If the recent weeks of Brexit uncertainty weren’t scream-inducing enough, Halloween is now upon us! Here at Mathys & Squire, we love the scary, the surprising, and most of all the unique, and so we thought we would highlight a few inventions that could make your Halloween celebrations bigger and spookier than ever before…

The decorations

Everyone knows that in order to successfully frighten your party guests, timing is everything – you have to surprise them when they least expect it! With this in mind, US 2012/0060270 discloses an attachable toilet appliance containing a flush responsive audio player. Once triggered, the appliance plays a pre-recorded (and hopefully terrifying) audio message to the user. 

Spooky decorations are also a must for any Halloween party, but with increasing demand for healthier food options and a drive to reduce plastic use, how do you frighten your guests whilst being environmentally friendly and avoiding high sugar treats? Fortunately, there seems to be an answer. US 4,827,666 discloses an apparatus for growing squash, cucumbers and other fruits into desired shapes with improved surface details. In particular, US 4,827,666 notes that ‘A zucchini in the likeness of  Clark Gable, for example, complete with mustache, would be no ordinary sight on the dinner table’ – we couldn’t agree more – the disembodied head of Clark Gable would indeed be both a uniquely frightening and healthy table decoration!

A more traditional Halloween decoration activity involves carving pumpkins, however US 2007/0114336 provides a modernised method of creating these spooky adornments. US 2007/0114336 discloses a decor kit for decorating and accessorising pumpkins, squash, various fruits and vegetables. The kit includes a support base, a covering to surround the support base, and accessories to humanise the carved fruit/vegetable. Our favourite is shown below, we think this ‘hip hop’-looking pumpkin is simply gourd-eous (sorry, at least it wasn’t a Jack the Rapper joke!).

As an alternative, US 2010/0003888 discloses ‘The Regurgitator’, a life size Halloween novelty decoration containing  multiple motion sensors triggering different messages when approached from different angles, for example: (Woman screaming with man laughing in background) “THIS IS WHAT YOU GET WHENYOU STAND IN FRONT OF THE REGURGITATOR AAAAAAAAAA” (throw up noises at end). When approached from the front, the man-shaped novelty item will also ‘throw up’ fluid into a metal bucket, while still playing messages. In order to achieve this effect, a fluid jug is located inside the head, wherein fluid contained within the jug will flow through the mouth orifice when triggered. The man-shaped novelty item also contains a bucket attached to the hands in order to catch the expelled fluid.

For something a little more high-tech, US 2016/0047536 discloses a novelty decoration which uses light to add human-like features to an inanimate object. The invention includes a film with an image that has been manipulated to provide for a low profile projection of an image onto a vertical surface directly adjacent to the object. The projected image includes an animated face along with audio in the form of music or vocal sounds.

The costume

As well as making sure your home is as terrifying as possible, in order to achieve maximum effect, you also need to make sure that you look the part, but how do you decide what to wear when the weather can be so unpredictable? US 2003/0177562 seems to have the solution and discloses a fancy dress costume specifically adapted for changeable weather. In order to improve the comfort of the wearer, this costume is adapted to accommodate not only losses of humidity, but also losses of heat, through the inclusion of vents. Venting is provided in the form of a mesh, net-like material, or other ventilated fabric in the fabrication of the costume. The costume also includes an insulating material disposed over at least a portion of the first garment base. 

If your main aim is to scare unsuspecting people, US 6,093,475 discloses a costume element which represents a bleeding body part. The bleeding costume element contains an inner layer which may or may not be transparent and an at least partially transparent outer layer with a passage formed there between. A red blood-like fluid, or any alternative fluid, can be pumped through these passages when desired in order to increase the scariness of your costume as desired.

If you have a ‘ghoulish’ idea for a ‘bloodcurdling’ invention – or any other kind of invention – and need some advice, get in touch with a member of our ‘talon’-ted team today.

The notion of whether or not artificial intelligence (AI) can be deemed eligible as an inventor or not has been challenged recently in the press. In this article for Robotics Law Journal, managing associate Andrew White, an expert in our specialist AI team, explores its implications for patent law.

