Friday, November 1, 2013
Bill C-8 Proposed New Trademark Defintion
Bill C-8 which addresses improved proposals for anti-counterfeiting also includes a proposal which will potentially widen the definition of trade-marks to include taste, texture, a number, a letter, etc... I wonder if the folks at McDonald's are trying to define the taste of a Big Mac. How is Coke going to define its beverages? Trade-mark law is going to get a whole lot more fun!
Sunday, October 20, 2013
Québec government announces support for Québec SMEs in seeking their “First Patent”
By way of the Politique nationale de la recherche et de l’innovation (National Policy on Research and Innovation), the Québec government introduced a program named Premier brevet (First Patent) which is designed to offer financial and technical assistance to small businesses in seeking patent protection in Canada for innovations that may otherwise have gone unprotected.
Preliminary descriptions of the program indicate that it may cover certain costs related to:
- Prior art searches used to determine the state of the art and assess patentability of an innovation;
- Freedom to operate opinions; - Patent application filing fees in Canada and abroad;
- Professional fees relating to drafting and prosecution of the patent application;
- Certain activities related to the use of the innovation once a patent issues.
This is a very smart move by the Québec government seeking to encourage both foreign and local investment in Québec companies in order to stimulate the growth of its knowledge-based economy. When conducting their due diligence prior to making investments, one of the first things investors will typically want to see is proof that a company has taken steps to secure patent protection for the products, processes and systems used by that company.
Oftentimes, the first filings by an SME are done on the cheap. The costs associated with drafting a complete and robust patent application are not insignificant, an SME often doesn’t have the resources to invest in such a drafting exercise. This can lead to complications down the road, and potentially the loss of patent rights if litigation arises.
Help from the Québec government in offsetting the costs associated with drafting and filing patent applications will allow Québec SMEs to engage the help of professionals and as a result will result in more complete and robust patent applications. This will lead to better and stronger patent rights. And when an investor reviews such patent applications, they will likely appreciate the quality of a properly drafted patent application and may be more likely to lay down such investments.
For more information (in French) see:
Friday, October 18, 2013
Teva Canada Limited v. Novartis Pharmaceuticals Canada Inc
The Federal Court of Appeal has affirmed Justices Hughes’ decision relating to the Order of prohibition issued in respect of Canadian Patent No. 1,338,937 (the ‘937 Patent) and Patent No. 1,338,895 (the ‘895 Patent).
Teva in its appeal had argued that Justice Hughes had “[s]ubstituted a higher standard for determining obviousness” and had “[f]ailed to properly ascertain the state of the art and to identify the differences between the inventive concept and the state of the art as required by step 3 of the “Sanofi test” (See paragraph 3 of the FCA decision).
The FCA disagreed with Teva on both points.
Teva further alleged in its appeal that “the Judge misconstrued and misapprehended the evidence and appears to have ignored some important evidence in respect of the prior art.” (See paragraph 5 of FCA decision). The FCA however found that Teva had “failed to establish that the Judge made an overriding and palpable error in his appreciation of the evidence.” (See paragraph 10 of FCA decision). The FCA noted in its decision that the “Judge is presumed to have considered all the evidence before him. This presumption is not rebutted simply because the Judge does not refer to particular pieces of prior art (Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 SCR 235 at paragraph 46). Moreover, in this case, there are clear indications that the Judge was alert and alive to the issues raised, but in the end, simply did not agree with the appellant’s analysis of the evidence.” (See paragraph 12 of FCA decision).
The decision can be found at:
Monday, October 7, 2013
Arr! Pirate Joe’s Blows Down Trader Joe’s in Trademark Infringement Dispute
Trader Joe’s called upon a powerful U.S. law called the Lanham Act to take down Pirate Joe’s. "The Lanham Act, which is this very broad powerful statute that allows corporations to, kind of, you know, beat up on anybody that affects U.S. commerce is very, very strong and powerful and can essentially shut down commerce in another country," said Hallatt in an interview with CBC on October 4, 2013.
Trader Joe’s alleged that 40% of the customers who pay by credit card in their Bellingham location are Canadian. They went on to say that these customers would most likely stay in Canada if they could purchase the same goods locally. However, in today’s judgement, a Washington state judge dismissed the suit saying that Trader Joe’s failed to prove it competes for customers. They have 10 days to file an appeal.
Michael Hallatt spends approximately $4,000 - $5,000 per week purchasing goods from Trader Joe’s in Bellingham. The trademark infringement lawsuit was filed in Washington state in May, 2013.
Wednesday, September 18, 2013
Expander Energy Showcased in New Technology Magazine
In view of the escalating environmental regulations and the stigma of the Alberta oil sands, the patented technology significantly reduces the concerns of the environmental impact being closely watched in the public forum.
Jim Ross, Chief Executive Office of Expander Energy Inc. is quoted in the article as saying:
“All our processes retain and convert carbon within the system, virtually eliminating low-value/waste products and significantly reducing GHG emissions by over 80 per cent”Recently, Black Press Group Ltd teamed up with Expander Energy and will use this green technology in their proposed refinery in Kitimat, B.C. David Black, founder of the Black Press Group, compliments the technology. My Black indicates:
“Our refinery will now be much cleaner than any other heavy oil refinery in the world.”MBM congratulates Expander on their new important venture in Kitimat!
By Paul Sharpe
Tuesday, August 27, 2013
The Truth About Digital Copyright Infringement’s Effect on the Film Industry
Those of us who remember the Recording Industry Association of America (RIAA) music piracy witch hunt of 2004-2007 and the colorful, if not flamboyant ranting of the late Jack Volenti of the Motion Picture Association of America (MPAA) may be predisposed to thinking that online file sharing has had a dreadful effect on the music and film industries.
A recent study, however, may dispel that myth, at least as it relates to the film industry. Researchers from the Ludwig-Maximilians-Universität Munich and Copenhagen Business School have found that far from hindering sales, online file sharing has even had a positive effect on some films’ bottom line. The study looked at a sizable data set- 10,272 movies released in 50 countries from week 31 of 2007 to week 5 of 2013.
On January 19, 2012, the globally popular file hosting site Megaupload.com was shut down and its founder Kim Dotcom arrested. The study found that the shutdown had little effect on the box office numbers for a majority of films. Some films, particular smaller and independent productions, saw a decrease in revenue. Only the top Hollywood films such as Ice Age and Harry Potter saw an increase in revenue after the Megaupload shutdown.
The study cites similar research dealing with the music industry (Bhattachar-jee et al. (2007)) which showed that while big-label titles spent on average less time on the sales charts, smaller labels and independent artists experienced a huge boost in revenue from file sharing.
