Encouraging acknowledgement from Rob Law (Trunki CEO and founder) of the importance of filing registered designs with “Trunki [now filing] a registered design for just about everything”, as reported here following a Design Week panel discussion attended by Mathys & Squire.

This follows the well-documented 2016 Supreme Court design infringement action brought by Trunki, which highlighted the importance of getting registered designs right. When used correctly, registered designs are an easy, effective and relatively inexpensive way of securing monopoly protection for designs.

For more information on designs and how Mathys & Squire can help you with protecting and commercialising your designs, please click here.

The German constitutional court has extended the deadline for comments in the constitutional case against the Unified Patent Court Agreement from 31 October to 31 December. We should therefore not expect to have an opinion on the case from the Court until the new year.

In the meantime, the UPC legislation has been moving through the Scottish legislative process but there does not seem to have been any movement from the UK government to progress the legislation towards ratification for the UK as a whole.

For more information about the UPC please click here or contact Caroline Warren.

Advocate General Wahl has issued his preliminary ruling on the interpretation of competition law in selective distribution agreements. 

A luxury perfume manufacturer, Coty Germany, is in dispute with one of its authorised distributors regarding the sale of its products on Amazon.de. The terms and conditions of its distribution agreement prevent the sale of its products on online platforms.

The German Regional Court dismissed the claim in 2014 on the basis that the term was unenforceable as it infringed antitrust laws. The Appeal Court has now asked the Court of Justice of the European Union for guidance on whether an online sales ban infringes European competition laws.

In its referral to the ECJ, the German Court explains that distributors want to make use of the increasing growth in online sales and there is uncertainty as to whether manufacturers can legitimately restrict or ban online sales.  In particular, there is uncertainty as to whether the protection of a brand’s luxury image is a valid reason for restricting the sale of goods via online platforms.

AG Wahl has disagreed with the German Regional Court and confirmed that a seller of luxury goods can lawfully restrict the sale of its products through conditions imposed on authorised retailers, including prohibiting the sale of products on online marketplaces.

He explained that in his view, selective distribution arrangements positively affect competition. Luxury brands use distribution systems to extend the geographic sale of goods and the restrictions they are able to put in place helps to maintain brand image. He went on to say that, if such restrictions were unlawful, brands would not risk the sale of goods through uncontrolled distribution agreements and competition would be diminished.

However, for selective agreements to be lawful the product must necessitate selective distribution, for example, due to its high quality or technical nature. Any restrictions must be objective and have criteria which are uniformly applied to all distributors.

We now await the Court of Justice’s judgment on the issue and whether they will follow AG Wahl’s common sense approach. 

For more information, please contact the litigation team here. 

Interim injunctions are a helpful tool to prevent potential infringement at an early stage of the litigation process, months before a court trial would take force. However, there are risks involved and applicants are usually required to provide an undertaking that they will cover any damages caused to the defendant as a result of the injunction should it be later found that their infringement claim is unfounded.

Napp Pharmaceutical Holdings Limited v Sandoz Limited and Others is an example of a case where a cross-undertaking in damages was given by Napp, in exchange for an interim injunction against Sandoz. Napp was unsuccessful in its patent infringement claim and the interim injunction against Sandoz was discharged.

Sandoz brought an application for damages caused by the interim injunction for over £100million. This figure was higher than the annual value of the relevant market, but was allegedly calculated on the basis that Sandoz was kept out of the market for 6 months, causing permanent damage to its business. Sandoz contended that the injunction prevented them from launching when they planned to and that they were entitled to the lost profit.

Napp requested further information relating to the profit margins and prices that Sandoz Limited claimed. Sandoz was unwilling to provide further detailed information as Napp was its closest competitor and Sandoz only gave a blended profit margin figure across all group companies.

The court agreed with Napp that the calculations and market growth figures were not explained adequately by Sandoz.  In addition, Sandoz had failed to plead how profits were attributed to the companies within the group.

It will be interesting to see what damages Napp are ordered to pay to Sandoz. This case highlights that although interim injunctions can be helpful to stop damaging infringement, there are risks involved and a cross-undertaking in damages should not be given lightly.

