that the similarities between the designs were not particularly significant, whereas the differences were significant. The Claimant had argued that undue weight had been given to the technical significance of some features, and that as a consequence the similarities between the designs had been downplayed. However, Sir Robin Jacob concluded that even if a greater degree of design freedom was assumed, the fact remained that the two designs produced overall impressions that were substantially different – “smooth, curving and elegant” in respect of the Claimant’s design versus the Defendant’s “rugged angular and industrial” design.

Comment James Dyson was quoted as saying “We’ve invested decades, not to mention millions, in creating better technology. And sadly we waste millions more in cases like this. We need to better protect British design.”

Businesses that seek to rely on registered designs to assist in preventing competitors from emulating their designs may share James Dyson’s frustration. Recent decisions in the United Kingdom suggest that design rights extend only to identical and very similar designs but not to designs that, whilst similar, have some eye catching differences, even if the differences are few in number.

However, the position taken by the English Court may appear to others to give design owners the ability to prevent direct copies and products that seek to unfairly exploit a popular design, whilst enabling reasonable competitors to develop products which are perhaps similar but can nonetheless be easily distinguished by consumers from the original design. In this respect, the decision encourages both competition and consumer choice.


EU General Court clarifies approach for determining individual character of components

Cases T-10/08 and T11/08 Kwang Yang Motor Co. Ltd v OHIM, (Honda Giken Kogyo Kabushiki Kaisha intervening)

The General Court of the European Union (the “General Court”) upheld two decisions by the Board of Appeal declaring that two Registered Community Designs (RCD) belonging to Kwang Yang Motor Co. (Kwang) for two internal combustion were invalid on the grounds that the designs lacked individual character.

Key Practical Consequences• A component part may only benefit from RCD protection

provided that when it is incorporated into the complex product, parts of the component remain visible during normal use of the complex product and the visible parts are new and have individual character.

• The informed user of a component part will be the user of the complex product in which it would be incorporated and not manufacturers who incorporate the component into the complex product.

• The visible parts are to be determined from the perspective of the user when using the complex product.

• To determine the overall impression produced by an RCD the proportions, arrangement, layout, size and shape of the product represented in the RCD must be taken into account.

• An informed user will be guided by the basic structures of a product and not by differences in details.

DiscussionKwang obtained two RCDs for internal combustion engines. Honda Giken Kogyo Kabushiki Kaisha (Honda) applied to the OHIM for declarations of invalidity on the grounds that the RCDs lacked novelty and individual character as they were identical to earlier design registrations in the United States (the “Earlier Designs”).

The Invalidity Division rejected both applications on both grounds. However the Board of Appeal found that the RCDs did not produce on the informed user a different overall impression from that of the Earlier Designs and therefore the RCDs lacked individual character. The decision of the Invalidity Decision was annulled and Kwang appealed to the General Court.


The General Court agreed with the Board’s assessment of Kwang’s RCDs and upheld the declarations of invalidity. Since it was common ground that the engines, which were the subject of the RCDs, are commonly used in lawnmowers, the General Court agreed that the incorporation of the engines in lawnmowers may serve as the basis for determining the validity of the RCDs.

The General Court upheld the Board’s ruling that when mounted in a lawnmower, the visible parts of the engines were primarily the top of the engine, since the user of a lawnmower would stand behind it and view it from above. The General Court rejected Kwang’s argument that the underside, which will be in contact with the ground, and the rear side of the engines should be taken into account. Therefore it is the top of the engines which should be taken into account when determining if the RCDs produced an overall impression. The General Court also agreed with the Board that the informed user is a person wishing to use a lawnmower, and disagreed with Kwang’s suggestion that the informed user of the engines are the manufacturers who install them in the lawnmowers.

A significant point of contention was the degree of freedom there was in creating designs of engines for use of lawnmowers. Kwang contended that the degree of freedom was limited due to the technical function of the engines. However, Honda produced evidence of engines in different shapes and configurations which both the Board and General Court considered proved that the designers of these engines enjoyed a high degree of freedom. Therefore minor differences between the RCDs and the Earlier Designs would not be sufficient to produce a different overall impression on the informed user.

The General Court upheld the Board’s assessment that the top of the engines represented in the RCDs and the Earlier Designs were similar with respect to the general shape of the engines, their components and position. The General Court dismissed the detailed differences raised by Kwang, stating that the informed user would be guided by basic structures and not by differences in detail.

CommentThe decision helps clarify the approach to adopt when applying the important test of “individual character” in RCD cases. The General Court seems to be advocating a more global assessment of the design as a whole, similar to the assessment of similarity of trade marks, rather than an over-analytical assessment which focuses on differences in the detail.

The case emphasises that manufacturers of components must focus on the design of the visible parts of the component when incorporated into a product from the perspective of the user when using the product. Regardless of how innovative the design of certain elements of the component are, if those elements are not visible to the user during use of the product in which the component is incorporated, it will not obtain RCD protection.


The Court of Justice gives guidance on the “informed user” concept in design law matters

Case C-281/10 P, Case C-281/10, PepsiCo v Grupo Promer Mon Graphic and OHIM

The Court of Justice of the European Union (“CJEU”) dismissed PepsiCo Inc’s appeal against the EU General Court’s ruling that its design for promotional items was not validly registered under the Community Design Regulation because it did not create a different overall impression on the informed user to an earlier design. According to the Court of Justice, the concept of the informed user may be understood as referring not to a user of average attention but to a particularly observant one, either because of his personal experience or his extensive knowledge of the sector in question.

Key Practical Consequences• The decision established that the concept of the informed user

lies between the average consumer of trade mark matters and a technical expert.

• The informed user is defined as knowing the various designs which exist in the sector concerned, possessing a certain degree of knowledge with regard to the features which those designs normally include, and, as a result of his interest in the products concerned, showing a relatively high degree of attention when he uses them. However, the informed user is not a designer or a technical expert.

• The decision also shows that a Registered Community Design is an important means of protection when trade mark registration cannot be obtained.

DiscussionGrupo Promer (“Promer”) had registered a Community design in respect of goods described as “metal plate[s] for games”, represented below:

PepsiCo applied to register the design shown across in respect of goods identified as “promotional items for games”.


Both designs related to small collectable children’s toys called “pogs”. Promer applied to declare PepsiCo’s design invalid on the basis that it was in conflict with its earlier Registered Community Design (“RCD”).

The Cancellation Division of the Office for Harmonisation in the Internal Market (OHIM) upheld the invalidity action. PepsiCo appealed to the OHIM Board of Appeal, which overturned the OHIM’s decision finding that, given the limited freedom of the designer in developing the design, the two designs produced a different overall impression on the informed user. Promer appealed to the EU General Court which annulled the Board’s decision, ruling that even though the designer’s freedom was severely restricted, the differences between the two designs were too insignificant to create a different overall impression.

PepsiCo thereafter appealed to the CJEU, which dismissed PepsiCo’s appeal. In its appeal, PepsiCo argued that the General Court had failed to take into account the constraints on the designer’s creative freedom in its assessment of the designs. However, the CJEU declined to consider the constraints of the designer’s freedom, as this was a finding of fact that could not examine unless the facts had been distorted.

PepsiCo also argued that the General Court had wrongly interpreted the notion of the “informed user”. Since the Community Design Regulation does not define who constitutes the “informed user”, there is some ambiguity on this point. However, concurring with the Advocate General’s opinion, the CJEU held that the concept must be understood as lying somewhere between that of the average consumer, applicable in trade mark matters, who need not have any specific knowledge and who, as a rule, makes no direct comparison between the trade marks in conflict, and the sectoral expert, who is an expert with detailed technical expertise. Thus, the concept of the informed user may be understood as referring, not to a user of average attention, but to a particularly observant one, either because of his personal experience or his extensive knowledge of the sector in question.

In relation to the informed user’s level of attention, the CJEU noted that he is not an expert or specialist capable of observing in detail the minimal differences that may exist between the designs in conflict. “Informed” suggests that, without being a designer or a technical expert, the user knows the various designs which exist in the sector concerned, possesses a certain degree of knowledge with regard to the features which those designs normally include, and, as a result of his interest in the products concerned, shows a relatively high degree of attention when he uses them.

Therefore, since the General Court had taken into account the informed user and not the average consumer, it had not erred in assessing the overall impression of the designs at issue, and in taking into account the goods actually marketed that corresponded to those designs.

CommentThis decision is significant in that it provides clarification of the definition of the “informed user” in design law cases, a concept not defined by the Community Designs Regulation, and his level of attention. The informed user appears to be more attentive than the average consumer, but not an expert.

The decision also confirms the importance of the design right in the European Union. Design owners should seek to protect their designs by registration rather relying on unregistered design rights and should also bear in mind that designs can constitute an alternative when trade mark protection cannot be obtained. The Court, however, did not shed any light on the issue of “constraints on the designer’s freedom”, which remains unclear.


CJEU rules that use of a trade mark with a reputation as a key word may be prohibited

Case C-323/09 Interflora Inc v Marks & Spencer Plc

The Court of Justice of the European Union (“CJEU”) recently delivered its preliminary ruling on questions referred to it by the English High Court in the case of Interflora, Inc., Interflora British Unit v Marks & Spencer PLC, Flowers Direct Online Limited [2009] EWHC 1095 (Ch). The CJEU’s position broadly follows the opinion of Advocate General Jaaskinen delivered in March 2011, ruling that use of a registered trade mark as a key word may be prohibited if it adversely affects the functions of the trade mark or, where the trade mark has a reputation, if the use takes unfair advantage of that reputation.

Key Practical Consequences• This ruling broadens the scope of protection available for trade

mark owners from the settled “double identity” infringement scenario, where adverse effect on trade mark function can be shown, to protection for marks with a reputation where the advertiser’s use is deemed to take unfair advantage of the registered trade mark.

• However, demonstrating damage to the origin function of trade marks remains important. This may prove to be a difficult task in the context of keyword use where the relevant public for establishing a likelihood of confusion is reasonably savvy and increasingly aware of the practice of using keywords and sponsored links.

DiscussionInterflora run a network of flower delivery services and own a number of registered trade marks for INTERFLORA. Marks & Spencer (M&S) runs its own, unconnected, flower delivery service and purchased “Interflora” as an advertising keyword from the Google search engine. Interflora objected and brought proceedings against M&S in the English High Court, who referred a number of questions to the CJEU relating to whether trade mark owners could prohibit advertisers from using a keyword identical to their registered trade mark.

The case fell within the “double identity” infringement scenario of unauthorised use of an identical trade mark in relation to identical goods and services. The CJEU followed established case law (such as the Google France decision) by reaffirming that use of a registered trade mark as a keyword would only constitute infringement where the use adversely affects one of the functions of the trade mark.


Considering the origin function, the CJEU ruled it would be adversely affected if the advertisement generated by the keyword meant that “reasonably well-informed and reasonably observant internet users” were not able, or were able only with difficulty, to ascertain whether the goods and services in question originated from the trade mark owner, an economically linked undertaking or a third party. In respect of Interflora, it was recognised that the network of separate and diverse undertakings comprising its business structure created the potential for confusion. Conversely the CJEU ruled that the advertising function of the trade mark was not adversely affected by keyword use as this fell within the ambit of fair competition. The investment function would be adversely affected if there was substantial interference with the trade mark owner’s use to acquire and preserve a reputation to attract consumers, but not if it merely obliged the rights holder to adapt its efforts in this regard.