While no study can correct for all possible variables, the researchers took care to put into place “robustness checks” for the purpose of ruling out alternative causes for the correlation they discovered. The researchers explain their results by highlighting the importance of word of mouth advertising facilitated through social networks. The study identifies two categories of consumers: those willing to pay for content and those unwilling to pay.
It appears that those consumers who are unwilling to pay for content still speak about and promote that content. Some of the people they speak to are those willing to pay for the content. These people then go and make purchases they would not have made but for the endorsement by the “pirate".
The effect of illicit file sharing on a film seems to relate to the film’s advertising budget and general exposure. The reason why big budget films released by major studios are aided by stemming online file sharing is that they have effective brand penetration. Paying customers are more likely to see an advertisement for a major film and therefore do not rely as heavily on social networks to discover these titles. On the other hand, for small and medium sized productions, the publicity accrued through social networks by way of exposure due to file sharing is palpable.
It would therefore seem that the statement that file sharing hurts the content industry may only be true for those who currently hold the biggest piece of the pie. If we assume that the greatest availability of the greatest variety and quantity of content is a worthy goal, perhaps the legislative frameworks surrounding copyright protection would benefit from an overhaul in light of this and similar studies. It’s worth mentioning, however, that the content industry groups that lobby governments for stricter copyright laws are likely influenced to a great extent by the biggest players in the industry; and for them, the study shows that file sharing is still bad for business.
By James Plotkin LL.L, J.D.
Summer Student with MBM
jplotkin@mbm.com
Wednesday, August 21, 2013
Sergey Brin turns 40
Brin is associated with a large number of patents not only in relevance to Google, but in other areas of computer science as well. Brin and Page use the patent system for its true purpose, protecting ideas. They even have the infamous Google-Doodle concept patented, although it took a little battle to get and criticism.
In the current events of legal battles and “patent-trolls”, Sergey Brin is a refreshing type of innovator, running a company who resides on a pillar statement of “Don’t Be Evil”. This also includes Google's Open Patent Non-Assertion Pledge which was spoken about in a previous article on this blog. Again we tip our hat to Sergey Brin on his 40th, a true modern-day innovator who believes that knowledge is better than ignorance.
By Richard Loucks
rloucks@mbm.com
Tuesday, August 20, 2013
Promise of Utility in Canadian Patent Law
On July 24, 2013, the Federal Court of Appeal issued its judgment in relation to Sanofi’s Canadian Patent No. 1,336,777 (the ‘777 patent) directed to the blockbuster anti-coagulating drug Plavix®.
The ‘777 patent is a selection patent that claims a subset of compounds already encompassed by Canadian Patent No. 1,194,875 (the genus patent). The active ingredient in Plavix® is the dextro-rotary isomer of clopidogrel, which exhibits beneficial properties over both the racemate and the levo-rotatory isomer.
The case began in 2005 when Apotex filed a Notice of Allegations pursuant to the Patented Medicine Notice of Compliance Regulations (“PMNOC”) alleging that the ‘777 patent was invalid. This PMNOC case was ultimately heard by the Supreme Court of Canada in 2008. The Supreme Court found that Apotex’s invalidity allegations were without merit.
Apotex and Sanofi then commenced separate actions in the Federal Court. Apotex again alleged that the ‘777 patent was invalid, while Sanofi asserted that Apotex infringed its clopidogrel patent. The separate actions were consolidated in 2011 and went before the trial judge Justice Boivin who declared that the ‘777 patent was invalid because it lacked utility and was obvious to an ordinary person skilled in the art.
The decision of Justice Boivin was appealed. The Court of Appeal reversed Justice Boivin’s findings on both utility and obviousness. The Court of Appeal’s finding on obviousness is insightful, but the more substantive part of the ruling relates to the legal concept of “promise of utility.” In Canadian patent law, at the time of application filing, a patent must either demonstrate utility or soundly predict utility of the invention. The utility is also measured by the promise of the patent:
Where the specification does not promise a specific result, no particular level of utility is required; a "mere scintilla" of utility will suffice. However, where the specification sets out an explicit "promise", utility will be measured against that promise: The question is whether the invention does what the patent promises it will do.The trial judge’s finding of inutility was based on his conclusion that the promise of the ‘777 patent was that clopidogrel could be used in humans. In addition to giving weight to Apotex’s expert evidence, which said that the ‘777 patent clearly referred to some human diseases and conditions, Justice Boivin arrived at his conclusion by making inferences; such as “the fact that clopidogrel is to be administered by oral, rectal or parenteral administration” and the usage of words like “patients” in the patent. Justice Pelletier and Gauthier at the Federal Court of Appeal, rejected the trial judge’s inference of a promise of utility to invalidate the ‘777 patent. Justice Pelletier cited the following remarks from AstraZenaca v. Mylan Pharmaceuticals:
I accept AstraZeneca's argument that not all statements of advantage in a patent rise to the level of a promise. A goal is not necessarily a promise. The third paragraph of the 420 Patent refers to a forward looking goal, a hoped-for advantage of the invention.Justice Gauthier augmented that “one must be careful not to treat each reference to a practical purpose as a promise of a specific result within the meaning of Consolboard".
The Court of Appeal held that the trial judge did not err in his finding that inferences were made which point to the prospect of clopidogrel being used in humans, but rather erred in his construction of the promise made in the patent. Most if not all pharmaceutical patents have the ultimate goal or aspiration of being applied to humans. However, as the Court of Appeal rightly ruled, these goals cannot be construed as specific promises to which the validity of the patent is measured against.
Going back to first principle, the Court of Appeal painted the context before they began analyzing the validity of the patent. This is congruent with the purposive approach to constructing patent claims laid down in Whirlpool Corp. v. Camco Inc. The trial judge erred when he failed to take into the context in which drug patents are drafted.
In my opinion, the Federal Court of Appeal has provided helpful guidance in delineating between a promise of utility and a goal when determining the utility standard that a patent is measured against.
By David Chen
Articling Student
dchen@mbm.com
Tuesday, August 13, 2013
Kirby Estate Denied Right to Terminate Copyright License for X-Men, Spiderman, Hulk and Ironman Comics
At issue in this case were drawings Kirby did between 1958 and 1963. Jack Kirby’s children sought to apply the complicated “termination provision” found in §304 17 USC. This provision allows the owner of a copyright protected work to terminate any assignment or license agreement after a defined period which depends on whether the work was created before 1978.