An artificially intelligent system called DABUS (Device for the Autonomous Bootstrapping of Unified Sentience), developed as part of ‘The Artificial Inventor Project’, is challenging the notion of whether AI can be listed as an ‘inventor’ of patent applications. DABUS has been listed as inventor on two different patent families, pending at the United States Patent and Trademark Office (USPTO), European Patent  Office (EPO), UK Intellectual Property Office (UKIPO) and Patent Cooperation Treaty (PCT).

The AI system, described as a type of ‘Creativity Machine’ by its creator Dr Stephen Thaler, an AI expert based in Missouri, contains a first artificial neural network, made up of a series of smaller neural networks, that has been trained with general information from various knowledge domains, and a second ‘critic’ artificial neural network that acts as a monitor to identify new ideas that are different from its knowledge base.

Can AI be an inventor under current patent laws?

Under the UK Patents Act 1977 and the European Patent Convention, inventorship is restricted to ‘natural persons’. Likewise, in the US, patent laws refer only to ‘individuals’ as eligible inventors. The intention behind this statute was allegedly to stop companies or corporations being listed as inventors (but who can instead own the patent applications) and instead provide recognition to those who developed the inventive concept central to such patents.

In the present case, the Artificial Intelligence Project is keen to emphasise the distinction between inventorship and ownership – while an inventor may often be the owner of an invention, this may not always be the case. For example, employees of a company may have the right to be listed as an inventor, but the patent may belong to the company if the invention was made as part of the inventors’ normal course of duties as part of their employment.

The Artificial Intelligence Project states that its view is that machines should not own patents (but rather the owners of the machines should be the default owner), but that nevertheless the machine should be acknowledged as the inventor if it truly devised the inventive contribution. This is because AI does not have legal personality and, therefore, cannot own property.

What did the AI create?

The inventions contained in the patent applications are described by the Artificial Inventor Project as being the result of an extensive neural system that combines the memories of various learned elements into potential inventions that are then evaluated through the equivalent of affective responses. These affective responses effectively act to either amplify these concepts, or instead general new concepts by generating ‘noise’. The system was previously developed to create surreal art.

One of these inventions is a ‘neural flame’ device, relative to a light-emitting element that flashes at a prescribed frequency and fractal dimension. The other invention relates to a ‘fractal container’, which is a container for beverages that has a wall with a fractal profile which provides a series of fractal elements on the interior and exterior surfaces, forming pits and bulges in the profile which enables multiple containers to be coupled together by inter-engagement of pits and bulges on corresponding ones of the containers. It is claimed that the profile also improves grip, as well as heat transfer into and out of the container.

Is AI likely to be listed as inventors in these cases?

When assessing who should be listed as inventor, while the approach to assessing inventorship is a matter of national law that varies from jurisdiction to jurisdiction and is not entirely uniform, many jurisdictions require the inventive contribution to be assessed, and then a determination of who came up with the creative or intelligent conception of that inventive contribution – in other words, who came up with the real inventive ‘spark’, i.e. that which distinguishes the invention from that which came before it. This is consistent with the Oxford English Dictionary definition of ‘conception’, which is defined as ‘forming or devising an idea or plan in the mind’.

However the nature of the ‘invention’ is defined, what is generally required is some actual creative or intelligent contribution to the conception phase of the invention, which goes beyond the provision of abstract ideas and the mere execution of ideas on the other. It will be interesting to see where the ideas contained in these patent applications fall on this spectrum.

In the present case, at least, the patent applications are likely to struggle for being formally deficient – for example at the European Patent Office, the applications are likely to fall foul of Article 81 and Rule 19 of the European Patent Convention for not designating the inventor, and if not remedied, refused.

In addition, many people consider that AI is still so primitive at present that it is considered merely a ‘tool’ – it is written by humans, and trained by humans. As such, because it is just a tool, the user of that tool should be listed as the inventor. Many commentators, such as Dr Noam Shemtov, of Queen Mary University of London, who authored a study on inventorship in inventions involving AI activity commissioned by the European Patent Office in February 2019, consider that AI systems that have currently been developed have not yet progressed beyond this stage.