As INTERFLORA is a mark with a reputation, the CJEU also considered whether M&S’s use caused detriment to the distinctive character of the trade mark (dilution) or took unfair advantage of the distinctive character or repute of the mark. The CJEU held that where there was no confusion as to origin, Interflora could not argue M&S’s use risked turning its trade mark into a generic term. In respect of unfair advantage, the CJEU followed Advocate General Jaaskinen’s opinion that M&S was deliberately taking advantage of the distinctive character and repute of the INTERFLORA mark.

However, like the Advocate General, the CJEU held that where such use offered alternative goods and services it fell within the ambit of fair competition and was therefore not without due cause such that it took unfair advantage of the trade mark. Unfair advantage would arise in this context where the advertisement offered “mere imitations” of the goods and services of the trade mark owner, caused dilution or tarnishment or adversely affected the functions of the trade mark.

CommentThe CJEU’s ruling will provide encouragement to trade mark owners as it broadens the grounds upon which they may bring infringement proceedings in relation to keywords to include dilution and unfair advantage of a registered trade mark. However, as the repeated references in the ruling to the origin function indicates, establishing a likelihood of confusion is still an important consideration. Although Interflora’s unusual business structure may lend itself to such a finding, other trade mark owners may not find this a straightforward threshold where the relevant public are reasonably savvy and increasingly aware of the practice of keywords and sponsored links.

Conversely, advertisers looking to purchase a competitor’s trade mark as a keyword must be confident that their advertisement does not infringe the trade mark and makes the origin of any goods and services offered clear. Such an assessment will evidently need to include consideration of the respective business structures of the advertiser and its competitor amongst other factors.


Court of Appeal sets its sights on supermarkets living dangerously

Specsavers International Healthcare Ltd and others v Asda Stores Ltd [2012] EWCA Civ 24

The Court of Appeal has overturned part of a High Court decision relating to whether straplines and logos used in a promotional campaign by Asda back in 2009 took unfair advantage of Specsavers’ reputation without due cause. However, although Asda had sought to “live dangerously” with regard to its promotional campaign, this was not sufficient in of itself to establish a likelihood of confusion on the part of the average consumer. The Court of Appeal also referred questions on colour and use of a trade mark to the Court of Justice of the European Union (“CJEU”).

Key Practical Consequences• Businesses who wish to draw parallels with their competitors’

goods and services in their marketing campaigns should avoid drawing a direct link with their competitors, other than through legitimate comparative advertising. This ought to avoid infringing their competitors’ trade marks by taking unfair advantage of the reputation of those marks.

• Although businesses may “live dangerously” by straying too close to their competitors’ marks in drawing such parallels, this does not automatically indicate an intention to deceive and benefit from another’s goodwill sufficient to establish a likelihood of confusion between the two marks.

DiscussionThis dispute dates back to 2009 when Asda re-launched its in-store optician service with a promotional campaign. The campaign incorporated the straplines “Be a real spec saver at Asda” (Strapline 1) and “Spec savings at Asda” (Strapline 2). Asda also used a logo featuring two ovals with ASDA OPTICIANS marked across it (the Asda Logo), similar to the Specsavers logos of two intersecting ovals with SPECSAVERS written across it (the Specsavers Logos).

Specsavers subsequently brought claims for trade mark infringement in the High Court in 2010, although most of its claims were dismissed. Asda was however found to have infringed the SPECSAVERS word mark under Article 9(1)(c) of the Community Trade Mark Regulation (the Regulation), with the High Court ruling that Strapline 1 took unfair advantage of the reputation of the mark. Specsavers appealed the decision in respect of its failed claims, and in turn, Asda cross-appealed the High Court’s finding of infringement.


The Court of Appeal upheld the finding of infringement against Asda, and considered that the High Court had erred in part in holding that Strapline 2 and the Asda Logo did not infringe the Specsavers word mark or the Specsavers Logos. The Court of Appeal found that Strapline 2 was visually, aurally and conceptually very similar to the word mark and that the aim of Asda’s campaign was to show that Asda was better than Specsavers, especially on price. Accordingly, Asda had intended to benefit from the “power of attraction attaching to the Specsavers brand.” In response to Asda’s argument that its use was merely comparative advertising, the Court of Appeal held that Asda’s campaign could not be said to be an “objective comparison of verifiable and representative features of the parties’ goods or services.”

However, Specsavers was not completely successful on appeal. The Court of Appeal agreed with the lower court that the use of the straplines and Asda Logo was not confusing to the average consumer, particularly because of the clear references to Asda that they contained. Further, marks could not be stripped of their context in assessing confusion, as it was imperative to obtain an informed understanding of the use of the sign, as it would be viewed by the average consumer. Moreover, although they had been held to take unfair advantage of the reputation of the Specsavers word mark and Specsavers Logos, there was a difference between “living dangerously” and an intention to confuse customers. Indeed, it was clear that Asda’s intention was to highlight that its service was better than Specsavers’, and so it plainly did not intend to confuse customers.

The Court of Appeal also referred two questions to the CJEU on the colour and use of trade marks. Specsavers had argued that its enhanced reputation in the colour green was a factor to consider in the likelihood of confusion analysis against Asda’s Logo. As Specsavers’ trade mark registration did not limit its use in relation to any specific colour, the Court of Appeal asked the CJEU to consider whether a colour could be relevant for the global assessment of the likelihood of confusion where it had become “associated in the mind of a significant portion of the public” with that mark. The CJEU was also asked to consider whether the use of a (separately registered) graphic device mark together with a word mark could qualify as use of each of the marks separately, sufficient to avoid revocation of the graphic device on the basis of non-use.

CommentMany businesses may wish to draw parallels between their services and those of their competitors precisely to show a distinction between the two rather than aiming to confuse potential customers. This ruling indicates that in so doing, if businesses stray too close to their competitors’ registered trade marks - outside the realm of legitimate comparative advertising – and create a link between the two, they may be found to have infringed those trade marks by taking unfair advantage of the reputation of the marks.


Advocate General recommends stricter approach to use of class headings in trade mark applications

Chartered Institute of Patent Attorneys v Registrar of Trade Marks, Case C-307/10, 29 November 2011

The Advocate General (AG) has stated that Office for Harmonisation in the Internal Market’s (OHIM) “class-headings-cover-all” approach is wrong and instead the class heading language should be interpreted as covering only the specific goods or services described and not the whole content of that class. Following a rare reference to the Court of Justice of the European Union (CJEU) by a UK appointed person, AG Bot handed down his Opinion in which he asserts that the practice adopted by the OHIM, with reference to Presidential Communication 4/03, where class headings of the Nice Agreement are used in the specification of a trade mark to provide protection in respect of all of the goods or services in that class, does not provide the necessary degree of precision or clarity required for the purpose of trade mark registration.

Key Practical Consequences• If the CJEU chooses to follow the AG’s opinion, OHIM and

other national EU registries that follow the “class-headings-cover-all” approach will be forced to adopt a more stringent examination of specifications, and move towards the “means what it says” approach adopted by the UK IPO.

• Such a change is likely to cause an increased number of specification objections raised by OHIM, and rights holders may find that the specifications of their existing marks are not as broad as they had previously believed, and that the goods and services covered may not reflect their actual commercial interests.

• If the CJEU does follow the AG’s opinion, brand owners would be advised to ensure that the specifications of any future applications accurately reflect their intended use of the mark, and they should also review their existing registrations to determine whether they need to amend specifications that recite the broad Class Heading.


DiscussionThe Chartered Institute of Patent Attorneys sought to register the mark “IP TRANSLATOR” in Class 41 of the Nice Classification for the class heading “Education; providing of training; entertainment; sporting and cultural activities.” The application was rejected by the UK IPO on the basis that the mark was descriptive of translation services which fall within Class 41 and consequently, that the mark was non-distinctive. In response, the Chartered Institute of Patent Attorneys submitted that its application did not cite (and therefore did not cover) translation services in Class 41. The UK IPO referred the case to the CJEU asking the following questions on the proper interpretation of class headings and the degree of clarity and precision required in specifications:

1. Is it necessary for the goods and services covered by a trade mark application to be identified with any degree of clarity and precision and if so, to what degree?

2. Is it permissible to use the class headings of the Nice Agreement to identify the goods and services covered by the trade mark application?

3. Whether, with reference to OHIM Presidential Communication 4/03, it is necessary or permissible to construe class headings of the Nice Agreement as covering all of the goods or services in a class.

The AG has now handed down his heavily anticipated opinion regarding the use of class headings in CTM applications and registrations. Crucially, the AG underlined the importance of defining a common approach to the identification of goods and services, to be applied both in the cases of national and Community applications. Without such a uniformed approach, the trade mark regime in the European Union would suffer, and due to inconsistencies and significant legal uncertainty, forum-shopping could be encouraged. The AG began by referring to the essential functions of a trade mark to guarantee commercial origin of the goods and services and the consequential implication that a trade mark must not therefore provide rights beyond those necessary to satisfy this essential function. The AG then provided his response to each question raised in turn.

(1) The AG stated that Directive 2008/95/EC and Council Regulation (EC) No 207/2009 require that the identification of goods and services for which trade mark protection is sought must satisfy the requirements of clarity and precision in order to enable the competent authority and economic operators to accurately determine the scope of protection provided by the trade mark. Accordingly, the terms used must be intelligible and unambiguous and must identify either the specific goods or services covered in each class, or identify the objective properties and essential characteristics of those goods or services. The AG added that the degree of precision required should be assessed on a case by case basis.

(2) The AG considered that the Nice Classification was a practical instrument that served as an administrative aid, but did not have any legal scope and the class headings themselves had no inherent value. However, Directive 2008/95/EC and Council Regulation (EC) No 207/2009 did not prevent the use of the class headings in the Nice Agreement to identify the goods and services for which protection is sought, provided that the requirements of clarity and precision are satisfied.

(3) The AG next stated that the OHIM Presidential Communication 4/03 was not a legislative text and had no binding legal value. Instead, it was an internal administrative document used to explain the administrative practice of OHIM. With regard to the content of the Communication, i.e. the President’s indication that OHIM does not object to the use of general indications and class headings on grounds that they are vague or indefinite, and also that these class headings cover all goods or services in a class, the AG asserted that this approach failed to ensure the necessary degree of clarity and precision required for the purpose of the registration of a national or Community trade mark.


The AG recognised that, whilst some of the class headings within the Nice Classification are sufficiently precise, for example “glassware”, or “soaps”, many do not provide sufficient clarity or precision, particularly those in the services Classes 35-45. For example, the Class 45 heading “personal and social services rendered by others to meet the needs of individuals” is incredibly broad and only contains very general indications. The AG stated that, due to the broad and general wording used in the class headings, the “class-headings-cover-all” approach adopted by OHIM allows for creates confusion amongst the public, particularly because certain goods and services could fall under several class headings. Furthermore, the OHIM Presidential Communication 4/03 failed to give sufficient transparency to what is protected by the CTM, and instead empowered the rights holder with almost unlimited exclusive rights over a particular class. The Communication also failed to encourage genuine use of the trade in connection with all of the goods or services for which the mark is registered. In particular, additional goods or services may be incorporated in a class as the Nice Classification evolves creating the prospect that the scope of rights can vary over time which therefore fails to provide legal certainty.