This provision came into force with the 1976 reforms to US copyright law. The goal of the provision was to balance the playing field between authors and non-author copyright owners. In desperation, authors would often sign onerous agreements that were drafted by, and slanted heavily in favour of publishers. §304 gives the original copyright holder the ability to, without fear of breaching contract, terminate any license or assignment of their copyright protected work. In other words, the author would get a second kick at the can to profit from his or her creations.
Marvel/Disney argued that Kirby’s drawings were works for hire, an express exception prescribed by the §304 termination right. The 1976 Copyright Act defines work for hire as follows:
(1) a work prepared by an employee within the scope of his or her employment; or
(2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.
Kirby was not an employee of Marvel and did not receive benefits or fixed salary. Further, while much of the work Kirby did for Marvel was delegated directly by Stan Lee (the former chairman and president of Marvel Comics) and others, some of his artistic output that made it into Marvel comics were entirely fruits of his own mind. Marvel/Disney therefore argued that his works fell under (2).
the 2nd Circuit’s legal test to determine whether a work is a work for hire is whether the work is created “at the instance and expense” of the hiring party. The court must also look at the degree of control exercised by the hiring party over not only the final product, but the general manner in which the tasks are carried out. In this case, the US District Court for the Southern District of New York found that there was enough control over Kirby’s output to consider his drawings works for hire.
Kirby’s estate appealed the District Court’s decision in which Judge Colleen McMahon granted summary judgment in favour of Marvel/Disney, disallowing the Kirby Estate’s claim. The appeal court agreed with the Trial Judge and dismissed the Kirby Estate’s appeal of that ruling.
This is not the first time Marvel has litigated this issue. Just two months ago in June, the 2nd Circuit Court of Appeal vacated and remanded a trial judge’s ruling over the ownership of the copyright in the Marvel character “Ghost Rider”. Gary Friedrich, the artist that created the Ghost Rider character sued Marvel for copyright infringement after the 2011 release of a Ghost Rider movie starring Nicholas Cage. The Court found that the trial judge erred in granting summary judgment in favour of Marvel given the ambiguity of the terms of the latter’s agreement with Friedrich. That matter is yet unresolved.
By James Plotkin
LL.L, J.D.
Summer Student with MBM
jplotkin@mbm.com
Friday, August 9, 2013
Additions to Google's Open Patent Non-Assertion Pledge
With different companies taking different approaches, it is refreshing to see these movements after all the Apple versus Samsung discussion that is being played over and over again in the media. Making these patents publically available means that developers can push existing ideas further without the fear of infringing on what Google already owns. Some of these patents were originally from IBM and Computer Associates that were purchased by Google back in 2005 and covered areas of software used to manage data centers including alarm monitoring, distributed storage management, and distributed database management.
You can read more about Google’s Open Patent Non-Assertion Pledge at their dedicated page http://www.google.com/patents/opnpledge/.
By Richard Loucks
rloucks@mbm.com
Protecting Foreign Brands with Trademark Law in China
However, Tesla’s plan had to come to a halt because in China, the trademark “Tesla” was already registered by Zhan Baosheng, a Chinese business entrepreneur. Zhan registered the mark for twelve categories of land, air, and marine transportation vehicles, including Tesla Motors’ products, finished cars.
The Chinese trademark authority rejected Tesla Motor’s application for the trademark “Tesla” because trademark law in China is based on a “first to file” regime. The same issue arose for Apple. Inc. in 2011 when Apple introduced its tablet iPad to China. A Chinese company named Proview Technology had registered the trademark “IPAD” prior to Apple’s application to register the mark. In the course of a few months, Proview obtained injunctions from Chinese courts to seize infringing articles and prevented Apple from selling iPad in China. Ultimately, Apple had to pay a steep price to settle with Proview- 60 million dollars!
Now Tesla Motors finds itself in a similar situation to Apple in 2011. Tesla Motors reportedly offered Zhan $326,000 to buy his trademark registration, but Zhan rejected the offer and countered, demanding approximately 3 million dollars. Many observers have criticized Zhan as an opportunistic trademark troll if not an extortionist.
However, in an interview with Cheyun, a popular online motor forum in China, Zhan retorted the criticisms stating that he registered “Tesla” because he admired Nikola Tesla, the famous electrical engineer who designed the modern alternating current electricity system. A nice tribute, but undercut by his registration of Tesla’s company logo. Zhan also claimed that he has reached production agreements with two car manufacturers in China and he will soon be selling electric vehicles in China.
In a manner similar to Canada’s trade-mark expungement proceedings, a registered mark can be cancelled if the owner cannot show use within the last 3 years. If Zhan satisfies the Chinese court that he has “used” the mark in association with the registered wares, i.e., electric vehicles within the last three years, his right over the trademark may be upheld. Tesla Motors will then be forced into a very difficult position.
Tesla Motor’s trademark turmoil in China serves to reinforce the need for international companies looking to tap into the Chinese market to plan ahead and to protect their trademark rights in China appropriately.
On the other hand, if companies were careful to avoid the pitfall of the “first to file” system, the legal protection offered by Chinese trademark law seems to be strengthening.
In July 2012, Cartier, the international luxury jeweler, sued two Chinese jewelers and China’s largest online supermarket Yihaodian.com for unfair competition and trademark infringement in a Shanghai court. The Chinese jewelers sold products with advertisements that referred to the products as “Cartier classic style” and “Cartier collection”. The court ruled in favor of Cartier and awarded about 29,000 dollars to Cartier because the court found that the advertisements could have confused consumers about the quality of Cartier’s products.
Cartier’s success demonstrates China’s commitment to offer adequate trademark protection to foster an economic environment attractive to foreign companies.
While the consequences of failing to register one’s trademark in China in a timely manner can be dire, as China transforms into the largest consumer market on the planet, companies also cannot afford to not expand into the Chinese market. The good news is that once companies overcome the initial trademark registration hurdle, we are seeing indications that trademark rights can be enforced effectively in China.
By David Chen
Articling Student
dchen@mbm.com
Thursday, August 8, 2013
Milestone anniversary of US Patent No. 1000000
It took the patent office 75 years to reach 1 million patents but after that the system was booming with intellectual property. It only took 24 years to get to patent 2 million which, ironically, was related to the safety and longevity of pneumatic tires. The trend continued its momentum to get to the over 8.5 million patents registered with the USPTO today.
Taken from a USPTO press release back in 2009 when they celebrated their milestone of 7 million patents, a summary of each millennial milestone.