For more information about this article and to see how Mathys & Squire can help, litigation associate, Abigail Nicholls. 

We are delighted to announce that we have now achieved ISO 9001 & 14001 accreditation. (International Organization for Standardization).

By meeting the standards of ISO 9001, the firm has shown commitment to providing a high level of customer service, delivering consistent performance and continuously improving. ISO 14001 focuses on environmental management, and recognises that we are committed to improving environmental performance through efficient use of resources and reduction of waste.

We are proud of being an environmentally aware firm, and are pleased to be able to formalise our processes and gain recognition for our commitment to delivering a first-class service to our clients. 

To find out more about ISO 9001 and ISO 14001, please click here. 

Mathys & Squire are thrilled to see that their client, ZapGo recently received notable media coverage for their battery innovation that is set to revolutionise, not only the automotive industry, but also how we charge our everyday home appliances.

The British start-up company developed nano carbon supercapacitors that could mean the rapid charging of gadgets and electric vehicles is imminent, and that it could take a matter of seconds to do so. The BBC has reported  that though the current version is unable to store a substantial amount of power, later versions of the carbon-ion supercapacitor batteries will.

Currently, lithium-ion batteries, found in most smartphones and electronics, take a significate amount of time to charge, however the supercapacitors developed by ZapGo can withstand thousands of charges thanks to less moving parts, meaning a portable charger can be fully powered in just 5 minutes. Which ultimately means you can simply zap and go!

To watch the BBC World News report, please click here. 

We are supporting #Worldmentalhealthday and Young Minds by wearing yellow for the day #HelloYellow.

By wearing yellow this Mental Health Day (Tuesday 10th October) we are supporting Young Minds, our charity of the year, to show young people that they’re not alone when it comes to their mental health.

Figures show that 3 children in every classroom have a diagnosable mental health condition, and over 80,000 young people are severely depressed. Young Minds do fantastic work with children, parents, schools and businesses to raise awareness, and address nationwide issues such as adversity and building resilience. They also run a parents helpline that provides help and guidance. 

Read more about Young Minds. 

In September, Health Enterprise East held an awards ceremony for its yearly NHS Innovation Competition, where NHS staff and SMEs across the East of England, East Midlands and London submit innovative ideas for products and services that address unmet needs in the NHS and improve patient services.

David Miller, Partner at Mathys & Squire, and Associate Andrew White were both judges for this event.

Andrew White also presented the award for Innovation in Primary Care to its winners, Dr Bhavagaya Bakshi & team from Herts Valleys and Luton CCGs. Their innovation, brilliantly titled ‘C the Signs’, involves a project using technology innovatively to fight cancer through early diagnosis.

Click here to see the full list of winners and their innovations.

In an attempt to harmonise European law relating to the patentability of products obtained from essentially biological processes, the EPO introduced an amendment to Rule 28 EPC that came into force on 1 July 2017[1].  New Rule 28(2) EPC states:

“Under Article 53(b) EPC, European patents shall not be granted in respect of plants or animals exclusively obtained by means of an essentially biological process.”

Whilst at first glance this Rule update appears to resolve ambiguity, unanswered questions still remain. Unfortunately, this means that the patentability of the products of essentially biological processes is likely to remain uncertain for some time.

Background

Article 53(b) EPC states that European patents shall not be granted in respect of:

“plant or animal varieties or essentially biological processes for the production of plants or animals [other than microbiological processes or the products thereof]”

The EPO’s Enlarged Board of Appeal (EBoA) has considered the patentability of plants, and essentially biological processes for their production, on two separate occasions.

In December 2010 the EBoA decided two cases (known as Broccoli and Tomatoes)[2] concerning the patentability of essentially biological processes for the production of plants.  However, those decisions were silent on the patentability of the products of such processes.

A second referral was then made to the EBoA (known as Tomatoes II and Broccoli II)[3], which concerned the patentability of products of essentially biological processes.  In March 2015 the EBoA held that:

“the exclusion of essentially biological processes for the production of plants in Article 53(b) EPC does not have a negative effect on the allowability of a product claim directed to plants or plant material”.