The AG also commented on the policy considerations and held that the “class-headings-cover-all” approach adopted by OHIM failed to ensure sound administration or guarantee undistorted competition in the marketplace and instead leads to an increased number of trade marks registered and, consequently, an increase in the number of conflicts.


CommentIt is common practice to file for CTM applications citing only the class heading in each class for which protection is sought, with the strategy that this will provide protection in respect of all goods and/or services in these classes, even if goods or services do not conceivably fall within the meaning of the terms of the class heading. At present, OHIM accepts such applications, which is largely thought to be due to reasons of administrative convenience as the time and cost in translating specifications is saved. Whilst this practice has also been endorsed by the Communication of the President of OHIM, it differs considerably from the approach of many national trade mark offices. For example, in the UK, a trade mark is viewed to cover only the goods or services expressly listed in the specification. As a consequence, CTM applications have proved very popular with brand owners in Europe however, the practice has been subject to much criticism, particularly due to the resultant confusion amongst the general public.

Accordingly, if the CJEU follows the AG’s decision, it is likely to impact heavily upon the CTM application and examination process and could cause the “class-heading-covers-all” approach adopted by OHIM to be revised significantly. The possible implications here are therefore vast, as all existing registrations would be affected as well as future CTM applications. Early indications suggest that around 20-25% of existing CTM registrations could be affected. Furthermore, this change could also affect enforcement proceedings and invalidity and revocation actions where the scope of protection is called into question. However, ultimately, the implications will be determined by how the national courts choose to apply the guidance provided by the CJEU.


Court of Justice calls time on beer dispute

Case C-482/09 Budejovicky Budvar, narodni podnik v. Anheuser-Busch Inc

The Court of Justice of the European Union (“CJEU”) has decided that “acquiescence” within the meaning of Art 9(1) of Directive 89/104 must be identical across all member states, rather than in accordance with the disparate provisions of the national laws of individual member states. The Court also recognised that the concept of “honest concurrent use” was a valid defence to the cancellation of an identical, later trade mark covering identical goods or services, but only in limited circumstances.

Key Practical Consequences• Legislative provisions with respect to acquiescence are to be

applied uniformly across the European Union, in accordance with the conditions and limitations for their application as set out in the decision.

• The concept of “honest concurrent use” has gained in recognition in the European Union. Although this has long been recognised in the United Kingdom, the position has not necessarily been clear in other member states. This should bring clarity and reassurance to brand owners whose trade marks have co-existed with other identical trade marks over lengthy periods.

DiscussionThis case revolves around the longstanding dispute surrounding the trade marks BUD and BUDWEISER in the United Kingdom between Czech brewer Budejovicky Budvar (“Budvar”), and US company Anheuser-Busch, both of which have marketed their products in the U.K. since 1973 and 1974 respectively. In this decision, the CJEU looked at the supposedly harmonised law of acquiescence and also issues of honest concurrent use.

Article 9(1) of Directive 89/04 provides that “Where, in a Member State, the proprietor of an earlier trade mark … has acquiesced, for a period of five successive years, in the use of a later trade mark registered in that Member State while being aware of such use, he shall no longer be entitled on the basis of the earlier trade mark either to apply for a declaration that the later trade mark is invalid or to oppose the use of the later trade mark in respect of the goods or services for which the later trade mark has been used, unless registration of the later trade mark was applied for in bad faith.”


Article 4(1)(a) of Directive 89/04 provides that “A trade mark shall .. be declared invalid if it is identical with an earlier trade mark , and the goods or services for which the trade mark … is registered are identical with the goods or services for which the earlier trade mark is protected.”

Acquiescence The CJEU concluded that there are four conditions that must be satisfied before the five year limitation period with respect to acquiescence can begin:

• the later mark must be registered in the member state concerned;

• the later mark must have been registered in good faith;

• the proprietor of the later mark must use his trade mark in the member state where it is registered; and

• the proprietor of the earlier mark must be aware of the registration of the later trade mark and of the use of that later trade mark after its registration.

The registration of the earlier mark is not a prerequisite for the commencement of the limitation period; the period can start when the proprietor of the later mark begins to use the mark.

The CJEU recognised that the concept of “acquiescence” contained in Art. 9(1) of Directive 89/104 is a matter of European Law, and is to be applied uniformly across all member states, rather than in accordance with the varying approaches contained within the national legislation of member states. The CJEU used the questions asked by the English Court of Appeal to clarify the conditions and limitations of the concept of acquiescence.

Honest Concurrent UseThe most striking aspect of this decision is that the CJEU recognised that Article 4(1)(a) of the Directive must be interpreted as meaning that the longstanding honest concurrent use of two identical trade marks is liable to prevent the proprietor of the earlier trade mark from obtaining the cancellation of the later trade mark, notwithstanding that the marks are identical. This interpretation effectively introduces the longstanding English concept of honest concurrent use into European Law, which may come as a surprise to some.

However, the Court made it clear that “honest concurrent use” under Art 4(1)(a) is only to apply on the condition that there is no adverse effect on the ability of the earlier trade mark to guarantee the origin of goods and services. Therefore, in the event that any honest concurrent use adversely affects the ability of the earlier trade mark to act as a guarantee of origin, the impact on the essential function of a trade mark must prevail. The Court also commented that the circumstances of this case were “exceptional”, whereby consumers in the United Kingdom are well aware of the difference between the beers of Budvar and Anheuser Busch, despite the identity of the trade marks, and are able to identify the respective products as originating from different companies.

CommentThe clarification of the uniform approach to acquiescence will bring a greater degree of certainty for co-existing brand owners, and the recognition of the concept of “honest concurrent use” will reassure owners of brands which co-exist with identical earlier marks. However, the Court made it clear that this decision was made with reference to Directive 89/104, which has since been replaced by Directive 2008/95. We expect that the provisions contained within this decision will also be applied to the new Directive in due course.


English High Court holds that post-sale confusion is relevant to likelihood of confusion

Datacard Corporation v Eagle Technologies Limited [2011] EWHC 244 (Pat)

The High Court considered a patent and trade mark infringement case, holding that with respect to trade marks post-sale confusion can be taken into account for the purposes of showing a likelihood of confusion, and that use of trade marks in a website’s breadcrumb trail may be trade mark use.

Key Practical Consequences• Post-sale confusion may be relied upon to demonstrate a

likelihood of confusion under the Trade Mark Directive (the Directive), even though consumers may not have been confused at the point of sale.

• Use of a trade mark in the “breadcrumb trail” of a website may constitute trade mark use for the purposes of the Directive where a competitor’s products are offered for sale.

DiscussionDatacard Corporation (Datacard) is one of the world’s largest suppliers of card printers and related products, such as printer ribbons. Datacard markets various printers for UK distribution, and in 1989 registered trade marks including the word element DATACARD for various goods in Classes 7 and 9. Eagle Technologies Limited (Eagle) is a relatively small company that sells card printers, including those of Datacard, and both original and compatible consumables for printers. Eagle sold these products to resellers and directly to end users through its website. Datacard brought actions in the English High Court against Eagle for patent and trade mark infringement over Eagle’s sale of compatible printer ribbons, sold under Eagle’s PLUS-RIBBON mark.

Trade mark claimsDatacard claimed Eagle had infringed its trade mark by its use of “DATACARD PLUS-RIBBON” on its website and those it managed for its resellers, as well as on labels on the packaging of its Plus-Ribbon products. Datacard’s claims comprised of (i) use of an identical mark for identical goods (the “Identity Claim”) and (ii) use of the same mark for similar goods (the “Confusion Claim”). Eagle raised as a defence that its use of the mark was necessary to indicate that its product was compatible with Datacard’s printers.


In considering the Identity Claim, Arnold J held that Eagle’s use of the mark on the website’s “breadcrumb trail” was not use merely for navigational purposes. Instead, because the site offered both Datacard’s products and Eagle’s own competitive products, the “breadcrumb trail” constituted trade mark use for the purposes of an infringement claim. However, as the goods in question were not technically identical, this use was not infringing under the identity claim.

With respect to the Confusion Claim, Arnold J noted that Eagle’s use of the DATACARD mark had changed over time, and since February 2010 it had emphasised that its Plus-Ribbon products were compatible with Datacard printers. However, prior to this time, Eagle’s use was held to be infringing. In his judgment, Arnold J considered post-sale confusion and remarked “I find it difficult to see why it should matter if confusion only arises after the goods have been sold.” Arnold J considered that although consumers may not be confused when purchasing the product online, the use of a mark on packaging labels could lead to post-sale confusion once the product was delivered to the consumer. This could damage the proprietor’s trade mark as the confused consumer may go back to the website to purchase the same goods again “under the same mistaken belief.” Accordingly, Arnold J rejected Eagle’s defence because its use of DATACARD could lead consumers to believe that there was, or may be, a commercial connection between Eagle and Datacard.

CommentThe High Court’s ruling raises important considerations for trade mark owners, particularly those who are concerned about competitors offering products and components which are compatible with their own branded goods, and which are often cheaper. On the one hand, this ruling provides comfort to trade mark owners by expanding the concept of infringing trade mark use to include use of a mark in the “breadcrumb trail” of a website, and to broaden the scope for infringement proceedings to include post-sale confusion.

However, trade mark owners should be aware that this ruling does not substantially impede the ability of third parties to sell compatible products, or indeed to use their competitors’ registered trade marks in connection with these products. Trade mark owners would therefore be wise to monitor such use, as a failure by third parties to use careful phrasing may be enough for owners to establish infringement.


Three-Dimensional Trade Marks and OHIM Examination Procedure: Style or Substance?

Bang & Olufsen A/S v OHIM Case T-508/08, 6 October 2011

Bang & Olfusen’s (“B&O”) application for a three dimensional shape mark was refused on the basis that it lacked distinctiveness. B&O successfully appealed this refusal and the matter was reallocated back to the Board of Appeal. On further examination and appeal, the application was again refused, this time on the basis that it consisted exclusively of the shape which gives substantial value to the goods.

Key Practical Consequences• Following a successful appeal, the OHIM can still consider a

three-dimensional trade mark application on other grounds of refusal and even refuse on this alternative basis.

• This decision highlights the relationship between a sign as a source identifier and as a value element of a product. Here, it was held that for the goods in issue, the design element will be very important to the consumer’s choice, even if the consumer also takes other characteristics of the goods into account.

• Designs that are an essential element of a rights holder’s branding cannot be registered as trade marks.