- August 8th, 1911 – “Vehicle Tire”, a tubeless tire.
http://www.google.com/patents/US1000000 - 24 years later, April 30th, 1935 – “Vehicle Wheel Construction”, the safety and longevity of pneumatic tires.
http://www.google.com/patents/US2000000 - 26 years later, September 21st, 1961 – “Automatic Reading System”, an automated system that translated letters, numbers and symbols to data processing code.
http://www.google.com/patents/US3000000 - 15 years later, December 28th, 1976 – “Process for recycling asphalt-aggregate compositions”
http://www.google.com/patents/US4000000 - 15 years later, March 19th, 1991 – “Ethanol production by Escherichia coli strains co-expressing Zymomonas PDC and ADH genes”, issued to the University of Florida for a process to produce fuel ethanol.
http://www.google.com/patents/US5000000 - 8 years later, December 7th, 1999 – “Extendible method and apparatus for synchronizing multiple files on two different computer systems “, 3Com Corporation’s Palm Computing for its HotSync® technology
http://www.google.com/patents/US6000000 - 7 years later, February 14th, 2006 – “Polysaccharide fibers”, fibers that have “cotton-like” properties but can be produced as continuous filaments on a year-round basis. The fibers are useful in textile applications.
http://www.google.com/patents/US7000000
Then finally 5 years later the USPTO hits the 8 million mark with a visual prosthesis apparatus patented by Second Sight Medical Products, Inc. If the USPTO is already at the 8.5 million mark, then it is possible we will see 9 million around 2015 and even hit 10 million before 2020. Looking beyond just these numbers we realize that there are vast amount of others patents being issued around the world. What this suggests is that the intellectual property process has its worth as ideas are protected around the world.
By Richard Loucks
rloucks@mbm.com
Wednesday, August 7, 2013
USTR disapproves of ITC decision on Apple import ban
Under § 1337 of
the Tariff Act, the ITC may issue an exclusion order (injunctive type relief)
against an entity that imports a patent infringing product. In deciding whether
to grant the exclusion order, the ITC must consider the effects of the order on
US trade and commerce. If the ITC believes that the public interest would not be
best served by the issuance of the exclusion order, it has the discretion to
refuse it.
Samsung’s patent is what is known as a “standard-essential
patent” (SEP). These patents cover inventions that must be incorporated into a
given device if they are to meet some applicable technical standard. SEPs have
the potential to give vertically integrated patent holders an advantage over
their competitors whom, for all intents and purposes must license the
technology from them.
To combat anti-competitive behavior while still allowing the
best technology to form industry standards, standards-developing organization
(SDOs) encourage patentees to establish “fair, reasonable, and
non-discriminatory” (FRAND) licenses. FRAND licenses allow any player in a
given market, incumbents and new entrants, to obtain a license to use the SEP
technology on a fair and reasonable license thereby stimulating a more robust
and competitive marketplace and eliminating a phenomenon known as “patent
hold-up” whereby the holder of an SEP asserts its patent with the goal of
frustrating a competitor’s entry into the market.
Far from trying to hold-up the process, Samsung alleges that
it sought to negotiate a license in good faith with Apple over the
technology. Samsung further claims that
it was Apple who refused to negotiate a FRAND license in good faith resulting
in a “reverse hold-up” situation: where the patentee is faced with a
recalcitrant would be licensee.
The Office of the President of the United States has a 60-day
window in which it may exercise veto power over an ITC decision. This power was
assigned
by the President to the USTR in
2005. In deciding whether to honor the ITC’s initial decision, the USTR will
consider the following factors:
1.
Public health and welfare;
2.
Competitive conditions in the U.S. economy;
3.
Production of competitive articles in the United
States;
4.
U.S. consumers; and
5.
U.S. foreign relations, economic and political.
In the present case, the USTR’s rejection of the ITC’s
decision was bolstered in part by a policy document
(http://www.justice.gov/atr/public/guidelines/290994.pdf) released jointly by
the Department of Justice (DOJ) and the United States Patent and Trademark
Office (USPTO). The document warns against the issuance of injunctions and
exclusion orders in instances when the American economy would not be best
served by the measure.
In the very same policy document, however, the DOJ and USPTO
note that exclusion orders are still sometimes appropriate, even when the
patent at issue is an SEP. One instance identified as appropriate is when “the
putative licensee is unable or refuses to take a F/RAND license and is acting
outside the scope of the patent holder’s commitment to license on F/RAND
terms”. If Samsung’s statements about Apple’s reticence to negotiate are to be
taken as true, it would seem that the present case was expressly contemplated
by the DOJ and USPTO as an instance in which the imposition of an exclusion
order is justified.
The USTR’s disapproval letter was clear that its ruling
applied only to the present case and should not be taken as a blanket statement
that exclusion orders should never be issued when the infringed patent is an
SEP. The ITC (and the USTR on review) will examine the facts of each case in
light of the policy considerations outlined above. It would seem that in this
case, despite the undisputed violation of Samsung’s patent rights, the USTR
found that in this case Apple was too big to fail; or perhaps more accurately,
too big to enjoin.
LL.L, J.D.
Summer Student with MBM
Friday, August 2, 2013
Pinch to Zoom - Apple versus Samsung
On July 28, 2013, Samsung’s counsel filed new evidence in the US court in efforts to invalidate Apple’s “pinch to zoom” patent (US. Patent No. 7,844, 915).
The United States Patent and Trademark Office (USPTO) has rejected “pinch to zoom” patent. The patent has already been rejected once by the USPTO and this is the “final objection” during the patent examination process. However, it is not so final. Apple will have two months to respond to the Examiner’s objections and even if that fails, further appeal venues will be available to Apple, including appealing to Patent Trial and Appeal Board, and if unsuccessful, judicial review. The entire process could take many years until final resolution.
The Examiner rejected all 21 claims of the patent on the grounds that the claims have been anticipated by a patent filed by W. Daniel Hillis and Fran Ferren back in 2005 for various gestures on touchscreens (US. Patent No. 7,724,242).
Although the ultimate determination of the validity of Apple’s “pinch to zoom” patent will not be available for years, the USPTO’s rejection may have an impact on the on-going patent litigation proceedings.
Back in August of 2012, Apple had its first patent litigation victory in US. Apple was awarded a hefty 1.05 billion US dollars in damages by the jury. The quantum however has since then been scaled down to approximately $598.9 million. It is predictable that Samsung will attempt to use USPTO’s rejection to bolster its appeal and to dissolve the damages claim.
The ramification however extends beyond United States. Apple and Samsung are going head to head in nine countries. Apple is now in a precarious position because it is fundamental and trite patent law everywhere that a patent must present novelty; something new. It is conceivable that Samsung is going to do everything they can in the other jurisdictions to use USPTO’s objection, convincing evidence from a credible regulator, to invalidate Apple’s corresponding “pinch to zoom” patents in these jurisdictions. Samsung may also seek to stay the proceedings in other jurisdictions, pending the outcome of the US battle.