Thus, following these EBoA decisions, the products of essentially biological processes could be patented.

The EBoA’s ruling was vocally opposed by many plant breeders, and at the European Parliament.  In November 2016 the European Commission issued a Notice[4] in which it gave its opinion that:

“the EU legislator’s intention when adopting Directive 98/44/EC was to exclude from patentability products (plants/animals and plant/animal parts) that are obtained by means of essentially biological processes.”

The Commission Notice directly contradicted the EBoA’s conclusions in Broccoli II and Tomatoes II.

In the Notice, the Commission indicated that one reason for the variance between its opinion and the EBoA’s decisions was that the EBoA had not considered the legislative intent behind the Biotech Directive.  However, the legislator’s intent had been considered by the EBoA in Broccoli II and Tomatoes II[5].

The Commission Notice is entirely non-binding.  Indeed, the Notice explicitly states that a decision of the Court of Justice of the European Union (CJEU) is required to interpret the Biotech Directive.  Notwithstanding the non-binding nature of the Notice, the President of the EPO then stayed all proceedings before Examining and Opposition Divisions in which the patentability of a plant or animal obtained by an essentially biological process was the sole outstanding issue[6].

In June 2017 the EPO Administrative Council (whose members represent governments of EU member states) adopted changes to the Implementing Regulations, and new Rule 28(2) EPC was introduced:

“Under Article 53(b) EPC, European patents shall not be granted in respect of plants or animals exclusively obtained by means of an essentially biological process.”

New Rule 28(2) EPC came into force on 1 July 2017 and the stay of proceedings was lifted the same day.

What next?

Now that the stay of proceedings has been lifted, prosecution of any affected cases should resume.  However, a number of issues remain following the change to Rule 28 EPC.

First, the legality of the change to Rule 28 EPC is questionable[7].  The amendment to Rule 28 EPC was drafted with the intention of excluding from patentability subject matter that the EBoA had already held to be patentable in Broccoli II and Tomatoes II.

The EBoA is responsible for deciding points of law referred to it by Boards of Appeal, and its decisions are binding on the Boards of Appeal[8].  The Administrative Council have amended Rule 28 EPC according to their competency under Article 33 EPC[9].  Article 164(2) EPC states that:

“In the case of conflict between the provisions of this Convention and those of the Implementing Regulations, the provisions of this Convention shall prevail.”

Thus, a decision of the EBoA in relation to an Article of the EPC is binding, and can only be overturned by amendment to the EPC itself, not the Implementing Regulations, which are secondary to the Articles.

In terms of the Biotech Directive, only the CJEU is competent to rule on the interpretation of EU law.

Therefore, a referral to the CJEU as to the true intention of the Biotech Directive may ultimately be required to give a final answer on the patentability of the products of essentially biological processes.  However, such a referral could take many years, if it occurs at all.

There is no mechanism for the EPO to refer cases to the CJEU.  Instead, referrals must come from national courts of EU member states.  If, following the introduction of new Rule 28(2) EPC no European patents are granted with claims to essentially biological products, then there will be no national validations which can give rise to actions in the national courts and hence there would be no opportunity for a corresponding referral to the CJEU.  Nevertheless, it is possible that there are existing granted European patents with relevant claims that could be litigated nationally and give rise to a referral.

Aside from the question of legality, there is also a question as to whether new Rule 28(2) EPC is enforceable.  Even if Examining and Opposition Divisions were to apply new Rule 28(2) EPC, it is likely that their decisions would be appealed.  The Boards of Appeal would find themselves bound by the EBoA’s decisions in Broccoli II and Tomatoes II, and would have to find claims to products of essentially biological processes allowable under Article 53(b) EPC.

Strategy

Applicants with pending applications and Patentees in ongoing opposition proceedings may wish to proactively submit arguments to the EPO regarding the validity and enforceability of new Rule 28(2) EPC.  For other pending applications, Applicants may wish to delay prosecution until the issue of patentability of the products of essentially biological processes is finally resolved, although this may take some years yet.