However, with the increasing speed at which AI is developing, it seems that even if in these two cases DABUS is not credited as being the inventor, sooner or later this question will have to be addressed by lawmakers around the world.

Furthermore, it should be noted that aside from the issue of whether or not AI may be listed as inventor in the present case, AI-related inventions (i.e. inventions that make use of AI, for example in drug discovery) are being filed at patent offices around the world at an increasing rate. Many patent offices, such as the European Patent Office, are keen to explain how such inventions are patentable, and recently held a conference in May 2018 on patenting AI inventions.

What are the implications if AI can be listed as an inventor?

Dr Shemtov hypothesises in his study that for an AI to be listed as an inventor under patent laws worldwide, this will require a change to the legal systems and legal frameworks that will involve the creation of a ‘legal or electronic personhood status’. This may be not dissimilar to a system relating to the legal personality of corporations. It may also require a fundamental reassessment of the notion of inventorship with respect to the chain of creation in that it can no longer be based on the idea of creative or intelligent conception, but one which could be described as a ‘functionalist’ approach that looks at the system’s output and contribution. 

Although the Artificial Inventor Project states that it considers AI should not own patents because AI does not have legal personality, if indeed AI can be held eligible as inventor, then the question that naturally follows is: why can’t AI then have legal personality also? This would lead to a far-reaching reassessment of ourselves as humans, and society’s relationship with technology. It would have implications for copyright law, civil liability and data protection, to name but a few. For example, with the advent of autonomous vehicles, it may have implications for the question of liability in an accident involving such autonomous vehicles.

Interestingly, the question of whether or not AI may have a legal personality is one that has already been considered by the EU Parliament, who considered that such an assessment of the nature of AI being considered as a legal person was a plausible future development, but one that is currently not warranted by current technical or legal considerations.

This article was originally published in Robotics Law Journal in October 2019.

The UK’s Supreme Court today issued its judgment in Shanks v Unilever, a long-running dispute regarding the issue of compensation of employees for inventions made during the course of their normal duties.

In deciding that an inventor was entitled to an additional £2 million in compensation, the court’s ruling potentially signifies a more inventor-friendly approach to this topic, particularly in the case of large companies or corporate groups having large overall profits much larger than those attributable to any particular invention and its related patents. However, the detailed commercial context will always need to be scrutinised closely in determining whether additional compensation is warranted.

In Shanks v Unilever, Professor Shanks had been employed as a researcher by Unilever UK Central Resources Ltd (CRL) for four years in the 1980s. During this time he came up with an invention which ultimately became widely used in the field of blood glucose testing. The rights in the invention were assigned from CRL to other companies in the Unilever group for consideration of £100. The invention was the subject of a European patent application and various corresponding foreign applications which were filed in the names of those Unilever companies. Unilever was not itself interested in developing a glucose testing business but ultimately made an estimated £24.3 million from a combination of licenses under the patents and the sale of the patent-holding company.

Under UK law, employee inventors are entitled to additional compensation if an invention protected by a patent is ‘of outstanding benefit’ to the employer, having regard to ‘the size and nature of the employer’s undertaking’. The Supreme Court in Shanks v Unilever overturned earlier findings by the Intellectual Property Office, the High Court, and the Court of Appeal, each of which had found that the benefit of £24.3 million was not ‘outstanding’. In reaching this conclusion, the court found that the earlier decisions had erred in considering the benefit only in the context of the business activities and profits of the Unilever group as a whole, rather than in the context of the subsidiary which employed the inventor. The court held that, where a group operates a research-based subsidiary for the benefit of the whole group and the work results in patents which are assigned to other group members for their benefit, the focus of the inquiry must be the extent of the benefit of that patent to the group in comparison to benefits derived by the group from other patents arising from research carried out by the same subsidiary. In these circumstances, Prof. Shanks’ invention was to be considered ‘outstanding’ and additional compensation was appropriate.