In the end, what does this all mean to consumers? Not a lot.
Sure, if Apple’s patents were held to be valid, Samsung will incur higher production costs. But with the fierce competition in the mobile phone market, Samsung would not be able to pass the costs down to the consumers easily. When we “zoom” ahead, whatever the final outcome is, consumers are not likely to feel the “pinch” in their pockets.
By David Chen
Articling Student with MBM
dchen@mbm.com
Monday, July 29, 2013
Alberta Oil and Gas Clean Technology News: Expander Energy's FTCrude
The new technology, referred to as FTCrude, cuts down carbon dioxide emissions and increases output by gasifying carbon-heavy refinery waste and blending it with natural gas. This process results in synthetic diesel, naphtha and other oil products. Expander Energy, Inc. secured a patent for partial and full heavy oil and bitumen upgrading and not surprisingly, they are seeking to obtain more.
Jim Ross, Expander Energy CEO, explains, “The real advantage of Expander is that you maximize all the carbon that is available in the system. The bottom line is a minimum 50% reduction in CO2, and we think we can see a reduction of as much as 80%.”
Expander Energy is currently engaged in contract negotiations with David Black’s proposed $16-billion oil refinery in Kitimat, British Columbia. If all goes well, a licensing agreement would enable FTCrude to process 400,000 to 500,000 barrels a day. The six-staff Calgary start-up will be well on their way to both entrepreneurial and environmental success.
The Alberta Oil Sands are the number one source of greenhouse gas emissions in Canada. Implementation of Energy Expander’s clean energy technology would assist Canada meet its international climate commitments under the Copenhagen Accord, which would also keep U.S. policy makers happy aka more business.
Expander Energy is discussing FTCrude with several oil companies. Paul Sharpe is a Registered Patent Agent representing Expander Energy and specializes in clean energy technologies. Paul can be reached at 613.567.0762 or psharpe@mbm.com.
Friday, July 26, 2013
Faulkner Estate loses copyright infringement suit over use of one line from Requiem for a Nun
At the heart of this case was the following sentence from Faulkner’s novel: “The past is never dead. It’s not even passed”. In Allen’s film, the protagonist Gil Pender says: “The past is not dead. Actually, it’s not even past. You know who said that? Faulkner, and he was right. I met him too. I ran into him at a dinner party.” As can be seen from this quote, the character actually attributes the slightly modified line to Faulkner in the movie itself. This was apparently insufficient for the Faulkner Estate who decided to sue Sony for copyright infringement and for some form of trademark/appropriation claim based loosely on the Lanham Act (the United States federal statute dealing with trade-marks and unfair competition).
Among the issues the Court was tasked with deciding was the question of de minimis copying. The Latin maxim de minimis non curat lex stands for the proposition that the law does not concern itself with the very minor or insignificant. This doctrine has been accepted as applicable in the copyright context in both the Unites States and Canada.
Given the Fifth Circuits thin case law on the matter of de minimis copying, the Court chose to examine the question under the ambit of the fair use analysis- which Sony put forward as an affirmative defense to the claim. The third factor in the fair use analysis is: “the amount and substantiality of the portion used in relation to the copyrighted work as a whole”. This factor mirrors the “substantiality test” used by several US jurisdictions to determine if there was a copyright infringement in the first place.
Originating in the 2nd Circuit, the substantiality test was first applied in Marks v. Leo Feist, Inc. In that case, the Court wrote that: “To constitute an infringement of the [Plaintiff’s] composition, it would be necessary to find a substantial copying of a substantial and material part of it.” This test derives from the equitable doctrine of substantiality. Historically, a plaintiff would not succeed in their claim at equity if the injury suffered was not deemed substantial enough for the law to take an interest.
The Plaintiff argued that since the test for substantial similarity is a qualitative and not quantitative analysis, the two sentence quote is enough to constitute copyright infringement in theory. They further claimed that the quote in question described “the essence of Requiem”. The Court did not find this argument persuasive. Even if the quote encapsulated the theme of the book, it is the expression- i.e. the text itself- that is protected by copyright law. The argument failed because of the idea-expression dichotomy at the heart of copyright law. Expressions are protectable; ideas are not.
The Plaintiff’s claim based on the Lanham Act was sketchy at best, referring to state tort law by analogy to make its point. The Court rejected this argument out of hand, writing that the Plaintiff was unsuccessful in clearly laying out the law upon which its complaint relied. In a nutshell, the Plaintiff argued that use of the line in the movie would cause confusion as to its origin. They argued further that use of the line without permission amounted to a misappropriation of Faulkner’s identity. Though the Court declined to deal fully with this argument because of the way it was brought, Chief Judge Mills noted in passing that Sony’s 1st amendment right must trump the Plaintiff’s claim under the Lanham Act.
All in all this decision was unsurprising. While the Plaintiff was correct in asserting that the relevant measure for determining what constitutes a substantial part of a copyright protected work is quality and not quantity, its arguments were patently absurd in the context. To purport that nine words out of a 240 page novel constitutes the qualitative heart of the work is a serious stretch. Even if they were able to make this argument convincingly, this is still a cut and dried instance of fair dealing. Woody Allen used the line in a novel and transformative way that in no way affects the commercial value of the source work.
By James Plotkin
LL.L, J.D.
Summer Student with MBM
jplotkin@mbm.com
Friday, July 5, 2013
Author Resale rights in Canadian Copyright Law
The resale rights (also known as a “droit de suite”) would allow an author to be remunerated not only for the first purchase of a copy of their work, but for every subsequent resale of that work. The droit du suite came about at the end of the 19th century in France as a response to a case in which the owner of a painting sold it for a hefty sum while the artist who painted it lived in poverty.
The droit de suite is a theory that runs directly counter to the “first sale doctrine”. This Common Law doctrine dictates that a copyright owner’s right to remuneration is extinguished after the first sale of a copy of a protected work. The first sale doctrine comes from the Common Law principle that restraint on the alienation of tangible property is to be avoided. The doctrine was first cited by the US Supreme Court in Bobbs-Merrill Co. v. Straus (1908) and was later codified in the American Copyright Act of 1909.
Today, the European Union, Australia and the Philippines have resale rights legislation. The State of California also had a resale right law on the books until it was struck down by the U.S. District Court (Central District of California) on May 17, 2012. Judge Jacqueline H. Nguyen found the law to be unconstitutional because it encroached on the Federal power over interstate commerce. This decision is currently being appealed to the 9th Circuit Court of Appeal.