DiscussionB&O filed for registration of the following representation as a three-dimensional trade mark covering goods in Classes 9 and 20:

The application was rejected by the OHIM on the basis that it was devoid of distinctive character and had not acquired distinctiveness through use. B&O appealed the refusal to register the mark on absolute grounds. However, the Board of Appeal also rejected the application on the ground that the applicant had not demonstrated acquired distinctiveness. B&O thereafter appealed to the Court of


First Instance (“CFI”), now the General Court. The CFI held that the mark contained sufficient distinctive character and reallocated the matter back to the Board of Appeal for further consideration.

The Board of Appeal then examined the application on other absolute grounds. In particular, the Board considered the absolute grounds prohibition whereby a mark cannot be registered where it consists exclusively of the shape which gives substantial value to the goods. For this reason, the Board refused the application (the “Second Grounds for Refusal”). In light of this subsequent refusal B&O again appealed to the CFI, which affirmed the lower court’s Second Grounds for Refusal.

This decision addresses two key points as to examination procedure, and absolute grounds refusal.

a) Examination Procedure

The CFI held that as the Second Grounds for Refusal had not been considered at first instance, these grounds could be re-considered on re-examination. The trade mark regulation lists various absolute grounds for refusal which may be raised, but does not specify the order in which they are to be considered. Each ground for refusal is independent of the other, and is to be examined separately. Where an application fails on one ground, it is the practice not to proceed to examine the other grounds.

For the majority of matters, this method results in procedural efficiency as a refusal on one absolute ground is sufficient for the application process to halt and the mark to be refused. However, the application process can be protracted where, as here, the initial ground of refusal is successfully overcome but a new absolute ground for refusal is raised on re-examination.

b) Value of a Sign

While the shape of a product may constitute a trade mark, the trade mark regulation provides that signs which consist exclusively of the shape of the goods themselves are not to be registered. The rationale in barring registration of merely functional shapes is to prevent the exclusive rights conferred by trade mark registration from extending the life of other rights which the legislature has sought to make subject to ‘limited periods’, such as design rights.

The Court noted that the evidence showed that it was the aesthetic characteristics of the shape applied for which were emphasised first, and that B&O admitted that the design was an essential element of its branding. Because of this, it was held that the Board of Appeal had not committed any error in finding that it was the shape for which registration was sought that gave substantial value to the goods concerned.

CommentThis case illustrates the difference between the ‘style’ and the function of a trade mark in protecting a sign that serves as a source identifier. While it may be the case that a consumer, when faced with the particular product concludes that it originates from a particular business, trade mark law is clear that functional shapes will be refused as trade marks.

Procedurally, this decision also highlights that different issues can be examined on a second appeal. Accordingly, brand owners should consider all registrability issues that may affect a trade mark application.


EU General Court holds that figurative mark “GSS Galileo sistemas y servicios” mark is not similar to the earlier GALILEO word and figurative marks

Galileo International Technology LLC v OHIM, Case T-488/08

The EU General Court upheld the decision of the OHIM Board of Appeal and held that there was no likelihood of confusion between a figurative mark containing the term “GSS Galileo sistemas y servicios” in classes 9 and 38 and the earlier GALILEO word and figurative marks in classes 9 and 38.

Key Practical Consequences• When assessing the likelihood of confusion under Article 8(1)(b)

of the Trade Mark Regulation, particular attention must be paid to how the mark will be perceived by the relevant public who will interpret and pay particular attention to the most dominant and distinctive elements of a mark.

• The analysis of the conceptual meaning of a mark should refer to what the consumer understands as the meaning of the word in the context of the mark as a whole (i.e. each individual element) and in connection with the goods and/or services for which registration is sought. Accordingly, practitioners can save time and money by not attempting to persuade courts or examiners to adopt a different approach, such as focussing instead on individual elements of a mark in isolation.

DiscussionGSS Galileo sistemas y servicios (“GSS”) filed a Community trade mark application for a figurative sign containing the words “GSS Galileo sistemas y servicios”, (pictured below) for ‘nautical, surveying and life-saving apparatus and instruments; apparatus and instruments for signalling, in particular antennae and radio beacons’ in Class 9 and “telecommunications’ in Class 38.

The application was opposed by Galileo International Technology (GIT) on the basis that the mark was similar to its earlier two Community trade marks consisting of the word GALILEO as well as the two figurative marks (displayed below) which included the word GALILEO, and covered identical or similar goods and services to

those protected by GIT’s earlier registered rights.

In addition to asserting that there was a likelihood of confusion under Article 8(1)(b) of the Trade Mark Directive, GIT also relied on Article 8(5) and claimed that GSS’s use was without due cause. GIT’s registrations mostly covered goods and services in connection with telecommunications and electronic communications, however the


opposition was subsequently broadened to include a number of national unregistered rights.

The Opposition Division found that there was a likelihood of confusion between GSS’s application and GIT’s prior registrations for the word mark GALILEO and the “Powered by Galileo” figurative mark. The Opposition Division did not however provide a decision on the issue of use without due cause nor did it not expressly rely on GIT’s unregistered national rights in its decision.

On appeal, the Board of Appeal disagreed with the Opposition Division and reversed the decision stating that, although the respective goods and services were identical and similar, there was no identity or similarity between the marks. The Board of Appeal reasoned that “the ‘Galileo’ component was not dominant within the overall impression of the sign of the mark applied for”.

Following the decision of the Board of Appeal, GIT filed an appeal which was considered by the General Court. In its decision, the General Court agreed with the Board of Appeal that the marks were not sufficiently similar to cause a likelihood of confusion and dismissed the appeal. In its explanation, the General Court held that the Board of Appeal was correct in its assessment that the individual letters of the “GSS” element within GSS’s mark were the dominant elements of the mark phonetically that would be considered by the relevant public. The General Court held that the relevant public would be unlikely to pay particular attention to the presence of the word ‘galileo’, noting that the term formed part of the full expression ‘Galileo sistemas y servicios’. Furthermore, the General Court also held that there was no visual similarity between the marks in light of the stylisation of the dominant “GSS” element within GSS’s mark.

Finally, the General Court considered the conceptual differences between the mark stating that “ ... the word ‘galileo’ will be perceived as an element of the expression ‘galileo sistemas y servicios’ which constitutes the meaning of the dominant element ‘GSS’ and refers to systems and services from an entity whose name incorporates the name of the 16th century Italian astronomer and mathematician. On the other hand, the public will understand the words ‘galileo international’ as referring to an entity whose name incorporates the name of the Italian astronomer and which is concerned with a business covering several countries”.

Comment Following this decision, the question has been raised as to the meaning and interpretation of conceptual similarity when considering whether a likelihood of confusion exists and three possible meanings of “conceptually” have been recognised:

1. “what the consumer understands as the meaning of the word”;

2. “what the consumer understands as the meaning of the word in the context of the entire mark”; and“what the consumer understands as the meaning of the word in the context of the entire mark and in relation to the goods or services to which it is applied”.

The correct approach to be adopted is the third meaning, such that the conceptual meaning refers to the understanding the relevant consumer gleans from the meaning of the word in the context of the mark as a whole.


VICTORY RED mark defeated by earlier VICTORY marks

Nike International Ltd v OHIM, General Court of the European Union, Decision of 28 September 2011, Case T-356/10

The EU General Court dismissed Nike’s appeal and held that the marks VICTORY and VICTORY RED covering identical/similar goods in Class 28 were confusingly similar on the grounds that the term VICTORY was the dominant element within Nike’s VICTORY RED mark.

Key Practical Consequences• he fact that a word is frequently used as a mark for similar goods

is irrelevant in assessing whether that word is the dominant element within a composite mark, and whether a likelihood of confusion with an earlier mark comprising of that word may arise.

• A claim of an increased level of attention of the relevant public (e.g. due to the technically specific nature of the goods at issue and their high price), aimed at denying confusion between marks, should refer to the specific goods at issue and should be supported by evidence in order to be fully assessed.

DiscussionNike applied to register the mark VICTORY RED for golf clubs and golf-related accessories in Class 28 in the European Union. The application was opposed by a German company, Deichmann SE, on the grounds that the mark applied for was confusingly similar to its earlier German and International marks VICTORY covering gymnastic and sporting articles (with the exception of accessories for golf) in Class 28. The opposition was upheld by OHIM and Nike appealed the decision to the General Court.

The Court dismissed the appeal and confirmed that there was a likelihood of confusion between the marks. It rejected Nike’s claim that the relevant public should be considered as paying an increased level of attention due to the technically specific nature of the goods at issue and their high price, particularly given that such goods included inexpensive goods, such as golf balls and towels, and goods which were not technically specialised, such as sports balls and bags in which to carry sport equipment.


The Court held that the term VICTORY was the dominant element in Nike’s mark on the following grounds: consumers in general paid more attention to the first part of a mark; such term would be the first that consumers would hear and, on that basis, would remember; such term contained a substantially greater number of syllables than the second term “RED”; conceptually, the term “VICTORY” was not indirectly descriptive or strongly suggestive of the goods at issue, even though it referred to the idea of triumph and therefore may allude to the efficiency of the sporting articles in question.

Comment This decision is goods news for brand owners who hold registrations for marks comprising or containing “diluted” terms (such as “victory” for sports equipment), as these registrations may be successfully enforced against third parties’ subsequent marks featuring the same “diluted” terms, especially where these terms are the dominant elements within both marks.


Colour mark allowed to proceed to registration on basis of acquired distinctiveness through use in the United KingdomUK Trade Mark Application no. 2376879 by Cadbury Ltd, Case O-358-11, 20 October 2011.

The UK Intellectual Property Office (IPO) issued an interim decision which partially dismissed Nestlé’s opposition and confirmed that Cadbury’s shade of purple can be registered as a trade mark on the grounds that it had acquired distinctiveness through use, however only in relation to part of the chocolate goods covered by Cadbury’s application.

Key Practical Consequences• Registration of colour marks may be granted, however only in

exceptional circumstances.

• If registered, the scope of protection of a colour mark may be restricted to the exact goods/services for which the colour mark has acquired distinctiveness through use.

• Applications for colour marks must be clear and precise and should at least contain Pantone references.

Discussion Cadbury Limited (“Cadbury”) applied to register a particular shade of the colour purple (Pantone 2685C) as a trade mark in the UK in relation to chocolate goods in Class 30. The application was initially objected by the IPO on the grounds that the mark was devoid of dis-tinctive character. Cadbury filed evidence of acquired distinctiveness through use of the mark and the objection was overcome. Societe des Produits Nestlé S.A. (“Nestlé”) opposed the application on a number of grounds, claiming inter alia that the mark was devoid of distinctive character and had not acquired distinctiveness through use.

In an interim decision which is likely to be confirmed in the final de-cision, the IPO held that the mark was not per se distinctive, but the evidence submitted by Cadbury showed that the mark had acquired distinctiveness through extensive use in the United Kingdom. Howev-er, the evidence only established acquired distinctiveness in relation to part of the chocolate goods covered by Cadbury’s application. Nestlé’s opposition was therefore upheld in relation to the remaining goods for which acquired distinctiveness had not been proven.


Comment This decision shows that the registration of a colour mark is only possible in exceptional circumstances, especially where the mark has acquired distinctiveness through extensive use. In this case, Cadbury first used purple in relation to chocolate in 1914, whereas the particular shade applied for had been in use for nearly 20 years. At the time the mark was filed in 2004, the Dairy Milk chocolate bar featuring the shade of purple in question was the best selling confectionery product in the United Kingdom.