The Supreme Court’s judgment clarifies the issues to be considered when identifying what is meant by the ‘undertaking’ of an employer and when determining whether an invention is to be considered of ‘outstanding benefit’. In particular, the judgment appears to emphasise that parties should be careful to avoid an analysis which arrives at the conclusion that an employer is ‘too big to pay’, for example in concluding that a patent has not been of ‘outstanding benefit’ merely because it has had no significant impact on overall profitability or sale value. In this respect, the judgment potentially signifies a lower bar for awarding compensation than has previously been adopted, although it is clear that the specific commercial context and facts will be crucial in any given case.

For further details on this case, or to learn more about our patent expertise in the life sciences sector, contact the author, Alexander Robinson, or a member of our specialist team.

The extended version of this article has been published by The Commercial Litigation Journal – available here.

In the race to open the market for connected and autonomous vehicles, Mathys & Squire managing associate and patent attorney Andrew White looks at the competing technologies in this article for Vehicle Electronics Magazine.

In August this year, Continental, Europe’s largest auto technology supplier, announced it would stop investing in parts for petrol and diesel engines as it positions itself for rapid growth in cleaner transportation amid declining global production of cars and lorries.

In July, Ford and Volkswagen (VW) announced a significant expansion of their global collaboration on electric vehicles and self-driving technology, as they look to manage the storms battering the global auto industry.

VW will invest $2.6bn in Argo AI, the Ford-backed driverless technology start-up, and will begin testing self-driving cars in Europe, while Ford will build a mass-produced electric vehicle in Europe using VW’s in-house development and manufacturing system for battery cars, promising savings for both companies in duplicated investment costs.

Further, Toyota and Suzuki announced in August that they would deepen their existing alliance and take stakes in each other’s businesses to bear the costs of developing autonomous vehicle technology.

Connected vehicles

It is no surprise that as vehicles use smarter technology, they need to adopt industry-accepted communication protocols to ensure interoperability, to communicate with one another and their external environment.

One of the most widely adopted protocols is the Can, which is now the ISO 11898-2 standard. It dates back to 1986 and can attain 1Mbit/s but, using the latest specification ISO-11898-2 2915, which uses flexible data rate operation (Can-FD), it can reach 12Mbit/s.

However, with the increased prevalence of on-vehicle safety systems such as adas providing functions including adaptive cruise control, lane departure warning systems, radar and lidar sensors, and so on, such speeds are woefully inadequate. Furthermore, Can is limited to a wired system.

With more advanced safety systems, and with autonomous vehicles on the horizon, there is a need for vehicles to communicate wirelessly not only with each other, but also with their wider environment. These communication systems are generally labelled as vehicle to vehicle (V2V) or vehicle to anything (V2X), with the ‘anything’ including the wider environment such as infrastructure and pedestrians.

Of course, these systems have major implications for public safety and are governed by tight regulatory and network constraints. Furthermore, for those businesses that are quick to protect core IP in this area, this may represent a real opportunity to disrupt the entire automotive industry.

DSRC

Over the years, two competing communication protocols have been developed. The first is Dedicated Short Range Communication (DSRC). This is an amendment to the IEEE 802.11 standard.

In short it is wifi for cars, but it has been adapted to be specifically suited to the automotive environment so has to have very low latency and be able to cope with extremely short windows in which it can exchange and transmit data.

The US Department of Transportation has been a big supporter of this system, having invested over $700m in its development, and a section of spectrum in the 5.9GHz band was allocated back in 1999. NXP has been actively pursuing DSRC technology, as have VW and Toyota having both trialled the technology.

Toyota announced in April 2018 that it would begin installation of DSRC technology in 2021, and General Motors began installing the technology in a small number of vehicles.

DSRC does, however, have shortcomings; its short range of 150 to 300m may not be large enough for safety-critical applications when considering vehicles travelling at speed. Collisions between messages from two devices may also occur when they are transmitted at the same time.

This coupled with a lack of sufficient coverage may have an impact on vehicle safety, despite the technology having been demonstrated to be highly effective.