The bill is presently in its first reading before Parliament. It proposes to grant authors the right to capture a 5% royalty in any subsequent sales of a work where the value of the transaction is $500 or more. This resale right is not limited to the first subsequent sale, but to all subsequent sales of the work while the work remains in copyright. The resale right may not be waived by the author and is not transferable. The onus is on the seller of the work to report and pay out the royalty. The bill mandates that royalty collection be carried out by a collective licensing society.
One interesting feature of the bill is that its provisions only apply to:
- Authors who were Canadian citizens or residents at the time of the sale; and
- Authors in other countries that offer similar resale rights to Canadian authors in their home jurisdictions (namely the EU as mentioned above).
Though the resale right is not transferable inter vivos, the right is transmissible upon the death of the author. The right passes to the person to whom it was expressly bequeathed; or, failing that, the person to whom the copyright in the work has been bequeathed.
While the chances of this legislation passing are slim, this initiative represents a potential shift in Canadian copyright policy towards the EU. This proposed change to the Copyright Act is more than likely related to the ongoing negotiations taking place between Canada and the EU on the “Canada-EU Trade Agreement” (CETA) in which the EU is putting pressure on Canada to once again amend its intellectual property laws to come into line with their own.
Though this iteration of the resale right may not pass, interested parties should keep watch as the negotiations over CETA progress. It is quite possible that a similar amendment may be introduced in the near future; though next time, it may come from the government’s side of the aisle.
By: James Plotkin
LL.L, J.D.
Summer Student with MBM
jplotkin@mbm.com
Tuesday, July 2, 2013
New development in Google Books saga: Google will get its chance to argue fair use
In 2004, Google undertook its massive “Library Project”. Google, in cooperation with a number of libraries, began scanning, digitizing and indexing millions of books. At the time my last post on this case was published, the total number of books digitized was estimated at 15 million. The 2nd Circuit’s decision puts that number at 20 million today. A group of plaintiffs- eventually settled into a class headed up by the Authors Guild- instituted a copyright infringement action.
The 2nd Circuit found Judge Chin’s class certification to be premature in light of Google’s fair use argument on the merits. The Court wrote that allowing the statutory fair use defense to be affirmatively argued may render some or all of the issues moot, thereby eliminating the need for the costly, complex class action to go forward.
Notable authority on the Google Books saga Professor James Grimmelmann has opined that the wording of the 2nd Circuit’s ruling, though not directly dealing with the fair use argument, suggested that the argument would be compelling. Grimmelmann explains that the normal procedure when the certification of the plaintiff class is itself (in whole or in part) contingent on the merits, the court will usually consider the merits only insofar as they aid in determining if the plaintiff class is appropriate. In this decision however, the 2nd Circuit gave express instructions in its remand to the District Court to consider the fair use issue specifically and to its end.
Professor Grimmelmann wrote that this unorthodox, if not pragmatic order may not only be a signal that the 2nd Circuit finds Google’s fair use argument to be meritorious; they may believe it to have a fair chance of success.
I’ve read a couple interesting breakdowns of Google’s fair use argument and while not all the case law is neatly on their side, the argument is tenable and persuasive; but that’s another post.
By: James Plotkin
LL.L, J.D.
Summer Student with MBM
jplotkin@mbm.com
Thursday, June 27, 2013
Intellectual Property Considerations in Mergers and Acquisitions
Intellectual Property may be part of a company that is acquired or with which another company merges. The Intellectual Property can take the form of Trademarks, Patents, Designs, Trade Secrets, Copyrights, Plant Breeder’s Rights, Integrated Circuits, etc.
Unfortunately, in merger and acquisition transactions, the Intellectual Property due diligence is often overlooked and the intellectual property is typically “thrown in with the deal”. This can be an unfortunate situation, since the real value of the intellectual property may never be realized. If analyzed, the intellectual property may be a source of income in terms of licensing fees, fees generated from sale of the assets, fees associated with assignments, trade of intellectual property for other intellectual property and monetary consideration. If the due diligence concerning the intellectual property is done prior to closure of the transaction, there is a distinctive vantage that can be realized; assuming the intellectual property is in good standing and there are no encumbrances (see below), the result could be a value-add proposition for the transaction which can also provide the concomitant advantage of expediting the transaction, increasing the transaction price among other attractive benefits.
As a further advantage, there may be an opportunity for a joint venture with another company to better position the purchasing company in a specific industry.
RISKS COMPONENTS TO BE CONSIDERED:
On other side of the coin, the intellectual property may be a detriment. It may be that some of the intellectual property infringes the rights of others or that licensing fees are owed to licensees or that licensees are owed fees that in turn are owed to the target company. Further still, there may be real or imminent litigation involving the intellectual property.
THE IMPORTANCE OF DUE DILIGENCES:
In any event, a due diligence should be conducted concerning the intellectual property. Although the prospect of conducting a due diligence may seem daunting, the procedure is extremely useful and can yield very profitable results for the purchaser. In general overview, there are a few simple procedures which, if observed, can go a long way to benefit the purchaser of the target company.
One should initially determine if the company being acquired properly owns or has the adequate license(s) in place to use to the technology. Second, a review of all agreements into which the target company has entered is required. This will ascertain whether the company’s licenses are of sufficient breath to cover future use and/or modifications of the technology and ownership indications for improvements. The issue of infringement should also be addressed. The company being acquired should fully disclose potential infringement issues to the purchasing entity whether they have been resolved or are pending.
The existence of any royalty obligations of the target company should also be analyzed in the form of licensing fees, lump sum payments, emissions, etc. as well as duration of payment and any conditions related thereto.
Finally, a further important consideration to bear in mind is employee requirements regarding intellectual property issues. It should be confirmed that all contractors/employees have signed agreements vesting the intellectual property to the target company. It is an important aspect and avoids competition issues as well as having to try to track down employees that may have been terminated or moved on after the transaction has been completed.
CONCLUSION:
It should be borne in mind that this is a general overview of the considerations involved in intellectual property assets in the merger and acquisition environment. There are tax consequences to be also considered as well as a series of other nuances that require professional assistance.
Should you require any additional information regarding the protection of intellectual property rights in the case of mergers and acquisitions, you are invited to contact the undersigned.
Paul Sharpe is a Registered Patent Agent in our Intellectual Property Group and can be reached at 613.567.0762 or psharpe@mbm.com.
Wednesday, June 19, 2013
I Have a Patent, Now What?
Your concept may be novel and your invention may be exactly what everybody needs. However, unless you get your patented idea from the drawing board into your customer's hands, the chances of it reaping profits could be scarce. Here's an overview of your options for getting your invention made and out the door.