For Applicants preparing new patent applications, consideration should be given as to whether it is possible to draft claims in such a way to fall outside the exclusion of new Rule 28(2) EPC.  In particular, new Rule 28(2) EPC only excludes products “exclusively obtained” by an essentially biological process.  Therefore, potentially claims could be drafted to make clear that other non-essentially biological processes are used in the production of a product, thereby taking it outside the exclusion.  No further guidance is presently available regarding what is meant by the term “exclusively obtained”, although we are hopeful that guidance will be forthcoming as the case law develops.   In addition, it may be that, on investigation, a product is not made by an essentially biological product according to the definitions set out in the first Broccoli and Tomatoes decisions.

If you have any questions about this article please contact our Agritech team.

German manufacturing is booming, and German SMEs are filing many more patent applications than their UK counterparts. A new study by the UK Intellectual Property Office (UKIPO) highlights the worrying fact that, not only are the Germans ahead in Europe wide patent protection, foreign companies also own 93% of patents which cover the UK.

Data produced by the EU IP Observatory shows that IP owning companies achieve better economic performance than their non IP owning competitors. Separate data, produced by Eurostat, shows Germany, France, and some Scandinavian countries all far outstrip the UK in patent filing (as shown in the map, above).

We suggest a low cost IP strategy for UK business with an eye on the wider European market.

Why does this matter?

A series of studies over the years since 2013 all show the value of IP. The statistics from the October 2016 update of those studies speak for themselves:

• 28 % of all jobs in the EU (60 million) can be directly attributed to IPR-intensive industries.
• 38 % of all employment in the EU (82 million) can be attributed, directly and indirectly, to IPR-intensive industries.
• IPR-intensive industries pay significantly higher wages than other industries, with a wage premium of 46 %.
• 42 % of the total economic activity (GDP) in the EU is attributable to IPR-intensive industries, worth EUR 5.7 trillion.
• IPR-intensive industries account for about 90 % of EU trade with the rest of the world, generating a trade surplus for the EU of EUR 96 billion.

In practical terms, for an individual manufacturing business, IP can allow that business to scale by generating income by licensing out their IP without the need to make large capital outlay on tooling. In addition, the ability to offer cross-licensing deals is often the most cost effective solution to any IP dispute. If a business does not have IP of their own, neither option is available to them.

Typically, companies file patent applications in their key markets, and in the countries where manufacturing facilities are located. It is no surprise therefore that the UK ranks so highly (sixth in the entire world) for the total number of granted patents. However, 93% of those UK patents are owned by foreign companies. UK markets and UK manufacturing capability are clearly of value, and foreign companies are investing heavily in UK patents to ensure their competitive edge in both.

It is startling that UK companies hold such a low number of UK patents. More worrying still is that the prevalence of foreign owned patents in the UK may decrease the freedom UK companies have to innovate, to open up new markets, and to win new investment and new business. UK companies who don’t hold IP may also be at a disadvantage when it comes to cross-licencing.

What can be done?

The UKIPO’s study shows that the UK patent office is high quality, low cost and efficient when compared with its international counterparts. Securing patent protection in the UK need not be as expensive as many people seem to assume. UK patent protection is available cheaply and quickly.

The most significant cost of any patent portfolio is generally the filing of foreign applications. Whilst the European Patent Office (the EPO) is renowned for quality, the fees they charge are higher than the UKIPO and the grant process is slow.

There may be a solution. Another German innovation is the so called “utility model” patent. These are granted without examination, which vastly reduces the cost of registration, and validity is only assessed if the utility model patent is used in legal proceedings. Their term is reduced (they only last ten years) but in fast changing markets, ten years may be enough.

One strategy UK SME’s might use is to obtain a UK patent, and a German utility model. This provides relatively low cost IP coverage in two of Europe’s key markets, and key manufacturing bases. Depending on the market, and the location of competitors manufacturing facilities, coverage in Germany and the UK together may provide a de facto block on the whole of Europe. Significantly, it can do so very much more quickly and at much lower cost than the alternatives.

Mathys & Squire specialise in supporting start-ups and SMEs on their IP strategy. For more information, please contact Sean Leach.

The map which accompanies this article was produced by Jakub Marian and has been included here with his kind permission.