Furthermore, a lack of commitment from the automotive industry, plus Donald Trump’s administration failing to push ahead with a mandate for the technology to be installed in all new vehicles, means DSRC hasn’t yet experienced a wide uptake and is perhaps falling out of favour with the industry, with Toyota announcing in April 2019 that it was going to abandon its plans to use DSRC.

We are delighted to announce the appointment of new partner Andreas Wietzke to our Munich office. See below the full news story published by JUVE Patent.

Mathys & Squire has announced the hire of Andreas Wietzke, a new partner for its Munich office. Wietzke joins the UK IP firm today, 15 October, around three months after it opened in the Bavarian capital. His move is the next step in a fresh continental strategy for Mathys & Squire.

Andreas Wietzke is a qualified patent attorney in Germany and Europe, and joins Mathys & Squire as a partner in its recently-opened Munich office. His expertise lies in prosecuting and enforcing patents. This is particularly in the fields of software and mechanical engineering.

In July 2019, other Munich partner Gerold Fiesser led a team from Herzog Fiesser & Partner to the Mathys & Squire office in Germany. Giuditta Biagini, Lorraine Aleandri-Hachgenei and Kirstin Wenck joined Fiesser as associates.

Previously, Fiesser had been a founding partner at patent attorney firm Herzog Fiesser & Partner. “We want to establish Mathys & Squire as a truly European IP attorney firm,” says Fiesser. The German team has further plans to expand in the near future.

Wietzke joins Mathys & Squire from Munich-based patent attorney firm Bals & Vogel, which works in European and international cases. His departure leaves the firm with eight patent attorneys and four partners, two of whom are managing partners Rüdiger Bals and Andreas Vogel.

Andreas Wietzke had been considered by Mathys & Squire since before its expansion to Munich was announced. Currently, Bals & Vogel is taking steps to shift Wietzke’s cases to the firm’s remaining partners.

Brexit effect

Although the full-service IP firm already has a strong presence in the UK, with offices in London, Manchester, Cambridge, York, Brighton, Oxford and the Midlands, Mathys & Squire continues to develop its continental strategy.

The Munich office comes in addition to a team of one partner and two associates in Paris. The firm also has a presence in Luxembourg. Mathys & Squire now has 106 attorneys in Europe, as well as 30 technical assistants.

Senior partner at Mathys & Squire, Paul Cozens, says, “We have been able to expand in Munich so quickly due to the excellent reputation of Mathys & Squire, and Gerold Fiesser and his team. Post-Brexit, Andreas’ experience will enhance our expertise within the EU.”

This news story was originally published in JUVE Patent – click here to visit their website.

We are delighted to announce that Mathys & Squire continues to be ranked in Tier 1 for the 2020 edition of The Legal 500 – the definitive guide to the legal market.

Our continued focus on instilling a culture of creativity, innovation and adding value for all our clients through our first-class service is reflected in this top-tier ranking.

As well as a Tier 1 firm ranking for PATMA: Patent Attorneys, a number of our patent attorneys have been recommended for their expertise:

Chris Hamer ‘is always keen to provide support in whatever way the firm can, which is very useful for an in-house team that has several peaks of legal work and different priorities from time to time.’

Martin MacLean ‘is a real guru in the healthcare and pharmaceutical field, and brings his experience to bear in not only giving very wise legal advice, but also setting things in a commercial context.’

Anna Gregson ‘is simply outstanding. Professional, pragmatic, approachable and always on hand for advice.’

Catherine Booth ‘excels in: 1) understanding the business needs, 2) learning the technical details, 3) capturing relevant law, 4) persuasive communication both on paper and in person, 5) listening to and countering third parties in real time.’

Sean Leach ‘is technically brilliant and even R&D folks, who are PhDs in their specialist areas, have commended his grasp of new technologies.’

Craig Titmus ‘is highly knowledgeable and consistently meets incredibly tight deadlines.’

Jane Clark, Paul Cozens and Cambridge-based Alan MacDougall were also recommended in the guide.

Praise for Mathys & Squire’s patent practice includes:

‘The team has a unique blend of diversity of technology expertise combined with individual personal touch, which means that you get both the security that the science is fully understood, along with the in-depth relationship with a single key legal adviser. They are adaptive and responsive to the client’s needs, and very experienced in handling complex collaborative projects with several stakeholders. They also have outstanding commercial expertise, so always see the bigger picture.’