UK High Court confirms customer base required to prove goodwill in passing off action

Plenty of Fish Media Inc v Plenty More LLP ([2011] EWHC 2568 (Ch))

The UK High Court has recently affirmed the well-established principle that in order to establish goodwill for the purposes of a passing off claim, a reputation alone will not suffice. What is required are actual customers of the goods and services. Mere visitors to a website will not constitute actual customers unless they receive the services on offer, irrespective of whether these are provided free of charge.

Key Practical Consequences• This case is an illustration of existing principles in relation to a

passing off claim. It serves as a useful reminder that in order to establish the existence of goodwill, it is necessary to prove an existing and real customer base.

• It is important that businesses keep good records of their customers (numbers, purchase orders etc) so that, if necessary, they can provide evidence to support and establish their rights, especially if they have no registered rights on which to rely.

• Mere information regarding the number of “hits” to a website will not be sufficient to establish actual customers, unless these same customers subsequently receive goods or services as a result of such visit.

DiscussionThe Appellant (Plenty of Fish Media) filed for a declaration of invalidity of the mark Plenty More Fish (stylised and device) for “dating agency services” and “computer dating services” in class 45 in the name of AT new media ltd (subsequently assigned to Plenty More LLP, the Respondent). The Appellant claimed to have an earlier right on the basis of goodwill acquired in the sign “plenty of fish” and that the Respondent’s use of its mark would cause a misrepresentation and that damage would or would likely be suffered.

The Appellant contended that its rights dated back to 2001 when it began operating online dating services under the name “Plenty of fish”. These services were provided to members free of charge with the website being funded by online advertising. The Appellant stated that it was the second most viewed dating website in the United Kingdom and one of the 150 most visited websites overall in the United Kingdom. The Respondent’s online dating agency, Plenty More Fish, was started in 2006 and the Appellant contended that there had been instances of actual confusion.


At first instance, the application was dismissed on the ground that the Appellant had not established the requisite goodwill at the relevant date, namely the date of filing of the Respondent’s mark, in order to establish a passing off claim. While the Appellant relied on the number of “hits” to its website as proof of its goodwill, it could not actually provide any details of genuine customers at the relevant date and therefore its application was dismissed.

On appeal, it fell to be determined whether actual customers were necessary in order to establish goodwill, or whether it sufficed for there to be a “trade connection”. In dismissing the appeal, the judge cited and distinguished the recent Cipriani case which concerned a business performing services abroad but taking bookings from customers in the United Kingdom. The judge ruled that the law was clear and in order for goodwill to be established, it was necessary to show genuine customers in the United Kingdom at the relevant time.

The fact that the Appellant’s members would not be charged for the dating agency services provided by the Appellant was irrelevant. The overriding factor was that in order to be a “customer”, there needed to be some sort of provision of the services in question. On the facts, there was no evidence that the Appellant had provided any dating services to anyone by the relevant date and the appeal was dismissed.

CommentThis case is a salient reminder, especially to foreign companies, that in order to have protectable goodwill in the United Kingdom to establish a passing off claim, it is necessary to show that they have customers here. Goodwill cannot be based on mere reputation but rather through the provision of goods and services to genuine customers irrespective of whether these goods or services are supplied free of charge.


Evidence not translated into the correct language cannot be considered in opposition proceedingsAdidas AG v OHIM (Patrick Holding ApS intervening) (General Court: T-479/08)

The EU General Court has recently ruled on the consequences of not fully translating documents which establish the nature and extent of the earlier rights relied on by an opponent in opposition proceedings.

Key Practical Consequences• It is important to determine early on which rights are to be relied

on in contentious proceedings, and ascertain what information is going to be translated.

• While there is no difference between the types of marks for the purposes of distinctiveness on absolute grounds, the type of mark is an important factor to be assessed in opposition proceedings.

DiscussionThe intervener Patrick Holding ApS filed an application for a figurative mark of a training shoe, for a range of goods in classes 18, 25 & 28. The application was opposed by the Appellant Adidas on the basis of a number of earlier German and international rights. The Appellant attached as an annex to the notice of opposition an extract from the online register of the German Patent Office, providing information on one of the earlier figurative rights on which the Appellant relied. A deficiency notice was issued by OHIM on the ground that the Appellant had failed to fully substantiate this earlier right by not providing a graphic representation or submitting a translation of the list of goods. The Appellant duly provided a representation, but certain elements from the Patent Office extract relied on in support were not translated. These included information regarding the type of mark, the legal and procedural status and whether any opposition proceedings in relation to the earlier mark were in existence.

Notwithstanding these omissions, the proceedings continued and OHIM subsequently upheld the opposition and refused the trade mark application. The intervener appealed to the Board of Appeal on the ground that the failure to translate all of the information in the extract provided by the Appellant into the language of proceedings, meant that OHIM could not have properly examined whether the earlier rights had been fully substantiated. The Board of Appeal agreed and upheld the appeal. It ruled that these procedural defects justified the complete annulment of the original decision. The Board of Appeal then remitted the case to the Opposition Decision.


The Appellant appealed the decision to the General Court on the ground that the rights had been properly substantiated, and the decision should be overturned and the opposition upheld. The General Court dismissed the appeal, holding that it was not the mere failure to translate certain information which proved fatal to the Appellant’s case, but rather the fact that the OHIM was unable to take account of that un-translated information and include it in its assessment of the opposition. The Court further held that in the absence of a full translation of the documents, the Board of Appeal may nevertheless give a ruling on the opposition on the basis of other evidence which it may have before it.

However, in the present case, it did not have evidence which could make up for the fact that the entries corresponding to the type of the earlier mark and its legal and procedural status had not been translated into the language of proceedings. On examination of the nature of the un-translated entries, it was held that the information that was missing, namely the type of mark, and legal/procedural status, was essential to assess the scope of protection of the earlier mark. While there was no difference between the types of marks for the purposes of distinctiveness, the type of mark was a factor to be assessed in the opposition proceedings. In the present case, where the earlier mark consisted of the shape of the product, it was necessary to take into consideration the shape of the product as a whole in order to assess the mark’s distinctiveness.

Consequently, where the type of mark at issue could not be determined from the graphic representation alone, it was therefore for the Appellant to confirm this information to the OHIM. It was clear from OHIM guidance that the legal/procedural status included circumstances governing the renewal of the earlier mark, and this type of information was a crucial component in the opposition proceedings. Moreover, the OHIM was not entitled to infer from the information given that the earlier mark was valid. Instead, it had to make a complete assessment of its own. It was therefore not possible to tell with sufficient certainty the validity of the earlier mark from the information provided, since the dates on the registration certificate alone were not sufficient to prove validity of mark in question. It was irrelevant that the intervener could understand the documents, including the un-translated aspects. Since the relevant parts were not translated, the appeal was dismissed.

CommentIt is important to note that the appeal was rejected not because certain information was not translated, but because the OHIM cannot take into account un-translated information and must set aside any un-translated information, irrespective of how important it is. This judgment should serve as a warning to brand owners and their representatives to ensure that all the administrative details relating to an opposition or any other proceedings are dealt with correctly, and in good time. It is crucial at an early stage in proceedings to determine not only what rights are relied on, but whether all the relevant information regarding these earlier rights are in the relevant language.

While it is a matter of discretion as to whether parties translate all the information submitted, where there are omissions then parties run the risk of having that information struck out if the OHIM determines that such information to be relevant. Only those parts which are translated will be taken into account.


The General Court rules on the issue of genuine use in the European UnionGeneral Court, Case T-427/09, Centrotherm Clean Solutions GmbH & Co KG v OHIM; Centrotherm Systemtechnik GmbH and Case T-434/09, Centrotherm Systemtechnik GmbH v OHIM; Centrotherm Clean Solutions GmbH & Co KG

The EU General Court upheld an appeal to partially revoke two identical trade mark registrations for the word mark CENTROTHERM, covering building and plumbing related items. The Court confirmed that genuine use cannot be proved by means of probabilities or suppositions, but must be demonstrated by solid and objective evidence of effective and sufficient use. Genuine use must ensure that the trade mark register reflects the signs that companies actually use on the market.

Key Practical Consequences• The CTM register must faithfully reflect what companies actually

use on the market to distinguish their goods and services in economic life.

• Genuine use of a trade mark cannot be proved by means of probabilities or suppositions, but has to be demonstrated by solid and objective evidence of effective and sufficient use of the trade mark on the market concerned.

• In order to avoid revocation of their marks, brand owners should ensure that they make sufficient use of their marks in the jurisdiction where they are protected.

DiscussionIn 1999, Centrotherm Systemtechnik GmbH (“CSt”), applied to register the sign CENTROTHERM as a Community trade mark (“CTM”) for goods and services in Classes 11, 17, 19 and 42. In 2007, another company, Centrotherm Clean Solutions GmbH (“CCS”), sought to revoke the CTM CENTROTHERM on the grounds of non- use.

In response, CSt sought to demonstrate that it had made genuine use of the trade mark in the relevant period of time. In particular, CSt submitted to the OHIM (i) fourteen digital photographs of pallets and boxes of goods; (ii) four invoices with the trade mark on the letterhead; and (iii) a sworn declaration from its manager as evidence of the use of the CENTROTHERM trade mark.

The Cancellation Division of OHIM revoked the CTM for all the goods and services at issue. The Board of Appeal upheld the decision in part, but annulled it in respect of some of the goods. The Board found that evidence of genuine use of the CENTROTHERM mark had been


adduced since the photographs submitted demonstrated the nature of the mark’s use and the invoices produced showed that the goods mentioned had been marketed under the mark.

Both CSt and CCS appealed to the General Court alleging incorrect assessment of evidence. The General Court upheld CCS’s revocation action, confirming the revocation of the CTM in its entirety. The General Court held that the rationale for the requirement that a mark must be the subject of genuine use in order to be protected under EU law is that the OHIM’s register cannot be compared to a strategic and static depository granting an inactive proprietor a legal monopoly for an unlimited period. On the contrary, that register must faithfully reflect what companies actually use on the market to distinguish their goods and services in economic life.

According to case-law, there is genuine use of a trade mark where the mark is used in accordance with its essential function, which is to guarantee the identity of the origin of the goods or services for which it is registered; genuine use does not include token use for the sole purpose of preserving the rights conferred by the mark. When examining evidence relating to the genuine use of a mark, regard must be had to all the facts and circumstances relevant to establishing whether the commercial exploitation of the mark is real. In particular, account must be taken of the commercial volume of the overall use, as well as the length of the period during which the mark was used and the frequency of use.

However, although the General Court did not assess the commercial success or the economic strategy of an undertaking, the Court made it clear that the concept of genuine use excludes all minimal and insufficient use of the mark. As a consequence, it was held that genuine use of a trade mark cannot be proved by means of probabilities or suppositions, but has to be demonstrated by solid and objective evidence of effective and sufficient use of the trade mark on the market concerned.