Many small inventors develop something new and then unrealistically expect that a path will be beaten to his or her door by big companies. They go to the expense of researching the area of their technology, preparing intellectual property rights, filing the rights and eventually issuing them without any real focus on what they really want from the protection they obtain.
Many inventors get to this point and then indicate that they do not know what to do going forward. This is a common theme and what they do not realize is that they are very capable of executing an effective strategy to commercialize or monetize their inventions. The patience, planning and skill that were involved in the steps to secure the intellectual property are transferrable to the commercialization/ monetization phase. The other problem that is always prevalent is a lack of funding to further advance the project. For many inventors this has the perception of being insurmountable and frequently results in the project coming to a standstill or being entirely abandoned.
In reality, the pursuit of commercialization/monetization of an invention is similar to any other business. A plan must be prepared and followed diligently with constant adaptation to changing factors.
A general game plan involves a series of steps including:
1. Define the market to which the technology relates. What is the size? What amount of revenue is generated? How many competitive products are in the market space?
2. Delineate the advantages attributable to the product or process relative to existing players. Is there a cost, ease of use, manufacturing, efficiency, etc. advantage?
3. Research which companies are most likely to entertain new developments for introduction into their existing product lines. This can be easily ascertained by internet research as well as through the use of intellectual property professionals.
4. Approach government funding agencies, technology innovation centers, bankers inter alia to source funds for eventual marketing and manufacturing of the invention.. There are a number of such agencies and the Canadian government has a large number of incentives available.
5. Prepare marketing materials to present the concept to other interested parties. Many of the previous steps material will also result in a loose business plan which can be perfected with additional help from an experienced person. The business plan is an important part of the process as it will demonstrate the economic feasibility to the target audience and illustrate that thought and preparation has gone into the project.
These initial steps will position an inventor for success. Other alternatives for monetization include listing the intellectual property in an auction for sale when direct involvement in the “business” of the invention is not desired by the inventor.
Finally, the technology may be licensed to another party. In this scenario, the innovator collects a licensing fee for certain activity undertaken by the party holding the license.
In conclusion, the road to commercialization/monetization requires perseverance and a disciplined approach exemplified by Mr. Bell and Mr. Edison.
By Paul Sharpe
Friday, June 14, 2013
Are Isolated Human Genes Patentable In Canada?
While the patentability of isolated human genes has not been considered by the Canadian courts, given the controversial nature of this area of patent law, it is not unreasonable to predict that this issue may be brought before the Canadian courts in the future. Particularly, in light of the fact, that a number of Canadian groups have publicly opposed these types of patents in Canada. Accordingly, the question to be asked is “Are isolated human genes patentable subject matter in Canada?”
What is patentable subject matter in Canada is set forth in Section 2 of the Patent Act which recites:
““invention” means any new and useful art, process, machine, manufacture or composition of matter, or any new and useful improvement in any art, process, machine, manufacture or composition of matter”
The only prohibition with respect to patentable subject matter in the Patent Act is set forth in Section 27(3) of Patent Act which states “No patent shall be granted for any mere scientific principle or abstract theorem.” There is no prohibition in the Canadian Patent Act relating to laws of nature nor is there any type of moral exclusion with regard to patentable subject matter in Canada.
Accordingly, when considering patentable subject matter in Canada, one must determine whether the subject matter in question is a mere scientific principle or abstract theorem and therefore specifically excluded by Section 27(3). If this is not the case, then it is necessary to determine if the subject matter in question falls within at least one of the categories set forth in Section 2. For example, the Supreme Court of Canada previously found that higher life forms (i.e. mouse) did not fall within one of categories set forth in Section 2 of the Patent Act and therefore was not patentable subject matter.
Isolated human genes clearly are not simply a mere scientific principle or abstract theorem and therefore do not fall under the Section 27(3) exclusion. Furthermore, isolated human genes are compositions of matter and therefore fall within at least one of the categories, composition of matter, set forth in Section 2. Accordingly, isolated human genes are patentable subject matter in Canada. The Canadian Intellectual Property Office clearly also regards isolated human genes as patentable given the numerous Canadian patents that have been issued with claims directed to isolated DNA generally and isolated genomic DNA in particular. In fact, Myriad Genetics Inc does have Canadian patents relating to the human genes, BRCA1 and BRCA2, and methods of genetic testing relating to these genes.
Nevertheless, given that there are no excess claim fees in Canada, there is no reason not to include claims specifically directed to cDNA, which is clearly not naturally occurring, in addition to generic isolated DNA / nucleic acid claims. We strongly recommend you consult with a Canadian patent agent to discuss your options with respect to your claim options in Canada.
By: Kay Palmer
Thursday, June 13, 2013
US Supreme Court rules that isolated human genes are not patentable
http://www.supremecourt.gov/opinions/12pdf/12-398_8njq.pdf
In a ruling that is sure to send reverberations around the world of intellectual property law, the US Supreme Court unanimously ruled that isolated human genes are not patentable.
More specifically, the Court found that the BRCA1 gene was not patentable subject matter in the very recent decision of Association for Molecular Pathology v. Myriad Genetics, Inc.
This ruling is remarkably timely, as public awareness of this aspect of patent law has never been higher. Hollywood film star Angelina Jolie recently announced that she underwent a double mastectomy in response to the results of a DNA test that identified her as having a mutation in her BRCA1 gene - which indicates an increased susceptibility for developing breast cancer. Public debate is heated with respect to the patenting of human genes. The BRCA1 gene had been patented by Myriad Genetics, a company based out of Utah. Myriad provides BRCA1 screening test at a cost of approximately $3000, which raises access to medicine issues. Can an average woman afford Myriad’s BRCA1 test?
In coming to its unanimous decision, the US Supreme court noted that although Myriad found an important and useful gene, it was also undisputed that Myriad did not alter the gene in any way. As such, Justice Thomas wrote that "separating that gene from its surrounding genetic material is not an act of invention."
It is important to note that the Supreme Court distinguished the patentability of complimentary DNA molecules (“cDNA”) in determining that “cDNA retains the naturally occurring exons of DNA, but it is distinct from the DNA from which it was derived," and accordingly, "cDNA is not a 'product of nature' and is patent eligible under §101." §101 of the Patent Act defines the eligible subject matter for a patent in the US.
Moreover, the Supreme Court explicitly noted that it was not ruling on the patentability of methods or applications of knowledge involving the BRCA1 and BRCA2 genes. Rather, the Court found that it was "merely hold[ing] that genes and the information they encode are not patent eligible under §101 simply because they have been isolated from the surrounding genetic material."
Check back with MBM’s blog for analysis and updates regarding this exciting and landmark ruling and the Canadian context with respect to human gene patenting.