‘Mathys & Squire LLP is an excellent associate office for EPO patent matters. The team is efficient and responsive. They are in tune with the client’s needs and handle our requests in a professional and well-organised manner. Their experience makes it easy to entrust them with patent filings for UK as well as for EPO matters.’

‘Very professional, innovative, reliable and efficient.’

‘Very thorough in analysis, preparation and strategy for oppositions.’

Alongside our patent practice, Mathys & Squire’s trade mark team has also been ranked in the 2020 guide (PATMA: Trade Mark Attorneys), with partners Gary Johnston and Margaret Arnott featuring as recommended individuals: ‘Mathys & Squire LLP assists with the full spectrum of trade mark prosecution and since its acquisition of Coller IP in December 2017 is also able to offer a comprehensive trade mark valuation and commercialisation service. The group is experienced in assisting large multinationals and domestic start-ups alike, with an especially strong focus on the automotive sector as part of an overall diverse sector offering. The Manchester-based Gary Johnston and the London-based Margaret Arnott, who is dual-qualified as a solicitor and heads the litigation practice, direct the team. Associate Rebecca Tew joined from Marks & Clerk LLP to head up the newly opened Midlands office, which complements the firm’s already wide domestic footprint. The international offices are in Paris, Munich and Luxembourg.’

For full details of our rankings in The Legal 500 2020 guide, please click here.

The referral from the UK High Court to the CJEU regarding ‘third party SPCs’ represented a matter of significant interest to the biotech community. Our earlier commentary regarding this referral can be found here.

The referred question was as follows: “Does the SPC Regulation preclude the grant of an SPC to the proprietor of a basic patent in respect of a product which is the subject of a marketing authorisation held by a third party without that party’s consent?”

The CJEU has now provided a response to the referral (C-239/19) – unfortunately without providing an answer to the referred question.

The CJEU comments that the referral from the UK High Court was “manifestly inadmissible”, particularly as the question referred was hypothetical in the context of the UK proceedings which gave rise to the referral.

In particular, the CJEU noted that the justification provided for the referral was based on the following purely hypothetical set of circumstances: Genentech would appeal the decision declaring the claims of the basic patent to be invalid; the Court of Appeal would overturn that first instance decision; the Court of Appeal would then find it necessary to refer a question to the CJEU; and the Court of Appeal might, by that point, have lost its jurisdiction to refer such a question to the CJEU  because of the UK’s planned withdrawal from the EU.

The CJEU decided that these circumstances did not justify the request for a ruling on the referred question. Specifically, the CJEU comments that its ruling was not “necessary for the effective resolution” of the dispute.

Disappointingly the UK High Court’s question regarding ‘third party SPCs’ therefore remains unanswered for now. However, given the level of interest in this issue, and the possibility of MA holders utilising the arguments put forward by Eli Lilly in future SPC revocation actions, it seems likely that a referral to the CJEU along similar lines will be made in the future. As noted in the referral, there are ongoing contentious proceedings between Eli Lilly and Genentech in other EU jurisdictions – a future referral could therefore even originate from the same parties.

If you have any questions about this update or SPCs in general, please visit our specialist SPC page.

Thank you to everyone who joined us for our drinks reception in The Shard on Sunday 15 September to celebrate the AIPPI 2019 World Congress coming to London. The Mathys & Squire team was joined by over 300 IP professionals from across the globe throughout the day.

AIPPI is the world’s leading international organisation dedicated to the development and improvement of legal regimes for the protection of intellectual property (IP).

Mathys & Squire partners Caroline Warren, Michael Stott and Peter Arch will also be attending the various AIPPI panels and events during the course of the Congress and are happy to meet with other IP professionals during the event.

If you attended our drinks reception and would like to arrange a follow-up meeting with one of our partners, please contact us here – we will be happy to arrange this for you.