CCS had adduced relatively weak evidence of sales compared to the statements made in the witness statement; the undated photographic evidence was from after the relevant period and the article numbers on the invoices did not match the numbers of the goods bearing the mark. Therefore, the General Court concluded that neither the photographs nor the invoices allowed the conclusion, without resorting to probabilities or presumptions, that the mark was the subject of genuine use during the relevant period.

CommentThis is an important decision in that it confirms that the courts are reluctant to grant legal monopolies to companies that do not show effectively maintain their marks. Trade mark protection can potentially last forever. Therefore, only companies that actually intend to make sufficient use of a mark and distinguish their goods and services in the market place under that mark should be allowed to maintain a trade mark registration.

Genuine use of a trade mark cannot be proved by means of probabilities or suppositions, but has to be demonstrated by solid and objective evidence of effective and sufficient use of the trade mark on the market concerned. Thus, brand owners should ensure that they make sufficient use of their marks, once protected, in order to keep their registrations alive and be able to fight any actions filed against their marks on the grounds of non-use.


Counterfeit and pirated goods in transit via European Union ports are not liable for destruction by EU Customs authoritiesC-446/09 and C-495/09, Koninklijke Philips Electronics NV v Lucheng Meijing Industrial Company Ltd and others and Nokia Corporation v Her Majesty’s Commissioners of Revenue and Customs, INTA intervening

The Court of Justice of the European Union (“CJEU”) has confirmed that counterfeit or pirated goods that are in transit between non-EU countries cannot be destroyed by EU customs authorities, unless it can be proven that the goods are to be sold to consumers within the European Union.

Key Practical Consequences• Brand owners will not be able to take advantage of EU customs

provisions to have counterfeit goods intercepted in transit, and must rely on border measures in the origin and destination territories in order to control the flow of those goods.

• This could disadvantage brand owners where intellectual property laws and customs enforcement procedures in destination territories outside the EU may not be as stringent or effective as the provisions in the EU.

DiscussionThis decision is based on references from the Belgian and United Kingdom courts surrounding the ability of customs authorities to detain and destroy counterfeit and pirated goods in transit through European Union ports, where the ultimate origin and destination of those goods are both outside the European Union. The Court decided that goods that are merely in transit between non-EU states cannot be destroyed under EU customs regulations on the basis that they infringe intellectual property rights that are valid within the European Union, or an individual EU Member State. The Court also set out the conditions under which customs authorities are entitled to detain goods that are in transit.

Temporary Detention of GoodsThe Court decided that goods in transit that are suspected of being counterfeit or pirated can only be detained under suspensive customs procedures where there exist indications that the operators involved, while not having yet begun to direct the infringing goods towards EU


consumers, are about to do so, or are disguising their commercial intentions. The Court provided a non-exhaustive list of the indications which can legitimately give rise to a suspicion that warrants the detention of the goods. These indications include:

• The destination of the goods is not declared;

• The lack of precise or reliable information as to the identity or address of the manufacturer or consignor of the goods;

• A lack of co-operation with the customs authorities;

• The discovery of correspondence suggesting that that there is liable to be a diversion of the goods to EU consumers.

The Court noted that any suspicion must be based on the facts of the case, and it would not be sufficient to detain goods on the basis of an abstract consideration that a fraudulent diversion cannot necessarily be ruled out.

Destruction of Goods following Temporary DetentionOnce goods are detained under a suspensive procedure, the only circumstance where counterfeit or pirated goods in transit can be destroyed are where the competent authority is in possession of evidence that the goods are to be sold (or offered for sale) to consumers within the European Union. The Court stated that any destruction cannot be on the basis of a mere suspicion, and that proof is required that the goods are intended to be distributed within the European Union, thereby infringing an intellectual property right.

The CJEU set out examples of relevant evidence that can be submitted as proof of an intention to distribute the offending goods within the European Union:

• The existence of a sale of the goods to a customer in the European Union, or an offer for such a sale;

• Advertising addressed to consumers in the European Union;

• Documents or correspondence showing that the diversion of the goods to EU consumers is envisaged.

CommentThis decision places a high burden on already stretched customs authorities that is likely to discourage customs authorities from investigating and intercepting goods in transit, unless they are provided with strong evidence that the goods are to be fraudulently diverted for sale within the European Union. In practice, if the brand owner becomes aware that a shipment of counterfeit goods in transit via the European Union is to be fraudulently diverted for sale to EU customers, the brand owner should notify the relevant customs authorities, rather than expect the authorities to detain the goods and carry out a further investigation at their own behest.

The Court’s decision appears to be based on an overriding intention to prevent the restriction of trade between states, and the reluctance to apply EU law to goods destined for consumers in countries with less restrictive intellectual property provisions. The decision therefore appears to be significantly influenced by general economic and trade policies, rather than focusing on the curtailment of illicit activities by counterfeiters, which cause damage to consumers and brand owners around the world.


Software owner loses battle to protect software functionalityCase C-406/10 SAS Institute Inc v World Programming Limited

In response to a reference from the High Court of Justice, Advocate-General (AG) Bot has advised the Court of Justice of the European Union (CJEU) to rule that the functionality of a computer program and the programming language do not benefit from copyright protection.

Key Practical Consequences

If the CJEU follows the AG’s opinion,• software owners will have to reconsider their strategy for

protecting the functionality and programming language of their programs as they are not works which may be protected by copyright; and

• software owners will also need to review and amend their standard license agreements where necessary, as henceforth licensees may decompile licensed software where it is necessary to obtain information required for interoperability, and are also permitted to observe, study or test the software to determine its underlying ideas and principles, provided in both cases they do not access any information protected by copyright, such as the source or object codes.

DiscussionSAS Institute Inc (SAS) developed a software suite (the SAS System) that enabled users to carry out data processing tasks and statistical analysis. Users can also manipulate the data by writing their own applications in SAS programming language. World Programming Ltd (WP) created a programme called World Programming System (WPS) which emulated this functionality. WPS was also designed to be interoperable so that WPS users may access and use data previously stored by them in the SAS format. SAS commenced proceedings against WP claiming that WP had infringed the copyright in the SAS System and the manuals.

The main question at issue is whether the functionality of computer software can be protected. In The High Court agreed with previous case law where it was held that copyright protection does not extend to the functionality, programming language or interfaces of software, but chose to refer a number of questions to the CJEU which were summarised by the AG as follows:

(a) May the functionality of a computer program and the programming language be regarded as the expression of that program and therefore benefit from copyright protection?


(b) May a licensee of a computer program reproduce code or translate the form of the code of a data file format in order to be able to write source code which reads and writes that format?

(c) what is the scope of the exception to infringement in Article 5(3) of the Software Directive which permits a user of a computer program to observe study or test the functioning of the program in order to determine the underlying ideas and principles of the program.

The AG recommended that the CJEU hold that the functionality of a computer program or a programming language does not benefit from copyright protection as they are ideas and not the expression of an idea. In the AG’s opinion, a licensee may decompile licensed software where it is necessary to obtain information required for interoperability and provided that the licensee does not become able to recopy the software code in his own program.

Finally, the AG considered that where the acts of loading and running the program is necessary for the licensee’s use of a program, the licensee may observe, study or test it to determine its underlying ideas and principles but must not access any information protected by copyright, such as the source or object codes.

CommentThe AG’s opinion is not binding on the CJEU, but if followed, it will limit the ability of owners of computer software to prevent third party competitors from replicating potential innovative functionality or indeed the “look-and-feel” of their products. These owners will, therefore, have to consider other ways of protecting their rights. However, the use of patents to protect the functionality of software in Europe is itself the subject of much recent litigation and legislative debate.

Consistent with previous European jurisprudence, the AG has also come down in favour of interoperability. While owners of computer programs may well have to reconsider or amend their terms of use to give themselves maximum protection, they must also ensure that any restrictions on the licence are valid and enforceable, particularly under competition law which heavily promotes interoperability. The CJEU’s guidance in this case is eagerly awaited.


ISP’s and Rights Holders: A Floodgate Averted?Twentieth Century Fox Film Corporation and others v British Telecommunications plc [2011] EWHC 2714 Ch, 26 October 2011

This decision follows on from a judgment on 28 July 2011 in which the High Court held that it had jurisdiction to grant an order against British Telecommunications (“BT”) under section 97A of the Copyright, Designs and Patents Act 1988 (“CDPA”). The matter was adjourned pending arguments from the parties as to the form of the order, which was determined to cover not only the offending website in question, but also “any other IP address or URL whose sole or predominant purpose is to enable to facilitate access to the Newzbin2 website”.

Key Practical Consequences• It is now clear that rights holders will be able to rely on the

provisions of the CDPA to force ISPs to block access to sites hosting infringing material.

• ISP’s will be relieved to see that, in determining the scope of the order, the Court considered the interests of the applicant and the ISP and sought to strike a suitable balance between them.

• Concerns as to ISPs bearing the costs of such orders in each instance are allayed by what appears to be an approach to consider the particular facts of each application, and whether it is the applicant rather than ISP who is to bear some or all of the costs of the order.

DiscussionIn the main judgment of 28 July 2011, the High Court ruled that BT must, in its capacity as an internet service provider (“ISP”), use technological means to block its users from accessing a file-sharing website containing links to copyright-infringing material, on the basis that it had ‘actual knowledge’ that those users were using its service to infringe. This action had been brought by six well-known distributors and producers of films (“the Studios”) following the case of Twentieth Century Fox Film Corporation & Ors v Newzbin Ltd [2010] EWHC 608 (Ch). In that case, the file-sharing website Newzbin was found to have authorised its users to infringe rights holders’ copyright, as well as being jointly liable with those users for the copying and communication of films to the public. Subsequent to the Court’s judgement, Newzbin ceased trading and its website went offline but commenced operations shortly thereafter via a second website (Newzbin2) located in Sweden.


The Studios successfully obtained an injunction against BT pursuant to Section 97A of the CDPA, which provides that “The High Court…shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright”. This provision had been introduced as a consequent of the European Information Society Directive which obliged Member States to enable injunctions to be available “against intermediaries whose services are used by a third party to infringe a copyright or related right”.

In granting the July 2011 injunction, the High Court found that “BT has actual knowledge of other persons using its service to infringe copyright: it knows that the users and operators of Newzbin2 infringe copyright on a large scale, and in particular infringe the copyrights of the Studios in large numbers of their films and television programmes, it knows that the users of Newzbin2 include BT subscribers, and it knows that those users use its service to receive infringing copies of copyright works made available to them by Newzbin2”. Put another way, ‘actual knowledge’ does not amount to specific knowledge of individual infringements, but merely knowledge that some of its customers use its service to infringe copyright.

The key issue was the scope of the order. While it was agreed that the Studios could notify BT of additional IP addresses and URL’s in the future, BT sought a narrow form order of “…any other website whose sole purpose is to provide access to the Newzbin[2] website” [emphasis added] whereas the Studios sought the broader “…any other IP address or URL whose sole or predominant purpose is to enable or facilitate access to the Newzbin[2] website” [emphasis added].

In the Court’s view, BT’s form of order was too easily circumvented to be effective and that it was not appropriate that the Studios “should be obliged to return to court for an order in respect of every single IP address or URL that the operators of Newzbin2 may use”. The form of order sought by the Studios was held to strike a suitable balance between the parties. The costs of implementing the order were to be paid by BT.