By: Adam Tracey
Friday, June 7, 2013
Supreme Court Revises Decision on Teva v. Pfizer
The Supreme Court of Canada has made a decision on Pfizer’s motion regarding the Court’s earlier decision in Teva Canada Ltd. v. Pfizer Canada Inc. (2012 SCC 60). In Teva v. Pfizer, Pfizer sought an order prohibiting the Minister of Health from issuing a Notice of Compliance to Teva for its generic version of Viagra under the Patented Medicines (Notice of Compliance) Regulations.
The Supreme Court issued its decision in the case in November 2012, pronouncing that the Pfizer patent for Viagra was “invalid” and “void”. After the decision, Pfizer brought a motion for either a re-hearing or a modification of the Supreme Court decision. Pfizer argued that the Supreme Court’s decision exceeded its jurisdiction in the matter, that the case had been brought in the context of the PM(NOC) Regulations wherein the purpose of the proceeding was not determining the validity of the patent. Pfizer asked the Court to vary its invalidity decision with respect to the Viagra patent, and to limit itself to the remedy available under the PM(NOC) Regulations, i.e. dismiss the application for an order prohibiting Teva from obtaining a Notice of Compliance.
On June 4, 2013, the Supreme Court issued its decision on Pfizer’s motion. The Court has modified its earlier order in Teva v. Pfizer by removing the statements that the patent is invalid and void, and replacing them with statements to the effect that Teva has established its allegations under the PM(NOC) Regulations that Pfizer’s patent for Viagra is not valid. The Court also amended its earlier decision by specifying in the first paragraph the application brought by Pfizer (i.e. an application under PM(NOC) Regulations for an order prohibiting the Minister of Health from issuing a Notice of Compliance to Teva), and by adding to the last paragraph that the Supreme Court dismisses that application.
The implications of this modification of the Supreme Court’s earlier decision will become fully clear in the future. One notable outcome of this decision is that the Supreme Court of Canada has demonstrated it is not above reconsidering and modifying its own decisions.
By Nazanin Ghaissarnia
Anti-Monopoly Laws In China
The Anti-Monopoly laws (AML) in China have been put in place to promote the “public interest” and constitute the equivalent of anti-trust laws in the US representing a step forward in unifying Chinese laws with the international laws. AML can be divided to three categories(1) : First is the merger category, which requires companies whose transactions exceed a certain threshold to inform the Chinese government of these transactions in order to receive clearance. The second category is focuses on monopoly agreements, prohibiting agreements from containing certain clauses that restrict competition, such as clauses directed to price fixing, technology restrictions and limiting production. The third category pertains to the abuse of dominant market position, which prohibits businesses that have dominant position in the market to abuse this position in controlling the market.(2)The AML are implemented through special government agency called “Anti-monopoly Enforcement Authorities” (AMEA) which decide when and how to enforce these decisions(3).
From a practical perspective, the law has been used more as a tool for organizing government activities, rather than as a method of balancing the interest of citizens and the state(4). Before AML, anti-trust competition laws were in place, which prohibited tied selling, price fixing and bid rigging, but failed to address other anticompetitive activities like creating monopolies(5). As a result AML is filling the gap that existed before.
Article 55 of AML contains provisions that speak specifically about Intellectual Property. This Article provides that “this law is not applicable to the undertaking which use Intellectual Property rights according to the laws and administrative regulation relevant to Intellectual Property, but it is applicable to the undertakings which “abuses IP” and “eliminate or restrict market competition”(6). This provision provides a safe environment for IP owners as long as they are within their legitimate rights and applies when the abuse of Intellectual Property occurs. However, the term “abuse” has not been defined. Some commentators find the existence of Article 55 equal to “patent misuse” provision under the US law, which does not allow a patent holder from “seeking to leverage its lawful monopoly IP rights to extend them beyond the proper scope of the patent”(7).
Commentators find three major issues with this Article(8). First, the relationship between the prohibitions and Article 55: Is this Article merely designed to further clarify the AML or does it create a prohibition? Some critics believe that this article prohibits companies that are abusing the market dominant position and it has been put in place to help the non-dominant companies carry out business as well. If this provision is interpreted widely, then it will include all dominant and non-dominant companies. For example, Microsoft argues that it does not have a dominant market share in China, as a result of the high amount of piracy. However, this position may be considered irrelevant if the provision is broadly interpreted. So far there has not been any case with regards to this matter.
The second issue is that Article 55 may prevent entities from price discrimination and discrimination in IP licensing. This means when it comes to licensing, an entity has to treat all third parties the same and favorably - if licensing is compulsory this can disincentivize innovation.
The third issue is the potential impact of Article 55 on patent infringement issues. Local companies may bring Article 55, to accuse the patent holder of monopolizing the market and preventing competition. Local companies then can ask for an investigation from the government with this regard. This will make it more difficult for foreign companies to enforce their IP rights in China. A law firm in China submitted a case to AMEA against Microsoft and suggested using AMEA to initiate an anti-monopoly investigation against Microsoft and further accusing Microsoft of abusing this alleged market monopoly.
Some of the defences used when facing an anti-monopoly charge are the ‘non-dominant position’ defence or the ‘defence of new development’. There are some approved exemptions to AML where the monopoly agreement are beneficial to: (1) improve technology or research and develop new products; (2) upgrade product quality, reduce costs, improve efficiency, unify product specifications and standards, or realize division of work based on specialization; (3) improve operational efficiency and enhance competitiveness of small and medium sized entities; or (4) serve the public welfare, by conserving energy, protecting the environment, and providing disaster relief (9). These provisions are designed to encourage foreign investment in China. Microsoft has set up the China research & development group and is planning to invest $1 billion on this research and development center.
AML in China has been created in an effort to keep China more in tune with the other countries; however it has also created a degree of ambiguity. Going forward, legal observers will be following the developments in Chinese jurisprudence to further clarify this legislation, giving foreign companies a sense of just how AML is going to be applied in Chinese courts.
By: Asrin Jawaheri
References:
(1)Hannah
C. L. Ha, “China’s Anti-Monopoly Law” online: www.mayerbrown.com
(2) Ibid(3) Thomas Brook, China’s Anti-Monopoly law: History, Application and Enforcement, (2011) 16 Appeal review of current law and law reform 31-48
(4) Ibid
(5) Ibid
(6) Dr. Yuun Tian, “The impact of the Chinese Anti-Monopoly Law on IP Commercialization Technology-Driven Companies and Future Regulators” (2010) Duke Law & Technology Reviews
(7) Ibid
(8) Ibid
(9) Ibid