Background

Advocate General (AG) Gerard Hogan has issued his opinion in connection with two requests for a preliminary ruling regarding the interpretation of the requirement in Article 3(a) of the Supplementary Protection Certificate (SPC) Regulation that the product must be “protected by a basic patent in force”. The referrals, C-650/17 (Royalty Pharma) and C-114/18 (Sandoz v Searle), were joined by the CJEU and the full text of the AG’s opinion can be found here.

Various previous decisions of the CJEU have addressed the question of how Article 3(a) of the SPC regulation should be interpreted. The most recent of these is C-121/17 (Teva v Gilead), in which the CJEU held that a product composed of several active ingredients is “protected by a basic patent in force” where:

“even if the combination of active ingredients of which that product is composed is not expressly mentioned in the claims of the basic patent, those claims relate necessarily and specifically to that combination. For that purpose, from the point of view of a person skilled in the art and on the basis of the prior art at the filing date or priority date of the basic patent:

(i)    the combination of those active ingredients must necessarily, in the light of the description and drawings of that patent, fall under the invention covered by that patent, and

(ii)    each of those active ingredients must be specifically identifiable, in the light of all the information disclosed by that patent.”

Cases C-650/17 and C-114/18 deal with the issue of how Article 3(a) should be interpreted in cases where a single active ingredient is defined in the patent either functionally, or by reference to a Markush structure. In particular, in case C-650/17, the authorised product is sitagliptin, but the basic patent defines the product functionally as a DP-IV inhibitor. In case C-114/18, the authorised product is darunavir, which is encompassed by the Markush structure in the claims of the basic patent.

The AG’s opinion

The AG’s opinion is that Article 3(a) of the SPC Regulation does not preclude the grant of an SPC for an active ingredient which is covered by a functional definition or a Markush formula, provided that the two part test which the CJEU set out in C-121/17 (see above) is satisfied. This test is equally applicable both to products consisting of a single active ingredient and to products composed of several active ingredients and must be applied from the point of view of the skilled person and on the basis of the prior art at the filing date or priority date of the basic patent.

Step (i) of the Teva v Gilead test is to determine whether the product “necessarily” falls under the invention covered by the basic patent. According to the AG, step (i) is satisfied “if the product to which the claims of the basic patent relate is a specification required for the solution of the technical problem disclosed by that patent”.  Conversely, if “the claims in a patent in relation to a product are not required for the solution of the technical problem disclosed by a patent”, then the test is not satisfied and an SPC may not be granted. Contrary to the suggestion of the UK Court in its referral in the Teva v Gilead case, the question of whether the product embodies the “core inventive advance” of the patent is of no relevance.

Step (ii) of the Teva v Gilead test is to determine whether the product is “specifically identifiable” in the light of all the information disclosed by the patent. The AG’s opinion is that the product is “specifically identifiable” if the skilled person would have been able “in the light of all the information contained in a patent, on the basis of the prior art at the filing date or priority date of the patent in question, to derive the product in question”. Conversely, a product is not “specifically identifiable” if, “in the light of all the information contained in a patent, a product or constituent element of the product remains unknown to a person skilled in the art on the basis of the prior art at the filing date or priority date of the patent in question”.

The AG’s opinion is not binding on the CJEU, and it remains to be seen whether the CJEU will follow the same approach. SPC holders will take comfort in the AG’s confirmation that functional definitions and Markush claims do not preclude SPC protection, but questions remain regarding the practical circumstances in which the Teva v Gilead test can be satisfied in such cases. We therefore await with interest both the CJEU’s decision and its subsequent interpretation by the national courts in the UK and Germany.

For further details about SPCs, visit our webpage here, or find out more about our pharmaceuticals team’s medical regulations experience here. 

Some technology innovation businesses focus on intellectual property (IP) generation and are well aware of the threats from the outset. However, despite intangible assets now usually making up the major part of most company valuations, many businesses still deal with these issues reactively when they get thrust into focus by events, rather than proactively, and end up with an outcome which is both less positive and more expensive.

Why does this happen?