CommentThe outcome of this case is of particular interest to rights holders and ISP’s, since it illustrates the practical application of Section 97A CDPA and the benefits that can be had for rights holders against infringements. The concerns of ISP’s as to costs are allayed to some extent, since although BT was ordered to pay the costs, the Court interpreted case law as meaning that measures pursuant to the Information Society Directive, such as Section 97A of the CDPA, “must not be excessively costly”. Further, in other instances it may be the case that the order would require payment of some, or all, of the costs of the application.


Advocate-General considers database copyright not to subsist in football fixture listsFootball Dataco Ltd and others v YAHOO! UK Ltd and others, Case C-640/10

The Advocate-General gave his non-binding Opinion, answering questions put to the Court of Justice of the European Union (“CJEU”) by the Court of Appeal of England and Wales in relation to database copyright. He advised the CJEU that database copyright does not subsist in football fixture lists for the English Premier League and other leagues.

Key Practical Consequences• If followed by the CJEU, the Advocate-General’s opinion will

leave UK football organisations and other companies involved in the publication of football fixture lists unable to derive an income from the licensing of those fixture lists.

DiscussionThe claimants comprised, amongst others, Football Dataco Ltd, a company that organises professional football matches in England and Scotland, and produces and publishes the annual fixture lists. The defendants comprised the media company YAHOO! and various betting companies who sought to use the fixture lists without paying a license fee to the claimant.

In the underlying case, from which the questions were referred, the claimants had claimed that their database was protected by database copyright and the sui generis database right as well as ordinary copyright. At the High Court they had successfully argued that their database was protected by database copyright (although they had failed to establish that they were protected under the sui generis database right). The defendants appealed and the Court of Appeal referred certain questions to the CJEU on whether database copyright applied.

The main question referred was what is meant by “databases which, by reason of the selection or arrangement of their contents, constitute the author’s own intellectual creation”. In particular this question was broken down as follows:

(1) Should the intellectual effort and skill of creating data be excluded?

The Advocate-General advised that it should be excluded as database copyright does not deal with the protection of data as such, rather the creation of systems for collecting and consulting data.


(2) Does “selection or arrangement” include adding important significance to a pre-existing item of data (as in fixing the date of a football match)?

The Advocate-General advised that in the case of a football fixture list, the determination of all elements relating to each individual match was done at the stage the data was created and that this could not therefore be relied upon.

(3) Does “author’s own intellectual creation” require more than significant labour and skill from the author, and if so what?

The Advocate-General advised that this should actually be a question of whether the labour and skill was sufficient for there to be intellectual creation, which should be answered by the national courts depending on the facts of each case.

The Court of Appeal also asked whether it could apply copyright protection in databases other than under European law. The Advocate-General advised that it was not entitled to do so as European law sought to harmonise the law in this area.

CommentIf the CJEU follows the opinion of the Advocate-General, then this may deny Dataco (and similar companies) an important revenue stream. Since in a previous decision the CJEU denied sui generis database protection to football fixture lists, it is entirely possible that it will agree with the Advocate-General and limit the application of database copyright. If so, then database owners will need to consider how to structure their databases in order to attract protection beyond the raw data, which on its own could not be protected.


The Patents County Court rules on infringement of the sui generis database rightBeechwood House Publishing T/A Binleys v Guardian Products Ltd & Anr ([2011] EWPCC 22 (Ch))

The Patents County Court has ruled on the sui generis database right in relation to a database of medical workers who were associated with GP practices. In the judgment the court provided guidance on when extraction and re-utilisation of part of a database is substantial in terms of quality and quantity, so as to breach the sui generis database right.

Key Practical Consequences• Database owners will get some reassurance from this case. It

provides an indication as to what extent the English courts will interpret the database right to protect against the quantitative and qualitative copying of the contents of a claimant’s database.

DiscussionDatabases may be protected by the sui generis database right (the “Database Right”) under the Copyright and Rights in Database Regulations 1997 (SI 1997/3032), implementing the EU Database Directive (Directive 96/9/EC), where there has been “a substantial investment in obtaining, verifying or presenting the contents of the database” (reg 13). A database may also potentially be protected in copyright. Infringement of the Database Right may occur where a person “extracts or re-utilises all or a substantial part of the contents of the database” without the owner’s permission (reg 16). Where insubstantial parts are extracted or re-utilised systematically this may still amount to extraction/re-utilisation, i.e. copying, of a substantial part of the database.

In the instant case, the claimant was the owner of a database comprising the names and contact details of doctors and practice nurses who were associated with GP practices. The claimants argued that the defendants had copied information from its database in breach of the Database Right. The notable issue which fell to be considered (by Judge Birss of the Patent County Court) was whether the defendants had copied a “substantial part” of the claimant’s database. The court adopted the approach of assessing substantiality from The British Horseracing Board v William Hill (Case C-203/02), by assessing whether there had been either qualitative substantial copying (i.e. how much content was taken judged against the size of the database as a whole) and/or quantitative substantial copying (i.e.


notwithstanding the quantity of the content copied, how much investment had the claimant put into that copied content).

The court found that the copying of some 6,000 individuals’ records from a database of 43,000 records did constitute quantitative copying, although on the lower end of the scale. The court further found that as the claimant’s investment of effort had extended to 1,800 telephone calls a year to collect and verify the records, it also constituted quantitative copying.

CommentThe case is significant as there are relatively few decisions that consider the Database Right. The guidance on the interpretation as what amounts to qualitative and quantitative copying also provides a useful insight into how the courts will address these questions. In addition, it is indicative of the future of the Patents County Court, where the intellectual property cases it is hearing are becoming increasingly varied.


A clause in a selective distribution contract banning the distributors from selling its products online amounts to a restriction on competition by object, unless that clause can be objectively justifiedPierre Fabre Dermo-Cosmétique SAS v Président de l’Autorité de la Concurrence and Ministre de l’Economie, de l’Industrie et de l’Emploi C-439/09, 13 Oct 2011

The Court of Justice of the European Union (“CJEU”) has held that banning the online sale of goods in a contract of selective distribution, lacking a specific reason in connection with the kind of the goods in question, is a restriction on competition and therefore prohibited in the European market. Further, the CJEU concluded that a restriction of this kind could not benefit from a block exemption but may, if certain conditions are met, benefit from an individual exemption.

Key Practical Consequences• This decision is an extremely significant development in European

competition law. Sellers must now ensure that if restrictions as to the place of sale are included in their distribution contracts, they are capable of being objectively justified. This decision is a potential blow to manufacturers of luxury goods who have often sought to limit distribution streams of their goods in order to maintain and protect their brands’ reputation.

• The perceived requirement to provide individual advice to the customer and to ensure their protection against the incorrect use of products, or the need to maintain a product’s prestigious image will not be accepted as legitimate aims for restricting competition.

DiscussionPierre Fabre Dermo-Cosmétique (‘PFDC’) manufactures and markets cosmetics and personal care products on both the French and European markets. While the products in question are not classified as medicines and are therefore not obliged to be sold in pharmacies, distribution contracts for those products stipulated that sales must be made exclusively in a physical space and in the presence of a qualified pharmacist, thereby restricting in practice all forms of internet selling. Article 101 TFEU prohibits agreements which have as their object or effect the restriction of competition. Subject to the


satisfaction of certain conditions, Article 101(3) TFEU provides for the grant of individual exemptions to the general prohibition in respect of agreements which improve the distribution of products or contribute to promoting economic progress. In addition, a number of European Regulations provide that certain categories of agreements may qualify for a block exemption.

Following a 2008 ruling by the French competition authority that a ban on internet selling necessarily had as its object the restriction of competition and could not benefit from a block or individual exemption, PFDC appealed to the French Court of Appeal, which subsequently referred the matter to the CJEU. The CJEU held that a selective distribution system could be, in principle, compatible with European Union law. However, this was subject to the conditions that resellers are chosen on the basis of objective and proportionate criteria which are not applied in a discriminatory fashion and that the characteristics of the product in question necessitate a selective distribution system in order to preserve the product’s quality and ensure its proper use. The Court held, however, that in the present circumstances there was no objective justification for PFDC’s selective distribution agreement and that accordingly it would necessarily affect competition.

Here, the seller claimed that its restriction on internet sales was objectively justified in order to provide individual advice to the customer and to ensure their protection against the incorrect use of products, as well as by the need to maintain their product’s prestigious image. However, the CJEU did not accept this as sufficient to benefit from an individual exemption. The CJEU ruled that the block exemption would not apply, as its application is precluded in respect of vertical agreements which have as their object the restriction of active or passive sales to end users by members of a selective distribution system operating at the retail level of trade. The Court did state, however, that a ban on internet sales could in theory benefit from an individual exemption, but that it was for the referring court to decide whether the relevant conditions were satisfied.

CommentManufacturers and sellers should now be aware that distribution agreements containing clauses restricting/regulating the physical outlets for sale may be deemed anti-competitive and therefore unlawful. While sellers may yet benefit from individual exemptions under Article 101(3) TFEU, it is for national courts to determine the applicability in each instance. Therefore, this decision is unlikely to provide sellers with much reassurance as to whether their selective distribution agreements will be exempted. In the absence of local guidelines, sellers are therefore likely to err on the side of caution and ensure that any restrictions are capable of being objectively justified.


Contract abandonment: Walking away from unprofitable IT contractsAstraZeneca UK Limited v Albermarle International Corporation & Others, High Court (Commercial Court), [2011] EWHC 1574 (Comm)

The decision of the High Court in 2009 in Internet Broadcasting Corporation (t/a NETTV) v MAR LLC (t/a MARHedge) [2009] EWHC 744 (Ch) gave rise to significant concerns that a party that deliberately walks away from an unprofitable IT contract will not necessarily be able to rely on the exclusions and limitations of liability under the contract. As a result, parties seeking to walk away had to reassess the risk associated with such behaviour as the financial liability could accordingly be uncapped. The decision in AstraZeneca v Albermarle casts doubt on the approach in NETTV v MARHedge and suggests that liability can be limited or excluded for deliberate contract abandonment in accordance with the general liability provisions agreed under the contract.

Key Practical Consequences• In the current economic climate, a party needs to understand

how the limitation of liability clause will be interpreted in circumstances where it deliberately wants to walk away from the contract. This is particularly relevant in IT disputes where parties regularly wish to terminate their arrangements early.

• The decision in NETTV v MARHedge gave rise to their being a strong rebuttable presumption against a party relying on an exclusion or limitation of liability clause in circumstances where that party deliberately abandoned or walked away from a contract. The language required to rebut this presumption would need to be very clear especially in circumstances where the non-defaulting party could not insure against this risk.

• Whilst the judge in AstraZeneca v Albermarle did not need to may a ruling on contract abandonment, his comments made it clear that the decision in NETTV v MARHedge was “heterodox and regressive” and does not properly represent the current state of English law. As a result, it is extremely unlikely that NETTV v MARHedge would be followed in the future.

• These decisions are relevant in all contracts, and not simply just IT contracts.