Well, to be honest, the issue is that it is not always easy to get IP strategy right, and particularly for the appropriate cost and level. Some attempts get bogged down in the detail and a lot of money is spent looking through the weeds without finding a clear path, while some businesses engage in consultancy which produces a nice sounding ‘strategy’ document that looks impressive in the annual report or at the Board but is painfully short on implementable details or specific value-adding output. Having experienced either in the past, or it simply not being clear what value is to be gained, often sensible (and perhaps cynical) business leaders under time and budget pressures understandably press ahead with the more tangible product development issues.

Let’s consider some typical scenarios involving a ‘moderately innovative’ company which doesn’t seek to be a cutting-edge disruptive player but nonetheless is routinely refining, updating and improving its products and adapting to expected customer requirements.

Perhaps the company considers it is simply adding automation, integration, connectivity and convenience features that users generally want, or it is improving manufacturing processes or product physical qualities. Occasionally, changes will be made which percolate up as being sufficiently distinctive that the company considers applying for a patent. At this point, it may transpire that for various reasons there are likely to be serious difficulties protecting what was thought to be interesting, which could be due to the technology area. For example, what can and cannot be protected in the field of software / AI / medical technology is often far from intuitive to someone who is not an IP expert in this area, or simply because it is a generally crowded field. However, it often turns out that the company did have some innovations along the way at the design stage that might not only have been protectable, but could even have been the basis for broader and more valuable protection but it is now too late as they have been disclosed or others have got there first. Moreover, some of the little tweaks that were dismissed or not registered (which were made to solve particular problems) could have been protected, and might have qualified the company for a tax break if patented.

Another worst-case scenario is that, whether by a benign means or by being the recipient of a threatening letter or court action, a company discovers that a competitor has patent protection for a feature after having spent time, money and effort developing and incorporating it into a product. At a late stage, the choices are unlikely to be attractive: either abandon / redesign the product; face the prospect of margin-destroying royalties, if even available; or worse – distracting and expensive litigation. It is often the case that early visibility of the situation might have enabled the design to be modified to reduce risk, and potentially protection could have been obtained which would have been valuable and possibly tradeable in a cross-licence with the competitor. The threat itself might have been relatively inexpensively cut down by opposing the competitor patent at the European Patent Office (EPO).

Benefits of considering an IP strategy early on

Now extensive searching for potential bad news is expensive and rarely worthwhile, but targeted intelligence on competitor IP may be simpler to obtain and can inform general business decisions. Identifying promising areas to develop and protect strategically (not simply reacting to what comes out at the end of the design process), and considering the IP angle early can identify less risky routes that are more protectable, might give rise to tax reductions and tradeable assets. Collectively this could make a company a more attractive acquisition target and a less attractive litigation target.

A number of companies opt to take IP more seriously after some successful early stage growth when new advisors and investors come on board. More often than not, it is discovered that many of the business’ good ideas were not protected appropriately at the time. A scrabble for second generation protection generally costs significantly more to obtain several narrow patents, each of which might be circumvented, than a broad patent covering key innovations in the first place might have cost.

How much does looking ahead strategically cost?

A fraction of what dealing with a surprise usually does. As little as half a day’s time of a handful of the right people (CTO, key technical/product people and an appropriately technically and commercially savvy IP advisor) appropriately prepared at the start of a new product development cycle can typically identify the more promising and less promising avenues before design commitment, and often generate potential IP in itself early on. This is particularly true for a small to medium size growing company: filing a number of strategically targeted patent applications can add value and can encourage otherwise likely litigious competitors to adopt a more constructive cross-licensing approach. To put in context, defending patent litigation costs may typically run into millions of pounds spent in short order at a time of a competitor’s choosing, whereas building a credible patent portfolio may cost a few tens of thousands spread over a few years, with timing adjustable to suit budgeting.

Sometimes the outcome of a strategic look ahead at IP is simply that there frankly is not much of a hard IP angle to the proposed new product activities. This knowledge, as well as usually being refreshingly inexpensive to acquire, is itself valuable in informing the likely speed of competition, appropriate branding and other marketing strategy to keep ahead.

As with most things in business, a little knowledge of the road ahead can be very valuable.

This article was published on Compare the Cloud in September 2019.