DiscussionIn this case, the supplier, Albermarle International Corporation (“AIC”), entered into a contract to supply pharmaceutical products (the “original product”) to AstraZeneca UK Limited (“AZ”), which AZ would then distil into its own pharmaceutical product (the “distilled product”). For EU competition law purposes, AZ agreed to take 80% of its requirements for the original product from AIC. The contract provided that should AZ decide to source its requirements for the distilled product in the future elsewhere, AIC would be given a right of first refusal. AZ subsequently stopped producing the distilled product and decided to source its requirements for the distilled products from a third party and not AIC. AIC subsequently refused to supply the original product to AZ pending the new agreement being entered into. The relationship deteriorated and both alleged that the other was in breach of the contract.

AZ brought proceedings against AIC for AIC’s failure to deliver the original products under the terms of the contract. As AIC had deliberately refused to supply the original products, AZ argued that AIC had committed a deliberate repudiatory breach of the contract and, according to the NETTV v MARHedge decision, AIC could not rely on the limitation of liability provisions. As a result, AZ could recover its full losses naturally flowing from the breach, taking into account English law principles on damages relating to remoteness, causation and mitigation. AIC then counter-claimed that AZ was in breach of the right of first refusal provision.

In the end, the High Court ruled that whilst AIC had been in breach of the contract, there had been no deliberate repudiatory breach by AIC. As a result it did not need to decide on the limitation of liability point as a straightforward breach of contract would be subject to the exclusions and limitations of liability under the contract. However, the judge made it clear that the decision in NETTV v MARHedge relating to deliberate repudiatory breaches was “heterodox and regressive” and does not properly represent the current state of English law. As a result, it is extremely unlikely that NETTV v MARHedge would be followed in the future. On the other issue of the breach of the right of first refusal, AZ were held to be in breach of the relevant clause.

CommentThe comments made by the judge in AstraZeneca v Albermarle are important as they weaken the impact of the decision in NETTV v MARHedge. In NETTV v MARHedge the High Court stated that ordinary exclusion and limitation of liability clauses would not protect a party that deliberately walks away from a contract on the basis that such contract abandonment would amount to a deliberate repudiatory breach. The exclusion and limitation of liability clauses would only apply in such circumstances to the extent that the wording specifically included deliberate repudiatory breaches. The High Court in AstraZeneca v Albermarle suggests the opposite and that any breach of contract, whether deliberate, repudiatory or otherwise, would be subject to the agreed provision on exclusion and limitation of liability.

Whilst the comments made in AstraZeneca v Albermarle were obiter dicta and, accordingly, do not change the impact of the decision in NETTV v MARHedge, it is now unlikely that a court will follow the approach in NETTV v MARHedge. As a result, parties are now able to once again understand the financial risk associated with deliberately walking away from an unprofitable contract.


Data Security Breaches: Credit card data theftLush Cosmetics Limited & The Information Commissioner: Compliance Undertaking, 9 August 2011

Between October 2010 and January 2011, the website of Lush Cosmetics Limited (“Lush”) was repeatedly compromised by fraudsters unlawfully obtaining the credit card information of Lush’s customers. A number of complaints were made to the Information Commissioner who investigated the data security breaches and found that Lush had not adequately protected the personal data held on their systems.

Key Practical Consequences• The number of data security breaches have increased

significantly over the last few years as service providers have accessed new technological solutions, such as cloud computing and other shared service platforms.

• The fundamental principle underlying EU data protection law is that it is the duty of data controller to comply with the Data Protection Principles, including the Seventh Data Protection Principle dictating that appropriate technical and organisational measures must be employed, and maintained, to prevent the unlawful processing of customer data.

• The ability to outsource hosting or payment processing to a third party provider does not impact a data controller’s underlying data protection compliance obligations.

• Whilst the Lush undertaking shows that the Information Commissioner is willing to encourage a pro-active approach to data protection compliance, the undertaking is seen as a warning from the Information Commissioner that online service providers must provide sufficient protection when processing customer credit card details.

DiscussionLush accepted online payment for products purchased online. Between October 2010 and January 2011, hackers were able to compromise the online payment platform and access the details of 5,000 customers. Many of these customers were subsequently the victim of credit card fraud.

The Information Commissioner’s Office investigated the complaints and required Lush to sign an undertaking confirming that they would undertake appropriate technical and organisational measures to


ensure the protection of customer data. In this instance, the undertaking required Lush to comply with the Payment Card Industry Data Security Standard. Whilst there were security measures in place to ensure security, these were not seen as sufficient to prevent a determined attack on their website.

CommentThe online market place is growing significantly as retailers have wider access to affordable solutions, including through cloud computing and other shared service platforms. However, as retailers’ online presence increases, the websites are increasingly subject to cyber-crime and data security breaches.

Any inadequate security measures gives rise to a risk that personal information (including credit card details) may be compromised. The Information Commissioner has stated that the Lush undertaking should serve as a warning to all retailers that online security must be taken seriously and that the Payment Card Industry Data Security Standard or equivalent must be followed at all times.

There are a number of other tools available to the Information Commissioner should data security breaches continue. They include criminal prosecution, non-criminal enforcement and audit. The Information Commissioner also has the power to serve a monetary penalty notice on a data controller up to a maximum amount of £500,000.


Failure To Obtain Ladygaga.Org Demonstrates Need To Approach Fan Sites With Caution Especially Given The Existence Of Two Interpretations To Fan SitesMs Stefani Germanotta v Oranges Arecool XD Claim Number: FA1108001403808, 21 Sep 2011

The failure to obtain the domain name ladygaga.org provides another reminder to investigate potential respondents, the two different approaches to fan sites when applying the UDRP and demonstrates the complainants need to establish each necessary element.

Key Practical Consequences• Brand holders should take care to investigate apparent fan sites,

remembering to identify other domain names registered to the same party and intention to generate commercial benefit given the ease in which it is possible for a websites content could be fed from automated feeds and existence of the possibility to rent domain names for apparent fan sites as in this case.

• Although the doctrine or defence of laches as such does not generally apply under the UDRP, brand holders should be careful to examine that they have established each necessary element of the UDRP.

DiscussionThe nub of this decision rested on if a fan site can generate rights or legitimate interests in a disputed domain name. There are two views of this. The first is that the registrant of an active and non-commercial fan site may have rights and legitimate interests in a domain name that includes the complainant’s trade mark. For this to be found pannelists have generally required the following three elements or conditions. First, that the website should actually be in use. Second, that the website for the offending domain names should be clearly distinguished from an official site. Thirdly, that the offending website should be of an non-commercial nature. This third element is less well defined. Panels have generally found that a claimed fan site that includes pay-per-click (PPC) links or automated advertising would not normally be regarded as a legitimate non-commercial use. However, some panels have suggested that a incidental degree of commercial activity may be permissible in certain circumstances. These circumstances include that the activity is ancillary to the website, of a limited nature or bears some relationship to the site’s subject.


In comparison the second interpretation is that a respondent expressing a view, even if positive, does not convey rights or legitimate interest when the domain name is identical or confusingly similar. Indeed panels have noted that where the domain name is identical to a trade mark of the complainant the respondent blocks and prevents that trade mark holder from exercising its rights and it is worthy of complainants to express this but not necessarily base the complaint solely on this evidence.

Indeed in this instance the panel expressly noted that if the Respondent changed their use of the domain name to indicate ‘an intent to profit’ could lead a panel to reach the alternative conclusion by satisfying 4.b(iv) of the Policy to demonstrate registration and use in bad faith. This provides a reminder that it is possible to re-file a complaint although only in limited circumstances such as breach of natural justice, due process or serious misconduct in the original case, such as perjured evidence or that the complainant establishes that new actions have occurred since the original decision, or new evidence that was reasonably unavailable to the complainant at the original decision.

CommentThis decision highlights the two interpretations of the UDRP reiterating the need to demonstrate each necessary element, and that the standard or proof required can generally be described as the balance of probabilities. Brand holders would also do well to consider to investigate apparent fan sites carefully considering the value in identifying others domain names that may be owned by the respondents and identify methods which demonstrate the respondents intention to attract Internet users to the website or other location for commercial gain, using the approach in 4.b(iv) of the Policy to satisfy the requirement for bad faith. Those that manage the rights of famous individuals should be particularly aware of respondents such as this instance; oranges arecool XD who state that they own over 206 domain names see http://fanfusion.org/about/. However, other similar organisations exist generating revenue for advertising on their own website rather than website for the infringing domain name. Thankfully such activities are incorporated by the Policy.


Commercial Gain Does Not Need Flow To Respondents For Sufficient Bad Faith To ExistLEGO Juris A/S v. James Mills Case No. D2011-1000 31 July 2011

Lego were able to obtain the domain name legosets101.com and establish that sufficient bad faith existed when there was commercial gain although not necessarily to the respondent when the domain name redirected to the domain names amazon.com and besttoys101.com.

Key Practical Consequences• It is worthwhile to consider how a domain name may be used for

commercial gain, beyond normal pay-per-click links, even if not apparently for the respondent.

• It can still be worthwhile considering identifying who owns domain names that a target domain name is redirected to where this is not apparent.

DiscussionLego were able to obtain the domain name legosets101.com and established sufficient bad faith existed when the commercial gain did not necessarily flow to the respondent. In this instance the respondent had redirected the domain name legosets101.com to the domain names amazon.com and besttoys101.com. The UDRP Policy provides four non-exhaustive methods in which a domain name can be demonstrated to be registered and used in bad faith. This includes 4.b(iv) ‘by using the domain name, you have intentionally attempted to attract, for commercial gain, Internet users to your web site or other on-line location, by creating a likelihood of confusion with the complainant’s mark as to the source, sponsorship’. This follows approach in the earlier decision in Villeroy & Boch AG v. Mario Pingerna, WIPO Case No. D2007-1912. Although in reality establishing the commercial gain to the respondent may have been easier than initially appears given the respondent was also the owner of one of the domain names (besttoys101.com and in turn another domain name bestdisneytoys.com which also included sponsored links) that the disputed domain name legosets101.com was being redirected to.

This in turn highlights the rule that the respondent will generally be deemed responsible for the content of a website located by the domain name. Although some decisions have found that inclusion of


advertising links may not necessarily be a basis finding the respondent’s bad faith such as Mariah Media Inc. v. First Place® Internet Inc., Case No. D2006-1275. For example the recent decision of Groupalia Compra Colectiva, S.L. v. Andrea Santini Case No. D2010-1979 attempt to add that deception of Internet users and commercial gain need to be central to the respondents plans to satisfy 4(b)(iv) of the Policy.

Once again this highlights the nature of the UDRP, that the UDRP does not operate a strict doctrine of precedent, although it common and arguably best practice to cite previous decisions in complaints. The general rule is that it is desirable that decisions are consistent with previous panel decisions with the similar situations of fact.

CommentThis decision reiterates the ability to find bad faith where the commercial gain does not necessarily flow to the respondent.

This publication is for general guidance only and is not intended to be a substitute for specific legal advice. If you would like any further information please contact:

John Olsen tel: +44 (0) 207 556 4350 [email protected]

February 2012

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